Category: Corruption

Documentary on Indonesian War Crimes Strikes a Chord

TalkShowThe documentary “The Act of Killing” appears to be an extraordinary commentary on the violent anti-communism of Suharto‘s Indonesia. As Francine Prose notes, “the country’s right-wing leaders recruited gangs of thugs to wipe out suspected Communists with messy, improvisatory, but astonishing efficiency; estimates of the number killed during this period range from 500,000 to a million or more.” As in Vietnam, it appears that extremism in the defense of liberty was no vice.

As gangs become a tool of the prison industry in the US (or vice versa), the following observations from participants in the documentary are a striking commentary on the relativity of law in extreme scenarios:

On screen, one unrepentant murderer mocks the notion of human rights: “The Geneva conventions may be today’s morality,” he says, “but tomorrow we’ll have the Jakarta Conventions and dump the Geneva Conventions. War crimes are defined by the winners. I’m a winner. So I can make my own definition.”

When some of “the most important figures in organized crime are employees of multinational companies, politicians and bureaucrats,” the definition of the “criminal” leaves ordinary rule of law principles behind. The problem affects far more countries than the obvious targets of, say, Indonesia, Italy, and India. The “officialization of the criminal” and “criminalization of the official” may well be one of the darkest trends of our already troubled times.

Image: From The Act of Killing (directed by Joshua Oppenheimer), video still of an Indonesian talk show, where the audience applauded the “homicidal exploits” of a “self-described gangsters who” engaged in “brutal campaigns against Communists, ethnic Chinese and critics of the military government.”

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Faculty and staff

The proximate cause of Danielle’s inviting me to guest-blog at Concurring Opinions was a celebration we had at Fordham of my colleague Robert Kaczorowski‘s publication of “Fordham University School of Law: A History,” the publication of which she had blogged here. The  first half the book analyzes decanal administrations prior to those of Dean John Feerick, who remains an illustrious and beloved member of the Fordham faculty. This section of the book is remarkable for being the very opposite of “law porn“: it tells the story of several decades of a law school’s decline. This decline, Kaczorowski convincingly argues, was driven largely by the insatiable voraciousness with which the central university plundered the law school’s revenues (read student tuition) for its own, non-law purposes. Today, we call that plundering the “central services charge.” At many universities, not just my own, central charges are a major driver of law school costs.

The central services charge is related to the explosive growth of the administrative sector within universities. Read More

“The Creditor Was Always Right”

What would a world of totally privatized justice look like? To take a more specific case—imagine a Reputation Society where intermediaries, unbound by legal restrictions, could sort people as wheat or chaff, credit-worthy or deadbeat, reliable or lazy?

We’re well on our way to that laissez-faire nirvana for America’s credit bureaus. While they seem to be bound by FCRA and a slew of regulations, enforcement is so wan that they essentially pick and choose the bits of law they want to follow, and what they’d like to ignore. That, at least, is the inescapable conclusion of a brief but devastating portrait of the bureaus on 60 Minutes. Horror stories abound regarding the bureaus, but reporter Steve Kroft finds their deeper causes by documenting an abandonment of basic principles of due process:
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Prosecutors, Gambling and Dead Horses

Should federal prosecutors who settled a tax fraud case with the New York Racing Association back in 2003 (amended in 2005) be kicking themselves? Besides commitments typical of criminal settlement agreements (called deferred prosecution agreements), to improve internal control and governance, this one required the NYRA to continue its best efforts to install gambling machines at the track. It finally did so last year and the results have included the deaths of 21 horses during the winter meet.

Gambling is a controversial topic and New York State politicians had in 2003 just begun a push to expand the kinds of gambling that are legal in the state, starting with video gaming machines at horse racetracks. Why federal prosecutors settling a criminal tax suit should have anything to say about the NYRA’s role in advancing this agenda is not clear. Prosecutors did not explain their reasoning when signing the DPA.

In any event, the NYRA worked earnestly to move its gambling program along amid growing political and legal controversy in the state over gambling. It finally prevailed, opening a gambling emporium at the Aqueduct track in Queens in October 2011. In the ensuing season, an astonishingly high number of horses — 21 — died while racing.

In March, Governor Andrew Cuomo formed a task force to investigate and in May took state control over the track from the NYRA. The task force released its report last week identifying numerous causes for the deaths and prescribing extensive reforms of the NYRA and Aqueduct operations. Among the culprits: casino funding was allocated to massively increase awards to owners of winning horses in lower-level claiming races. Read More

Nordstrom on Global Outlaws

I was recently listening to a podcast by Carolyn Nordstrom of her 2008 Franke Lecture in the Humanities, Emergent(cies).  Nordstrom discusses the extraordinary power wielded by those in control of an underground economy of weapons, drugs, and human trafficking.  Paul Farmer attested to Nordstrom’s extraordinary dedication to ferreting out the transactions that knit together so many imperiled and privileged lives.  I look forward to reading her book Global Outlaws.  This excerpt describes her aims in it:

I am interested in the intersections of crime, finance, and power in activities that produce something of value: monetary, social, and cultural capital, power, patronage, survival. . . . Public media focus on . . . aggressive individuals under the sensational banner of “crime,” yet this interpersonal violence constitutes a small percentage of the universe of criminal actions. Smuggling cigarettes brings in far greater profits and economic repercussions. Robbing an entire country or controlling a transnational profiteering empire is the gold standard of crime.

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The Partisan Foundations of Judicial Campaign Finance

The Center for American Progress has just issued a report on judicial campaign finance that documents the increasing costs of campaigning in judicial elections and raises alarm that “[i]nstead of serving as a last resort for Americans seeking justice, judges are bending the law to satisfy the concerns of their corporate donors.”  Jeffrey Toobin followed up in the New Yorker that “the last thing you want to worry about is whether the judge is more accountable to a campaign contributor or an ideological group than to the law. . . . [b]ut it’s clear now that in many states you should worry—a lot.”

My colleague Joanna Shepherd and I study judicial campaign finance and argue that what is regularly missed in this simple narrative is the crucial role of the major parties.  In our empirical work, we find a very real relationship between contributions to judges and judicial decisions favorable to contributors, but the intuitive narrative of direct exchanges of money for decisions between individual contributors and judges is too simplistic to describe the larger realities of modern judicial elections.  The Republican and Democratic Parties broker connections between contributors and their candidates, and we argue that parties, not elections, seem to be the key to money’s influence on judges.

In a new paper still in progress, The Partisan Foundations of Judicial Campaign Finance, we identify broad left- and right-leaning political coalitions, allied with the Democratic and Republican Parties, whose collective contributions exercise systematic influence across the range of decisions by judges who receive their money.  The parties appear to coordinate judicial campaign finance under partisan elections where their investment and involvement is greatest, and what is more, we find that the robust relationship between money and judicial decisions largely disappeared in our data for judges elected in nonpartisan elections where parties are relatively less involved.

In addition, we go on to find a striking partisan asymmetry between Republicans and Democrats in judicial campaign finance.  Money from conservative groups in the Republican coalition, as well as from the party itself, is associated with more conservative judicial decisionmaking by Republican judges, even controlling for individual ideology.  However, decisionmaking by Republican judges is not responsive to money from liberal sources.  Decisionmaking by Democratic judges, by contrast, is influenced by campaign support from both liberal and conservative sources and thus cross pressured in opposite directions.  The result is that judicial campaign finance reinforces party cohesion for Republicans while undermining it for Democrats.  Campaign finance thus predicts judicial decisionmaking by judges from both parties in some sense, but is much more successful in serving partisan ends for Republicans, netting out in a conservative direction between the two parties.

Penn State Scandal: Could a Corporate Compliance Model Have Prevented It?

The Penn State scandal has become ever more shocking with each new revelation. My colleague Kathleen Boozang argues that it is time for higher ed to learn from other large enterprises about the importance of compliance:

It appears that even now, Penn State lacks a compliance program, the creation of which Special Investigative Counsel Freeh’s Report recommends. Previously limited to financial fraud and HR issues, a June 21, 2012 posting by Penn State’s internal auditor announces a poster redesign advertising its hotline number, to which any ethical or legal concerns can now be reported.  Important will be training throughout the university regarding the law’s protection of whistleblowers, about which, according to Freeh’s Report, top university leaders were unaware.

While it is stunning that, even now, Penn State has not advanced further in setting up these protective measures, it is fair to say that much of higher ed has been slow to adopt compliance best practices common to the healthcare sector and most business entities.

In related news, the Institute of Internal Auditors met in Boston last week. It looks like they will need to play an increasing role in the higher education setting, especially if internal compliance methods are not mere “rituals of verification.”

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Stanford Law Review Online: The Money Crisis

Stanford Law Review

The Stanford Law Review Online has just published an Essay by former U.S. Senator Russ Feingold entitled The Money Crisis: How Citizens United Undermines Our Elections and the Supreme Court. Senator Feingold explains how the Supreme Court decision in Citizens United threatens the integrity of our political process:

As we draw closer to the November election, it becomes clearer that this year’s contest, thanks to the Supreme Court’s 2010 Citizens United decision, will be financially dominated by big money, including, whether directly or indirectly, big money from the treasuries of corporations of all kinds. Without a significant change in how our campaign finance system regulates the influence of corporations, the American election process, and even the Supreme Court itself, face a more durable, long-term crisis of legitimacy.

[In Citizens United,] the Court was presented with a narrow question from petitioners: should the McCain-Feingold provision on electioneering communications (either thirty days before a primary election or sixty days before a general election) apply to this movie about Hillary Clinton? The movie, of course, was not running as a normal television commercial; instead, it was intended as a long-form, “on demand” special.

Yet Chief Justice Roberts clearly wanted a much broader, sweeping outcome, and it is now clear that he manipulated the Court’s process to achieve that result. Once only a question about an “on-demand” movie, the majority in Citizens United ruled that corporations and unions could now use their general treasuries to influence elections directly. Despite giving strenuous assurances during his confirmation hearing to respect settled law, Roberts now stands responsible for the most egregious upending of judicial precedent in a generation. As now-retired Justice John Paul Stevens wrote in his dissent to the majority in Citizens United: “[F]ive Justices were unhappy with the limited nature of the case before us, so they changed the case to give themselves an opportunity to change the law.”

He concludes:

The Court has a clear opportunity. A new challenge from Montana could allow the Supreme Court to reconsider its decision in Citizens United, and at least two justices have hinted that the 2010 ruling is untenable. In granting a stay of a Montana Supreme Court decision upholding that state’s anticorruption laws, Justice Ginsburg, writing with Justice Breyer, found the pulse of the chaos Citizens United has wrought: “Montana’s experience, and experience elsewhere since this Court’s decision in Citizens United v. Federal Election Commission, make it exceedingly difficult to maintain that independent expenditures by corporations ‘do not give rise to corruption or the appearance of corruption.’”

Justice Ginsburg is correct. Today’s framework for corruption cannot stand.

Read the full article, The Money Crisis: How Citizens United Undermines Our Elections and the Supreme Court by Russ Feingold, at the Stanford Law Review Online.

Note: corrected for typos

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Did Spitzer and Levitt Stoke the Financial Crisis?

Many are to blame for the financial crisis and plenty of reports and analyses have been written detailing assorted causes and assigning responsibility.  Overlooked in accepted versions of events are two fateful decisions and their context: Eliot Spitzer’s overzealous drive to oust Hank Greenberg from heading AIG, and Arthur Levitt’s governance reforms implemented at AIG shortly thereafter.

The ouster of Greenberg and transformation of AIG are pivotal events because before the ouster and reforms, AIG wrote few of the credit default swaps that became the centerpiece of the crisis, but wrote increasingly risky and unhedged swaps thereafter.  Many informed people consider it extremely unlikely or nearly impossible to imagine that, had AIG still been run by Greenberg under its traditional governance structures, the swap business at AIG could have gotten so out of hand. 

In that telling, Spitzer’s aggressive tactics to have Greenberg ousted and Levitt’s ambitious reforms were at least indirect contributing causes of the crisis and its severity.  The actions and ideas therefore deserve greater scrutiny than they have been given.  

In Spitzer’s case, it’s important to highlight how he took many steps that were at least dubious as a matter of prosecutorial ethics; in Levitt’s case, the reforms were extreme departures from traditional corporate governance. Potential lessons include the importance of prosecutors not overstepping their bounds and the value of adhering to some traditions in the development of corporate governance. Read More

The Poor Get One Strike; Banks Get Thousands

Most readers of this blog are already familiar with draconian treatment of the poor by various law enforcers and state bureaucracies. Here’s yet another example:

[A] one-strike clause . . . allows the public housing authority to evict [the tenant] if any member of her household or any guest engages in certain kinds of criminal activity. . . . Stories abound about the one-strike policy being wielded in seemingly egregious ways to evict “innocent tenants,” such as a disabled elderly man in California whose caretaker was caught with crack. . . .The Chicago Reporter wrote in September that 86 percent of Chicago’s one-strike evictions last year did not arise from criminal activity by the person named on the lease.

“These policies, the effect of them on children, families, women, families of color, were not thought through. And I think now a national conversation is beginning to rethink that,” said Ariela Migdal, a senior staff attorney with the Women’s Rights Project of the American Civil Liberties Union. Migdal pointed to a June 2011 letter from HUD Secretary Shaun Donovan to public housing directors, encouraging the directors to use their “broad discretion” to create a flexible set of standards for who will be admitted to and allowed to stay in public housing.

Certainly the Obama administration has ample experience deploying “discretion” and “mercy” in other areas.  For example, consider Barry Ritholtz’s summary of a shocking Reuters report by Scott Paltrow on foreclosure fraud:
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