Dodd"s $50,000 Bribe for SEC Employees

Senator Chris Dodd admitted Securities & Exchange Commission employees have such sorry jobs, they need incentives to do quality work. Workers could get $50,000 bonuses for snitching on each other, by offering "suggestions or allegations with extraordinary merit."

How long will it take for SEC employees to game the system, optimizing their pay at the expense of the organization? Might it look like?

"I'll sit on this, until you turn it in."

" You hold that and I'll submit it."

"$100,000 payday, baby!"

This is a long history of incentives distorting behavior. Nearly 30% of corporate executives cheated on stock option compensation. The SEC went ultra light on offenders, especially the politically connected. Recall Wall Street's billions in bonuses drove investment quality to zero. One former CEO slammed the 1970's bonus culture for creating "spoiled and ungrateful schmucks."

Surely, SEC lawyers are as smart as CEO's and will game Dodd's incentives to their favor. Chris Dodd is the latest fractal in America's abysmal leadership. Will they ever learn?

Senator Chris Dodd is but the latest briber. He's a White House follower. President Obama wants to manipulate teachers, doctors and nurses.

"If you want people to do a good job, give them a good job to do."--Dr. W.Edwards Deming

In my career as a hospital administrator, the worst leaders did two things. One, they relied almost exclusively on money schemes to motivate employees. Two, they contracted out most departments to a third party.

The federal government abdicates its leadership responsibilities in similar fashion.

"Privates" Asking for Government Money

Xe (formerly BlackWater Security) CEO Erik Prince told a Congressional panel his company's financial information was "private." The federal government provided over $500 million in annual contracts to his firm in 2007, the year of the hearing. Facing serious negotiating leverage, Eric didn't budge.

Fast forward to 2009. Mrs. Alice Rogoff Rubenstein, founder of a charitable nonprofit to promote Alaskan Native American art and culture, wants government support for The Alaska House, located in New York City. She approached both federal and state representatives for $1.5 million in funding. Otherwise the 3,000 square foot Alaska House may have to its doors, after opening in September 2008.

Mrs. Rogoff provided financing for the Alaska House but can no longer afford to do so. Her husband, David Rubenstein, is co-founder of The Carlyle Group and the 123rd richest American with $2.5 billion. His philanthropic donations are well noted.

The Anchorage Daily News reported:

Rogoff declined to specify how much she has put into Alaska House, saying her personal finances are private. She said she never intended to carry the operation herself and that her plan was to raise around $1 million a year for its operations, "I thought fairly easily," from the money managers who have made enormous fees managing the assets of the Alaska Permanent Fund. But the same day Alaska House opened, Rogoff said, the investment services company Lehman Brothers went under, and the financial industry imploded. She said she's had a problem even locating the managers to solicit.

Rogoff said her "Plan B" had been grants from charitable foundations, but they are hurting badly.

Alaska House requested a $1.5 million federal appropriation from U.S. Sen. Lisa Murkowski in February, according to Murkowski's office. But Murkowski, who sits on the Appropriations committee, chose to not submit it to Congress.

Rogoff said she's also pursuing private partnerships for Alaska House, which has a staff of six. If Alaska House stays open it might be through a public-private effort or an annual state appropriation, she said.

Did you note the Erik Prince "private" defense in the midst of a sales call? When firm's buy each other, they go through a due diligence process. Surely, David Rubenstein shared this fact with his wife.

I'm sure Mrs. Rogoff's motivations are of the highest good. However, her strategies say much about how business is conducted in America today. The government is the till. When the wife of a billionaire reaches her financial limit, why would the taxpayer have the where with all to bail her nonprofit venture out?

Award Goes to Frances Townsend?

Frances Townsend authored the Bush Lessons Learned report on Hurricane Katrina. Her "investigation" omitted Memorial Medical Center, the hospital with the highest patient death toll. Apparently the U.S. Airport & Seaport Police failed to read her whitewash. Government Security News press release stated:

The U.S. Airport & Seaport Police gave the Fred V. Morrone Nine-Eleven Award to Frances Townsend, the former chairman of the White House Homeland Security Council.

Ironically, another awardee at the ceremony makes evacuation aids. High Rise Escape Systems won the category "Best Clean-Up, Decontamination, Disaster Preparedness or Recovery Product." Their CEO stated:

"The real reward is being able to create an evacuation solution for a person with disabilities, a nursing home or hospital that has no plan except 'evacuate in place.'"

That exactly what happened in Memorial Medical Center in New Orleans. They evacuated in place for five days.

Recognizing Mrs. Townsend is patently laughable. She prepared to board a plane to Saudi Arabia, while patients lingered in toxic gumbo. When Fran returned, she crafted a report that reads more like a risk management document for Tenet Health and the Carlyle Group's LifeCare Hospitals than any credible investigation. Take her beastly advice with more than a shaker of salt.

Banking on the Church for Support

London churches hosted British bankers, intent on restoring their good name. Bloomberg reported that some confessed:

Bankers became too obsessed with short-term gains in a financial crisis that is a “profoundly moral issue,” Lazard’s Ken Costa said in the church of St. Katherine Cree on Oct. 15.

One intoned Jesus' teaching on selfishness:

“The injunction of Jesus to love others as ourselves is an endorsement of self-interest,” Goldman’s Brian Griffiths said.

Others lorded:

“There’s no conflict between doing business in an ethical and responsible way and making money,” Varley said. “We make our biggest contribution to society by being good at what we do.”

Barclays “objective is to pay the minimum compensation consistent with competitiveness,” CEO John Varley said.

John Varley channels Jacob Marley, Ebenezer Scrooge's partner? Might a laid off Barclays employee been outside? "May I please 'ave sum scraps from the Barclays' table, sirhh? Little Timmy is in a bad way, governuh."

In the Church of King Henry VIII's genitalia, British bankers showed their wankers. So did a visiting American banker. Christmas is around the corner. Beware bankers' swinging Christmas balls.

America is Top Tax Haven

The five biggest tax havens, according to the Tax Justice Network, are:

1. Delaware (United States)
2. Luxembourg
3. Switzerland
4. Cayman Islands
5. London (UK)

Who's taking advantage of tax havens? Here are #15-- the Netherlands' abusers:

Multinationals like Boeing, Walt Disney and US Steel use addresses in the Netherlands to take advantage of the Dutch tax regime. The documentary claimed 8,000 billion euros are processed through the Netherlands to avoid paying tax. That is a tenth of world trade.

And the politically connected?

Even the royal family came into criticism earlier this year, when it emerged the queen's sister Princess Christina was running a tax evasion fund on the Channel Islands, using the address of the queen's palace in The Hague.

Channel Islands? That's where Carlyle Capital Corporation imploded. The Carlyle Group also has subsidiaries in The Caymans. Yes, the politically connected know where to shelter their money. The U.S. Congress knows how to remain hands off. So does the White House.

The race to the lowest global common denominator on worker pay/benefits, regulations and taxes continues. Executive compensation and political donations are exempt from the race to the bottom.

Wall Street Swine

Federal officials finally targeted Wall Street swine for intervention, only it's not the SEC or Justice Department calling. It's public health with H1N1 flu shots. While doctors, nurses, pregnant women and other high risk groups wait for vaccine, Goldman Sachs and CitiBank received 1,400 doses.

Don't say the Government-Industrial Monstrosity, Eisenhower's MIC on steroids, won't take care of its own. The GIM is way past the military, now encompassing infrastructure, financial, and health care industries. It's a remarkably insular group, where money and favors freely flow.

While I may have said "stick it to 'em," I didn't mean inoculate them from contagion.

Update: HHS contracted with The Carlyle Group's Booz, Allen & Hamilton for Vaccine Management Business Improvement. The contract began in 2005 and was renewed in 2008. The system sets criteria for who gets vaccine and directs shipments from manufacturers. Are the big money boys looking after one another?

Get Ready to PPP

Public-Private Partnerships (PPP's) are the topic du jour. While Congress dithers on health care deform, the Obama team circles the globe promoting PPP's.

Neal Wolin (formerly of The Hartford) pushed PPP's in Africa
Tim Geithner will sell PPP's in Japan
President Obama offered PPP's to the Muslim world in his Cairo speech

Companies and Markets reported:

The proliferation of PPP schemes and infrastructure investments in the United States has undoubtedly accelerated in the past two years.

Their study mentions Texas toll roads and The Carlyle Group's bid for Virginia Ports as promising indicators.

The Hartford announced innovative insurance policy underwriting for PPP's. Their press release coincided with Neal Wolin's African trip.

Public-private partnerships don't stop at our border. The World Bank, Export-Import Bank and Overseas Private Investment Corporation (OPIC) all want to help American companies PPP globally. Politically connected Americans stand ready to help. A Zoellick here, an Albright there, and a Frist in global finance?

American branded corporations stand to win big in global PPP'ing. Rest assured these foreign subsidiaries will gladly take U.S. federal money, without repatriating any earnings. Take the Rwandan PPP case highlighted by Treasury's Neal Wolin:

In Gisenyi, on Lake Kivu, an American company has joined in a public-private partnership with the Rwandan government to develop a $325 million power generation facility to extract methane from the lake.

Neal didn't mention the firm, but a little digging led to ContourGlobal. Their March 2009 press release stated:

ContourGlobal announced today that its subsidiary ContourGlobal Kivuwatt Ltd signed an agreement with the Republic of Rwanda to develop an integrated gas extraction and electricity generation facility which will provide 100 MW of natural gas fired electricity to Rwanda and the East African Region.

ContourGlobal’s $325 million Kivuwatt project will be the first large scale facility to extract methane from the depths of Lake Kivu, a deep water lake located on the border of Rwanda and the Democratic Republic of Congo. Lake Kivu possesses a unique source of energy, methane gas held in solution deep within the lake water.

In Africa, ContourGlobal is currently constructing electricity generating projects in three countries: Togo, Nigeria and Rwanda. The company is also actively developing additional projects in Sub-Saharan Africa.

Reservoir Capital Group is a privately held investment firm with approximately $4 billion under management and is ContourGlobal’s controlling shareholder.

An October 2009 press release revealed OPIC is supplying ContourGlobal with "political risk insurance" and financing for African power generation projects. What else did Neal Wolin sell during his visit to sub-Saharan Africa? Who benefits?