The Center for Public Integrity Latest Stories

Practice attack on Moscow was anything but routine

Moscow,Russia — 2013-05-24T18:00:51-04:00

An ailing, 69-year-old Yuri Andropov was running the Soviet Union from his Moscow hospital bed in 1983 as the United States and its NATO allies conducted a massive series of war games that seemed to confirm some of his darkest fears.

Two years earlier Andropov had ordered KGB officers around the globe to gather evidence for what he was nearly certain was coming: A surprise nuclear strike by the U.S. that would decapitate the Soviet leadership. While many of the officers didn’t believe that the U.S. had such plans, they dutifully supplied the Kremlin with whatever suspicious evidence they could find, feeding official paranoia.

The Western maneuvers that autumn, called Autumn Forge, were depicted by the Pentagon as simply a large military exercise. But its scope was hardly routine, as Americans learned in detail this week, for the first time, from declassified documents published by the National Security Archives, a Washington-based nonprofit research organization.

To the Russians, it could easily have looked like a genuine preparation for a nuclear strike, the documents revealed: A total of 40,000 U.S. and NATO troops were moved across Western Europe, while 16,044 more U.S. troops were airlifted overseas in 170 missions conducted in radio silence.

More ominously, in an unpublicized exercise called Able Archer 83, U.S. and NATO officers practiced the procedures they would have followed in authorizing and conducting real nuclear strikes, shifting their headquarters as the game escalated toward chemical and nuclear warfare. In communications, they several times referred to non-nuclear B-52 sorties as nuclear “strikes” — slips of the tongue that could have been intercepted by Soviet eavesdroppers.

While historians have previously noted the high risk of an accidental nuclear war during this period, the new documents make even clearer how the world’s rival superpowers found themselves blindly edging toward the brink of nuclear war through suspicion, belligerent posturing and miscalculation.

In a coincidence that could have proved catastrophic, the script for the maneuvers dovetailed snugly and perilously with the Soviets’ fears that they were under threat, coupled with nagging doubts about their ability to protect themselves from U.S. military might.

The problem with this brinksmanship was that it increased the risk of a nuclear exchange due to miscalculation, according to Nate Jones, a Cold War historian with the National Security Archives who edited and published the collection of more than 50 documents, totaling more than 1,000 pages, in three installments beginning May 16 and ending Thursday.

Ranging from presidential note cards to previously secret CIA reports, the documents describing Able Archer 83 offer fresh insight into a much studied but incompletely understood episode in the U.S.-Soviet rivalry. “This episode should be studied more because it shows that U.S. leaders might not have learned as much from the Cuban missile crisis [about avoiding accidental conflict] as they should have,” Jones said.

In the current edition of the Journal of Strategic Studies, Israeli historian Dmitry Adamsky calls the 1983 war games “the moment of maximum danger of the late Cold War.” Able Archer, he wrote “almost became a prelude to a preventative nuclear strike.”

The March 1984 edition of Air Man Magazine, a rare detailed public account, called Autumn Forge “the biggest North Atlantic Treaty Alliance show of force of the year — a test of military readiness in the context of NATO’s deterrent mission.” But the article emphasized the air lift, never mentioning rehearsal for nuclear war.

Even the troops on maneuver tried not to draw too much attention to themselves. At Dusseldorf Airport, the 45th Tactical Air Wing commander had his planes park away from the passenger terminal to keep a low profile. Most travelers, he was sure, were not even aware of troop activity at the airport.

But the Pentagon knew that the Soviets were monitoring his troops’ every move. “The series of exercises are watched very carefully by the Eastern Bloc nations, just as we try to watch their exercises as closely as we can, to learn tactics and procedures,” Air Force Maj. Gen. William E. Overacker told Air Man.

The impetus for the exercise came from the White House, “where they wanted to stare down the Soviet bear,” said Jones.

Tensions had heated up that September, after the Soviet shoot-down of Korean Air Lines Flight 007, which had strayed into Soviet air space. The administration responded with stepped-up surveillance, and provocative naval maneuvers, and pressed for the deployment of new Pershing II missiles in Europe capable of reaching Moscow in less than ten minutes.

Considered in a vacuum, Able Archer 83, in which officer’s at NATO’s Belgium headquarters practiced their response to a hypothetical chemical and nuclear conflict with a thinly-disguised Soviet Union, might not have seemed particularly threatening.

But for two years prior to Able Archer 83, KGB agents had been scouring the world for evidence of what the Soviet leadership in general — and Andropov in particular — believed were U.S. preparations for all-out nuclear war against the U.S.S.R.

The massive intelligence-gathering effort, called “Operation RYAN,” pressured the KGB to find proof that the U.S. was planning a “decapitating” strike against Moscow with its nuclear forces. (The Russian acronym derives from Raketno-Yadernoye Napadeniye, or nuclear missile strike.)

According to an unclassified summary of the Western nuclear exercise scenario, prepared for the National Security Archives by a NATO historian, the war game began with briefings on an imaginary East-West conflict in the Middle East, including “Orange” — that is, Soviet — arms deliveries to Syria, coupled with unrest in Eastern Europe.

Rising tensions and a change in the Soviet leadership triggered an invasion by the Red Army of Yugoslavia, Finland, Norway and Greece, according to the exercise scenario. After the “Orange” Soviets finally attacked “Blue” — U.S. and NATO forces — with chemical weapons, NATO decided to respond with two series of nuclear strikes.

The Soviets -- in a characteristic mirror-image -- feared a U.S.-initiated attack, and certainly made no secret about it at the time. One key document, released by the Reagan Presidential Library files, describes how Andropov repeatedly warned that the U.S. was approaching the “red line” leading to nuclear war when he met with veteran U.S. diplomat Averell Harriman in June 1983.

But President Reagan was unsure if the Soviets were really convinced that the U.S. was preparing a sneak attack on them, or were merely “huffing and puffing,” as Reagan asked his ambassador to the U.S.S.R. in 1984.

There was skepticism in Washington about Andropov’s sincerity. Three days after the end of Able Archer 83, the CIA issued a Top Secret Joint Net Assessment of U.S. and Soviet strategic forces that assured senior administration officials that the balance of forces “is probably adequate to deter a direct nuclear attack on the United States.” It did not acknowledge the possibility of nuclear war through miscalculation.

Another Top Secret CIA analysis, written six months after Able Archer 83, shows how profoundly the spy agency may have misread the Kremlin’s thinking. “We believe strongly that Soviet actions are not inspired by, and Soviet leaders do not perceive, a genuine danger of imminent conflict or confrontation with the United States,” its authors wrote.

It acknowledged, however, that since the Able Archer exercise, the Soviet military had stepped up its activity and deployed new weapons and forces.

Even if his intelligence advisers were sanguine, Reagan himself was worried after the exercise that the Soviets genuinely feared the U.S. was preparing to commit nuclear aggression, writing at one point in his diaries that “I feel the Soviets are so defense minded, so paranoid about being attacked that without being in any way soft on them we ought to tell them that no one here has any intention of doing anything like that. What the h—l have they got that anyone would want.”

Moscow’s reaction to the November 1983 war games is not well documented, partly because obtaining material from Russian government archives has become increasingly difficult since the 1990s. “I wouldn’t say it has stopped, but it’s proceeding at a glacial pace,” Jones says.

But Russia isn’t the only country hanging onto some of the secrets surrounding the 1983 war scare.

The papers of former Washington Post reporter Don Oberdorfer include a summary of what Jones says may be the most comprehensive account of the Able Archer 83 ever written, a classified 110-page report completed in 1990 by the President’s Intelligence Advisory Board.

The report has never been released, but Oberdorfer’s notes, based on an interview with a confidential source, say it concluded that the 1983 “war scare was an expression of genuine belief on the part of Soviet leaders that US was planning a nuclear first strike, causing Sov(iet) military to prepare for this eventuality, for example by readying forces for a Sov(iet) preemptive strike.”

The note concludes in telegraphic style: “If so, war scare a cause for concern.”

Jones says the 1990 report to President George W. Bush may be the most comprehensive account ever written on what happened during those five days in November of 1983, but he’s been fighting to get it declassified without success since 2004. “Until the President’s Intelligence Advisory Board report is declassified, we won’t know how close the U.S. came” to nuclear war, Jones said.

Vitter's hunt for super PAC cash limited — but watch out, alligators

2013-05-24T15:48:38-04:00

During his time at an upcoming “Louisiana Bayou Weekend” super PAC fundraiser, Sen. David Vitter, R-La., will be able to ask attendees how they like the Cajun cooking. And he’s free to inquire whether they bagged a gator during the weekend’s planned alligator hunt.

But he won’t be able to ask them to contribute more than $5,000 to its sponsor, the Fund for Louisiana’s Future, a super PAC created to support Vitter.

That’s because federal law prohibits federal candidates from officeholders from soliciting contributions in excess of $5,000 per year for super PACs, even though the groups may accept contributions of unlimited size.

It also doesn't matter "whether the funds are used for state or federal election work,” attorney Paul S. Ryan of the Campaign Legal Center told the Center for Public Integrity.

“The donor can always give as much as they choose to,” added Joe Birkenstock, an attorney at Caplin & Drysdale in Washington, D.C. “It’s a limit on what can be asked.”

Vitter, who is mulling a run for governor, will appear at the September fundraiser as a “special guest,” according to an invitation obtained by Politico.

The Fund for Louisiana’s Future is also registered with the state of Louisiana, which caps contributions to all political action committees at $100,000 per election cycle.

Since the advent of super PACs during the 2010 election cycle, federal politicians on both sides of the aisle have solicited funds for the unlimited-spending groups, including Senate Majority Leader Harry Reid, D-Nev., and GOP presidential nominee Mitt Romney.

Neither Fund for Louisiana’s Future treasurer, Charlies Spies, nor a spokesman for Vitter immediately responded to requests for comment.

Conservative nonprofit seeks to oust IRS official

2013-05-24T13:53:42-04:00

The American Future Fund, a Republican-aligned “social welfare” nonprofit, is circulating a petition to “fire Lois Lerner,” the Internal Revenue Service official at the center of the ongoing political storm about the agency’s targeting of conservative groups seeking tax-exempt status.

“Did you see IRS official Lois Lerner’s stunning and insulting actions before a Congressional committee yesterday where she made a personal statement of innocence, then plead the Fifth and left?” American Future Fund founder Nick Ryan wrote in an email to supporters Friday obtained by the Center for Public Integrity.

“Does it leave you seeing red that Ms. Lerner refused to fully and honestly answer questions before the Committee about who knew what and when?” Ryan continued. “Then let’s do something about it.”

The American Future Fund itself has frequently been singled out by campaign finance reform groups, who have accused the nonprofit of masquerading under Section 501(c)(4) of the U.S. tax code when it ought to be registered as a political committee — and subject to donor disclosure rules.

During the 2012 election season, the American Future Fund spent more than $29 million on political advertisements, as the Center for Public Integrity previously reported.

As a 501(c)(4) nonprofit, it is allowed to make election-related expenditures, so long as politics are not its “primary” purpose.

Little is known about the donors to the American Future Fund. Between 2009 and 2011, 51 percent of the money the group raised came from another nonprofit — the Arizona-based Center to Protect Patient Rights, which has no website and lists its address in government filings as a post office box in Phoenix.

The American Future Fund was awarded tax-exempt status under Section 501(c)(4) in October 2008, IRS records show.

Lerner, the director of the IRS exempt division, was put on administrative leave from the IRS on Thursday.

Two DOE electric car loans, two different paths

2013-05-23T16:09:18-04:00

They are two cutting-edge electric car makers, headquartered in California and backed by powerhouses of politics and money. In 2009, each secured half-billion dollar loan commitments from President Obama’s Department of Energy to help transform their clean-energy cars from drawing boards to showrooms.

But this week, the fortunes of Tesla Motors and Fisker Automotive took sharply divergent turns.

On Wednesday, the Energy Department announced that Tesla repaid the balance of its $465 million government loan nine years early. Fisker, meantime, has ceased making cars as it weighs potential bankruptcy, confronts a $171 million loan balance with DOE and, last month, faced questions from the House Committee on Oversight & Government Reform.

In October 2011, The Center for Public Integrity and ABC News explored the Energy Department’s risky $1 billion bet on two companies lauded for their innovative design, but facing warnings from experts over the marketability of cars that, in some models, carry price tags hovering around six figures.

In announcing Tesla’s loan repayment this week, the department said the risks were worth taking, coming at a time the industry itself suffered a deep downturn. “The lack of financing for the automotive industry was critical and potentially lethal,” Energy Secretary Ernest Moniz said in a statement. “Providing these loans was a calculated risk — but it was the right decision for the country.”

Yet for Fisker, whose loan was heralded by Vice President Joe Biden, the risks remain ripe. The company’s vision of developing a muscular Karma and more practical sedan faltered amid a series of setbacks from slow- moving government approvals to recalls and financial downturns involving suppliers.

DOE initially agreed to loan Fisker $529 million to help the company develop two lines of plug-in hybrids. Of that, $359 million would help the company re-open a shuttered former GM plant in Delaware, where Fisker would develop “Project NINA” — a mass-market hybrid sedan to be called the Atlantic. “The company estimates it will build 75,000-100,000 of these highly efficient vehicles every year by 2014,” DOE announced in 2009.

The remaining money would help Fisker complete its luxury Karma.

"We understood a new chapter had to be written, a new chapter in which we strengthen American manufacturing by investing in innovation,” Biden said in 2009, citing Fisker’s loan.

Yet reality collided with those projections, and Fisker Automotive has not come close to meeting its goals.

The company began drawing down on the DOE loan in 2010, and by the middle of 2011, had collected $192 million in government money, records show. But then, as Fisker encountered production hiccups, the Energy Department cut off the money spigot. DOE has recouped $21 million of the $192 million it loaned Fisker, leaving the company $171 million in debt to the government as it weighs a potential bankruptcy.

Testifying before the Oversight and Reform Committee late last month, co-founder Henrik Fisker said the company had sold 2,000 Karmas worldwide. He cited a series of setbacks that, like a domino, helped topple production of the company’s fleet.

In 2011, Fisker said, regulatory approvals for the Karma in the United States “took longer than anticipated.” Then, after the company began delivering the car to customers, two parts provided by outside suppliers had to be recalled. “The recalls generated bad publicity, diverted management attention, impacted sales, and further delayed our production schedules,” Fisker said.

Then came a bigger blow: In October 2012, Fisker’s lithium ion battery manufacturer filed for bankruptcy protection. Fisker’s exclusive supplier — another recipient of DOE funding — stopped manufacturing batteries.

“Fisker Automotive had to cease production of the Karma,” Fisker said. “We explored options for other battery suppliers, but due to large investment costs and long development cycles, we could not secure arrangements that would allow us to resume production immediately.

“This was a crippling factor in restarting production of the Karma.”

With Hurricane Sandy came more bad news. More than 330 Karmas, awaiting shipment at Port Newark in New Jersey, were “damaged beyond repair during this unforeseen natural disaster. This constituted a major share of the company's inventory and resulted in a drastic loss in revenue,” Fisker said.

Fisker’s other car, the Atlantic, has yet to go into production.

Henrik Fisker stepped down as CEO in 2012, and resigned from the board in March. Yet he told the committee the company’s technology earned honors, and said Fisker Automotive “still has the potential to build on these achievements” if it can secure financing.

“From the outset, Fisker Automotive aimed to be a new American car company, setting pioneering standards for low-emission technology and cutting-edge design,” he said. “I sincerely hope that the company can find a way to move forward and repay its Department of Energy loans.”

Tesla, the other California electric car company backed by DOE money, repaid its loan this week.

Both companies received backing from heavyweights in business and politics. Fisker’s prime supporters included the California venture capital firm Kleiner Perkins Caufield & Byers, whose partners include former Vice President Al Gore. Tesla’s prime backers include venture capitalist and Obama fundraiser Steve Westly, and Google co-founders Larry Page and Sergey Brin.

While Fisker searches for a potential buyer to help salvage the company, Tesla has, of late, pointed to headlines: Its Model S was recently named Motor Trend Car of the Year. On its website, Tesla prices the sedan from $62,400-$87,400, depending on the model — after a $7,500 federal tax credit. Its six-figure Roadster sports car, it said, is sold out in North America.

Tesla’s $465 million loan, the DOE said, enabled the company to open a shuttered plant in Fremont, California, “and to produce battery packs, electric motors, and other powertrain components.”

In a brief interview Thursday, Diarmuid O’Connell, Tesla’s vice president of business development, said the company raised money to pay off the DOE loan this week.

Asked why the two electric car companies have forged disparate paths, he provided a concise answer.

“Fisker and Tesla have always been on different trajectories, our business models have always been different,” O’Connell said. “What we are focusing now on is building market.”

For the Energy Department, the next focus could be Fisker — and bankruptcy court, should the company take that route. On Thursday, energy officials did not respond to questions about what steps the department would take if Fisker files for bankruptcy, or how much the government anticipates recovering.

Senators investigating Apple own company stock

Apple Inc. — 2013-05-23T10:31:05-04:00

Two senators serving on a subcommittee that Tuesday grilled Apple Inc. executives over the company's offshore tax practices are themselves owners of Apple stock, either directly or through a spouse, according to interviews and a review of federal disclosure documents by the Center for Public Integrity.

Sen. Heidi Heitkamp, D-N.D., owns the most Apple stock among the 14 members of the Senate Homeland Security and Governmental Affairs Committee's Permanent Subcommittee on Investigations, with her holdings worth at least $250,001 and up to $500,000, according to personal financial disclosure documents for calendar year 2012. She also earned up to $5,000 in Apple stock dividends last year, records show.

Heitkamp was one of six committee members to not attend Tuesday's hours-long hearing, during which Apple Chief Executive Officer Tim Cook defended his company against accusations of tax dodging. Attendee or not, the senator's stock holdings do not pose a conflict with her committee service, a spokeswoman said.

“Senator Heitkamp was selected to serve on the Homeland Security and Governmental Affairs Committee because of her unique position being from a border state and her past experience as a state attorney general working along aside law enforcement," spokeswoman Whitney Phillips said. "Her position on this committee is in no way impacted by her personal financial holdings.”

Sen. Tom Carper, D-Del., chairman of the Homeland Security and Governmental Affairs Committee and an ex officio member on its Permanent Subcommittee on Investigations who attended the hearing and asked questions, reported that his wife, Martha Ann, owned up to $100,000 worth of Apple stock during 2012. The stock also generated up to $2,500 in dividends last year, federal records show.

Officeholders generally disclose their assets and earnings in broad ranges.

Carper's committee office confirmed the senator's wife currently owns Apple equities, but spokeswoman Jennie Westbrook declined to answer specific questions about the stock holding.

(Update, 10:19 a.m., May 23: Westbrook followed up with a statement regarding Carper's Apple holdings, which reads: “In his role as chairman of the Homeland Security and Governmental Affairs Committee, Chairman Carper continues to make it a top priority to conduct thorough and proper oversight. Neither Chairman Carper’s financial holdings nor his family’s influence his policy and oversight work on the committee or in the Senate. This is underscored by the fact that he actively participated in Sen. [Carl] Levin’s hearing on this important matter.”)

Sen. Tom Coburn, R-Okla., another ex officio subcommittee member, also reported trading in Apple stock options during 2012, earning up to $50,000 from the transactions, according to his newly released personal financial disclosure document.

The same document also states that Coburn's Apple holdings at the end of 2012 were worth $1,000 or less — an indication he may no longer have Apple holdings. Representatives for Coburn, who also did not attend Tuesday's hearing, could not be reached for comment.

In addition to Carper, Sens. Carl Levin, D-Mich; John McCain, R-Ariz.; Claire McCaskill, D-Mo.; Ron Johnson, R-Wis.; Rob Portman, R-Ohio; and Kelly Ayotte, R-N.H. attended Tuesday's hearing. These senators reported no Apple stock holdings in 2012 outside of what might exist in broad-based mutual funds that many of them reported.

Another committee member in attendance, Sen. Rand Paul, R-Ky., was granted a 90-day filing extension for his 2012 disclosure paperwork after asking for more time. It is therefore unknown whether Paul, who defended Apple during the hearing, owned Apple stock during 2012. During 2011, he did not, federal records show.

In 2011, Apple stock, which today closed at $441.35 per share, ranked among the most popular holdings by all members of Congress — just below the stock shares of other massive companies such as General Electric, ExxonMobil, Pfizer and Bank of America, according to the Center for Responsive Politics.

Pro-Rand Paul super PAC's name may violate law

2013-05-22T14:56:53-04:00

Supporters of Republican Sen. Rand Paul, R-Ky., have launched “Rand PAC 2016.” But because the super PAC uses the potential presidential candidate’s first name, this action may violate federal law.

Three Hillary Clinton-themed super PACs established earlier this year could also find themselves in the same situation. Since, however, the former secretary of state is not officially a candidate for president or any other federal office, they are on safe ground — for now anyway.

Paul, on the other hand, has raised more than $600,000 for his 2016 re-election to the U.S. Senate, including $457,000 during the first quarter of 2013, according to Federal Election Commission filings.

Federal law, in most cases, only permits political committees authorized by a candidate to use that candidate’s name — which super PACs, by definition, are not.

The regulations, though, are unclear about whether the use of a partial name would trigger a change.

This would be “a good area for the FEC to clarify its own rules,” Paul S. Ryan, an attorney at the nonpartisan Campaign Legal Center, told the Center for Public Integrity.

An FEC spokesman directed questions to the agency’s chairman and vice chairman, who could not immediately be reached for comment.

The FEC typically sends a letter to a super PAC if it uses a candidate’s name. For example, during the 2012 GOP presidential primaries, the super PAC “Americans for Rick Perry” ran afoul of the rule and changed its name to “Restoring Prosperity Fund.”

Brandon Edwards — the 27-year-old, self-described libertarian from California who is the chairman of the newly created Rand PAC 2016 — said that if his group were asked to change its name by the FEC, “that would be no problem.”

Edwards said his group does not want to be seen as “leaching off" Paul's name.

“That’s definitely not the goal of this,” he added. “The goal is to become active with the community, find other like-minded people and help spread the message of liberty.”

Another pro-Paul group may face a similar predicament. It christened itself the "Stand with Rand PAC" when it registered in March as a hybrid super PAC.

A hybrid super PAC can operate one bank account fueled by limited contributions to dole out money to candidates — plus a second account funded by unlimited donations that are used to produce political advertisements.

Bill Willenbrock, Stand with Rand PAC's treasurer, said his group had not been asked to change its name by the FEC, adding that he was "not aware that Ayn Rand was running for office," making reference to the deceased author, a libertarian icon.

The super PAC’s website features a photo of the Kentucky senator above the assertion that it exists to “support candidates like Rand Paul who stand up for the Constitution and, more specifically, the Bill of Rights.”

In a previous interview with the Center for Public Integrity, Willenbrock said his group planned to support Paul as well as "other candidates who stand for liberty," such as Sens. Ted Cruz, R-Texas, and Mike Lee, R-Utah.

In January, several notable Clinton supporters formed a super PAC called “Ready for Hillary PAC,” as the Center for Public Integrity previously reported.

The super PAC has not yet been required to report any fundraising to the FEC, but Democratic heavyweights such as strategist James Carville and former Michigan Gov. Jennifer Granholm have already made pitches for the group.

“We are aware of this federal regulation,” said Jim Lamb, Ready for Hillary's general counsel. "If Hillary decides to run and becomes a candidate, we will continue to be in compliance with this regulation."

Clinton supporters have also created an Iowa-based group called "Hillary Clinton Super PAC" and a California-based super PAC called "Hillary FTW," an acronym standing for "for the win."

Further confusing the issue, political committees designed to specifically oppose a candidate are granted an exemption from the rules governing names.

Case in point: the “Stop Hillary PAC” registered with the FEC last week as a hybrid super PAC. Similarly, the “Retire Pryor” super PAC has spent about $10,000 opposing the re-election of incumbent Sen. Mark Pryor, D-Ark, who will face voters in 2014.

The only other exception to the naming restriction is for groups that seek to “draft” a candidate to run for office. These groups must also “clearly indicate” that they are “a draft committee,” according to federal law.

Like super PACs, draft committees need not abide by the strict contribution limits faced by candidate’s own committees.

Release of offshore records draws worldwide response

2013-05-24T10:49:43-04:00

ICIJ’s investigative series on offshore secrecy – which draws from a cache of 2.5 million secret records – has ignited reactions around the globe.

Since the initial release of stories by the ICIJ and its media partners across the world, public officials have issued statements, governments have launched investigations, and politicians and journalists have been debating the implications of the records and the reporting.

Among the latest reactions and responses:

The Chief Executive Officer of one of Europe’s biggest banks, Raiffeisen Bank International AG, has resigned a day after officials began a probe into his investments revealed through Offshore Leaks.

Documents show Herbert Stepic, who has worked with the Raiffeisen banking group for four decades and took its eastern European division public, used companies in Hong Kong and the British Virgin Islands (BVI) to conduct property deals he did not report to his employer.

Stepic did not answer any questions at a press conference called by the bank this morning. In a statement, he referred to the potential damage to the bank because of the "media debate" around the Offshore Leaks revelations and that he took the responsibility to resign to avoid this.

He repeated an earlier statement that he made his offshore investments with income that had been taxed in Austria, and said he was resigning "for personal reasons".
European Council President Herman Van Rompuy says there has been a "real breakthrough" in the EU's efforts to combat offshore tax evasion.At the council's May 22 meeting, Reuters reports, Rompuy said the current aggressiveness of the EU's push is "unprecedented. We couldn't speak in those terms on those issues, let's say, a month or two months ago. . . . There is a strong political will by the leaders, not only the Europeans but also on a global level, to go forward in attacking tax fraud and tax evasion."
The Luxembourg finance ministry announced they would automatically exchange information with United States tax authorities about the bank accounts held by U.S. citizens and residents. The tiny nation, one of the biggest financial centers in Europe, announced in April they would "follow a global movement" and end decades of banking secrecy in regards to EU citizens. The move came on the eve of European leaders meeting to discuss sharing more data on citizens who park wealth across borders, in an effort to limit tax evasion.
The Council of the European Union issued a statement May 14 calling for efforts at the national, EU and international levels “to combat tax fraud and tax evasion” and “aggressive tax planning.” The statement noted that the council’s presidency plans to ask ICIJ to supply EU member states “with the names and details regarding all EU citizens on the ‘offshore leaks’ list.” ICIJ has said that it will not turn over the data to government agencies, but that it is exploring the possibility of publicly releasing some entity ownership data.
After meeting with President Barack Obama at the White House, British Prime Minister David Cameron made a strong call to tackle what he called “the scourge of tax evasion,” one of the key topics in next month’s G8 meeting in Ireland. “We need to know who really owns a company, who profits from it, whether taxes are paid. And we need a new mechanism to track where multinationals make their money and where they pay their taxes so we can stop those that are manipulating the system unfairly,” Cameron said.
British, U.S. and Australian tax authorities announced that they are pursuing tax evasion investigations based on a cache of offshore documents that link to the Cook Islands, Singapore and the Cayman Islands, among other jurisdictions. The secret records are believed to include those obtained by ICIJ and that are the basis of the Offshore Leaks investigation. British tax authorities said the files “reveal extensive use of complex offshore structures to conceal assets by wealthy individuals and companies.” The three agencies plan to share the information with their counterparts from other countries in what could be the beginnings of one of the largest tax investigations in history.
Canada's revenue minister Gail Shea announced a $30 million commitment to fight tax evasion and target the practice of hiding money in offshore accounts, and the formation of an international tax expert "SWAT team". Asked if her department now has the list of 450 Canadian names contained within the documents obtained by ICIJ, Shea said: "We currently don’t have the list and I can assure you that we’re looking at all of our options. We’re working with our international partners to get that list."
The UK Treasury announced that following the lead of the Cayman Islands, all British overseas territories – including Bermuda, the British Virgin Islands, Anguilla, Montserrat and the Turks and Caicos Islands – have agreed to share information about individuals holding bank accounts in their jurisdictions with the UK, France, Germany, Italy and Spain.
The South China Morning Post reported that the new information exchanges will have real implications for Hong Kong and China companies, which do significant business through the Cayman islands, the British Virgin Islands and other offshore locales.
European finance ministers may reach an agreement to eradicate tax havens on May 13, after a meeting in Helsinki between finance ministers from Finland, Luxembourg, Greece, Slovakia, and Lithuania as well as the European Commissioner on Taxation to discuss measures against tax evasion.
The European Commissioner on Taxation Algirdas Šemeta and Irish Finance Minister Michael Noonan sent a letter to all EU Finance Ministers, setting out 7 key areas for immediate action in improving the fight against tax fraud, evasion and avoidance. Member States were asked to agree on these actions at the ECOFIN in May. The letter credits the offshore leaks investigation with "sharpening the focus" on tax fraud, and says it will ask ICIJ to supply names and details of European citizens from its data.
Finance ministers and central bankers at the G20 meeting in Washington said in a communiqué that automatic exchange of tax-relevant bank information should be adopted as the global standard to overcome international tax evasion. Skeptical European leaders reportedly "became more enthusiastic" after the public outcry over ICIJ's offshore leaks revelations.
Bayartsogt Sangajav, deputy speaker of the Mongolian Parliament, has beendismissed from his post following ICIJ's revelations about his undeclared offshore company and bank account. In a parliamentary session he was asked to explain his actions. Several MPs called for further disciplinary action, including expelling him from Parliament entirely.
Santosh Kumar Agarwal (Kedia), a member of the board of directors for the Antwerp World Diamond Centre, has resigned from the organization after his offshore dealings were revealed. “In the interest of the integrity of the Antwerp World Diamond Centre as [an] organization and the industry as a whole, Kedia has taken the initiative to withdraw from the AWDC's board of directors, awaiting the outcome of a potential investigation,” said a statement released by the company.”
French president Francois Hollande has published the personal financial details of government ministers on the official government website, following the Jerome Cahuzac and Jean-Jacques Augier offshore assets scandals. The list of assets includes details of bank accounts, life insurance, property and other expensive items such as cars, art works and antiques. Various properties in Paris and the south of France have already been itemized by ministers, as well as designer lounge chair (Industrial Renewal Minister Arnaud Montebourg) and a David Beckham t-shirt (Culture Minister Aurelie Filippetti).
European Council president Herman Van Rompuy announced that tax evasion will be discussed at the next European Council in May, saying "we must seize the increased political momentum to address this crucial problem."
BVI government officials have announced they are opening a new business headquarters in Hong Kong, with Orlando Smith, BVI Premier and Finance Minister, confirmed to officiate the opening. Executive director of BVI International Finance Centre, Elise Donovan, said the data obtained by the ICIJ was "a small fraction" of the total number of BVI firms. She later added, "We want to reassure clients in Hong Kong and the region that this is an isolated incident. We remain committed to clients' privacy and confidentiality."
The Swiss and U.S. governments are investigating a possible solution to the dispute over wealthy Americans using Swiss banks to hide their money . These talks come at time when Switzerland’s banking sector is under increased pressure to surrender personal information about suspected tax evaders. Swiss Finance Minister Eveline Widmer-Schlumpf said all countries should be treated equally in the drive for bank transparency. "We consider it very important that rules must apply to all and are engaging ourselves for a level playing field in multilateral forums," Widmer-Schlumpf said.
German Chancellor Angela Merkel urged UK's PM David Cameron to crack down on tax havens during talks in Berlin, following a public outcry in Germany over the "offshore leaks." Sources "close to Cameron" claim he was actually the first to raise the issue, spelling out how his government was cracking down on tax avoidance in places such as Jersey and Guernsey.
Russian Deputy Prime Minister Igor Shuvalov.Russian Deputy Prime Minister Igor Shuvalov is moving his offshore assets back to Russia after ICIJ's revelations that Shuvalov's wife Olga Shuvalova was either a shareholder or owner of several secretive offshore entities. The Shuvalovs had a declared income of $12.7 million in 2011, most of which was earned by Olga.
Spanish political party Unión Progreso y Democracia submitted written questions to the Spanish Congress today in the wake of French president François Hollande's announcement that French banks had to declare their tax haven subsidiaries. The questions read: Is the government going to present in the European institutions any initiative to eradicate the tax havens within the Member States? and Is the government going to force banks to disclose the subsidiaries they have in tax havens and what are their activities?
Francois Hollande: called for tax havens to be "eradicated."French president François Hollande called for "eradication" of the world's tax havens and toldFrench banks they must declare all of their subsidiaries. He also announced the creation of a special prosecutor to pursue cases of corruption and tax fraud. French government ministers have been ordered to declare their assets publicly within days.
Luxembourg's Prime Minister Jean-Claude Juncker announced his country plans to lift bank secrecy rules for European Union citizens who have savings based in the country, ending decades of bank secrecy in Luxembourg. "We are following a global movement," Juncker told parliament in a state-of-the-nation address. The new transparency regime would begin in January 2015. Austria is now the only EU country not sharing data about bank depositors. In a recent interview, Austrian Vice Chancellor and Finance Minister Spindelegger Fekter said: “How much money someone has in the bank is a matter between the bank and the customer and is no one else’s business."
Algirdas Semeta, European Union Tax Commissioner stated in a recent interview that it istime to move “quicker and harder” against tax evasion. He said the “growing willingness to act” increases the likelihood of a more coordinated EU stance against tax havens.
Europe’s five biggest economic powers — Britain, France, Germany, Italy and Spain —announced they would begin regularly exchanging banking and tax information as a way of identifying tax dodgers and other financial wrongdoers.
Meanwhile, the British Virgin Islands (BVI) authorities are not fans of the ICIJ investigation. The BVI premier and Finance Minister Orlando Smith told the South China Morning Post that "BVI authorities are actively investigating how this private information has been illicitly obtained and used to attack the BVI financial services industry, which operates compliantly within international guidelines and the law."
Athens’ district attorney Panayota Fakou has started a preliminary probe to find out if Greeks who own offshore companies unearthed by the ICIJ investigation have evaded taxes or laundered money. According to the Greek newspaper Ta Nea, prosecutors will send information requests to British Virgin Islands’ financial authorities asking them to turn over records of 107 entities connected to Greek citizens.
An investigation by Finnish State Televisionand ICIJ exposing the offshore connections of state-owned postal company Itella has been received with surprise by the Finnish Finance Minister, Jutta Urpilainen. The minister said that “state owned companies should be an example for other companies. That is why it is especially unacceptable that Itella owns a company in a tax haven.” Urpilainen said the Finnish government should adopt clear rules on the use of offshore jurisdictions by state-owned corporations and called tax havens “one of the biggest threats to the Finnish welfare state.”
Canada's national revenue minister Gail Shea says the government may pursue the Canadian Broadcasting Corporation in court to force it to share the offshore leaks records.
Quebec Premier Pauline Marois has declared that neither she, nor any other elected officials in her government have dealings in the offshore world. Marois also supported the handover of internal documents to Canadian authorities, stating the Quebec government would not hesitate to use "all legal means" to ensure this.
French budget minister Bernard Cazeneuve joins the clamor from governments around the globe in urging ICIJ and its media partners to release the offshore tax haven files to them, to "aid justice and help them do their job." Le Monde's response: "It is up to the justice system to establish responsibilities at a time when the law might have been broken ... It is up to the press to enlighten the reader..."
Austrian Chancellor Werner Faymann says he is ready to make concessions on banking secrecy, to bring the nation in step with Switzerland and Luxembourg. "Austria should participate in talks on banking secrecy,” Austrian Chancellor Werner Faymann declared to Die Presse.
The European Commissioner for Taxation, Algirdas Šemeta, called for an automatic exchange of information between countries and a "tough common stance." "Recent developments,fuelled by the outcome of the Offshore Leaks, confirms the urgency for more and better action against tax evasion .... Now it is time to put words into action." He said he was "very pleased" to see many of the Member States reviewing where they stand on the issues and "intensifying their political will to act."
The Swiss government has distinguised itself from other world governments by publicly stating it does not want access to the offshore leaks records. Finance minister Eveline Widmer-Schlumpf said Switzerland has worked hard in recent years to curb fraud and tax evasion and that much of the activity pointed to in the leaked documents can be perfectly legal. She says the Swiss government does not want access to the data as "it was acquired illegally and Bern wants no part of that".
The Philippine Presidential Commission on Good Government probe into the disclosure that Maria Imelda Marcos Manotoc, the eldest daughter of the late dictator Ferdinand Marcos, was a beneficiary of a secret offshore trust in the British Virgin Islands, will release its report within two weeks. “We are duty bound to investigate and, depending upon informed preliminary findings, decide whether to pursue the matter,” said Andres Bautista, the chairman of the Presidential Commission on Good Government, tasked with recovering the Marcos family’s alleged ill-gotten wealth.
The president of the Association of German Banks denied that his group’s members had helped customers engage in tax evasion. “First in line are the individuals and the organizations that invest their money in tax oases,” Andreas Schmitz said."
The Berne internal revenue service authorities announced they will re-open the Gunter Sachs case after ICIJ's revelations about the former Mr. Brigitte Bardot's intricate offshore scheme.
In Canada, a Liberal senator urged his caucus colleague, Senator Pana Merchant, to answer questions in the wake of CBC News and ICIJ reports that she has been listed as beneficiary of an offshore trust created by her husband, a well-known class-action attorney. "We're all innocent until proven guilty in this country, but I want to hear her explanation," Senator Percy Downe told CBC News in an interview.
In the Philippines, two lawmakers dismissed a report by an ICIJ media partner, the Philippine Center for Investigative Journalism (PCIJ), that they had offshore holdings. Senator Manuel Villar said his offshore entity was a “1-dollar shell company” that he wasn’t required to report, because he hadn’t made any real investment in it. Villar said that he hadn’t conducted business with the British Virgin Islands company “because I decided to concentrate in the Philippines.” Congressman Joseph Victor ‘JV’ G. Ejercito suggested the story about him was politically motivated. “To the best of my knowledge, I have truthfully and accurately declared all my assets, liabilities, and net worth” on required disclosures forms for public officials, he said in a statement.
Germany's Economics Minister Philipp Rösler urged the media to pass the data on to the government, stressing that tax evasion was a "criminal act."
Luxembourg's Finance Minister Luc Frieden says he is open to greater transparency of its banks in order to cooperate further with foreign tax authorities.
The Indian Finance Minister P. Chidambaram said an inquiry had been initiated by the authorities against individuals whose names figured in the global media report. “Yes. We have taken note of the names and inquiries have been put in motion in respect of the names that have been exposed,” he told a press conference.
The Mongolian Deputy Speaker, Bayartsogt Sangajav, admitted to an "ethics failure" over his undeclared million-dollar Swiss bank account. He told a press conference: “It is true that there is 1,658 Euros or 2.9 million MNT in a Swiss bank account. I opened the account to trade in international stocks with three other acquaintances in 2008. My failure of responsibility is that I did not include the company in my declaration of income. I have admitted my ethic failure and I am ready to take responsibility."
Philippine government officials said they will investigate evidence that Maria Imelda Marcos Manotoc, a provincial governor and daughter of the late dictator Ferdinand Marcos, was the beneficiary of a secret BVI offshore trust.
George Mavraganis, the Deputy Finance Minister of Greece announced that the Greek government is moving to address offshore-driven tax dodging. Greek members of parliament asked Mavraganis what he planned to do about the 103 offshore companies that ICIJ found hadn’t been registered with Greece’s tax authorities.
George Sourlas from Greece’s Ministry of Justice said the revenue loss caused by offshore was huge. “By the actions of offshore companies in Greece, the revenue loss to the Greek government is in the order of 40% or more of the debt of our country,” Sourlas said. “The offshore companies cast a shadow at this time of great crisis, when some get rich and many get poor.”
In France, President Francois Hollande denied knowledge of the offshore accounts held by his 2012 campaign manager, Jean-Jacques Augier, asserting that it’s up to the tax administration to monitor Augier’s private activities. Reports about Augier’s offshore dealings by Le Monde, the BBC and other ICIJ partners came in the wake of news about tax fraud charges against Hollande’s ex-budget Minister, Jerome Cahuzac.
The office of Azerbaijani President Ilham Aliyev asserted there was nothing unusual about the information in the leak – which showed that his two daughters were shareholders of three offshore companies. The statement said the President’s daughters “are grown up and have the right to do business.” A spokesperson for Azersun – a holding company controlled by Hasan Gozal, a corporate mogul who was listed as the director of the daughters’ companies – said the report was biased and based on inaccurate information. “I regret that authority of Press Council doesn't go beyond Azerbaijan and there is no such institution worldwide to fight racketeer journalists,” the spokesman said.
Ex-Colombian President Álvaro Uribe Vélez publicly defended his sons’ involvement in offshore business. Uribe stated that his sons Tomás and Jerónimo are entrepreneurs and “have participated in business dealings since they were children” and “they are not tax evaders.”
In the UK, David Cameron is facing renewed pressure to take action over Britain’s entanglements within the offshore world. Lord Oakeshott, a senior Liberal Democrat said that the secrecy haven of the British Virgin Islands “stains the face of Britain.” Oakeshott and others are questioning whether Cameron will raise the issue in June of at the G8 summit of wealth nations. "How can David Cameron keep a straight face calling for the G8 to make big business pay tax when we let the BVI use British law and British protection to suck in billions in dirty money?" Oakeshott asked.
German Finance Minister Wolfgang Schäuble stated on public radio that he was “pleased”with the ICIJ reports. He went on to say, “I think that such things as have been made known will increase the pressure internationally, and we will be able to increase the cooperation with those who have been more reticent”, a sentiment reflected in Germany’s previous lobbying to stamp out tax avoidance.
Canadian Federal Revenue Minister Gail Shea called the released of offshore banking information as “good news” for Canadians and bad news for tax evaders. Ms. Shea urged ICIJ or anyone else with information on tax cheats to come forward.
Pascal Saint-Amans, director of the Organization of Economic Cooperation and Development, said: "Secrecy is no longer acceptable. We need to get rid of it. If the rules make it possible, then we'll change the rules.”

Nuclear security bill clears House but Senate prospects unclear

United States — 2013-05-22T06:03:01-04:00

WASHINGTON -- The U.S. House of Representatives on Monday overwhelmingly approved legislation to ensure the United States complies with two broadly supported international nuclear security accords, but a key Senate opponent on Tuesday affirmed his lingering opposition.

The 390-3 vote marked the chamber's second endorsement of measures needed to comply with the treaties and two separate maritime security agreements. The two nuclear pacts, which address nuclear terrorism law and domestic nuclear material security, are themselves relatively noncontroversial; the Senate issued resolutions of advice and consent for them in 2008. House lawmakers, though, took nearly four years to break a stalemate over measures included in the legislation that could extend wiretapping authorities and apply the death penalty in nuclear terrorism cases.

The House first passed the legislation last summer without those elements, but, Senate Judiciary Committee Ranking Member Charles Grassley (R-Iowa) said he wanted them included, and an anonymous hold prevented a Senate vote. Grassley would be willing to consider it on the Senate floor this year with a separate vote on the death penalty provision, Grassley spokeswoman Beth Levine said. Senate Democrats last year prevented passage of a draft containing revisions sought by Grassley.

As with four prior drafts, the newest bill would complete U.S. ratification of the International Convention for the Suppression of Acts of Nuclear Terrorism. The pact, which entered into force in 2007 and now has 86 states parties, requires member nations to criminalize possession and use of nuclear and radiological weapons by individuals. It establishes guidelines for cooperating in the extradition and prosecution of individuals linked to a nuclear plot or threat.

The bill would also bring the United States into line with a 2005 amendment to the Convention on the Physical Protection of Nuclear Material. The amendment updates the 1980s-era pact, which governs international shipments of civilian nuclear material, by including standards for securing nonmilitary atomic substances held, used or transferred within a single nation’s borders.

Sixty-seven governments had fully adopted the amendment as of last month. To take effect, the measure must receive backing from two-thirds of the full treaty's signatories. The original convention now has 148 members, placing the amendment's implementation threshold at 99 states.

"Many other countries have indicated that they are waiting for the United States to complete ratification before moving ahead with their own ratification processes, since it was the United States that pushed for the amendment in the first place,” Kingston Reif, nuclear nonproliferation director at the Center for Arms Control and Nonproliferation, said in comments released by the Fissile Materials Working Group. Responding to one of Grassley's key objections to the House-approved language, Reif and another expert argued last week that existing law already allows for the execution of convicted nuclear terrorists.

"In the wake of the Boston attacks, it seems clear that an attack involving radiological or nuclear material would allow prosecutors plenty of latitude to seek the death penalty,” Reif and Miles Pomper, a senior research associate at the James Martin Center for Nonproliferation Studies, wrote in a World Politics Review column last Friday.

Story by Diane Barnes, courtesy of Global Security Newswire.

Clean Air Act law, reality collide

Texas,United States — 2013-05-21T08:28:30-04:00

Nothing in the law allows for the invisible danger from “upset” emissions to persist, but legislation and reality often collide.

On the contrary, the federal Clean Air Act was meant to reduce harmful emissions by requiring continuous pollution limits for industrial facilities. But since its passage in 1970, state and federal regulators have created loopholes involving accidental releases — loopholes that have for years been challenged, re-written and bogged down in bureaucracy.

Nearly from the start, regulators began waiving pollution standards when equipment unexpectedly malfunctioned and had to be shut down, started up and maintained.

By 2004, 29 states had devised what University of Texas-Austin researcher Kelly Haragan calls “a flat-out exemption” for such emissions. The Environmental Protection Agency offered similar immunity for those involving hazardous air pollutants.

“There is a big caveat here,” acknowledges Adam Kushner, who headed the EPA’s air enforcement unit until last year. “They didn’t necessarily count against your compliance picture.”

This murkiness began fading after environmental groups sued the EPA in 2003, alleging its exemption violated clean-air laws. By December 2008, a federal court agreed, vacating the language. The agency has lagged at fully closing its loophole; earlier this year, it unveiled a proposed rule that would require facilities in any state to follow pollution limits during periods of start-up, shut down and maintenance.

At the state level, regulators have begun replacing blanket exemptions with rules that, critics say, aren’t much firmer. In Louisiana and Texas, plant managers can claim unauthorized releases are “upsets” as a defense to enforcement.

“When regulators get one of those reports, they don’t even think about it any further,” says Adam Babich, of the environmental-law clinic at Tulane University, who has sued a half dozen plants. “It’s like, ‘Look, here’s another incident report. Let’s file it away.’ ”

Frequently, state regulators — the primary enforcers of the Clean Air Act — fail to investigate the thousands of reports of emissions events they receive, let alone issue enforcement orders. When regulators do act, punishment can amount to a slap on the wrist. Less than one percent of the 7,533 upset reports filed by Texas companies in 2004 had ended in penalties or corrective plans, a 2005 study by the nonprofit Public Citizen found.

Little has changed, enforcement data collected by the Texas Commission on Environmental Quality suggests: Throughout fiscal year 2011, agency officials investigated 36 percent of emissions events. About 3 percent of the reports led to enforcement notices yielding fines or corrective action.

Regulators bristle at the notion they’re ignoring this fence line pollution. To some extent, they say, they must expect that industrial facilities — many complicated amalgamations of countless pieces of equipment — will have unexpected releases. Simply put, says Tim Knight, an environmental-compliance administrator at the Louisiana Department of Environmental Quality, “Industry will have problems.”

Earlier this year, the LDEQ launched a voluntary workgroup with ExxonMobil Baton Rouge and 39 other petrochemical facilities to identify common causes of upsets. The TCEQ has paid particular attention to emissions events over the past decade, requiring that companies report online and revamping permitting policies.

Larry Soward, a former TCEQ commissioner, believes such scrutiny has had an effect; indeed, upset events in Texas declined from 4,766 reported incidents in fiscal year 2010 to 4,469 a year later.

EPA officials, too, portray emissions as a “high priority.” Officials at the agency’s regional office encompassing Texas and Louisiana launched a program in 2011 inviting the area’s top 17 emitters to the table.

Program directors asked companies to analyze their own records of upsets. Under current voluntary-compliance guidelines, companies wouldn’t begin to “benchmark” the emissions and thus document reductions until 2014. So far, no company has agreed to participate.

“We have found that using multiple approaches to try and solve this problem has worked best,” says Sam Coleman, EPA’s deputy regional administrator, noting that a similar initiative in 1999 “consistently” reduced upsets for several years. “The voluntary approach is simply one tool in the toolbox.”

Advocates remind federal regulators problems continue.

Eric Schaeffer, director of the Environmental Integrity Project and a former EPA enforcement chief, has sent letter after letter to Texas and EPA officials, flagging “egregious upset releases” and urging them to pursue the worst offenders. On April 23, he asked the EPA’s inspector general to examine how regulators responded to repeated upsets by the biggest Texas emitters. In Louisiana, Bucket Brigade advocates have turned toward a little-known EPA program that inspects facilities for the risk of “unanticipated” releases.

After a flurry of lobbying activity by the group highlighting a benzene leak at ExxonMobil Baton Rouge, EPA inspectors showed up at the company’s refinery for four days last July. Inspectors outlined a host of concerns, including pervasive “piping, valve, and vessel corrosion,” a November report shows. Exxon supervisors also failed to “correct deficiencies” in processing equipment; to assure that equipment was installed correctly; and to inspect underground piping.

Exxon says it has reviewed the EPA report and is sharing information that “we believe may clarify many of the areas of concern.” The company stresses the report doesn’t constitute a notice of violation.

EPA officials declined to elaborate. Coleman says, “It’s not appropriate for me to say whether there will be violations or what the outcome will be.”

'Upset' emissions: Flares in the air, worry on the ground

Exxon Mobil Corporation — 2013-05-21T12:56:19-04:00

BATON ROUGE, La. — Shirley Bowman noticed the smell after 8 a.m. on June 14, 2012, her 61st birthday. In Baton Rouge, where the petrochemical industry dominates the landscape, foul odors resembling burnt rubber or propane are perennial. But this odor, caustic and potent, seemed especially foul — “like some sort of chemical,” she recalls.

Bowman found her daughter crying over a migraine. Her neighbors experienced headaches, dizziness, nausea. One family reported a toddler son coughing up phlegm; another, an elderly father collapsing on the floor. She soon suspected the cause: A leak of “steam-cracked” naphtha, a liquid mixture of volatile petrochemicals, occurring at the ExxonMobil Baton Rouge petrochemical complex a half mile away.

Four hours earlier, Exxon operators detected an odor in the East area tank field, and discovered a “bleeder” valve on Tank 801 dripping naphtha into a sewer. The leaky valve dumped 411 barrels into the underground system, company records filed with the state show. The liquid traveled a mile before pouring into a separator pit, vaporizing along the way, and releasing tens of thousands of pounds of benzene and other toxic chemicals into the air.

What happened that day in Baton Rouge is one thread of a larger story about the often toxic, sometimes hidden releases emanating from oil refineries, chemical plants and other industrial facilities along the chemical corridor of Louisiana and Texas. Those unplanned emissions — known in regulatory parlance as “upsets” — are occurring more often than industry admits or government knows, according to more than 50 interviews with regulators, activists, plant representatives, workers and residents, and an analysis of tens of thousands of records by the Center for Public Integrity.

For many communities, these upsets have evolved into an invisible menace: They disrupt lives, yet offenders are rarely punished. In Texas, where activists have clamored for relief, state officials say enforcement efforts helped reduce incidents by 6 percent in the most recent year of reporting; Louisiana officials cite a 41 percent decrease since 2008.

Yet those numbers tell only part of the story. The mass of pollution emitted in Texas, the nation’s refinery hub, hit a five-year peak in 2011, the Center found — so even as the number of reported events dipped, the amount of pollution increased. And, experts say upset releases are consistently underreported. For communities straddling industry fence lines, worry and fear remain in the air.

This hidden pollution can produce harm. Over the last five years, records show, upset events have yielded almost four million pounds of toxic air pollutants in Texas alone — the 189 chemicals deemed so harmful to health Congress sought to bring emissions under control two decades ago. That’s two percent of all upset emissions.

“These are a major public health threat,” acknowledges Larry Soward, a former commissioner at the Texas Commission on Environmental Quality, who served on its board from 2003 to 2009.

“Upsets” occur when equipment breaks down or production units are shut off, restarted and repaired; or, as regulations state, when there’s an “unavoidable” accident.

Under law, plant managers must notify officials when accidental releases exceed certain hazardous air thresholds. In Baton Rouge, Exxon did this. Yet its numbers kept escalating.

At 5:10 a.m. that day, Exxon supervisors told the state the benzene leak would likely exceed the 10 pound reportable quantity. Within hours, they classified it “level 2,” barricading areas and monitoring the air. According to a call log, company officials found benzene levels “so high” bordering a rail yard, they advised the railroad “not to let anyone go through that area.” By 12:30 p.m., the company was testing 400 workers for exposure to the cancer-causing chemical.

The following day, Exxon reported that benzene emissions totaled 1,364 pounds during the leak’s first three hours. By June 20, it increased the number to 28,688 pounds. In its final report filed 60 days later, Exxon revealed the benzene total was actually 31,022 pounds — nearly four times what the refinery released in upset events in eight years, according to company reports compiled by the nonprofit Louisiana Bucket Brigade. State regulators later deemed the leak “preventable,” issuing an enforcement order contending that Exxon “failed to provide notification of a change in the nature and rate of the discharge.”

Exxon doesn’t dispute the leak was preventable. But the company, saying it accurately reported the release, is appealing the state’s order. While plant supervisors acknowledge the “large” leak, they say it didn’t threaten residents. Tests along the fence line showed “no community impact,” their records state; air sampling by regulators back up the company.

“It was a large number. We regret that number,” says Derek Reese, Exxon Baton Rouge’s environmental manager. “But we believe we did an appropriate response to mitigate the impact.”

That’s little consolation to residents, like Bowman. “Everything seems to stop at that magical gate,” she says, motioning to Exxon’s South Gate adjoining her neighborhood. “But if you live here, you know. Chemicals are let out on you.”

Upsets plague plant, community — time and again

Last spring’s valve leak has played out again and again at the sprawling, 2,400-acre ExxonMobil Baton Rouge complex, which encompasses an oil refinery and a chemical plant, and dwarfs the Standard Heights community. The leak marks the 1,068^th upset emissions event at the compound in the last eight years, according to a database of incident reports compiled by the Bucket Brigade. Of these events, 172 involved benzene, a carcinogen that can trigger headaches, dizziness and rapid heart rate.

Exxon’s chemical plant had 265 of all incidents. At the refinery, the data show 803 accidental releases over these years; at its height, the facility averaged two a week.

ExxonMobil Baton Rouge questions the Bucket Brigade’s analysis, calling it “likely another misrepresentation of data.” In an email, the company criticizes the environmental group’s methodology and findings, contending that incident numbers published by the group don’t match the reports catalogued by the state.

The Bucket Brigade stands by its analysis, and explains that Louisiana doesn’t have a standardized system for companies to report upset events. Instead, reports are filed on a rolling basis and then posted online.

The steady hazards extend far beyond Baton Rouge. In the Gulf states of Texas and Louisiana, the vast number of plastics, power and gas plants provide an on-the-ground case study of a national problem.

“Non-routine” upset emissions have become regular occurrences at oil refineries, chemical plants and manufacturing facilities.

Data collected by the Texas Commission on Environmental Quality, TCEQ, offer a rare window into this pollution peril; the state agency requires companies to report events online within 24 hours, as well as annual totals.

From 2007-11, just over 2,400 of the largest facilities across Texas spewed almost 180 million pounds of upset emissions, contamination on top of the 14.8 billion pounds of routine air emissions in that time. Nearly half the facilities experienced at least one event in that period, pumping out sulfur dioxide and other smog-inducing pollutants. The greatest concentration came in 2011: 58.1 million pounds.

The 20 biggest offenders — oil refineries and natural-gas plants in Kermit, Beaumont, Corpus Christi and beyond — account for more than half of all such emissions in Texas.

“It’s a lot of stuff,” says Neil Carman, a former state air pollution inspector who investigated upset events.

Carman now heads the air program for the Sierra Club’s Lone Star chapter, which has filed several citizen lawsuits targeting illegal emissions. Two facilities the Club sued rank among the state’s top emitters: ExxonMobil, whose petrochemical complex in Baytown has released 5.1 million pounds of upsets in the five years; and Shell Oil, whose Deer Park plant has emitted 2.5 million.

Studies have also explored this problem, documenting how the releases sometimes occur every day or two, and for largely avoidable reasons: Equipment breakdowns and poor maintenance, for instance. One researcher, Texas A&M University’s Melissa Jarrell, says they “are happening so frequently, it’s more likely companies know about the problems and know what to do to stop upsets.”

Industry portrays the discharges as an inevitable — and overwhelmingly harmless — byproduct of manufacturing. Regulators have encouraged this casual attitude, some say.

For decades, the U.S. Environmental Protection Agency and state regulatory agencies have effectively ignored the emissions. Officials don’t count upset events in facility permits and compliance records, notes Kelly Haragan of the environmental law clinic at the University of Texas-Austin, because they “aren’t supposed to happen.” In August 2004, Haragan penned a 215-page report showing how easily facilities can get away with releasing more pollution than allowed by the federal Clean Air Act — with little to no repercussions.

At times, she says, “It’s like having a whole other plant no one is even acknowledging.”

These incidents skirt normal pollution controls, venting through flares and leaks. Plants can have scores of events a year, giving off a constant cloud of invisible spoliation.

“A big dose of toxins are coming out of these facilities,” says Soward, the former TCEQ official, who now works for Air Alliance Houston, “and into fence line communities.”

The health effects are harder to measure; little research exists on the threat to residents. But recently, Dr. Mark D’Andrea, at the University of Texas Cancer Center, began tracking 4,000 residents exposed to the poster child of all upsets — the “40-day Release” at the BP refinery, in Texas City, which belched 514,795 pounds of benzene and 20 other pollutants throughout the spring of 2010. Earlier this year, D’Andrea unveiled preliminary data showing the residents have “significantly higher” white-blood cell and platelet counts than their Houston counterparts. The data suggests BP’s release may have increased their risk of developing such cancers as leukemia, the doctor says.

In a statement, BP says it does “not believe any negative health impacts resulted from” its 40-day release. “To our knowledge, the University Cancer Centers’ pilot study does not support a claim for any plaintiff alleging injury from that flaring and has no relevance to those claims,” the company wrote, referring to pending litigation filed by 47,830 residents and workers against BP alleging health ailments caused by the release. D’Andrea has not been hired as an expert witness for either side in the case, but has testified in pre-trial discovery.

‘An Invisible Poison’

In Baytown, Texas, about 250 miles from Baton Rouge, ExxonMobil operates the nation’s largest petrochemical complex, replete with an oil refinery and two chemical plants. The mass of stacks, tanks and pipes spans 3,400 acres on Houston’s ship channel, looming over blue-collar neighborhoods nestled in its shadow. In Harris County, a manufacturer’s Mecca, Exxon’s refinery tops all 155 upset emitters, spitting out 3.8 million pounds’ worth from 2007 to 2011. Its olefins plant ranks third in the county, with 1.1 million.

Here, residents describe fiery flares that have rattled windows, belched black smoke and cast a sooty substance on the ground. At times, they’ve unleashed a thunderous boom, “like an Air Force fighter jet,” says Shae Cotter, who lived across a highway from the complex. He remembers the sound jolting him from sleep at 3 a.m. Occasionally, he videotaped flares aglow like celestial globes, flames ballooning toward his home.

Residents say smells drive them inside. Stuart Halpryn, whose house sits a quarter mile from Exxon, says he tried to adapt to the odors, along with the runny noses and allergy-like symptoms. That changed in February 2009, he says, when his family became sick after a valve leak at the refinery. His four children suffered from such severe indigestion, he says, they missed school for a week. Later, he learned from reading Exxon’s report the leak had unleashed 17,432 pounds of six different toxic chemicals.

“Nobody really understands what’s being dumped on them,” says Halpryn, who moved his family to Kentucky in June. “It’s an invisible kind of poison that’s being rained down.”

The Exxon complex ranks among the state’s biggest emitters of upset emissions involving carcinogens and noxious gases. Top chemicals include hydrochloric acid, 1,3-butadiene and benzene, toxins that can trigger skin irritations, respiratory problems, neurological disorders and gastro-intestinal diseases.

Baytown residents Cotter and Halpryn, worried over Exxon’s emissions, are witnesses in a citizen lawsuit against the company in the U.S. District Court in Houston.

The Sierra Club, along with Environment Texas, filed suit in December 2010, charging that non-routine incidents at the Baytown complex since 2005 have heaved more than eight million pounds of “unauthorized emissions.” The complaint alleges “longstanding systemic problems,” and company records revealed in court show some facility units have encountered dozens of upset events: The refinery’s Fluid Catalytic Cracker Unit 3 raked up 34 incidents from 2005 to 2011; at the olefins plant, the Cold Ends Unit has had 32.

In a statement, ExxonMobil Baytown says it has worked with regulators to “greatly” reduce emissions. “We are proud of the overall reductions we have made,” the company wrote. Since 2000, Exxon notes, it has decreased total emissions at the Baytown complex by more than 50 percent. The company declined to provide similar statistics for the facility’s upset emissions. “ExxonMobil is committed to continuously improving the environmental performance of our Baytown Complex,” the company said.

In court records, Exxon doesn’t deny the 9,374 violations alleged by plaintiffs for “unlawful upset emissions”; they’re based on its reports cataloged with the state.

In August, the company filed a motion to dismiss the suit, contending, among other issues, that environmental groups aim to “second-guess” enforcement practices by the TCEQ. On April 3, a federal magistrate denied most of Exxon’s motion, paving the way for a possible trial.

For residents, the court proceedings might not come soon enough. Since December, the Baytown facility has set off a wave of upset emissions. One, triggered by a tripped compressor in the refinery’s Booster Station Four, pumped out 114,000 pounds of sulfur dioxide in 18 hours. It was the 20^th upset recorded there by company reports.

“Exxon is emitting all of these day after day,” says Marilyn Kingman, a long-time resident. “Anybody who lives in the Baytown area is suffering.”

Infrequent monitoring, incomplete data

The threat to fence line communities may be even greater than industry self-reports — and official data — suggest. One reason is that companies rely on infrequent air monitoring to estimate chemical emissions, including upsets. When monitors do measure toxic air pollution, they can miss the short spikes characterizing upset events. “Part of the problem with upsets,” says Jarrell, of Texas A&M University, “is you’re not getting a lot of true data.”

Companies can misstate the magnitude of events through faulty calculations, environmental advocates argue. Formulas used to estimate what’s spewed from tanks and flares are so antiquated — 19 and 20 years old, respectively — they “do an extremely poor job of predicting emissions,” says Eric Schaeffer, director of the Environmental Integrity Project. Attorneys from his nonprofit are suing the EPA to force it to update these “emissions factors.” Recent studies have shown discrepancies between what’s reported and what’s emitted.

Take the 40-day release at BP’s Texas City refinery. Plant supervisors assumed one flare had destroyed nearly 98 percent of the emissions, a regulatory requirement. Three years earlier, however, regulators concluded that, in some cases, actual emissions were six times greater than what the company reported. BP maintained it has “multiple bases for concluding that the flared hydrogen stream was well combusted.”

Others aren’t so sure.

“It’s a typical example of what goes on in these situations,” says Jim Tarr, a former Texas air regulator who serves as a consulting expert in pending lawsuits against BP over its 40-day release. “Not all companies do it this way,” he says, referring to the flaring forecast, “but a lot do.”

If the calculations seem questionable, critics say, so do all those upsets that don’t count. Company reports don’t account for unpermitted releases falling beneath the thresholds for reporting requirements — up to 5,000 pounds for some pollutants. Plant supervisors must keep records detailing the events and include their emissions in annual totals, but not in incident reports. Considered “below reportable quantity,” they essentially never happened.

“That’s the bigger story on upsets,” asserts Jay DeLouche, a Lake Charles lawyer who has sued facilities over the emissions. Some managers “just determine [an upset] is below reportable quantity … and say, ‘Nothing happened, it’s a non-event.’ ”

“Non-events” can translate into big numbers. Company records revealed in court in the ExxonMobil Baytown case show thousands more “non-reportable” emissions events than the “reportable” ones filed online with TCEQ. Filling 235 pages’ worth of documentation, the 2,158 non-events outnumber the 333 reportable events by more than six to one. In Baton Rouge, Exxon’s refinery has boasted a similarly high ratio of non-events; according to the latest data compiled by the Louisiana Bucket Brigade, the company has designated 70 percent of refinery incidents “below reportable quantity” in 2011, up from roughly 10 percent in 2005.

“We believe the refineries under-report,” says the Bucket Brigade’s Anne Rolfes.

Exxon says it “is very diligent in its reporting of incidents, no matter how small.” Plant supervisors must notify authorities of events within an hour of discovery, even if the amount is unknown, the company notes; often, they must report back to regulators that “the quantity is less than initially thought.”

Over the last five years, the company says it has reduced incidents exceeding the reportable quantity at the Baton Rouge refinery by 86 percent, and at the chemical plant by 47 percent. “We take every environmental incident seriously,” Exxon wrote. “We have a passion to reduce incidents and releases.”

Some residents and workers wonder whether ExxonMobil disclosed the massive amount of benzene released last June because regulators had swooped in to investigate. “If they could have hid it, they would have hid it,” contends Bob Landry, of the United Steel Workers Local 13-12.

The Louisiana Department of Environmental Quality is exploring that question.

In their 206-page report in 2012, LDEQ inspectors determined that Exxon supervisors failed to notify the agency once they knew a “substantial amount” of benzene was emitted. An Exxon Baton Rouge environmental manager informed inspectors the company had become aware of the leak’s extent at 12:30 p.m. that first day — just seven hours after notifying the state — when its engineers calculated the vapor loss. Exxon disclosed the calculations six days later.

The agency “believes Exxon knew more about the leak than it shared with us,” says Cheryl Nolan, LDEQ’s enforcement chief. She declined to elaborate, citing the company’s appeal.

Exxon supervisors insist they intended to notify regulators of the growing leak. “As the data came in we shared those concentrations with” the LDEQ, says environmental manager Reese, noting that his calculations kept changing as workers collected the naphtha and tested the air. “We want to be open and honest.”

The Trouble in Shreveport

Upstate in Shreveport, residents have for years complained of the Calumet Specialty Products oil refinery’s upsets, which have shattered windows and shaken foundations. Regulators wouldn’t necessarily know about the drama from company reports. The refinery has filed just 83 incident reports with the LDEQ from 2005 to mid-2011, among the lowest numbers in the state, the Bucket Brigade’s data shows.

Tired of the pervasive “rotten-egg” stench, residents have kept event logs and taken samples with specially equipped buckets, exposing unsafe levels of hydrogen sulfide. The gas causes headaches, eye irritations and sore throats. “It’s a battle every day,” confides Velma White, of the Residents for Air Neutralization, “and I’m tired.”

In August 2011, after a push by RAN and the Bucket Brigade, EPA inspected the refinery, uncovering a series of plant failures. The agency also found a litany of reporting problems. Calumet managers notified the EPA of six incidents in five years, yet their internal files documented nearly 600 — 100 times as many — a 2011 EPA document shows. Inspectors audited 161 records, finding most lacked the basic required information. Some offered no details.

Calumet’s plant manager, Tom Germany, didn’t respond to emails and calls seeking comment, and neither did other facility representatives. According to the EPA’s inspection report, Germany told regulators that “he knows what good looks like and recognizes that Calumet is not there yet.”

In the ensuing 18 months, Calumet managers have filed 19 reports of “unauthorized discharges” with the state, nearly one a month. “You’d have thought they’d be more cautious” since the EPA visit, says RAN’s White. “But they’re still piling it on us.”

Sometimes, the government stick is more tepid than expected. More than a year and a half after the EPA’s damning report in Shreveport, regulators have yet to issue violations. Advocate White says she met with EPA officials and Calumet supervisors as part of negotiations in a civil enforcement action — relaying community demands for anti-pollution projects including a medical mobile unit. While EPA officials told her to expect a “large” fine, she says past settlements with Calumet, including a $1 million fine levied by state regulators in 2010, have meant little in real terms.

“It didn’t solve the problem,” White says. “You send DEQ and EPA to Calumet, and they come out with roses.”

Some former regulators view such fines as “ineffective.” As TCEQ commissioner, Soward tried to change the way the agency determines financial penalties, to no avail. Today, he says, upset events aren’t treated “any differently than a common violation,” rendering fines so paltry companies have no incentive to stop.

Citizen suits, whistleblowers expose truths

The citizen suits in Texas may reveal deeper truths than regulators have found. In 2008, environmental groups sued Shell over recurring emissions at its Deer Park facility, which ranked among the state’s top 20 upset emitters at the time. By 2010, Shell had settled the case, agreeing to pay a $5.8 million penalty for its violations, a record in any Texas citizen suit, and to annually reduce the plant’s upsets in volume and number. Since then, Shell has cut upset emissions by 35 percent, court records show.

“That proves it right there,” says Karla Lande, who lives across a river from Shell Deer Park, and attributes her lost sense of smell partly to its upsets. When companies are forced to ease upsets, she adds, “They’re able to do it.”

In Baton Rouge, it took an ExxonMobil worker to shine a light.

The first day of the valve leak, Bucket Brigade advocate Anna Hrybyk remembers giving two EPA officials a “toxic tour” of Standard Heights and noticing a “rancid smell.” She got a headache; the officials, she recalls, “were like, ‘Quick, get in the car, roll up the windows.’ ” On June 15, Hrybyk asked regulators about the incident, and received an email assuring her the initial “estimated quantity was 10 lbs.”

The next day, a whistleblower worker tipped off Hrybyk to a different scenario. More than 48 hours into the incident, company records show, refinery employees were still collecting naphtha from the sewer, trying to suppress benzene vapors. Hrybyk dialed the state’s hotline, setting off a series of regulatory activities that would end in the LDEQ’s enforcement order. The July 2012 notice of violation says Exxon, among other things, was “emitting pollutants not authorized by a permit.” The action, pending the company’s legal challenge, could result in penalties.

Critics believe regulators never would have brought down the hammer without outside pressure. Nolan, the LDEQ enforcement chief, acknowledges that agency officials “didn’t act until we got a complaint,” but stresses that the enforcement order proves “we do act when a company has unauthorized releases.”

For residents, it all seems like more of the same. In the aftermath of the leak, Bowman displayed posters in her yard declaring, “ENOUGH IS ENOUGH,” helped form the Standard Heights Community Association, and traveled to the nation’s capital to lobby.

As the months have passed, feelings of helplessness have surfaced. She has noticed other pungent odors pervading her neighborhood. The Bucket Brigade’s latest data show 13 incidents at Exxon’s Baton Rouge complex since last June’s release, emitting more than 62,000 pounds of hydrochloric acid in one upset last November alone.

“I live up in fear here,” Bowman says. “I’m just sitting here, waiting to get poisoned.”

David Donald contributed to this report.

IRS rarely denies 'social welfare' applications

2013-05-20T17:37:11-04:00

During its past four fiscal years, the Internal Revenue Service has formally denied the applications of just 60 organizations seeking recognition under Section 501(c)(4) of the U.S. tax code as “social welfare” groups.

In the same period, the agency processed 8,214 applications and approved 6,837 of them — about 83 percent, according to a Center for Public Integrity analysis of IRS data.

Sometimes applications were neither approved nor denied, meaning groups could still be awaiting recognition of tax-exempt status or still be providing the IRS with additional information. They may also have withdrawn their applications.

The IRS's approval processes have come under fire following an inspector general report that found IRS employees used “inappropriate criteria” to discern which organizations’ applications warranted additional scrutiny.

The IRS’s 2012 fiscal year, which covered the period between Oct. 1, 2011, and Sept. 30, 2012, saw a surge of new applications under Section 501(c)(4). During that period, 2,774 groups sought recognition as “social welfare” nonprofits, as the Center for Public Integrity has previously reported.

That represented an increase of more than 56 percent from fiscal year 2011 — and an increase of nearly 86 percent from fiscal year 2008.

The IRS processed 23,722 applications for 501(c)(4) nonprofit status between fiscal years 2001 and 2012, records indicate.

The agency approved roughly 77 percent of those, while rejecting less than three-tenths of one percent: 66 denials versus 18,214 approvals, albeit in fiscal year 2008 the IRS did not report how many groups it denied “to avoid disclosure of specific taxpayer data.”

Before the House Ways and Means Committee on Friday, Steven Miller, who served as the agency’s commissioner until he resigned last week, testified that IRS did not have “sufficient personnel” to process all of the applications its tax-exempt unit has received.

Both the Senate Finance Committee and the House Oversight and Government Reform Committee are planning hearings on the topic this week.

OPINION: hidden influence-peddling in Washington

2013-05-20T16:13:49-04:00

I was not among those who believed the Supreme Court’s Citizens United decision would open the floodgates of corporate money to influence elections and public policy. While the decision enables corporations to call for the election or defeat of federal candidates, those expenditures have to be reported and few corporations will take the risk of losing customers by getting involved in politics so publicly.

The reality is, the floodgates have been open for years, and the attention focused on Citizens United has actually been helpful to corporations, because it has diverted the public’s attention away from the deceptive yet perfectly legal ways corporations are able to deploy enormous sums of money to advance their political agendas.

The mainstream media, meanwhile, seems to willfully ignore what corporations and other moneyed interests do to get what they want in Washington. That was certainly the case last week after National Journal reporter Chris Frates disclosed how America’s Health Insurance Plans, the insurance industry biggest PR and lobbying group, funneled hundreds of thousands of dollars to a longtime ally with a better reputation to pay for an industry-serving communications campaign. The only media outlets I could find that picked up the story were The Huffington Post, Bloomberg Businessweek and ABC News online.

As Frates’ investigation uncovered, AHIP in 2011 gave the National Federation of Independent Business $850,000 to finance an effort to persuade Congress to repeal a provision of Obamacare that will actually help many uninsured people afford coverage. NFIB is a nonprofit that calls itself the voice of small business but which I know from my days in the insurance industry has often been a voice for my former bosses.

Insurers are delighted that Obamacare will require most Americans to buy coverage from them beginning January 1. That was one of their health care reform goals, along with making sure reform did not include the creation of a public option to compete with private companies. And insurers love the fact that the federal government will be sending them billions of dollars every year to help subsidize the coverage of low-income Americans who would otherwise be unable to afford their premiums.

Knowing that insurers would be getting a windfall in new revenue from all of that, drafters of the Affordable Care Act included a provision that would impose a tax on some policies insurers sell to help finance the expanded coverage that insurers will benefit from. Sounds reasonable, right?

Well, not if you are the CEO of a health insurance company who cares more about meeting Wall Street’s profit expectation than the health care needs of Americans.

But even health insurance executives know they’re not viewed as positively as small business owners. If AHIP spent that $850,000 in a way that could easily be traced to the insurance industry, the campaign to get the tax repealed would be considered — rightly — as self-serving. So AHIP needed a trusted partner with a better reputation to try to get the job done, and the NFIB was more than willing to sign on and take the money.

Exactly how the NFIB spent insurers’ money will likely never be known, but there is a good chance most of it went to set up and finance the operations of an outfit called the Stop the HIT Coalition. (HIT stands for Health Insurance Tax.) That’s the group that is fronting for the industry to get the tax repealed.

The NFIB, one of the organzations that challenged the constitutionality of the Affordable Care Act, undoubtedly was willing to partner with AHIP because insurers say they will pass the tax along to their small business customers instead of absorbing it as a cost of doing business or as goodwill from getting the additional business guaranteed by Obamacare. Rather than push back against the insurers, the NFIB clearly saw this as a new reason to attack and weaken the law.

Frates discovered this back channeling of money by looking at tax returns filed by both AHIP and the NFIB. It turns out the $850,000 from AHIP was the second largest contribution the NFIB received in 2011. To put that into context, the NFIB offers small business memberships for $180, so AHIP’s money (which comes from premiums insurers charge their customers), was equivalent to 4,722 small business memberships.

Other than the reporters at the Center for Public Integrity, Frates — who last year broke the story that AHIP funneled more than $100 million to the U.S. Chamber of Commerce in 2009 and 2010 to pay for an anti-reform advertising campaign — is one of the few Washington reporters investigating how corporations and trade associations hide the money they spend to influence Congress. As a result of this lack of media interest, Americans remain in the dark about how big special interests are able to control what happens in the nation’s capital. And Citizens United has nothing to do with it.

Funds from Adelson-backed super PAC boost Georgia nonprofit

Georgia,United States — 2013-05-20T01:24:29-04:00

One of the largest super PACs active in Virginia’s high-profile U.S. Senate race last year has ceased operations and transferred its leftover funds to a Georgia-based nonprofit — though what the group plans to do with the money is unclear.

Rise and Shine America, Inc., the Georgia nonprofit, is organized as a “social welfare” organization under section 501(c)(4) of the U.S. tax code. It received nearly $42,000 on April 30 from Independence Virginia PAC, according to records filed with the Federal Election Commission.

Ahead of the 2012 election, Independence Virginia PAC spent approximately $5 million attempting to boost Republican George Allen in his unsuccessful U.S. Senate bid against Democrat Tim Kaine.

Casino magnate Sheldon Adelson accounted for $4 million of the group’s $5.2 million in receipts. Adelson was the top donor to super PACs during the 2012 election cycle, when he, along with his relatives, contributed more than $93 million to GOP-aligned super PACs.

Independence Virginia PAC’s donation to Rise and Shine America was first reported by Roll Call’s Kent Cooper, who posited that the funds might be used in connection with the state's upcoming U.S. Senate election.

However, Doug Chalmers, the attorney for Rise and Shine America, Inc., told the Center for Public Integrity that the nonprofit “does not intend to be involved in the Georgia U.S. Senate race.”

“We're not sure how that story got started, but it's pure speculation and incorrect,” he wrote in an email to the Center for Public Integrity.

Chalmers declined to specify how the money would be put to use.

Incumbent Republican Sen. Saxby Chambliss announced that he will not seek re-election, sparking a flurry of interest from Georgia Republicans who are eyeing the seat including three sitting U.S. House members, Reps. Paul Broun, Phil Gingrey and Jack Kingston.

In filings with the Internal Revenue Service, Rise and Shine America describes its mission as “protecting conservative values” such as “limited government” and “fiscal responsibility.”

Harry “Chip” Lake III, a former aide to Rep. Lynn Westmoreland, R-Ga., serves as Rise and Shine America’s chief executive officer, chief financial officer and secretary, according to business records filed with the state of Georgia.

The super PAC’s five-figure donation nearly equals the nonprofit’s entire budget during its first year of existence.

Rise and Shine America, which was formed in July 2011, raised $50,000 during its first year, according to a new tax filing obtained by the Center for Public Integrity.

As of June 30, 2012, at the end of its first fiscal year, the nonprofit listed assets of $340 with liabilities of $2,000 — leaving it $1,660 in the red.

There is at least one definitive link between Rise and Shine America and Independence Virginia PAC: Republican political consultant Paul Bennecke.

Bennecke was the treasurer of the Virginia-based super PAC. He is also listed as a director of Rise and Shine America on its IRS annual report.

Bennecke, a former executive director of Georgia’s Republican Party and former political director of the Republican Governors Association, could not be reached for comment.

Do nonprofits' names imply political activity?

2013-05-20T15:52:05-04:00

Trevor Potter — a Republican lawyer and president of the Campaign Legal Center, which advocates for stronger campaign finance regulations — says that the Internal Revenue Service is right to be on the lookout for organizations with a “significant amount of political activity.”

“What they are trying to do is identify groups that intend to be politically active, which is the appropriate thing for them to do,” he told the Center for Public Integrity, adding an important caveat.

“It seems to me, personally, that using the name is a pretty weak indicia,” he continued.

There are about 90,000 organizations recognized by the IRS as "social welfare" nonprofits under Section 501(c)(4) of the U.S. tax code.

Most don't have politically charged names, but scores do.

For instance, there are 20 social welfare nonprofits with the word "Democrat" in their name, according to a Center for Public Integrity review of IRS data. Meanwhile, 18 social welfare nonprofits include the word "Republican" in theirs.

Twenty-one organizations use the word "conservative," while 31 use the word "progressive."

Sixty-nine social welfare nonprofits include the word "campaign" in their names. Just three use the word "politics."

Words such as "America" and "veterans" are far more commonly used by 501(c)(4) organizations, as our word cloud illustrates.

According to a recently released inspector general report, the buzzwords “tea party,” “patriot” and “9/12” were used by IRS employees to flag potentially political cases.

Only two social welfare nonprofits with any of those buzzwords in their names reported any political spending to the Federal Election Commission, as the Center for Public Integrity today reported. One was Republican-aligned and one was Democratic-aligned.

Methodological note: This graphic was constructed based on a Center for Public Integrity analysis of organizations listed in the IRS business master file that were recognized in 2012, omitting some common, generic words such as "association," "club" and "inc."

Without better laws, "dark money" groups will prosper in 2014 state races

2013-05-17T06:09:01-04:00

Campaign spending is flooding all levels of government in the post-Citizens-United era. What is worse than the millions flowing freely, however, is that much of this is so-called “dark money”—the sources of this spending are hidden. The public has no idea who is behind the deluge of ads that can swamp a campaign in the final weeks of an election.

The Center for Public Integrity’s latest report on independent money spent on state-level races shows that state disclosure laws are weak or nonexistent in more than half of all states. You can find out about your state by clicking here.

Produced in collaboration with the National Institute on Money in State Politics, we show clearly that in 30 states it is impossible to calculate how much money is being spent on campaigns by outside groups like “social welfare” nonprofits — information that is mostly available when it comes to federal contests.

And in 35 states, disclosure laws are less stringent than federal election laws, meaning shadowy nonprofit groups and big-spending super PACs are able to do business virtually undetected in many races.

This is important because a majority of states will elect their governors, legislatures and other major statewide officers in 2014. But the public will not know how much money will be spent to influence the outcome of most of those races. This 50-state analysis of state laws graded the states from A to F on disclosure requirements for super PACs, nonprofits and other outside spending groups.

A fresh example from Montana shows how last-minute “dark money” can swing an election. We report that a candidate for the state Supreme Court was clobbered with misleading mailers and radio ads. The ads were paid for by a nonprofit group called the Montana Growth Network, a largely unknown organization. Under Montana’s laws, the group is not required to report its spending nor disclose the sources of its funds.

The U.S. Supreme Court’s Citizens United decision in 2010 added about $1 billion in spending to federal races in the 2012 election cycle and led to unlimited spending by individuals, corporations and unions.

But the decision also impacted the states. It is a near certainty that more money than ever before will be pouring into state races in 2014, but without better laws in many states, the sources of these funds will never be known.

One hundred years ago, in an article in Harper’s Weekly, U.S. Supreme Court Justice Louis Brandeis wrote that "sunlight is said to be the best of disinfectants." To paraphrase the justice, transparency and full accountability for campaign spending can be the best disinfectant for democracy, and an antidote to dark money.

Until next week,

Bill

'Tea party' nonprofits rarely endorsed political candidates

2013-05-20T01:56:51-04:00

Tea party groups and other conservative nonprofits at the heart of a scandal rocking the Internal Revenue Service have, of late, largely avoided electoral politics, according to a Center for Public Integrity review of Federal Election Commission filings.

About five dozen groups with the buzzwords “tea party,” “patriot” and “9/12” in their names have been officially recognized by the IRS as "social welfare" nonprofits under Section 501(c)(4) of U.S. tax code. There are about 90,000 such organizations.

But only two of the buzzword groups reported overtly advocating for or against political candidates during 2012, or even mentioning political candidates in broadcast advertisements immediately before primary or general elections.

And one of those is, in fact, unabashedly liberal.

Both groups, which use a version of "patriot" in their names, offer contrasting perspectives into the nebulous world of politically active nonprofits.

One of these is Patriotic Veterans, Inc, a Chicago-based organization launched in 2008. Conservative political consultant Paul Caprio serves as its president.

Patriotic Veterans told the FEC that it spent $86,700 on radio ads that mentioned Sen. Bob Casey, D-Pa., and Republican House candidate Adam Kinzinger of Illinois ahead of during the 2012 election.

IRS records show automated phone calls have also been a regular expense of the group.

In 2004, Caprio worked with John O’Neill, co-author of the controversial book Unfit for Command, to design a voter-contact program aimed at veterans highlighting Democratic presidential nominee John Kerry’s “true record of service in Vietnam,” according to Caprio’s online biography.

An archived version of the group’s now-defunct website says its mission is “to inform voters of the positions taken by candidates and office holders on issues of interest to veterans.”

Only one other 501(c)(4) “patriot”-named nonprofit reported spending to the FEC during the 2012 election cycle: a liberal-aligned group called Patriot Majority USA.

Ahead of the 2012 election, Patriot Majority USA reported spending about $7.5 million to the FEC on political advertisements, most of them highly critical of Republicans.

Based in Washington, D.C., Patriot Majority USA was established in March 2011, after being spun-off from another operation.

The nonprofit is headed by strategist Craig Varoga, who has advised numerous Democratic candidates, including Maryland Gov. Martin O’Malley and Kentucky Gov. Steve Beshear. In 2010, political committees that were part of the Patriot Majority network spent millions on behalf of Senate Majority Leader Harry Reid, D-Nev., who won a contentious re-election battle that year.

A 2011 filing with the IRS describes the nonprofit’s primary purpose as seeking to “encourage a discussion of economic issues in the United States in order to make America stronger and promote our country’s future economic prosperity.”

When it applied for tax-exempt status, the group told the IRS that its political spending would not exceed 40 percent of its annual budget, according to documents obtained by the Center for Responsive Politics.

Patriot Majority USA has never publicly reported any of its funders.

When the FEC asked about the lack of information about donors, Patriot Majority USA’s counsel Ezra Reese said that the group, as a matter of policy, “does not accept contributions earmarked for a specific political purpose.”

Federal law only requires nonprofit groups to disclose the names of donors who earmark contributions for political advertisements — something donors rarely do.

Meanwhile, political committees — including super PACs, which, like nonprofits, are allowed to accept donations of unlimited size — are required to reveal all donors who give more than $200.

Neither Varoga nor Caprio responded to requests for comment.

Faced with an onslaught of new applications by organizations seeking tax-exempt status under Section 501(c)(4) of the U.S. tax code, IRS employees in 2010 developed a shorthand for cases they thought might merit additional scrutiny.

If words such as appeared in groups’ names, applications were flagged as potential political cases, according to a report released Tuesday by the Treasury Inspector General for Tax Administration.

The rules for who can fund social welfare nonprofits’ political advocacy have been loosened in the wake of the U.S. Supreme Court’s 2010 Citizens United v. Federal Election Commission ruling.

While 501(c)(4) nonprofits cannot primarily be in the business of influencing elections, they are legally allowed to call for the election or defeat of candidates. When they do, they must disclose their expenditures to the FEC — just as individuals, labor unions, business associations and corporations do.

They must also report expenditures related to ads that mention politicians shortly before an election, even if they fall short of explicitly advocating for their support or defeat.

Social welfare nonprofits — such as Crossroads Grassroots Policy Strategies, which was co-founded by Republican strategist Karl Rove — spent hundreds of millions of dollars ahead of the 2012 election.

The inspector general’s report concluded that despite the use of “inappropriate criteria,” the IRS was “not politically biased” in its assessment of nonprofits’ applications.

In recent days, the agency’s actions have received bipartisan condemnation, and IRS Acting Commissioner Steven Miller resigned Wednesday.

Ben Wieder contributed to this report.

Los Angeles school board cracks down on suspensions for minor infractions

2013-05-16T16:05:03-04:00

Amid a deepening debate over appropriate school discipline, board members of the nation's second largest school district — Los Angeles Unified — took bold steps this week sure to be noticed nationally.

They voted to prohibit out-of-school suspensions of students based on "willful defiance,” a vague label, critics say, that’s become far too handy a vehicle for ejecting students rather than helping them settle down and improve academic performance. The board members also voted to implement a sweeping review and new standards for the district’s sizable police force, which has a history of aggressive ticketing of students.

The landmark provisions are contained in a “School Climate Bill of Rights” the school board adopted in a 5-2 vote on Tuesday.

Los Angeles Unified is the nation’s second largest school district, and with 300-plus police officers, it has the country’s largest school police force. It is the first school district in California to bar “willful defiance” suspensions. These suspensions — and school police citations for more serious criminal allegations — have fallen heavily on black and Latino students in neighborhoods struggling with high dropout rates.

A “willful defiance” suspension can stem from a student violating dress codes to lashing out with crude behavior or language, or refusing to be quiet or perform assigned work.

Separately, hundreds of L.A. Unified students, many of them middle-school students, have also been given school-police citations each month for engaging in physical fights or other “disturbing the peace” charges or for committing other infractions. In some cases, teachers or school administrators have requested that students receive tickets; in other cases, police officers have made the decision.

The new L.A. Unified policy aimed at curbing ticketing and arrests by school police stems from brewing controversy that the Center for Public Integrity has reported on over the last year.

The board’s new mandate strengthens existing requirements that L.A. Unified’s schools embrace other practices, including “positive behavior intervention” methods and “restorative justice” to improve student behavior and resolve disputes among students and teachers. The new order ensures that students can’t be sent home for defiance, but they can be removed from a class and kept at school.

Critics of student suspensions argue that children who act out in class are often are having trouble learning or are troubled by family crises. Kids only fall further behind and more detached from school when they languish at home for days or hit the streets unsupervised, they say.

Judith Perez, president of the Associated Administrators of Los Angeles, said her organization supports the new policy’s goals and supports keeping kids in school. But her members are worried about how they’re going carry out their orders without more adult supervisors inside L.A. Unified’s crowded, understaffed schools.

“The district needs to do more than enact a policy,” Perez said. “The first recommendation we are making is an increase in the number of assistant principals and counselors.”

A middle school, she said, can’t even get a second counselor unless it has more than 891 students. She also said that teachers’ contracts don’t allow them to supervise students pulled out of classrooms.

California, as a state, could follow Los Angeles’ lead in ending suspensions for defiance and setting limits on police involvement in discipline matters.

L.A. Unified’s policy mirrors a bill in California’s legislature that would sharply limit the ability of schools statewide to issue out-of-schools suspensions simply for defiance. During the 2011-2012 school year, state data shows, nearly half of more than 700,000 student suspensions in the state were for defiance.

Golden State legislators are considering another bill that would require all schools to set standards for the role of school police and strive to keep police out of routine disciplinary matters. Both bills have already passed through critical first committees.

“I’m a social worker by profession, and we at the Los Angeles Unified School District support the school police. But we cannot have a system that is just punitive and focuses on ‘the gotcha,’ “ L.A. Unified district board president Monica Garcia told the Center.

Garcia sponsored the “bill of rights” because she thought suspensions and aggressive use of school police in some schools was backfiring and failing to improve student behavior and achievement rates.

“What I expect to happen now is more graduation in Los Angeles,” Garcia said. She said L.A. Unified has an opportunity to show national leadership in efforts to stop a “school-to-prison pipeline.”

The board’s new policy declares that: “Studies indicate that suspension does not often result in positive behavior conditioning and furthermore can instead intensify misbehavior by increasing shame, alienation, and rejection amongst students.”

The text of the policy also says: “A study from Texas found that students are five times more likely to drop out, six times more likely to repeat a grade, and three times more likely to have contact with the juvenile-justice system if suspended.”

Garcia said that juvenile-court judges in Los Angeles also appealed to her in recent years to change practices that were leading to increasing numbers of court citations of students.

The judges said that too many students were being sent into the criminal justice system for minor offenses they felt should be handled at school, immediately, rather than with court appearances weeks or even months later.

Last year, the Center analyzed L.A. Unified’s school-police citations and produced reports in collaboration with KPCC radio in Southern California and KQED The California Report.

The analysis found that between 2009 and the end of 2011, L.A. Unified school police were issuing, at times, more than 1,000 court citations a month to students for a range of violations, including tardiness, graffiti, pot or cigarette possession and, especially, for allegations of “disturbing the peace.” The disturbing-the-peace charges stemmed from accusations of a student getting into fisticuffs, threatening to fight or using challenging language.

More than 40 percent of all tickets issued by police during this period were going to students younger than 15. And the numbers of citations issued in Los Angeles far exceeded the tickets that school police were handing out in New York City, a bigger district, the Center found.

A more recent analysis by the Center showed that tickets issued in L.A. Unified have fallen dramatically, the result of pressure from community activists, juvenile-court judges and news reports disclosing how the volume of tickets had ballooned.

But tickets that L.A. Unified school police still hand out to students for disturbing the peace, especially, remain highly concentrated in certain middle schools.

Students at Markham Middle School received more tickets during this time — 47 — than any other school in the district. Forty-one tickets were for fighting, or disturbing the peace. Students at the Watts Learning Center Charter Middle School got the next highest batch of tickets, with 13 out of 33 for fighting. Banning High School was third, with 32 tickets.

The Center’s latest analysis found that between last November and March of this year, about half of all the 1,590 tickets issued went to children 14 and younger.

More 13-year-olds — almost all of them black or Latino — received tickets than 16 or 17-year-olds. Black students, 10 percent of district enrollment, received more than 37 percent of disturbing-the-peace tickets. And 56 percent of black students cited for that infraction were between 11 and 14 years of age.

Manuel Criollo, a community organizer with the Labor-Community Strategy Center in Los Angeles, has spent several years working with students, parents, district officials and school police to embrace alternatives to police citations. Starting last summer, school police began referring ticketed students to Los Angeles County Probation Department officials, who say they’re trying to keep kids out of court and instead send as many as they can first to community-based counseling services.

But Criollo’s group has been pushing for explicit, written district policies designed to roll back ticketing even more and set strict limits on police involvement in disciplinary matters and minor offenses.

The group has long complained about “racial patterns” and unfair ticketing practices, and asserted that some police officers’ attitudes have spoiled students’ relations with law enforcement and teachers. The Labor-Community Strategy Center drew attention to and helped end early-morning sweeps that officers were doing around schools in low-income neighborhoods in recent years; officers would nab students, search them and issue tickets with hefty dollar fines to kids` who were even minutes late.

Criollo said the board’s new policy is a “strong mandate” for district officials to sit down and hammer out new police policies they promised they would do last year. “It’s the culmination of a lot of what community groups have been fighting for,” Criollo said of the policy.

The “bill of rights” adopted this week orders the district to “review and evaluate” all current school policies, practices and training “relating to the equitable treatment of students.”

It also orders the district to “review the data on the use of school-based citations and arrests and identify and remedy frequent use at individual school sites.”

L.A. Unified School Police Department Chief Steve Zipperman did not oppose the policy, and Garcia consulted with him when it was drafted. L.A. Unified Superintendent John Deasy publicly supported the new policy, and said it was aimed at stopping “early criminalization” of students for “frivolous” matters.

ADA forces judge to slash jury award for disabled workers

2013-05-21T13:30:44-04:00

An Iowa federal judge who frequently attends business-friendly judicial education conferences slashed a landmark $240 million verdict to $1.6 million for 32 mentally disabled workers who suffered abuse and discrimination at the hands of their employer.

It might appear that a pro-business judge made a predictably pro-business ruling. Turns out the judge had no choice. The 22-year-old Americans with Disabilities Act — designed to protect the rights of disabled workers — is to blame for the paltry award.

On Tuesday, U.S. District Judge Charles R. Wolle of the Southern District of Iowa ordered Henry’s Turkey Service to pay $50,000 in damages to each of the workers involved in a discrimination lawsuit brought by the Equal Employment Opportunity Commission. In total, the judge ruled, the company must pay the workers $1.6 million.

Wolle’s decision came two weeks after a federal jury awarded each of the workers a total of $7.5 million in damages — $240 million in all. Jurors found that Henry’s, a now-defunct Texas company, violated the Americans with Disabilities Act by subjecting the disabled workers to years of unfair treatment and harassment.

The EEOC’s complaint, filed in 2011, accused Henry’s of taking advantage of the workers’ mental disabilities, paying them substandard wages — $60 to $65 per month despite working at least 35 hours per week — failing to attend to the workers’ illnesses and injuries, and subjecting them verbal and physical abuse.

(Updated May 21, 2013, 1:28 p.m.: This story has been updated to add details of the accusations by EEOC against the employer.)

According to the EEOC, the disabled workers were hit, kicked and even handcuffed by their supervisors. One former Henry’s supervisor admitted in federal court that he had slapped and kicked mentally disabled employees at the turkey processing plant. In addition to being physically abused, the EEOC wrote in its complaint, workers were also called derogatory names, denied bathroom breaks and forced to live in a squalid bunkhouse.

The company, jurors unanimously agreed, acted with “malice or with reckless indifference” to the workers’ federal civil rights. The jury awarded each of the 32 men $5.5 million to compensate them for their pain and suffering, and another $2 million in punitive damages.

In a May 1 press release, the EEOC trumpeted the “historic verdict,” claiming that the $240 million in total damages amounted to “the largest verdict in the federal agency’s history.”

Not so fast.

As it turns out, the Americans with Disabilities Act limits the amount of damages that can be awarded to plaintiffs. That’s why Judge Wolle so drastically reduced the award.

Under the act, compensatory and punitive damages are capped at $50,000 for companies like Henry’s that employ between 14 and 101 employees.

The limit is $300,000 for companies that employ more than 500 employees.

EEOC attorney Robert Canino acknowledged the caps in a brief he filed on May 10.

The EEOC “understands that the amount of damages of $7,500,000 assessed and awarded by the jury to each of the 32 class members, while certainly an appropriate and meaningful measure of the actual harms suffered by these victims of discrimination, including but not limited to, the mental anguish, pain and suffering, and ‘loss of enjoyment of life,’ must be drastically reduced in order to come within the stringent statutory limits for recovery under” the law, he wrote.

Robert Dinerstein, an American University law professor who specializes in disability law, says the caps on damages were implemented in an effort to balance plaintiffs’ needs to be compensated for their pain and suffering without unnecessarily putting companies out of business.

Still, he says, “I think the [caps] are problematic.”

For one thing, Dinerstein says, plaintiffs are already burdened with proving to a jury that the discrimination they’re alleging is real and intentional. “It’s not as if any Tom, Dick and Harry can go to a sympathetic jury and win,” he says.

Moreover, Dinerstein says $300,000 is “chump change” for a large company employing more than 500 workers.

When companies discriminate against their disabled employees, “They should pay the piper.”

Even though the damages were significantly cut, Dinerstein says, “You still have a symbolic victory.”

That symbolic victory is also supplemented by a previous judgment ordering Henry’s to pay the workers a total of about $1.3 million in back pay.

Canada buoyed by former U.S. ambassador

2013-05-17T10:27:07-04:00

Since U.S. Ambassador to Canada David Wilkins moved back home from Ottawa in 2009, he’s reclaimed his role as liaison between the U.S. and its northern neighbor.

But this time, Wilkins — the Bush Administration’s top diplomat in Canada from 2005 to 2009 — is working for the Great White North, lobbying the U.S. federal government on behalf of Canadian business and government entities.

And last week, Wilkins parlayed his former ambassadorship into a job lobbying Congress on behalf of the Toronto-based Investment Industry Association of Canada, according to reports filed with the U.S. Senate.

Does Wilkins’ latest circuit through the international revolving door create conflict of interest or the appearance of one? No, Wilkins told the Center for Public Integrity, saying he “respectfully disagreed” with such a notion.

“As U.S. ambassador, I advocated for the U.S.-Canada relationship,” Wilkins said. “I do the same thing today, but in the private sector.”

The South Carolina native has lobbied on behalf of handful of Canadian interests since 2009, when he joined the Washington-based firm Nelson Mullins Riley & Scarborough, LLP as partner and chair of the public policy and international law practice group.

Last year, the provincial government of Saskatchewan spent $400,000 to hire Wilkins and his associates to advocate for province’s energy exports and cross-border food safety. That same year, the Canadian Association of Petroleum Producers spent $240,000 for Nelson Mullins to lobby Capitol Hill regarding Canada’s oil sands industry, records indicate.

Additionally, Wilkins has sat on the board of the Toronto Island-based Porter Airlines since April 2009, according to a Financial Post report.

Wilkins is not the only former U.S. diplomat to represent a foreign entity on Capitol Hill.

Jim Blanchard, an ambassador to Canada during the Clinton administration, advocated for the Forest Products Association of Canada in in 2009.

The Republic of India hired Robert Blackwill — a Bush Administration ambassador to India — to lobby Congress and federal agencies on the U.S.-India civil nuclear agreements, records show.

Wilkins says he has not breached any ethical standards by lobbying for Canadian industry because he has not engaged in any lobbying issue that he was “actively involved” with as ambassador.

The bulk of his pro-Canada advocacy has been devoted to facilitating meetings and lining up press opportunities when Canadian officials visit Washington, Wilkins said.

“There is no conflict of interest, because I’m not advocating on any position that I was actively involved in as a U.S. ambassador.”

The Province of Alberta had, however, hired Wilkins to lobby Congress on "issues impacting Alberta's forestry industry" — an area with which he became familiar while for a time overseeing the decades-long U.S.-Canada lumber trade dispute as ambassador.

Since 2010, Alberta has spent $480,000 for Nelson Mullins lobbying services, including those of Wilkins. Officials from the Alberta and Saskatchewan governments did not reply to requests for comment.

Wilkins said that his most recent work for a Canadian client, the Investment Industry Association of Canada, was consigned to a “one afternoon deal,” meet and greet with the association’s President and CEO Ian Russell and members of the House Financial Services Committee.

“When it came to Congress, we needed to have Nelson Mullins provide us with a little bit of help to meet the right congressional leaders,” Russell said.

During typical visits to Washington, D.C., IIAC officials meet with individual regulators in the Securities and Exchange Commission and the Commodity Futures Trading Commissions, but this trip was focused on educating members of Congress on the association’s agenda of regulatory reform and Canada’s securities markets, he said.

Wilkins, who works out of a Greenville, S.C., office, said was not present for those meetings and said that the lobbyist registration form filed on behalf of IIAC was submitted in “an abundance of precaution” to ensure transparency in Nelson Mullins’ dealings — however limited — with Canadian trade group.

“We were not advocating for any specific law or bill,” Wilkins said of the visit. “I don’t anticipate any ongoing lobbying effort.”

Judicial candidate blames mystery nonprofit's attacks for defeat

2013-05-16T16:20:38-04:00

When Ed Sheehy looked at his mail one day last fall, he was startled to see his face staring back at him, posed alongside the notorious “Christmas Day Killer.” Sheehy, as a public defender, had represented the man a year earlier. Now Sheehy was running for a seat on the Montana Supreme Court and someone was using the double-murder to accuse him of being soft on crime.

“I was furious,” the 60-year-old Sheehy, who was born in Butte, Mont., and now resides in Missoula, told the Center for Public Integrity. “It was misrepresenting what I did and what I do as a lawyer.”

So who was behind the attack?

The mailer showed only that it was paid for by the “Montana Growth Network,” a “social welfare” nonprofit, registered under Section 501(c)(4) of the U.S. tax code. Montana election records revealed next to nothing about the organization, which, because of its tax status, is not required to disclose its donors. The nonprofit’s website says its goal is to make Montana “more business friendly.”

Despite finishing on top in the summer’s primary election, Sheehy lost in November.

Mystery mailers

He blames the mailers and similarly themed radio ads paid for by the group for his defeat, and he is angry that it was not required to report the full extent of its spending — much less the names of those who bankrolled it.

Montana, in fact, is one of 35 states where disclosure laws for independent groups like the Montana Growth Network are less stringent than what federal election law requires, according to a new analysis by the National Institute on Money in State Politics.

Sheehy, the nephew of a former Montana Supreme Court justice, first faced off against attorney Elizabeth Best and Laurie McKinnon, a district judge, in a three-way, nonpartisan primary in June. The top two vote-getters advanced to the general election in November.

Ahead of the primary, the Montana Growth Network endorsed McKinnon and touted her in a mass mailing as “fair,” “honest,” “constitutional” and “the only nonpartisan choice for Supreme Court.”

The group’s mailers also focused on Sheehy’s work defending a murderer and criticized Best for pursuing a lawsuit to “seize control of the state’s atmosphere … to stop global warming.”

Sheehy, who finished first with 34.3 percent of the vote, spent $32,000 during the primary, and McKinnon, who finished second with 33.6 percent of the vote, spent about $30,000, records show. Best came in at third with 32.1 percent.

Best raised more than the other two candidates combined — $128,000, which included roughly $20,000 of her own money. She was the only candidate to advertise on television.

The Montana Growth Network spent roughly $42,000 during the primary election — more than either Sheehy or McKinnon’s own campaigns.

Outsider spends big

Best told the Center for Public Integrity that she was “stunned” by the result.

“Hearing from the candidates doesn’t matter anymore,” she said, adding that what matters is who has well-financed outside supporters to “cast candidates as something they aren’t and to tip the scales.”

McKinnon, Best said, was “running as a partisan with unlimited backing.”

The amount spent by the Montana Growth Network in the primary was required by state law to be disclosed because the mailings urged voters to support or oppose a candidate — a line the nonprofit says it didn’t cross with its subsequent activities, whose costs it did not disclose.

Ahead of the November election, one direct mail piece from the Montana Growth Network argued that under Sheehy, justice would be “beholden to a political party,” based on Sheehy’s past financial support of Democratic candidates.

Additionally, both mail and radio advertisements said that Sheehy had an “activist agenda” for his defense of Tyler Michael Miller, the so-called “Christmas Day Killer” who murdered his girlfriend and her 15-year-old daughter “in cold blood” in 2010.

While defending Miller, Sheehy had unsuccessfully sought for Montana’s death penalty process to be ruled unconstitutional because a single judge, not a jury, is allowed to assess whether “mitigating factors” exist that might rule out a death sentence.

Sheehy says he was simply “doing his job.” Miller is currently serving two life sentences after ultimately pleading guilty.

Ads tread fine line

Instead of urging people to vote against Sheehy or support McKinnon, the ads advised voters to “contact Ed Sheehy and tell him that you want an impartial Supreme Court” and to sign an online petition.

How much was spent on these advertisements is not public.

Montana media outlets reported on the anti-Sheehy radio ads, and Sheehy called on McKinnon to denounce them, which she did.

“Negative advertising has no place in a nonpartisan race,” McKinnon said in a press release at the time. “I ask for your vote based on who I am, not on negative portrayals of my opponent.”

On Election Day, McKinnon bested Sheehy by 12 percentage points.

She had also been endorsed by the Montana Chamber of Commerce and spent about $35,000 on the general election campaign. Sheehy, who had been endorsed by the Montana AFL-CIO and state’s teachers’ union, spent roughly $44,000.

Being painted as an “activist” by the Montana Growth Network, Sheehy said, was insurmountable.

“In judicial elections, that does you in,” he said.

University of Montana political science professor Jim Lopach said he was surprised by the election results.

Name didn't help

“It’s amazing that Sheehy didn’t win with name recognition he had," Lopach said, adding that McKinnon came across as the "more conservative" candidate.

One fact that is known about the Montana Growth Network is the name of its founder and treasurer — Republican state Sen. Jason Priest, who donated the legal maximum of $620 to McKinnon’s campaign.

McKinnon declined to be interviewed for this story. Priest told the Center for Public Integrity that Best and Sheehy “disqualified themselves” during the race.

“The voters made their own decision based on the information they had,” Priest said. “We told voters that you’re better off with a nonpartisan court.”

Priest said the Montana Growth Network didn’t report the spending to the state because it was “issue advocacy,” which is not required to be disclosed.

In the months since the election, the Montana Growth Network has continued to produce issue advertisements, including mailers that encouraged Montana lawmakers to reject the expansion of Medicaid coverage called for under the health care reform law signed by President Barack Obama.

Jim Murry, the Montana Political Practices Commissioner until he resigned earlier this year, told the Center for Public Integrity that “voters should be angry and upset” about the lack of transparency at the state level regarding political ads.

In the wake of the U.S. Supreme Court’s Citizens United v. Federal Election Commission decision in 2010, which lifted a ban on corporate spending on political ads that call for the election or defeat of federal candidates, many lawmakers have attempted to update regulations at the state level.

During its most recent legislative session, a bipartisan group of Montana lawmakers pushed for new campaign finance rules that would have required disclosure of “electioneering communications” — defined as ads run within 90 days of an election that show or mention candidates without explicitly advocating for their election or defeat.

The Montana state Senate passed the bill in March on a 29-21 vote, but it died in committee in the Montana House of Representatives. A motion in April to bring it to the House floor without committee approval received majority support but fell six votes short of the three-fifths required.

Secret spending in judicial elections concerns Adam Skaggs, senior counsel at the New York-based Brennan Center for Justice, which advocates for fair and impartial courts.

“There are real concerns that judges will be partial to the individuals or the interest groups that are responsible for putting them on the bench,” he said. “The power of the judiciary depends on its reputation.”

For more information about money in state politics, visit the National Institute on Money in State Politics online at www.followthemoney.org.

Lax state rules provide cover for sponsors of attack ads

2013-05-16T16:20:38-04:00

While much criticism has been lobbed at the federal system for failing to adequately identify who is spending money to influence campaigns, 35 states have independent spending disclosure laws that are less stringent than federal election law.

In fact, in 30 states it’s impossible to total how much money outside groups are spending on campaigns, information that is mostly available when it comes to federal contests.

That’s according to a new 50-state analysis by the National Institute on Money in State Politics, which graded the states on disclosure requirements for super PACs, nonprofits and other outside spending groups.

Fifteen states — Alaska, California, Colorado, Connecticut, Illinois, Maryland, Massachusetts, North Carolina, Ohio, Oklahoma, Oregon, Rhode Island, Texas, Washington and Wisconsin — received an “A” grade, meaning the states’ laws were at least as robust as federal independent spending requirements.

New Jersey and Virginia, states where residents will be casting votes for governor and state legislature this year, were among 26 states that received a failing grade.

The others were Alabama, Arizona, Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, New York, North Dakota, Pennsylvania, South Carolina, Tennessee and Wyoming.

States were graded on a 100-point scale, based on how much information is provided to the public about non-candidate organizations that buy ads, often negative and misleading, just before an election. Six states — Alabama, Indiana, New Mexico, New York, North Dakota and South Carolina — didn’t garner a single point in the survey.

Independent super PACs and nonprofits intent on influencing campaigns proliferated in the wake of the 2010 U.S. Supreme Court’s Citizens United v. Federal Election Commission ruling, adding about $1 billion in spending in federal races in the 2012 election cycle.

At the state level, lavish spending by outside groups often faces weaker disclosure rules than federal contests and receives far less media attention.

The result is a mishmash of rules, with some states scrambling to pass legislation in the wake of the high court decision while others show little interest in enacting any changes.

In South Carolina, for example, outside groups paid for ads attacking several state and local politicians in 2012 but were not required to report the spending.

Two federal court decisions have left the state without “any rules” related to outside groups’ spending, according to Cathy L. Hazelwood, deputy director of the state Ethics Commission.

State Sen. Wes Hayes, a Republican from Rock Hill, estimates that an anonymous group called Conservative GOP PAC, which despite its name has no apparent affiliation with the state’s Republican party, spent at least $100,000 on campaign fliers in an unsuccessful effort to unseat him.

He concedes that’s just a guess.

“I’ll never know the amount, just like I’ll never know who spent it,” Hayes says. Efforts to contact Conservative GOP PAC were unsuccessful, as the group has no office, no phone number, no website, did not file incorporation records with the state and no individuals have claimed membership in the organization.

Non-candidate, independent spending on elections can be broken into two general categories: “independent expenditures” and “electioneering.” With independent expenditures, potential voters are asked to back or oppose a candidate. With electioneering, a candidate is named, but there’s no explicit request for support or opposition.

In 25 of 50 states, electioneering advertisements are not required to be reported, according to the analysis by the National Institute.

The term “electioneering communications” came to be with the passage of the Bipartisan Campaign Reform Act of 2002. The federal law requires such expenditures be reported, but it applies only to television and radio ads that air shortly before an election.

In a few states, however, the definition of electioneering communications is broader than at the federal level, and may include non-broadcast expenditures like direct mail and print advertising. Independent expenditures refer to all expenditures used to support or oppose a candidate, including non-advertising costs like polling and yard signs.

Points were withheld in the survey based on the level of disclosure and whether disclosure forms differentiate between independent spending and other types of campaign expenditures.

While North Dakota scored a zero, the state passed legislation this year that will beef up disclosure requirements for outside groups once the law goes into effect August 1.

The National Institute’s rankings focus solely on spending and not on donors to the groups that are doing the spending. Increasingly, “social welfare” nonprofits — currently at the center of a scandal involving the IRS — and trade associations are being used to hide donors’ identities in both federal and state races.

In New Mexico, outside political action groups spent heavily on races for the state Legislature, races that typically attract fewer than 20,000 voters. Once sleepy contests have become bruising battles fought through statewide television ads, said state Sen. Peter Wirth, a Democrat from Santa Fe.

He’s pushed a bill requiring greater disclosure by outside groups through the Senate three times (twice with unanimous approval) only to see it die in the state House after frenetic lobbying by “very powerful special interests” from both parties, he says.

“It’s bipartisan support in the open, and then behind the scenes it’s full-on bipartisan opposition,” Wirth says.

But several states have enacted disclosure requirements that go beyond federal requirements.

In Maryland, corporations are required to alert shareholders about a company’s independent political spending;
A “stand by your ad” provision in a 2010 Massachusetts law requires that in corporate-funded ads, the CEO appear in the spot;
Alaska, California and North Carolina require independent expenditure groups to list their top donors in political ads.

The National Institute’s rankings also factor whether states require independent spending groups to disclose which candidate they are targeting.

Two states, Florida and Delaware, require that spending be made public but not the targets or the purpose of the spending. The result: It’s virtually impossible to track how much was spent by outside groups trying to hurt or help a particular candidate.

Thirty-six states will elect governors in 2014. Edwin Bender, executive director of the National Institute on Money in State Politics, said he hopes states with poor grades will strengthen their reporting requirements.

“The majority of states will elect their governors and other major statewide offices in 2014,” he said. “We think the public should know how much money is spent on these races, and by whom.”

John Dunbar contributed to this report.

For more information about money in state politics, visit www.followthemoney.org.

IRS scandal sparks fundraising blitz

2013-05-24T13:50:59-04:00

The scandal-singed Internal Revenue Service could unwittingly generate a mountain of cash for Republican interests.

GOP politicians and party committees this week are soliciting supporters far and wide in attempts to capitalize on conservatives' outrage over IRS officials singling out tea party and other right-leaning nonprofit groups for enhanced scrutiny.

Republican National Committee Chairman Reince Priebus blasted a missive to backers Wednesday asserting that this week has been a "complete disaster for the White House," citing the IRS imbroglio, congressional hearings on Benghazi and revelations that the Department of Justice secretly seized phone records of Associated Press journalists. He also snipes at House Minority Leader Nancy Pelosi, D-Calif.

"Clearly he's hoping a Democrat-controlled House will let him off the hook. We can't let that happen," Priebus wrote. "Contribute $25, $50, $100, or whatever you can today to help us defend our House so we can hold President Obama and the Democrats accountable."

Sen. Marco Rubio, R-Fla., wrote supporters through his Reclaim America PAC leadership committee to say that "if there was ever a time for conservatives to take a stand against an expanding federal government, it is now." He further noted that "the very message of the Tea Party movement has been validated" because of the IRS situation.

Then Rubio's pitch: "You can help by contributing to the Reclaim America PAC today. Your donation will ensure that we have the resources to take this fight to the highest levels possible."

The National Republican Congressional Committee, for its part, has set up a page featuring a large photo of House Speaker John Boehner with his recent quote superimposed: "My question isn't about who's going to resign — my question is who is going to jail over this scandal?"

Next to it sits a form where people are asked to submit their name, email address and ZIP code, which the NRCC reserves the right to use for future solicitation purposes. The NRCC is also spending "thousands" of dollars on three Web advertisements slamming the IRS and directing people to its page.

The IRS scandal is a galvanizing issue ripe for political advocacy because it "involves an institution every American has had to deal with and understands — and to make matters worse, Americans hated the IRS to begin with," NRCC spokeswoman Andrea Bozek says. "In terms of 2014, this latest abuse of power is another indication that Democrats are going to have a hard time winning the House with Obama leading their recruitment efforts."

Among House of Representatives members fundraising off the IRS' actions is Rep. Chris Collins, R-N.Y.

"Targeting conservatives and Americans who believe in the Constitution is outrageous and we can't let it stand," he wrote supporters before providing a link to a donation page that states, "Help me today."

Rep. Pat Meehan, R-Pa., took a slightly more direct approach.

"House Republicans are going to investigate the IRS' actions -- but we need a majority in the House to do it," he writes. "Please consider supporting our efforts with a contribution of $250, $100 or even $50."

Democrats haven't shied away from fundraising this week, although there's nary a mention of the IRS to be found in their financial come-ons.

Instead, they struck out at one member of their usual cast of conservative bogeymen and women.

"Scandal-ridden Republican Michele Bachmann is at it again," the Democratic Congressional Campaign Committee writes today. "That's right: in the midst of a federal investigation for campaign violations, Bachmann has the nerve to spearhead the Republican effort to block Obamacare before its full implementation."

The email then asks readers to "declare your support for Obamacare" and provides a link to a political contribution page that urges individuals to "contribute $3 or more today to support President Obama's agenda!"

The Democratic National Committee, meanwhile, today asked party faithful to "chip in $5 or more today and help elect Democrats who will stand up for marriage equality across the country, just like the ones in Minnesota did yesterday."

IRS employees back Obama, Democrats

2013-05-20T01:56:07-04:00

President Barack Obama collected more than $110,000 from employees of the Internal Revenue Service during his 2008 and 2012 campaigns — significantly more money than any other contemporary political candidate, according to a Center for Public Integrity analysis of Federal Election Commission filings maintained by the Center for Responsive Politics.

The donations were split roughly evenly between Obama's two presidential bids.

Ahead of the 2012 election, IRS employees collectively gave Republican presidential candidate Mitt Romney about $25,000 — less than half the amount received by Obama. For his part, Sen. John McCain, R-Ariz., the GOP's presidential nominee in 2008, collected only about $6,000 from IRS employees.

The IRS has become the center of attention following an apology Friday by Lois Lerner, director of the agency’s division that oversees tax-exempt organizations, for what she acknowledged was "inappropriate" targeting of conservative nonprofits for additional scrutiny since 2010. Obama himself said on Monday that offenders in the agency needed to be held "fully accountable."

On Tuesday, a report from the Treasury Inspector General for Tax Administration said the IRS used "inappropriate criteria" when reviewing organizations seeking tax-exemption.

During the past two decades, individual employees of the agency have collectively increased their political giving, which has overwhelming benefited Democrats and liberal-leaning organizations.

Overall, rank-and-file IRS employees donated more than $840,000 to federal candidates and committees from 1989 to 2012, according to the Center's analysis. Democrats and liberal-leaning organizations received about two-thirds of this sum.

While GOP-aligned groups and candidates received the remainder, during some election cycles, such as the 2002 midterms and the 2010 midterms, Republicans and conservative-leaning organizations achieved near-parity.

The Democrats' 2004 presidential nominee, John Kerry, who is now serving as secretary of state, ranked second behind Obama and ahead of Romney among candidates to benefit from the financial largesse of IRS employees, collecting about $31,000 during his failed presidential bid.

The top organizational beneficiary of money from IRS employees is the National Treasury Employees Union, which accounted for more than $102,000 in donations. The labor union has historically supported Democratic candidates, according to the Center for Responsive Politics.

Both the Democratic National Committee and Republican National Committee have also received notable support from IRS employees, with each collecting about $45,000 over the years.

All federal employees, including those who work for the IRS, are bound by the Hatch Act, a law passed in 1939 with the intent of curbing partisan power abuses by civil servants.

The Hatch Act generally bans federal employees from engaging in political activity while on the job, including soliciting funds for candidates. But political activities during personal time that do not use government resources, such as donating or volunteering for a campaign, are typically allowed.

Federal campaign finance law requires all individuals who donate more than $200 to a political group or candidate to list their employer and occupation. These filings may understate the donations of individuals who give less than the reporting threshold or who do not clearly identify the IRS as their employer.

Nonprofits organized under Section 501(c)(4) of the U.S. tax code have flourished in the wake of the U.S. Supreme Court’s Citizens United v. Federal Election Commission decision in 2010, which lifted restrictions on the types of political advertising in which these groups could engage.

During the IRS’s 2012 fiscal year alone, nearly 2,800 groups sought tax-exemption under Section 501(c)(4), as the Center for Public Integrity previously reported.

This tax status permits organizations to pursue a mission of promoting "social welfare" and allows them to keep their funders secret. Groups with the primary purpose of engaging in electoral advocacy must disclosure their donors.

Reporter Ben Wieder contributed to this report.

IRS nonprofit division overloaded, understaffed

2013-05-20T15:50:01-04:00

Amid withering accusations the Internal Revenue Service targeted tea party and other conservative groups with enhanced scrutiny, the agency faces another problem: it’s drowning in paperwork.

The IRS’ Exempt Organizations Division, which finds itself at the scandal’s epicenter, processed significantly more tax exemption applications in fiscal year 2012 by so-called 501(c)(4) “social welfare” organizations — 2,774 — than it has since at least the late 1990s, according to an analysis of IRS records by the Center for Public Integrity.

Compare that to 1,777 applications in 2011 and 1,741 in 2010, federal records show. Not since 2002, when officials processed 2,402 applications, have so many been received.

Meanwhile, Exempt Organizations Division staffing slid from 910 employees during fiscal year 2009 to 876 during fiscal year 2012, agency personnel documents indicate.

In 2010, IRS officials projected exempt division staffing at 942 employees. But IRS officials cut the number to 900 after the agency began slashing its budget in response to fiscal woes affecting most corners of the federal government.

The agency said this weekend that a heavy workload prompted bureaucrats to “centralize” the “influx of advocacy applications” and, in the name of efficiency, scrutinize groups that contained more common phrases such as “tea party” in them.

“That was wrong, that was absolutely incorrect, insensitive and inappropriate — that’s not how we go about selecting cases for further review,” Lois Lerner, IRS exempt organizations director, said Friday. “We don’t select for review because they have a particular name.”

Lerner, who denied the targeting was politically motivated, added that about 75 groups with words such as “tea party” or “patriot” received extra scrutiny but none had its tax-exempt status revoked.

The IRS could not be reached for comment Monday.

(Also read: IRS employees back Obama, Democrats)

For Washington, D.C.,-based attorney Dan Backer, who represents two tea party-affiliated organizations, blaming such actions on staffing cuts and increased workload is a “lame excuse” that the IRS should stop using.

“They could have hired new employees, they could have reallocated employees, they could have done a lot of things, the not doing of which doesn't suddenly make it OK for them to engage in viewpoint discrimination,” said Backer, who said he is considering suing the IRS. “At worst, their staffing woes maybe justifies a growing backlog, not discriminating against those whose viewpoints they disagree with.”

IRS records show that applications of the most common nonprofit organizations — 501(c)(3) educational nonprofits, private foundations, charities and the like — have dropped this decade after reaching a high of more than 85,000 in fiscal 2007. Generally, this type of nonprofit entity must remain apolitical.

As for 501(c)(4) nonprofit organizations, such as the tea party groups in question, they may engage in politics so long as it isn’t their primary purpose.

During the 2012 election cycle, however, numerous 501(c)(4) organizations — most of them conservative, a few left-leaning and all endowed with new spending powers thanks to the Supreme Court’s 2010 Citizens United v. Federal Election Commission decision — together spent tens of millions of dollars overtly advocating for or against political candidates.

And unlike super PACs, which may also raise and spend unlimited amounts of money, they’re not required to reveal their donors

Democrats primarily cried foul, accusing groups such as the Karl Rove-backed Crossroads GPS and Koch brothers-supported Americans for Prosperity of violating their tax-exempt status.

But the IRS has taken no definitive action against these or other nonprofit groups, and several campaign finance reform advocates have opined that this latest incident will further stymie their effort to convince the IRS to crack down on nonprofit groups they consider overridingly political.

As for tea party-named nonprofit groups, for all the attention now on them, they generally played bit roles during the 2012 election.

Of the more than 40 organizations that identified themselves as tea party-related in IRS documents, just one — the National Tea Party Group of California — reported assets of more than $100,000 in its most recent publicly available financial filing.

For now, Republicans and Democrats in Congress have called on the Obama administration to investigate the matter, and Obama himself described the IRS’ conduct as “outrageous.”

The Treasury Inspector General for Tax Administration is expected to release a full report on the matter later this week, and officials in the House and Senate are promising hearings.

Karen Gries, an appointee to the IRS Advisory Committee on Tax Exempt and Government Entities, says she expects her committee will discuss the matter when it meets later this year.

In the meantime, Gries praised the overall performance of Lerner, the exempt organizations director, while expressing concern about her department’s ability to do its job.

“They are asked to do more with less resources,” said Gries, a principal at with accounting firm CliftonLarsonAllen LLP. “The EO group operates very lean.”

Join ICIJ's 'Secrecy for Sale' reporters for Google Hangout

2013-05-14T09:58:37-04:00

A little over a month ago, the International Consortium of Investigative Journalists (ICIJ) rolled out a massive piece of the 'Secrecy for Sale' investigation into offshore tax havens. Since then, the project has made waves in France, Germany, Canada, Mongolia, Sweden, Finland, The Netherlands, India, Venezuela and The Phillipines, to name (more than) a few. Stories using ICIJ's 260GB data trove ran in 47 countries, and thanks to the hard work of more than 90 journalists, the work has been cited close to 10,000 times worldwide. Just last week, tax authorities in Great Britain, the U.S. and Australia announced they are working together to investigate their own cache of offshore tax data for potential wrongdoing. That collaboration could be the beginning of the biggest tax probe in history.

On Tuesday, May 14 at 11:00am ET, six journalists from ICIJ will answer your questions on this groundbreaking investigative project in a live Google Hangout hosted by Wendell Cochran, senior editor at the Investigative Reporting Workshop and former board member of Investigative Reporters and Editors.

The discussion will include:

Gerard Ryle, ICIJ Director
Marina Walker Guevara, ICIJ Deputy Director
Michael Hudson, ICIJ Senior Editor
Mar Cabra, ICIJ Data Research Manager and ICIJ member from Spain
Stefan Candea, ICIJ Assistant Project Manager and ICIJ member from Romania
Frédéric Zalac, ICIJ member from Canada and investigative reporter at Canadian Broadcasting Corporation

You can watch the hangout live, or submit a question, here.

OPINION: ObamaCare myths and realities

2013-05-13T14:06:40-04:00

The House of Representatives is expected to vote for the 40^th time this week to repeal ObamaCare, not because anyone believes the 40^th time will be the charm, but because the exercise will enable Republican freshmen to vote for repeal and brag about it during their campaigns next year.

Those lawmakers probably won’t tell their constituents that two of the most important provisions of the law they profess to hate were actually Republican ideas the Democrats embraced in hopes of getting bipartisan support for reform. The first such provision is the requirement that all Americans not covered by a public plan like Medicare or Medicaid must buy coverage from a private insurance company. The second provision: establishment of state health insurance marketplaces (called exchanges in the law) where private insurers compete online for customers.

One of the first states to set up such a marketplace was Utah, among the reddest of states, which had its exchange up and running months before ObamaCare was enacted. Starting this fall, Americans everywhere will be able to shop in Utah-like marketplaces for coverage effective January 1, the date the GOP-inspired requirement to have health insurance kicks in.

The reason Republicans once liked health insurance exchanges is that in theory they will facilitate choice and competition, which should bring down the cost of coverage. If the exchanges work as planned — and as ObamaCare stipulates — consumers will be able to make apples to apples comparisons among health plans and pick the one that seems to offer the best value.

Based on news out of Oregon last week, there is reason to believe that the theory is holding up and that consumers will indeed benefit from price transparency that until now had never been available to the layman.

Health insurers in Oregon were required to tell the state last week how much they planned to charge for the policies they would sell this coming fall on “Cover Oregon,” the name of the state’s exchange.

As reported in the Oregonian, when the state insurance department published the insurers’ proposed rates in a chart, some of companies that had planned to charge the highest rates wasted no time in saying said they had made a serious mistake and would quickly revise their offerings with lower rates.

The charts were made available online Thursday. Within 24 hours at least two insurers asked for a do-over, according to the newspaper. One of the companies promising to resubmit new rates was Family Care Health Plans, which had said it would charge $422 a month to cover a 40-year-old non-smoker in Portland, two and a half times as much as another insurer said it would charge for the exact same policy.

Another insurance company, Providence Health Plan, said that, oops, it had made a mistake in its cost projections and would reduce its planned rates by 15 percent. A spokesman for Family Care blamed its sky-high rates on overly pessimistic underwriters and said that, upon reflection (and after seeing what competitors planned to charge) it would cut its rates even more than 15 percent.

For years, insurance companies have been able to charge essentially whatever they wanted because there has been no organized marketplace for individuals and small business and no requirement that insurers provide information in a way that would enable us to make truly informed decisions. One of the most popular provisions of ObamaCare changes that by requiring insurance carriers to provide plan descriptions in a standardized format and in language we can understand. They also have to tell us how much our monthly premiums will be and provide examples of how much we’ll have to pay out of our own pockets if we get sick — or pregnant.

ObamaCare critics have charged that the rates insurers will be charging on the exchanges will be much higher than what insurers charge today because of other consumer protections in the law, such as the one that makes it unlawful for insurance companies to refuse to sell someone a policy because of a pre-existing condition.

While it’s possible that some people will have to pay more — especially those with low-benefit, high-deductible plans that are soon to be abolished — most folks who have to buy coverage without an employer’s help will likely pay less, thanks to income-based tax credits that will be available for the first time. As the Oregonian noted, at least half the people who buy coverage on the state’s exchange will qualify for a tax credit. And they’ll be able to determine quickly how much the tax credit will reduce their premiums simply by providing income information on the exchange website.

Americans in every state can look forward to these GOP-inspired consumer benefits and protections and the very real possibility of lower premiums, assuming ObamaCare goes forward. Which, of course, it won’t if House Republicans’ 40^th attempt to repeal ObamaCare does indeed prove to be the charm.

'Chemicals of Concern' list still wrapped in OMB red tape

2013-05-15T08:27:55-04:00

For anyone anxious about toxic chemicals in the environment, Sunday marked a dubious milestone.

It has been three years since the “chemicals of concern” list landed at the White House Office of Management and Budget. The list, which the Environmental Protection Agency wants to put out for public comment, includes bisphenol A, a chemical used in polycarbonate plastic water bottles and other products; eight phthalates, which are used in flexible plastics; and certain flame-retardant compounds called polybrominated diphenyl ethers, or PBDEs.

The EPA wants to highlight these chemicals because “they may present an unreasonable risk to human health and/or the environment,” the agency says.

But any such listing must first be vetted by the OMB’s Office of Information and Regulatory Affairs, OIRA.

The EPA proposal arrived at OIRA on May 12, 2010. There it remains — a symbol, some say, of a broken regulatory system.

“It’s far past time for the OMB to conclude its review of the EPA’s proposal to list chemicals of concern,” Sen. Frank Lautenberg, D-N.J., said in a statement to the Center for Public Integrity. “Americans deserve access to information about the chemicals found in products throughout their homes that might pose a risk to their health.”

In a statement, OMB spokeswoman Ari Isaacman Astles wrote, “The Administration is committed to chemical safety and when it comes to complex safety rules, it is critical that we get them right.”

An EPA spokeswoman said only that the agency’s list, which has been challenged by companies such as ExxonMobil and Dow Chemical, “remains in interagency review.”

By executive order, OIRA is supposed to review proposed rules within 90 days of receiving them, with the possibility of a single, 30-day extension. That’s four months, maximum.

Why has the chemicals of concern list been at OIRA for three years? No one is saying.

Yet in a draft of an upcoming law review article, former EPA official Lisa Heinzerling, a law professor at Georgetown University, offers some clues.

Heinzerling lays some blame on recently departed OIRA director Cass Sunstein, now teaching at Harvard Law School. In his new book, “Simpler: The Future of Government,” Sunstein makes clear “how much power he wielded” at OIRA — with the authority to make sure that some rules " ‘never saw the light of day, ’ ” Heinzerling writes.

Sunstein did not respond to an invitation to comment. President Obama has nominated Howard Shelanski, director of the Federal Trade Commission’s Bureau of Economics and a former law clerk for U.S. Supreme Court Justice Antonin Scalia, to replace him at OIRA.

Problems at the office have become entrenched, Heinzerling argues.

“Many outside observers believe that there is in fact a deadline for OIRA review,” she writes. “Not only is there no deadline for OIRA review, but OIRA itself controls the agency’s ‘requests’ for extensions. In this way, it comes to pass that rules can remain at OIRA for years.”

EPA rules seem to draw extra scrutiny. “EPA receives more sustained attention from OIRA than any other federal agency,” Heinzerling writes. Fifteen of the 22 EPA rules under review have been at OIRA for more than a year.

What’s so threatening about the chemicals of concern list?

The American Chemistry Council, a trade group, did not respond to requests for comment.

In a statement to the Center last year, however, the group said, “We are concerned that EPA is creating a list of 'chemicals of concern' for potential regulatory action, without establishing consistent, transparent criteria by which these chemicals are selected. ... It is OMB’s job to closely review the proposed action and consider any negative economic impact; we appreciate that officials are taking the time they need to fully study the matter.

“Failure to fully review such agency proposals undermines public and private sector confidence in the regulatory process and can seriously harm American innovation and jobs.”

Richard Denison, a senior scientist at the Environmental Defense Fund, said publication of the list would not restrict commerce and is within the EPA’s authority.

“OIRA has deprived the public of the right to even comment by refusing to allow EPA to issue the proposed rule,” Denison said. “The debate is being squelched by an office that doesn’t have any real scientific expertise and certainly shouldn’t have the ability to override the authority that Congress gave EPA.”

ICIJ tax havens investigation pushes countries to launch investigations

2013-05-10T14:55:11-04:00

It appears our international investigation of offshore tax havens may have prompted government tax authorities to go public with their own data digging operations in pursuit of international tax evasion.

On Thursday, the U.S. Internal Revenue Service, along with British and Australian tax authorities, jointly announced that the three nations “have each acquired a substantial amount of data revealing extensive use of such entities [tax havens] organized in a number of jurisdictions including Singapore, the British Virgin Islands, Cayman Islands and the Cook Islands.” These are roughly the same jurisdictions being investigated using a similar amount of leaked data by the International Consortium of Investigative Journalists (ICIJ), the international arm of The Center for Public Integrity.

As the Guardian reported in a page one story on Friday, more than 100 of Britain's richest people have been caught hiding billions of pounds in secretive offshore havens, sparking an unprecedented global tax evasion investigation. George Osborne, the British chancellor, warned the alleged tax evaders, and a further 200 accountants and advisers accused of helping them cheat the taxman: "The message is simple: if you evade tax, we're coming after you." The IRS said in a statement, "Our cooperative work with the United Kingdom and Australia reflects a bigger goal of leaving no safe haven for people trying to illegally evade taxes.”

Drawing from a leaked trove of 2.5 million digital files, ICIJ led what may be the largest cross border journalism collaboration in history, publishing more than 30 reports in dozens of countries. The ICIJ investigation into tax havens has become a major political issue in Europe, and the results of our investigation have been cited more than 9,000 times by media organizations worldwide.

ICIJ’s investigation opens the secrets of more than 120,000 offshore companies and trusts and nearly 130,000 individuals and agents, exposing hidden dealings of politicians, con artists, and the mega-rich in more than 170 countries. Secrecy for Sale: Inside the Global Offshore Money Maze is ICIJ’s largest investigative reporting project in its 15-year history.

Including the Guardian and the BBC in the U.K., ICIJ has worked with 86 investigative journalists from 46 countries and used data mining software and old fashioned shoe leather reporting to unveil the previously hidden but thriving world of fraud, tax dodging and political corruption. To analyze the documents, ICIJ collaborated with journalists from Le Monde in France, Süddeutsche Zeitung and Norddeutscher Rundfunk in Germany, The Washington Post, the Canadian Broadcasting Corporation (CBC) and 31 other media partners around the world.

Since publishing our tax haven reports, various federal agencies and foreign governments, including the IRS, have asked The Center for Public Integrity to give them the ICIJ leaked data. In each case, based on our long-standing policy, we have declined to turn over such material. “The ICIJ is not an arm of law enforcement and is not an agent of the government. We are an independent reporting organization, served by and serving our members, the global investigative journalism community and the public.”

According to the Guardian, U.K. tax authorities have had the offshore data for 3-4 years. It was leaked to authorities by a whistleblower in 2009. No reason was given for the delay in announcing their investigation of that data until now, only after ICIJ started publishing its own investigative reporting.

We expect our international investigation to continue through the next year.

Until next week,

Bill

Benghazi debate sparks little formal lobbying

Benghazi,Libya — 2013-05-09T20:23:11-04:00

Benghazi is a non-starter for professional lobbyists.

Despite this week's politicized fray on Capitol Hill, just two organizations have specifically lobbied the federal government about the Libyan city in the months after terrorists there killed four Americans, including U.S. Ambassador Christopher Stevens, according to disclosure documents filed with the U.S. Senate and House of Representatives.

Of late, the families of people killed in Libya-related terrorist attacks from the 1980s brought to bear more formalized lobbying pressure, federal records indicate.

Among lobbying groups focused on Benghazi, ACT! for America spent $60,000 from October through March lobbying Congress on a variety of issues that include support for "legislation establishing a select committee to investigate and report on the attack on the United States consulate in Benghazi, Libya," congressional disclosures show.

Republicans in particular have loudly criticized the Obama administration — former Secretary of State Hillary Clinton, specifically — for what they consider failures to adequately protect the U.S. diplomatic mission in Benghazi. They've also accusing Democrats of hiding details about the incident. State Department official Gregory Hicks joined in the chorus of criticism while under oath before a House committee investigating the matter.

But this outrage has failed to materialize into a more formal lobbying effort, in which organizations and special interests invest big dollars to advocate for a specific action or result.

"It's surprising, but even more than that, it's disturbing," said Guy Rodgers, ACT! for America's executive director, when informed his group is all but alone in terms of formally lobbying the federal government on Benghazi-related issues.

Rodgers cites "a failure by the establishment press" to properly report on the aftermath of the killings as a major reason why more lobbies haven't pressured lawmakers through formal lobbying channels on Benghazi-related matters.

"If you're an organization, or a lobbyist paid to do things, you're looking at what people are paying attention to," Rodgers said. "The establishment press needs to start being a watchdog, not a lapdog."

ACT! for America describes itself as a "nonpartisan, non-sectarian organization whose mission is to give Americans concerned about national security, terrorism and the threat of radical Islam, a powerful, organized, informed and mobilized voice."

Virginia-based security company Triple Canopy, Inc., also noted lobbying on Benghazi among several other issues in a report covering July through September of last year when it spent $129,000 overall on federal-level lobbying.

While the firm's filing doesn't indicate whether its efforts pertained to the Benghazi attack, the company confirmed in a statement to the Center for Public Integrity that its lobbying was attack-related.

"Following last year’s attack on the U.S. Consulate in Libya, Triple Canopy took the initiative to suggest a series of security solutions to protect U.S. diplomats and others who serve overseas," the statement said, offering no details on what its suggestions involved.

Since Sept. 11, 2012, when the Benghazi attack took place, about a dozen companies and organizations have reported lobbying lawmakers and federal agencies about Libya in general, congressional disclosures show.

None their efforts, however, appear related to the events in Benghazi.

Marathon Oil, for example, lobbied the government on petroleum issues in Libya. The National Foreign Trade Council lobbied on U.S.-Libya relations. And Halliburton pressed the government on Libyan trade issues.

Tax authorities move on leaked offshore documents

2013-05-09T15:10:47-04:00

The U.S., British and Australian authorities are working with a gigantic cache of leaked data that may be the beginnings of one of the largest tax investigations in history.

The secret records are believed to include those obtained by the International Consortium of Investigative Journalists that lay bare the individuals behind covert companies and private trusts in the British Virgin Islands, the Cook Islands, Singapore and other offshore hideaways.

The hoard of documents obtained by ICIJ represents the biggest stockpile of inside information about the offshore system ever gathered by a media organization.

But the British tax authority claims it has even more data.

Continue reading at ICIJ.org.

Authorities in the U.S., U.K. and Australia announce new international tax haven investigation

United Kingdom — 2013-05-09T14:49:35-04:00

The International Consortium of Investigative Journalists (ICIJ), a project of the Center for Public Integrity, today acknowledged the announcement that U.S., British and Australian tax authorities are working with a gigantic cache of leaked data that may be the beginnings of one of the largest tax investigations in history.

The hoard of documents obtained by ICIJ represents the biggest stockpile of inside information about the offshore system ever gathered by a media organization.

The U.S. Internal Revenue Service said in a statement the three nations “have each acquired a substantial amount of data revealing extensive use of such entities organized in a number of jurisdictions including Singapore, the British Virgin Islands, Cayman Islands and the Cook Islands.”

It said the data “contains both the identities of the individual owners of these entities, as well as the advisors who assisted in establishing the entity structure.”

The statement said early analysis had uncovered information that may be relevant to tax administrations of other jurisdictions that they would be willing to share, at the request of other countries.

“This is part of a wider effort by the IRS and other tax administrations to pursue international tax evasion,” said IRS acting commissioner Steven T. Miller.

"Our cooperative work with the United Kingdom and Australia reflects a bigger goal of leaving no safe haven for people trying to illegally evade taxes.”

British tax authorities claim they have even more data than that unearthed by ICIJ.

The total size of the ICIJ files, measured in gigabytes, is more than 160 times larger than the leak of U.S. State Department documents by Wikileaks in 2010.

A statement from the British tax office puts the size of the data obtained by the three tax authorities at 400 gigabytes, compared to the 260 gigabytes gathered by the ICIJ.

“The 400 gigabytes of data is still being analyzed but early results show the use of companies and trusts in a number of territories around the world including Singapore, the British Virgin Islands, the Cayman Islands and the Cook Islands,” the British tax office statement said.

“The data also exposes information that may be shared with other tax administrations as part of the global fight against tax evasion.”

Last month, the ICIJ and 37 media partners began reporting on more than 2.5 million files that include the names of thousands of American, Australian and British citizens as well as families and associates of long-time despots, Wall Street swindlers, Eastern European and Indonesian billionaires, Russian corporate executives, international arms dealers and a sham-director-fronted company that the European Union has labeled as a cog in Iran’s nuclear-development program.

The files leaked to ICIJ provide facts and figures — cash transfers, incorporation dates, links between companies and individuals — that illustrate how offshore financial secrecy has spread aggressively around the globe, allowing the wealthy and the well-connected to dodge taxes and fueling corruption and economic woes in rich and poor nations alike.

The records detail the offshore holdings of people and companies in more than 170 countries and territories.

The ICIJ publication sparked government inquiries, resignations and a new sense of urgency from European leaders to fight tax evasion. A few days after the articles ran, Europe’s five biggest economic powers — Britain, France, Germany, Italy and Spain — announced they would begin regularly exchanging banking and tax information as a way of identifying tax dodgers and other financial wrongdoers.

Secrecy for Sale: Inside the Global Offshore Money Maze, ICIJ’s largest investigative reporting project in its 15- year history, is available at www.icij.org/offshore.

The stories released in April by the ICIJ and its partner outlets around the world are the first installment in an ongoing series. More ICIJ reports will be published throughout the year as ICIJ and its partners continue the investigation.

The files illustrate how offshore financial secrecy has spread aggressively around the globe, allowing the wealthy to avoid taxes, fueling corruption and economic woes in rich and poor nations. The current banking crisis in Cyprus is one example of how the offshore system can impact an entire country’s financial stability.

The ICIJ worked with 86 investigative journalists from 46 countries and used data mining software and old fashioned shoe leather reporting to unveil the previously hidden but thriving world of fraud, tax dodging and political corruption.

To analyze the documents initially, ICIJ collaborated with journalists from The Guardian and the BBC in the U.K., Le Monde in France, Süddeutsche Zeitung and Norddeutscher Rundfunk in Germany, The Washington Post, the Canadian Broadcasting Corporation (CBC) and 31 other media partners around the world.

Among the countries included in the data are: Argentina, Armenia, Australia, Azerbaijan, Belgium, Brazil, Bulgaria, Canada, Chile, Colombia, Costa Rica, Croatia, Denmark, Finland, France, Georgia, Germany, Greece, India, Ireland, Italy, Japan, Kosovo, Latvia, Malaysia, Mexico, Moldova, Netherlands, New Zealand, Nigeria, Norway, Pakistan, Paraguay, Philippines, Romania, Russia, Serbia, Singapore, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Thailand, Ukraine, United Kingdom, United States, and Venezuela.

About the International Consortium of Investigative Journalists (ICIJ)

The International Consortium of Investigative Journalists is a global network of reporters who collaborate on in-depth investigative stories. Founded in 1997, ICIJ was launched as a project of the Center for Public Integrity to extend the Center’s style of watchdog journalism, focusing on issues that do not stop at national frontiers. With 160 members in more than 60 countries, ICIJ is dedicated to investigating cross-border crime, corruption, and the accountability of power. Backed by the Center and its computer-assisted reporting specialists, public records experts, fact-checkers and lawyers, ICIJ reporters and editors provide real-time resources and state-of-the-art tools and techniques to journalists around the world.

About the Center for Public Integrity

The Center for Public Integrity is a nonprofit, nonpartisan, and independent digital news organization specializing in original investigative journalism on significant public policy issues. Since 1990, the Washington, D.C.-based Center has released more than 500 investigative reports and 17 books to provide greater transparency and accountability of government and other institutions. It has received the George Polk Award and more than 50 other major journalism awards, including honors from Investigative Reporters and Editors, Online News Association, Overseas Press Club, Society of Environmental Journalists, and Society of Professional Journalists.

MEDIA CONTACTS:

Emily Lenzner Emily@lenznerpr.com / 202.997.7776

Maureen Higgins Mhiggins@scottcircle.com / 202.207.3662

Sheldon Adelson's anti-cancer campaign

2013-05-09T14:01:36-04:00

As casino mogul Sheldon Adelson buoyed Republican politicians with unprecedented riches, he quietly funded warfare on a decidedly apolitical enemy: cancer.

Adelson and his wife personally fueled their little-known private foundation — The Dr. Miriam and Sheldon G. Adelson Medical Research Foundation — with about $4.3 million during 2011, according to documents filed with the Internal Revenue Service.

The Dr. Miriam and Sheldon G. Adelson Medical Research Foundation in turn disseminated most of the money to more than a dozen hospitals, laboratories and universities for medical research into cancer, as well as inflammatory bowel disease and neural repair and rehabilitation, IRS documents indicate.

Donation recipients in 2011 include The Rockefeller University in New York ($500,000), Tel Aviv University in Israel ($457,608), Harvard Medical School ($280,328), the UCLA Foundation ($280,000) and Johns Hopkins University ($200,000).

Such money is a fraction of the more than $93 million the Adelsons bestowed on pro-Republican super PACs during 2011 and 2012, ahead of last year's national elections. Nearly half of that amount went to a pair of conservative powerhouses: American Crossroads, the super PAC co-founded by Karl Rove received $23 million, while pro-Mitt Romney super PAC Restore Our Future took in $20 million.

But Adelson's medically focused giving further illuminates the complex and diverse donation habits of the nation's top super PAC patron, whose Las Vegas Sands gambling empire has made him one of the world's most wealthy individuals.

Consider that the Adelsons also operate a much larger, separate nonprofit foundation, the Adelson Family Foundation, that's contributed $191 million to primarily pro-Israel and Jewish cultural, educational and research organizations. Most went to Birthright Israel, a charity that offers free 10-day trips to Israel to Jews between age 18 and 26.

Yet another Adelson-led 501(c)(3) charitable foundation, the Dr. Miriam and Sheldon G. Adelson Educational Institute, funds an "extensive secular and Judaic studies curriculum" for school-aged children at the Dr. Miriam and Sheldon G. Adelson Educational Campus in Las Vegas.

The educational foundation's latest filing with the IRS shows it raised more than $8 million from July 2011 to June 2012, although it doesn't state where the money came from. The organization reported more than $48 million in assets but more than $49 million in liabilities, leaving it about $800,000 in the red through last June, according to its IRS filing.

Meanwhile, the Dr. Miriam and Sheldon G. Adelson Charitable Trust, which is also a 501(c)(3) nonprofit, had nearly $80 million in assets through the end of 2011, IRS filings show. Most of the more than $19.4 million it spent that year went to other Adelson-controlled foundations.

But the Dr. Miriam and Sheldon G. Adelson Charitable Trust did report giving $500,000 in 2011 to the George W. Bush Foundation, which funded the design and construction of the newly opened George W. Bush Presidential Library and Museum near Dallas.

The Las Vegas-based Dr. Miriam and Sheldon G. Adelson Clinic for Drug Abuse Treatment & Research Inc., likewise organized as a nonprofit charity, reported about $133,000 in net assets through the end of 2011, IRS records show.

As for the Dr. Miriam and Sheldon G. Adelson Medical Research Foundation, it's taken in about $58.9 million — mostly from the Adelsons themselves — from its formation in mid-2006 through the end of 2011. It spent about $58.5 million during the same time period, according to IRS records.

After spending more than $24.4 million in 2007, the research foundation's giving has waned, dropping to $4.2 million in 2010 before inching up in 2011.

Sheldon Adelson's office in Las Vegas directed questions to Kenneth Fasman, the foundation's chief science officer, who declined to comment on the Massachusetts-based foundation's work and finances during 2012 and 2013.

"The Adelsons prefer a relatively low profile in this area," Fasman said.

The foundation's website offers some general details on its purpose and mission.

"Instead of funding individual experiments that cautiously advance progress, we ask investigators who receive funding to interact with peers at many institutions within the context of creative and risk-taking approaches that may yield much more than the incremental progress engendered by many funding organizations," it states.

Thank you for your support

2013-05-09T14:04:12-04:00

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Washington fury over military sexual assaults hits the Pentagon

2013-05-08T10:35:37-04:00

A storm of outrage over sexual assaults within the U.S. military struck the Pentagon with intense fury on May 7, with public expressions of regret by top military leaders about a rising number of reported assaults and blunt, quick condemnation from members of Congress and President Obama.

The tempest was stirred primarily by the Defense Department’s disclosure that 26,000 military personnel said in a recent confidential survey that they had been the victims of unwanted sexual contact in 2012, a term used to describe incidents ranging from sexually-related touching to rape.

That represents an alarming average of more than 70 episodes a day, and a 36 percent increase since 2010, when the last survey was performed. The victims amount to 6.1 percent of all active-duty women and 1.2 percent of the men in the 2.2 million member American military.

The president, when asked about the report during a press conference with the visiting South Korean president, seized the topic forcefully. “If it’s happening inside our military, then whoever carries it out is betraying the uniform that they’re wearing,” he said. “And they may consider themselves patriots, but when you engage in this kind of behavior that’s not patriotic — it’s a crime. And we have to do everything we can to root this out.”

His voice rising, Obama said: “I have no tolerance for this ... I expect consequences. So I don’t want just more speeches or awareness programs or training but, ultimately, folks look the other way. If we find out somebody is engaging in this stuff, they've got to be held accountable -- prosecuted, stripped of their positions, court-martialed, fired, dishonorably discharged. Period. It's not acceptable.”

Anger was already widespread on Capitol Hill because an Air Force lieutenant colonel who directed the Air Force’s sexual assault prevention branch was himself arrested on Sunday on charges of sexually assaulting a woman in a Virginia parking lot. That arrest followed a congressional inquiry into repeated sexual assaults of female recruits by Air Force instructors at a base in Texas, and a growing controversy over the ability of military commanders to vitiate punishments for military personnel in their units who are accused of sexual misconduct.

“This is a cultural issue, it is a leadership issue, it’s a command issue,” said Defense Secretary Chuck Hagel at a press conference where the report was released. He vowed to hold accountable leaders “at every level in the chain of command” for the “climate” within their units, and said “ultimately eliminating sexual harassment and sexual assault should be our goal.”

One of the report’s most troubling disclosures was that many service personnel remain afraid of reprisals for reporting sexual assaults despite recent efforts by the Pentagon officials to encourage such reports — suggesting a widespread belief that the military’s culture generally tolerates, rather than punishes, such conduct.

Of the large number who reported such assaults in the survey, for example, only 3,374 made their allegations formally, a 6 percent increase from 2011. Forty-seven percent of the women who experienced unwanted sexual contact indicated fear of retaliation or reprisal was their reason for not formally reporting the episodes, and 43 percent said they had heard about negative repercussions for others who had gone ahead.

Those fears, moreover, proved to be well-founded. Of the women who did file complaints, 31 percent indicated they experienced “social retaliation” while 26 percent said they experienced "a combination of professional retaliation, social retaliation, administrative action, and/or punishments," the report said.

Partly as a result, “it’s a vastly unreported crime,” Army Maj. Gen. Gary Patton, director of the Pentagon’s Sexual Assault Prevention and Response Office, acknowledged to reporters. Nonetheless, both he and Hagel said they saw a bit of encouraging news in the increase in reported cases in the last year. “We have more victims coming forward for medical care and more cases [referred to the military justice system],” Patton said.

“It is clear the department still has much more work to do," said Hagel, who Obama said he had instructed “to go at this thing hard.” Hagel added, "This crime is damaging this institution ... There are thousands of victims in the department, male and female, whose lives and careers have been upended, and that is unacceptable."

The assault reports were considerably higher when service personnel were asked if they had been assaulted at any point in their career, not just in 2010. In that context, 23 percent of women and 4 percent of men reported being assaulted. Active duty assignments were the most threatening, with considerably fewer episodes among women in the National Guard and reserves.

Despite the size of the problem, the report found that only 880 of the 3,288 military and civilian suspects identified in sexual assault complaints last year had been disciplined for that misconduct, with more than half of those being charged in a court-martial. Some cases were dismissed because the suspects were missing, dead, or were foreign civilians or members of foreign militaries. But in other cases, investigators did not bring the cases to a conclusion, commanders decided that evidence was lacking or the allegations were false, or punishments were meted out for nonsexual misbehavior.

The Pentagon’s report acknowledged that military authorities weren’t always prepared to handle sexual assault cases. In several cases reported by the Navy, for example, there were delays in administering rape kit tests and in one case the test was administered by a health care provider who wasn’t trained or certified in the procedure.

Hagel ordered a series of steps and reviews to increase the accountability of officers for what happens under their commands. He gave commanders until July 1 to inspect workspaces to make sure they are free of degrading materials, and he said the four military service chiefs have until Nov. 1 to recommend ways to assess officers and hold them accountable for their command climates.

Gen. Patton said that the assessments — which would include how well sexual assault prevention and victim care principles are incorporated into officers’ commands — could become part of the evaluation process for promotions.

The Defense Department also plans to hold meetings with sexual assault victims to talk about their experiences in reporting the crimes committed against them. And it has already created an expedited system of transfers for victims of sexual assault so they can escape their tormentors. Commanders have 72 hours to approve or turn down the request, and approved 216 of 218 of these requests last year, the report said.

Speaking about the arrest on sexual assault charges May 5 of Air Force Lt. Col. Jeffrey Krusinski, the service’s sexual assault prevention branch chief, Hagel said “we’re all outraged and disgusted by these very troubling allegations.” Air Force officials said they relieved Krusinski of his position as soon as they learned of the arrest; efforts to reach him for comment were not successful.

On Capitol Hill, House and Senate committees seized on the arrest as a sign of systemic problems. “While under our legal system everyone is innocent until proven guilty, this arrest speaks volumes about the status and effectiveness of DOD’s efforts to address the plague of sexual assaults in the military,” Senate Armed Services Committee Chairman Carl Levin, D-Mich., said at the opening of a hearing involving the Air Force’s leadership.

Gen. Mark Welsh, the service's chief of staff, told Levin’s panel that he and Air Force Secretary Michael Donley were "appalled" and that the Air Force has requested jurisdiction over Krusinki's case from the Arlington County police.

At the hearing, Sen. Kirsten Gillibrand, D-N.Y., raised her voice at Donley, saying that the case suggested a “failing in training and understanding of what sexual assault is” within the Air Force. "This is not good enough," said Gillibrand, who has been advocating removal of sexual assault cases from the chain of command to encourage more victims to report their crimes with less fear of retribution. "I am highly concerned that so few victims feel they could ever receive justice that they won't report,” she said.

Sen. Claire McCaskill (D-Mo.), questioned why Krusinski was chosen to lead the Air Force sexual assault prevention unit, wondering what sort of background check was conducted. “It is hard for me to believe that someone would be accused of that behavior by a complete stranger and not have anything in their file that would indicate a problem in that regard,” she told Welsh. “Have you looked at his file to determine that his file was absolutely pristine?

Welsh said he examined Krusinski's record, spoke to his supervisor, and found nothing that disqualified him for his postition.

McCaskill, perhaps speaking for all her colleagues, told Welsh, “I will be watching very carefully who is selected to replace Lt. Col. Krusinski because I think it is one of those time when you’ll be able to send a message, and I think it’s important we do it.” She already is holding up the nomination of Air Force Lt. Gen. Susan Helms to be vice commander of the U.S. Space Command while awaiting more information about Helms' decision to overturn a jury conviction in a sexual assault case.

As a result of congressional furor over a similar case, Hagel urged Congress last month to eliminate a commander's power to overturn a court martial, except for certain minor offenses, and require a written explanation for any adjustments in sentences. He reiterated at his news conference Tuesday that he wants Congress to act on his recommendations.

Controversy ensnaring governor raises new questions about Virginia laws

STAR SCIENTIFIC, INC. — 2013-05-23T13:15:10-04:00

Editor's note, May 23 —A local Virginia prosecutor is examining whether Gov. Robert McDonnell violated state disclosure laws by failing to report a 2011 gift from a campaign donor. The investigation, first reported Wednesday by the Richmond Times-Dispatch, began in November at the request of Attorney General Ken Cuccinelli

A series of revelations and stinging media reports about Virginia Gov. Robert McDonnell’s relationship with a corporate executive is bringing new attention to the state’s forgiving accountability laws — a subject highlighted last year by the State Integrity Investigation.

The root of the uproar is a $15,000 catering tab for the wedding of McDonnell’s daughter back in 2011, quietly paid by Jonnie Williams Sr., the CEO of Star Scientific, a Glen Allen, Va.-based dietary supplement company. Now the news, first reported in late March by the Washington Post, is dominating conversation in the state’s political circles and raising questions about Virginia’s liberal allowances for gifts to politicians: there is no limit.

Through a series of reports, the Post has detailed a close relationship between Williams and McDonnell’s family. Three days before the wedding, McDonnell’s wife, Maureen, flew to Florida to promote Star Scientific’s new product at a gathering of scientists and investors. Three months later, the company held its launch party for the product at the governor’s mansion. The McDonnells have also vacationed at Williams’ home, flown on his corporate jet and received more than a hundred thousand dollars to the governor’s campaign and PAC.

Published reports indicate that federal officials are interested, but the relationship may have stayed entirely within the bounds of Virginia’s ethics laws. The main question is whether McDonnell should have disclosed the $15,000 catering gift. He has said it was a present to his daughter (while Virginia officials must report any gift over $50, money given to family members is not subject to disclosure). The Post unearthed documents showing that the governor signed the catering contract and that an overpayment to the caterer was returned to Maureen McDonnell.

Whether or not the governor violated any rules or laws, the controversy says more about the laxity of Virginia’s ethics laws, according to John McGlennon, chairman of government department at the College of William & Mary.

“The ironic aspect of it is that because Virginia’s ethics regulations are so loose, relatively few people have actually run afoul of them,” McGlennon said. “They exempt so much, they don’t impose limits or really restrict the source of either contributions or gifts, that it’s pretty hard to run afoul of the law itself.”

As the State Integrity Investigation’s summary for Virginia points out, the allowance for unlimited gifts is just the beginning. The project is a state-by-state ranking of government transparency and accountability released last year by the Center for Public Integrity, Global Integrity and Public Radio International. Virginia is one of nine states without an ethics commission and one of four without limits on campaign contributions. In fact, Virginia’s ethics laws are among the least restrictive in the nation, a dubious distinction that helped place it 47^th out of 50 states with a grade of F.

Due to the paucity of oversight, McGlennon said “there’s very little other than self-policing,” he said. “Unless you see some smoking gun, you just take people’s word for it.”

Without an ethics commission or other oversight body, the task of investigating falls to law enforcement, which rarely results in much action, he said.

Last week, the Post and the Associated Press reported that the FBI is now looking into whether McDonnell gave any special dispensation to Star Scientific or to Williams. The inquiry is an outgrowth of an investigation into some of the company’s securities transactions.

McDonnell has denied doing any favors for the company in return for the gifts.

The scandal has reached into the governor’s cabinet as well. In April, Attorney General Ken Cuccinelli, who is running for governor on the Republican ticket this year, amended his own disclosure forms to include gifts from Williams dating back to 2009. Secretary of the Commonwealth Janet Vestal Kelly amended her disclosure reports to include travel gifts from Star Scientific and the South Carolina Republican Party.

McDonnell and Cuccinelli each said they would be open to tightening the state’s disclosure laws to require reporting of gifts to family members. In response to the scandal, Terry McAuliffe, the Democratic candidate for governor, has said he would propose limiting gifts to $100 per donor. The episode has led several local newspaper editorial boards, including the News Leader and The Daily Progress, to call for more robust gift rules. In an editorial last month, the Post said the lack of disclosure for gifts to family members is a “whopper” of a loophole that enables “secret cash payments” to public officials.

10 years after landmark study, progress and challenges remain for youth mental health treatment

2013-05-08T06:09:01-04:00

In 2010, the federal Office of Juvenile Justice Delinquency Prevention released results from the first-ever nationally representative survey of youth confined in juvenile justice facilities. This Survey of Youth in Residential Placement (SYRP) offered a treasure trove of information about the mental health and substance abuse problems faced by confined youth and the treatment provided to them.

However, because interviews were conducted back in 2003, the SYRP findings beg the question: What changes have occurred since 2003 in mental health care for confined youth?

Unfortunately, few national data on the breadth or quality of mental health treatment in juvenile facilities have become available since 2003. Yet there is no doubt that awareness of mental health needs among delinquent youth has grown substantially, and there are many signs that services have improved.

Carefully constructed mental health screening and assessment tools, once rare, are now used routinely in juvenile detention and correctional facilities nationwide. And either voluntarily or in response to conditions of confinement lawsuits, many states have hired additional mental health professionals and substantially expanded counseling and treatment inside their juvenile facilities.

“I think that [state facilities] are better equipped to work with the mental health population today,” says Ned Loughran, executive director of the Council of Juvenile Correctional Administrators, a membership organization for state youth corrections agency heads. “States are using the results of the screening and assessments to build treatment plans,” Loughran says. “Is it perfect? No, it’s not perfect. But it’s far better than it was 10 or 15 years ago.”

However, experts caution that serious gaps remain in treatment for youth in confinement. Front-line workers in many facilities are not trained to understand or respond appropriately to young people with mental health problems, they say. And widespread reports of violence and maltreatment in juvenile facilities suggest that many confined youth continue to be housed in unhealthy environments that are likely to exacerbate their underlying mental health conditions.

Recognition of the Mental Health Challenge in Juvenile Justice

Twenty years ago, a national study on mental health in our nation’s juvenile justice systems yielded an alarming conclusion: “For the most part, current mechanisms and instruments for systematically screening and evaluating these youth are nonexistent and current treatment approaches are ineffective.”

“We still know very little about the mental health needs of youth who are involved in the juvenile justice system,” found the 1992 study, published by the National Coalition for the Mentally Ill in the Criminal Justice System. In addition, the study said, “The services now typically available in the juvenile justice system -- when any services are provided -- bear little resemblance to what either common sense or empirical research suggests is likely to be effective.”

In the late 1990s, however, the mental health needs of young people in the delinquency system began to garner more attention. When the Council of Juvenile Correctional Administrators (CJCA) first surveyed state youth corrections agencies about their mental health treatment efforts in 2004, 34 of the 40 states answering the survey had already adopted standardized screening procedures for youth admitted to correctional facilities. Most of these states (23 of 34) employed the Massachusetts Youth Screening Instrument (or MAYSI) – a 15-minute, 53-item questionnaire that can be conducted by front-line staff without counseling credentials to identify young people with signs of mental illness.

However, few states were following best practice in 2004 when it came to in-depth assessments for youth who did demonstrate mental health symptoms. As the 2004 CJCA report stated, “a normed, age-appropriate and validated mental health assessment should be completed by a trained and qualified mental health professional” for all youth with elevated risks for mental illness. Yet most states were assessing youth informally, CJCA found, concluding that, “mental health assessments in juvenile facilities are variable and not usually based on scientifically-sound instruments.”

When CJCA asked states in 2004 what share of youth confined in their facilities was assessed as mentally ill, only 11 states provided data. Thirty-two states were unable to answer.

More and Better Mental Health Screening

CJCA’s most recent survey of mental health treatment in state youth corrections agencies, conducted in 2010, revealed significant progress. By then 43 of 45 states screened all youth for mental illness, with 38 states using the MAYSI screening tool. States also reported using a wide array of validated assessment tools, often in combination -- a significant improvement over 2004. In addition, 22 states in 2010 were able to provide data on the number of youth with mental health problems -- twice as many as in 2004.

“I think there’s an incredibly greater awareness of the fact that many of these youth have mental health issues,” says Joseph Cocozza, director of the National Center for Mental Health and Juvenile Justice (NCMHJJ).

Less clear, however, is whether the increased awareness resulting from improved screening and assessment is resulting in better care for emotionally disturbed youth in custody.

“What we’re worried about now is what do you do about it when you can identify it,” says Thomas Grisso, the University of Massachusetts Medical School professor who developed the MAYSI screening instrument. “How can we get resources to respond to those kids that we can identify as having needs? Ironically, now that we are identifying kids, we’re recognizing the size of the problem.”

On the positive side, there are many indications that mental health treatment provided in juvenile facilities has become both more prevalent and more sophisticated.

CJCA’s most recent survey found that state youth corrections agencies employed more than 2,200 mental health professionals in 2010. While CJCA does not have hard data on mental health staffing or programming trends from previous years, Loughran says that most states have increased their mental health capacity, either by hiring staff, partnering with outside agencies, or both.

Virtually all state corrections agencies now offer cognitive behavioral therapy, which uses role playing and other strategies to help confined youth stay out of trouble. Studies find that this type of therapy – which teaches strategies to improve self-control, defuse tense situations and empathize with others’ feelings – reduces reoffending rates by 25 percent for juvenile and adult offenders alike.

Despite the expanded efforts in mental health assessment and treatment, however, reports of recurring youth-on-youth violence, routine use of solitary confinement, and excessive use of force by facility staff all remain widespread in youth corrections facilities nationwide. In 2011, an Annie E. Casey Foundation report found that 17 states have been successfully sued over conditions of confinement since 2000, and credible reports of maltreatment had emerged from public watchdog agencies or the media in five others states. Since 2011, maltreatment in correctional facilities has been documented in three additional states.

Indeed, in many states, increases in mental health programming have resulted directly from conditions of confinement lawsuits – many of which have ended with consent decrees requiring states to take remedial action. Unfortunately, in several of these states -- including Ohio, New York, and Texas, among others -- recent reports have found continuing widespread violence or maltreatment inside state youth facilities.

A Need for Training

“Most of the staff in most juvenile justice facilities do not have any background or training in mental health or behavioral health issues,” says Cocozza. “The juvenile justice system was not built to be psychiatric centers, but what’s happened over time is that many of these youth are ending up in the juvenile justice system.”

“Some of the things that go on are, honestly, just a lack of understanding among staff,” Cocozza adds. You know, the kid is doing these things and I think he’s being a pain in the ass confronting me, when in fact it’s just a symptom of the kinds of problems the kid is having in terms of mental health.”

In recent years, Cocozza’s organization has been working to improve training on adolescent mental health for non-clinical staff in juvenile facilities. With funding from the John D. and Catherine T. MacArthur Foundation, NCMHJJ developed a train-the-trainer curriculum and delivered it to staff in the eight states participating in the Models for Change project’s Mental Health Juvenile Justice Action Network.

Last year, with additional funding from the federal Office of Juvenile Justice and Delinquency Prevention, NCMHJJ issued a request for proposals to see if other states might want to participate in this training.

The response was overwhelming, Cocozza says, with 46 agencies in 35 different states submitting proposals. After a competitive selection process, the curriculum has now been delivered in 9 of the 10 states selected. In each, NCMHJJ has trained 40 staff, and the participating states have pledged to deliver the training themselves to workers in at least three detention or corrections facilities.

“The staff needs to understand what it is that they’re seeing,” Cocozza says, “and how to respond in an appropriate way that both helps the kid and keeps them safe.”

Fewer kids in state custody, more community-based treatment

Cocozza and Loughran both argue that the behavior management challenge in youth facilities has grown more difficult in recent years as youth with less serious offending histories have been increasingly steered away from secure juvenile detention and corrections facilities. As the Annie E. Casey Foundation documented in a recent data brief, the overall youth confinement rate fell 37 percent nationwide from 1997 to 2010.

“Because the low-risk youths are being diverted from the deep end of the system, and a number of facilities have closed, there’s a concentration of older, more aggressive kids, and a group of kids with serious mental health problems,” Loughran says, “so a number of programs around the country are experiencing a rise in violent behavior.”

“There needs to be improved services, better training, better access to effective services. I think … the screening is getting in place in many instances,”Cocozza adds. “So that’s the place where we’re trying to have an impact.”

Negative ad blitz can't stop Mark Sanford in S.C.

South Carolina,United States — 2013-05-09T17:16:01-04:00

In a district much more Republican than average, former South Carolina Gov. Mark Sanford tonight survived an onslaught from allies of Democrat Elizabeth Colbert Busch, the sister of comedian Stephen Colbert, to win a seat in Congress.

Supporters of Colbert Busch spent nearly $1 million on advertisements criticizing the GOP's scandal-singed Sanford ahead of the special election in South Carolina’s 1st Congressional District, according to a Center for Public Integrity analysis of Federal Election Commission filings. Most of these groups were based in Washington, D.C.

But during the election's final week, Sanford’s allies more than achieved spending parity: They reported making $157,000 in independent expenditures that either advocated for his election or against that of Colbert Busch, according to a Center for Public Integrity analysis of FEC records.

Colbert Busch’s allies reported spending about $152,000 on such independent expenditures during the race's final week.

That 11th-hour rush of cash helped reverse what had, to that point, proven to be anemic outside support for Sanford. Super PACs, political action committees and nonprofit groups overall spent less than $200,000 on ads that expressly advocated for Sanford's election or Colbert Busch's defeat.

Sanford-aligned groups included FreedomWorks, Independent Women’s Voice and the National Right to Life Committee.

Some pro-Sanford ads made the argument that a vote for Colbert Busch equated to a "vote for Nancy Pelosi," the highest ranking House Democrat who hails from San Francisco.

The Democratic Congressional Campaign Committee and the deep-pocketed super PAC known as House Majority PAC, which backs House Democrats, accounted for the bulk of spending on Colbert Busch's behalf.

The DCCC alone reported spending about $460,000 on anti-Sanford independent expenditures while House Majority PAC spent about $430,000 on negative ads, federal disclosures indicate.

The DCCC's Republican counterpart, the National Republican Congressional Committee, decided against supporting Sanford — he cheated on his now-former wife while serving as governor and this week faces charges he trespassed in her house — with financial resources.

Colbert Busch's campaign committee itself raised more than $1.1 million as April 17, according to federal campaign finance records.

Sanford, for his part, had raised about $788,000 as of April 17, including money he spent winning a crowded GOP primary and subsequent primary runoff.

Both those figures will assuredly increase when the campaigns release final financial reports next month.

The vacancy in South Carolina’s 1st Congressional District arose when Republican Rep. Tim Scott was tapped by Gov. Nikki Haley to fill Republican Sen. Jim DeMint’s seat after he resigned to lead the conservative Heritage Foundation think tank in Washington, D.C.

Sanford first served in Congress from 1995 to 2001.

New sexual assault trouble in the Air Force

2013-05-07T12:08:08-04:00

The chief of the Air Force’s Sexual Assault Prevention and Response branch was relieved of his duties after being arrested last weekend on charges of sexually assaulting a woman in a Virginia parking lot. It was the latest in a series of embarrassments for the service related to sexual assaults, and came only days after the Air Force concluded its April observance of Sexual Assault Awareness Month.

The arrest and charging of Lt. Col. Jeffrey Krusinski, 41, of Arlington, Va., for sexual battery prompted Air Force officials to relieve him of his post “pending the outcome of the case,” Lt. Col. Laurel Tingley, an Air Force spokeswoman, said Monday. Arlington County police said they arrested Krusinski after an incident at 12:35 a.m. May 5 in Crystal City, not far from the Pentagon.

“A drunken male subject approached a female victim in a parking lot and grabbed her breasts and buttocks,” the police report of the incident said. “The victim fought the suspect off as he attempted to touch her again and alerted police.”

Krusinski was released later in the day after posting a $5,000 unsecured bond, Arlington County police spokesman Dustin Sternbeck said Monday. A picture taken by police after his arrest portrayed facial injuries. Efforts to reach him on Monday to obtain his comment were unsuccessful.

Secretary of Defense Chuck Hagel's spokesman tweeted on Tuesday morning that Hagel was "outraged, disgusted over arrest of Air Force sexual assault prevention chief on charges of sexual battery."

The arrest followed other incidents that have brought unwanted publicity to the Air Force over sexual assaults and the steps taken by the service to stop it. Congress recently held hearings over how the Air Force reacted when a sexual assault victim came forward two years ago with allegations of misconduct at its Lackland training headquarters near San Antonio, Texas. Instructors were found to have sexually harassed, improperly touched or raped dozens of young female recruits and airmen in what has been called the biggest U.S. military sexual assault scandal in years.

At a House hearing in January, Air Force Chief of Staff Gen. Mark Welsh III called what happened at Lackland “stunning” with “no justifiable explanation.”

Then on Feb. 26, Air Force Lt. Gen. Craig Franklin sparked controversy by overturning a lieutenant colonel’s conviction by courts martial of aggravated sexual assault of a civilian contractor near Aviano Air Base in Italy. Members of Congress angrily criticized the three-star general’s action and called for changes in the Uniform Code of Military Justice, which allows a commanding officer “the absolute power to disapprove the findings . . . and sentences” stemming from a military court proceeding. The case also prompted a Senate Armed Services Committee hearing in March on sexual assaults in the military.

Responding to lawmakers, Defense Secretary Chuck Hagel urged Congress last month to eliminate a commander's power to overturn a court martial, except for certain minor offenses, and require a written explanation for any adjustments in sentences.

At the January hearing, General Welsh said the Air Force had received nearly 800 reports of sexual assault last year – a nearly 30 percent increase over the previous year – even as it worked to curb misconduct.

"The Air Force goal for sexual assault is not simply to lower the number. The goal is zero," he said. "It's the only acceptable objective. The impact on every victim, their family, their friends [and] the other people in their unit is heart-wrenching, and attacking this cancer is a full-time job, and we are giving it our full attention."

Colbert Busch backed by D.C.-based groups

2013-05-07T08:56:26-04:00

Some support Republican Mark Sanford. Far more back Democrat Elizabeth Colbert Busch.

But the political groups that have together poured $1.1 million — 85 percent benefiting Colbert Busch — into South Carolina’s special congressional election are effectively uniform in where they’re from: Washington, D.C.

Only one of the 10 political action committees, super PACs, nonprofit groups or party committees that have urged voters to support or oppose Colbert Busch or Sanford is based in the Palmetto State, and it’s spent a pittance — just $20,000, a Center for Public Integrity analysis of federal spending disclosures through Monday indicates.

And of the more than 20 contractors and vendors these political powerhouses hired to produce television attack ads, print flyers or place telemarketing calls, all but one are located outside South Carolina. The others hail from seemingly everywhere but: North Carolina, Virginia, Alabama, Maryland, Minnesota, Ohio and California, among others, according to federal records.

So as many South Carolina voters hit the polls today to elect their newest 1st District congressional representative, they do so amid a torrent of out-of-state influence that’s increasingly commonplace following the Supreme Court’s Citizens United v. Federal Election Commission decision, which eliminated many restrictions on how outside political groups could raise and spend money to advocate for or against candidates.

Today’s dead-heat special election, which features the state’s philandering former governor against comedian Stephen Colbert’s comparatively unknown sister, could foreshadow outside groups’ activities in regularly scheduled midterms in 2014.

Congressional races in even the sleepiest states or districts could attract unprecedented attention from moneyed national entities that have little inherent connection to locals and primarily care about picking up (or defending) a critical seat for their party or pressing a particular special interest, which in other contests might include guns or energy and environmental issues.

The D.C.-based Democratic Congressional Campaign Committee has so far spent the most during the South Carolina special election, hitting Sanford with more than $458,000 in negative advertising. It has used Great American Media of D.C. and Adelstein | Liston LLC of Illinois to produce its ads, disclosures show.

Democratic super PAC House Majority PAC, meanwhile, has spent nearly $426,000 on broadcasts, direct mail and online ads denouncing Sanford. The super PAC, which is based in D.C., has exclusively used D.C.-based firms to do so: Waterfront Strategies, The Strategy Group, Ralston Lapp Media and Rising Tide Interactive.

Independent Women’s Voice, a conservative 501(c)(4) nonprofit group based in the nation’s capital, has proved to be Sanford’s strongest outside advocate, slamming Colbert Busch with more than $145,000 in broadcast ads, flyers and telephone calls, according to federal records.

Its contractors include Victory Media Group of Illinois, Antietam Communications of Georgia, Creative Associates LLC of Wisconsin and Kasey Kirby of Washington, D.C. And it’s particularly significant since the National Republican Congressional Committee, the DCCC’s GOP counterpart, decided against spending money in the race.

Other D.C.-based outside groups that have made independent expenditures leading up to today’s vote include FreedomWorks Inc. (pro-Sanford), Environmental Majority (pro-Colbert Busch), National Right to Life Political Action Committee (pro-Sanford), National Right to Life Victory Fund (pro-Sanford) and the Votevets.org Action Fund (pro-Colbert Busch).

The Columbia, S.C.-based South Forward IE PAC is the lone outside group not from D.C. to advertise for or against the candidates, spending about $20,200 on television and online ads, as well as door hangers, to oppose Sanford’s candidacy. Its contractors are all from outside of South Carolina.

The Amalgamated Transit Union used a South Carolina firm — Harbinger Publications — to produce its $5,000 worth of pro-Colbert Busch flyers, but the union itself is based in D.C.

It’s possible that outside political groups could spend close to, or as much as the candidates themselves during the race.

As of April 17, Colbert Busch had spent about $942,000, federal records show, while Sanford had spent about $626,000, including money he spent winning the GOP nomination. But Sanford entered the home stretch with slightly more cash on hand (more than $284,000) than Colbert Busch (more than $254,000).

The candidates' spending figures will assuredly have increased by the time post-election disclosures are filed with the Federal Election Commission. Unlike outside political expenditures, which are filed in real time, candidates’ expenditures are not.

IMPACT: Georgia governor signs bills limiting gifts from lobbyists

Georgia,United States — 2013-05-07T06:06:01-04:00

Gov. Nathan Deal brought Georgia in line with nearly every other state in the nation Monday by signing into law the state’s first restrictions on lobbyists’ gifts to lawmakers. Deal’s action puts in place the first major piece of ethics reform Georgia has passed in decades.

Until now, lobbyists in the Peach State had been free to lavish legislators with gifts and junkets of any size. But starting next year, they’ll be forbidden from spending more than $75 per gift.

The previous lack of gift rules was one of many reasons why Georgia ranked dead last a year ago in the State Integrity Investigation, a data-driven ranking of state government accountability and transparency carried out by the Center for Public Integrity, Global Integrity and Public Radio International. In addition to its overall grade of F, Georgia received failing grades in the specific categories of lobbying disclosure and legislative accountability.

“Our success as leaders of Georgia depends heavily on the public’s ability to trust us,” Deal said in a statement after signing the gift ban along with a second bill that deals with campaign finance reporting, primarily at the local level. “Together, these bills constitute a major step in improving ethics, trust and transparency in our state.”

While advocates of tighter ethics laws hailed the legislation as a step in the right direction, the gift cap bill contains several exceptions they believe substantially weaken the provision.

“It’s like you’re starving for a meal and somebody gave you a saltine cracker,” said William Perry, executive director of Common Cause Georgia, an advocacy group.

The bill permits lobbyists to pool their gifts, allowing three colleagues to jointly buy a dinner worth $200, for example. Lobbyists can also continue to shower committees and other group events with gifts of any size, and they can open their wallets to spend freely on travel for lawmakers as long as it is within the country and related to legislators’ official duties. The measure also makes it easier for lawyers to advocate for specific issues without registering as lobbyists, Perry noted.

“It’s chock full of loopholes,” he said.

The bill was the culmination of three years of work by a coalition of liberal and conservative activists, including Common Cause Georgia and Tea Party groups, called the Georgia Alliance for Ethics Reform. State Sen. Josh McKoon, a Republican, had also pushed the slate of reforms. The campaign met with little success until last year, when local news coverage and the release of the State Integrity Investigation pushed ethics reform on to the public agenda.

Last summer, the alliance placed non-binding referenda on primary ballots asking voters whether they supported a limit on lobbyist gifts. The measure won approval from 87 percent of Republicans and 73 percent of Democrats, and a gift cap quickly became a major issue in this year’s brief legislative session, which ended in March.

In January, on the first day of the session, the Senate passed a rule covering only the upper chamber that imposed a $100 gift cap. The leadership in the House then developed its own legislation, which initially included an outright ban on lobbyists’ gifts. But the bill contained several exceptions to the ban, and to the outrage of many Tea Party leaders, broadened the definition of who is a lobbyist in a way that would have required volunteer, citizen activists to register. The final bill is a compromise measure hashed out between the two chambers. The language was rewritten to address the concerns of citizen advocates about the definition of a lobbyist, but it still includes many exemptions to the cap.

Andre Jackson, editorial editor at the Atlanta Journal Constitution, criticized the legislature for waiting until the last minute to work on a compromise. “There was no justifiable reason why slapdash, last-second, basement-room dickering should have been employed,” he wrote in a blog post after the legislature passed the final measure in March. “As a result, what we ended up with, frankly, stinks.”

Debby Dooley, state coordinator for the Georgia Tea Party Patriots, said she’d like to see a limit to the gifts each legislator can receive each year. Advocates would also like to restrict spending on travel.

The final law also restores rulemaking authority to the Government Transparency and Campaign Finance Commission, which oversees ethics laws in the state. That authority had been stripped in 2009, hindering the body’s ability to collect fines and carry out other tasks.

Many of the issues that contributed to Georgia’s F grade from the State Integrity Investigation remain unchanged. Among advocates’ highest priorities are finding a stable source of funding for the ethics commission and creating an independent, grand jury-style body to investigate ethics complaints.

Still, many felt the measures signed Monday represented a step in the right direction.

“If you compare where we were March of last year, when we couldn’t have a hearing on an ethics bill, to this year where we got a bill passed, I think that’s tremendous step forward,” McKoon said. He said he plans to introduce legislation next session that would eliminate some of the exemptions in the gift cap, and would also like to improve financial disclosure for political appointees. “We have to make sure we don’t rest on our heels and say we’ve dealt with this issue.”

OPINION: health reform to be political fodder in 2014

2013-05-06T00:09:01-04:00

Will the implementation of some of the most important provisions of ObamaCare this fall and next year result in the “train wreck” Senate Finance Chairman Max Baucus (D-Mont.) predicted a few days ago?

No. But you can be certain that there will be no shortage of political candidates and high-powered political spin doctors who will be working relentlessly between now and the 2014 midterms to convince us that it will be.

ObamaCare — even though it already has reduced the number of uninsured Americans by several million and has limited price gouging by insurance companies — represents the best hope that many Republicans will have of maintaining or boosting their majority in the House and possibly retaking the Senate.

Think about it. The economy seems to be on the right track. Just last week the stock market reached record highs and the jobless rate fell to its lowest point in four years. The war in Iraq is over and most American troops are scheduled to be out of Afghanistan by the end of next year. The GOP appears to have lost the advantage to Democrats on gun control and immigration, and abortion and gay rights are no longer the reliable campaign wedge issues they once were.

That leaves ObamaCare and “big government spending” as just about the only issues that remain for right-leaning candidates, barring any unforeseen domestic or global calamity. But if their campaigns against ObamaCare next year are as successful as their campaigns against it were in the 2010 midterms — and the White House and supporters of the law are once again asleep at the switch — GOP candidates might not need anything else to talk about to take both houses of Congress.

When Barack Obama was inaugurated in January 2009, there was wide support for health care reform, and Republican strategists knew it. They realized they might be able to turn reform into a winning issue for their candidates by mounting a campaign to make people afraid of what the Democrats might try to do. So just as Congress was beginning preliminary work on what eventually became the Affordable Care Act, GOP message guru Frank Luntz persuaded his clients to condemn whatever the Democrats proposed as a “government takeover of health care.”

Even though the bill that ultimately became law was anything but a government takeover, GOP lawmakers and candidates never missed an opportunity to insist that it was. Luntz’ sound bite was repeated hundreds of times in floor speeches by Republican members of Congress in the hours before the House voted on its version of the bill on November 7, 2009.

Their fear-based campaign worked so well to influence public opinion that GOP candidates have never stopped using the “government takeover” meme, which is why the perception of ObamaCare as being exactly that has become a reality for millions of Americans.

When you consider the inadequate job that the White House and the President’s supporters have done in explaining how the law benefits just about every one of us — and never letting us forget why reform was necessary in the first place — it’s little wonder Republicans see opportunity once again.

There no doubt will be glitches when the online health insurance exchanges go live on October 1 for the relatively small percentage of Americans who will use them to shop for coverage because their employers don’t offer health insurance as an employee benefit. The exchanges will work just fine for the vast majority of people, but there will be some who will have complaints. You can expect the law’s critics to give every one of them a voice in their effort to create the impression that the exchanges are a disaster and that the government can’t do anything right.

Similarly, some people who have been paying relatively low premiums for what they don’t realize is junk insurance will be upset when junk insurance is outlawed next year. Because real insurance costs more than junk, some invariably will complain about having to pay higher premiums for coverage that will actually be there if and when they need it.

You can also expect that a fair number of folks will squawk when the requirement to have health insurance kicks in on January 1. And you can bet that the opponents of the law will be aided, unwittingly in most but certainly not all cases, by the media. Just as local TV reporters tell us about the drivers who crash into each other instead of the rest of us who get to our destinations unharmed, the media will focus on the glitches. And they’ll interview far more complainers than happy campers.

I’m betting that Frank Luntz and other Republican strategists have already been hired to craft the sound bites to use against Democrats next year. If the Democrats and consumer advocates who support ObamaCare are not at work developing their own strategies to counter the coming barrage of misleading spin, the GOP will have an excellent chance of controlling Capitol Hill after the next elections.

Need political cash? Use the force

2013-05-04T11:25:36-04:00

Politicians aren't always the most grounded bunch.

For Rep. Derek Kilmer, D-Wash., he's off in galaxy far, far away.

That's not necessarily a knock, however, since the brainy, bespectacled freshman — he's a Princeton University graduate and University of Oxford doctoral degree recipient — is parlaying his love for the cosmos into potentially exospheric campaign cash.

To wit: Kilmer is set to benefit from a Star Wars-themed political fundraiser later this month originally conceived as not one, but two separate Star Wars-themed fundraisers, easily putting him on pace to become the first sitting congressman to make the Capitol Hill Cash Run in less than 12 parsecs.

The merged fundraiser will culminate May 22 in a "galactic trivia battle," with tickets starting at $50 and climbing skyward to $1,000 for political action committees and full trivia teams, according to an invitation. The National Cable and Telecommunications Association's Washington, D.C., headquarters will play host.

A spokesperson for Kilmer's re-election campaign could not be reached for comment, but Stephen Carter, Kilmer's congressional spokesman, confirmed his boss is, "yes, a pretty huge Star Wars fan."

Perhaps it's no surprise, then, that Kilmer is a member of the House Committee on Science, Space and Technology.

(See the current event's invite here. The other, once-separate-and-now-incorporated fundraiser's invitation advertised a screening of Star Wars: A New Hope.)

Novelty political fundraisers are commonplace these days, with rubber chicken dinners and stodgy grip-and-grin sessions increasingly yielding to ski trips, skeet shoots and sports events. A Taylor Swift concert, Las Vegas golf retreat and Bermuda beach bash are among federal legislators' many scheduled outings this month, according to fundraiser tracker Political Party Time.

Thank the burgeoning cost of campaigns and never-ending election cycles for congressional candidates' compulsory creativity.

In 2005, the Democratic Congressional Campaign Committee lambasted three Republican congressmen for conducting a political fundraiser at the screening of a Star Wars movie, saying the "GOP looks to the dark side." Given Kilmer's unabashed fandom, however, his event almost assuredly features the highest probability in congressional history of at least one lobbyist ditching his power suit for Boba Fett armor or a political aide donning a Yoda mask.

Looking for the real thing?

Kilmer should know that Han Solo — that is, Harrison Ford — is a dedicated Democratic donor, having contributed tens of thousands of dollars to candidates and committees over the years, including $28,500 to the Democratic National Committee in 2008, according to federal records.

But, according to the Center for Responsive Politics, it was the people and PACs associated with Boeing and the International Association of Machinists and Aerospace Workers, among others, that donated the most to Kilmer en route to him rasing nearly $1.9 million last cycle.

More impact from our watchdog work

2013-05-03T16:00:19-04:00

Our brand of watchdog investigative journalism generates impact again and again, as demonstrated by the examples that come across my desk nearly every day at the Center for Public Integrity. Each time, I am reminded that we don’t spend months investigating environmental crises or secret money laundering just to call attention to problems. We publish our detailed, fact-filled investigative reports in order to have an impact, to contribute to solutions, eventually fixing myriad problems.

Let me cite some of our impact from just this last week:

The Environmental Protection Agency announced Friday that it has revamped its conflict of interest process to prevent conflicts and bias from tainting its science, including efforts to assess the dangers of toxic chemicals. The reforms target EPA scientific review panels that are selected by outside contractors. Today’s announcement follows a Center for Public Integrity-PBS NewsHour examination revealing ties between scientists and the chemical industry on a panel reviewing hexavalent chromium, a compound commonly found in drinking water that may cause cancer. This is a critical issue because as our Toxic Clout series has reported, more than 80,000 chemicals are on the market in the United States, with hundreds added each year. The EPA is supposed to protect the public from contaminants in the air, water and in consumer products that can cause cancer and other illnesses. But the chemical industry's sway over science and policy is powerful. Our series has explored how the chemical industry's actions create uncertainty and delay, threatening public health.
Our massive international investigative series into offshore tax havens — which draws from a cache of 2.5 million secret records — continues to generate official action. Most recently, European finance ministers said that when they meet next week they may reach an agreement to eradicate tax havens. Meanwhile, our latest report on JP Morgan raises concerns about our largest bank’s commitment to fighting the flow of dirty money around the world. The investigation is being conducted by the International Consortium of Investigative Journalists, or ICIJ, a project of The Center for Public Integrity. The work is ongoing and has already drawn 9,000 media citations worldwide in just the last month.
Over the past two years, the Center for Public Integrity has examined how a rare and mysterious type of chronic kidney disease is killing tens of thousands of agricultural workers along Central America’s Pacific Coast, as well as in Sri Lanka and India. Scientists have yet to definitively uncover the cause of this deadly illness, although emerging evidence points to toxic heavy metals contained in pesticides as a potential culprit. Following years of official inaction in the U.S. and beyond, a new Central American declaration last week — for the first time — formally recognized the disease and its unique characteristics. Central America’s health ministries signed the declaration on Friday citing the ailment as a top public health priority and committing to a series of steps to combat its reach.
Florida became the latest state to make changes in its ethics laws after our State Integrity Investigation gave the Sunshine State an “F” in ethics enforcement. Republican Gov. Rick Scott signed a package of reform bills Wednesday night, marking the first major overhaul of the state’s ethics laws in more than three decades. The two bills give significant new powers to the state’s ethics commission, extend a ban on lobbying for lawmakers after they leave office and rework the state’s campaign finance limits. The new ethics legislation will address at least some of the weaknesses responsible for Florida’s overall grade of C- from the State Integrity Investigation, a state-by-state ranking of ethics and accountability released last year by the Center for Public Integrity, and our partners, Global Integrity and Public Radio International.

Ultimately, I believe our work is contributing to solutions of all kinds, and a more accountable and transparent world.

Until Next Week,

Bill

EPA adds safeguards to spotlight conflicts on scientific panels

2013-05-03T17:14:40-04:00

The Environmental Protection Agency announced new safeguards Friday to prevent conflicts of interest or bias from tainting its science, including efforts to assess the dangers of toxic chemicals.

The reforms, targeting scientific review panels selected for EPA by outside contractors, follow a Center for Public Integrity-PBS NewsHour examination revealing ties between scientists and industry on a panel reviewing hexavalent chromium, a compound commonly found in drinking water that may cause cancer.

In that case, three panelists who urged the EPA to delay potentially stricter drinking water standards had been expert witnesses for industry in hexavalent chromium litigation. The scientists denied any conflict and said their input was based on research, but the case study revealed how the EPA is unaware of potential conflicts on its own panels.

Under its own process, the Center reported, the agency turns over the job of selecting panelists to private companies, which handle conflict-of-interest reviews in secret. All information the vendors collect, including financial disclosure forms, is “considered private and non-disclosable to EPA or outside entities except as required by law,” the EPA policy says.

The changes announced Friday add more layers of review — and provide more public disclosure — to the process.

Environmental watchdogs, who had questioned EPA's existing process, say the steps are overdue.

“It brings transparency to a process that wasn’t there before,” said Francesca Grifo, a senior policy fellow and expert on scientific integrity at the Union of Concerned Scientists.

One key change: After an EPA-hired contractor selects members of a scientific review panel, “the contractor will consult with EPA to review whether the contractor followed existing conflicts of interest guidance and requirements, and identify and provide input on any issues.”

That step adds an extra layer of review by EPA.

Also, the agency said, the names of chosen panelists will be publicly posted before any meetings take place.

The new steps do not change EPA’s existing standards for assessing conflicts, the agency said, but instead add sunshine to the process.

“This process will ensure that existing conflicts of interest guidance and requirements are applied correctly and where a potential conflict of interest is identified, allow EPA to determine whether the contractor’s plan to address the conflict is acceptable,” the agency said.

The EPA’s acting administrator, Bob Perciasepe, said Friday the new steps show the agency is “committed to scientific integrity.”

“Improving the contract-managed peer review process and increasing transparency will lead to stronger science at the agency,” Perciasepe said in a statement.

Richard Denison, a senior scientist at the Environmental Defense Fund, has been outspoken about industry influence at the EPA. Denison praised the EPA for bringing more openness to the process.

“The hexavalent chromium example was the major impetus for this revision,” he said.

Hexavalent chromium, best known as the toxic chemical compound from the hit film Erin Brockovich, is found in the drinking water of more than 70 million Americans, according to the Environmental Working Group.

New animal studies published in 2008 showed that mice and rats given high doses of the compound developed large numbers of tumors. The National Toxicology Program, part of the National Institutes of Health, cited the compound as a “clear carcinogen.”

The EPA planned to revise its assessment of the compound in 2011, even as a trade group, the American Chemistry Council, urged the agency to wait for industry funded studies. Several members of the peer review panel also urged the EPA to wait.

One was Steven Patierno, then a scientist at George Washington University, who was a consultant on ACC studies.

Another was Joshua Hamilton, a scientist at the Marine Biological Laboratory in Woods Hole, Mass., which is affiliated with Brown University. Pacific Gas & Electric Co., the company that polluted the water in Hinkley, Calif., with chromium, hired Hamilton as a consultant in 2009.

Hamilton said that just before the EPA peer-review panel met, PG&E asked him if he would go back to Hinkley to discuss the health effects of hexavalent chromium. PG&E said it paid Hamilton $110,000 for his work in Hinkley. Hamilton said he revealed the PG&E work to the private contractor hired by EPA, Eastern Research Group, and that the firm concluded it was not a conflict.

Officials with Eastern Research Group, based in Massachusetts, have not responded to interview requests.

Meanwhile, some members of Congress are pushing potential change to support industry.

The House science committee recently approved a bill to change the rules at the EPA for setting up scientific advisory panels. It would prevent the EPA from excluding people from panels with industry ties, as long as those ties are disclosed. It would also exclude panelists whose research is incorporated in the assessment. The bill is awaiting action by the full House.

Government auditor challenges White House account of Afghanistan security

Afghanistan — 2013-05-03T14:20:30-04:00

Since the United States first sent troops to Afghanistan in 2001, a signature goal of the war has been to increase the size of Afghan national security forces and give their members the skills to vanquish domestic terrorist groups and other security threats on their own.

But as the Obama administration prepares to pull 34,000 U.S. troops out of the country by February and most of the remaining troops by the end of 2014, estimates of the size of the Afghan force trained to take over this lead security role have suddenly grown fuzzy and possibly unreliable.

A new report this week by the government’s top watchdog over U.S. spending in Afghanistan casts doubt on whether the U.S.-led coalition and the Afghan government has met a goal set in 2011 of enlisting and training a total of 352,000 Afghan security personnel by October 2012. Pentagon officials have said that target was meant to strike a balance between what is needed and what America and its allies can deliver in concert with the Afghan government.

The White House declared two months ago, in conjunction with the President’s State of the Union address, that the goal had been attained. Afghan “forces are currently at a surge strength of 352,000, where they will remain for at least three more years, to allow continued progress toward a secure environment in Afghanistan,” it said.

But on Tuesday, Special Inspector for Afghanistan Reconstruction John F. Sopko challenged this rosy assessment, which White House officials said was based on data supplied by the Pentagon.

“The goal to ‘train and field’ 352,000 Afghan National Security Forces by last October was not met.” Sopko said in his latest quarterly report. Instead, as of Feb. 18, the number of personnel in the Afghan National Army, National Police and Air Force totaled 332,753, or about 20,000 fewer, according to data he said he collected from the Coalition-led transition command in Kabul.

Sopko said Afghan troop and police strength is actually declining, not rising – belying a longstanding goal of the U.S. intervention. There are now 4,700 fewer personnel than a year ago, he noted, drawing on the same data that the Pentagon routinely uses.

The discrepancy between the force size the White House has claimed and what the Afghans have actually been able to field is not a trivial one, Sopko’s report suggested. ”Accurate and reliable accounting for ANSF personnel is necessary to ensure that U.S. funds that support the ANSF [Afghan National Security Forces] are used for legitimate and eligible costs,” it said.

As a result, the discrepancy has triggered a wider audit by his organization into "the extent to which DOD [the Department of Defense] reviews and validates the information collected" from Afghan officials, Sopko said in the report. It will broadly assess "the reliability and usefulness” of what the Afghans – and the U.S. government – say about the force’s size.

In a statement to the Center for Public Integrity, Sopko explained that "we are not implying that anyone is manipulating data. We are raising a concern that we don't have the right numbers. We appreciate how difficult it is to get the correct numbers -- but we need accurate numbers because we're using those numbers to pay ANSF salaries, supply equipment and so forth."

The financial stakes behind the numbers are huge. Sopko’s report says Congress has appropriated more than $51 billion so far “to build, equip, train and sustain the Afghan National Security Forces.”

But U.S. officials and watchdog groups have previously raised alarms about the existence of “ghost” personnel in the Afghan forces, whose salaries are still funded by Western aid but who quit the units to which they are assigned. The annual attrition rate for the Afghan army is nearly 30 percent, according to U.S. military commanders, provoking an enormous churn in the ranks that complicates accurate record-keeping.

Part of the problem, according to Sopko’s report, is that Western officials have allowed “the Afghan forces to report their own personnel strength numbers,” which are based on hand-written ledgers in “decentralized, unlinked and inconsistent systems.” The Combined Security Transition Command-Afghanistan, which oversees the training effort, reported last year “there was no viable method of validating personnel numbers,” the report added.

But U.S. officials have added to the confusion by adopting a new definition of what it means to be a member of the Afghan security force, loosening its terminology in a way that enlarges the ranks to include all those “recruited” rather than those actually trained and field-ready.

For example, the Defense Department’s so-called Section 1230 reports, which track the progress of the war, including efforts to build an effective Afghan security force, said in April 2012 that “the ANSF are ahead of schedule to achieve the October 2012 end-strength of 352,000, including subordinate goals of 195,000 soldiers and 157,000 police.”

But last December’s Section 1230 report – the most recent progress report available -- changed the way it referred to the 352,000 figure. “The ANSF met its goal of recruiting a force of approximately 352,000 by October 1, 2012,” the December report said. Some of these personnel were awaiting induction at training centers, said the report, adding that the Afghan army’s recruits were not scheduled to be “trained, equipped, and fielded until December 2013.”

Marine Corps Gen. Joseph Dunford Jr., who in February took command of U.S.-led forces in Afghanistan from Marine Corps Gen. John Allen, used still different terminology during April 16 testimony before the Senate Armed Services Committee. He said the Afghan government “has recruited and fielded most of its authorized strength of 352,000,” a circumstance that he said enables it to “be responsible for security nationwide” in the near future.

The Pentagon is still working on its written response to the special inspector general's report. But a Pentagon spokesman, Navy Cmdr. Bill Speaks, separately told the Center for Public Integrity that "fluctuation in overall strength of the ANSF due to recruitment and attrition is expected."

Speaks said recruitment targets were lowered last year to slow growth as Afghan forces approached "its force structure ceiling of 352,000. . . . Lower recruitment, coupled with several months of higher-than-average levels of attrition in the ANA [Afghan National Army], resulted in a net decrease."

He said ANSF end-strength rose to 336,365 in March, but added that the focus of the training mission now is on “the quality of the force; developing the right balance of seniority, skills and specialization,” more than on the number of trainees.

Sopko’s report attributed the decline partly to a decision last October to no longer include civilians in the official security force tally, such as those in the Afghanistan Ministry of Defense. But Speaks said Thursday that civilians continue to be counted, calling them “a necessary and integrated part" of the Afghan Army. He said an effort is underway to convert the jobs to the civil service system, and also that the Afghan reporting system “is increasingly moving from a paper-based system to a more automated one with new standards" and processes.

Despite the squishiness of the data, U.S. military officials have repeatedly cited the buildup in Afghan forces as the principal reason for declaring the 11-year war a success. “For the last few years, many people have shied away from using the word ‘win,’” Dunford told the senators. “I personally have used that word since arriving in Afghanistan.”

Sharing his optimism, Gen. Allen told Brookings Institution in March that Afghan security forces “turned out to be better than we thought, and they turned out better than they thought.” During the ceremonial change of command in Kabul in February Allen said, “Afghan forces defending Afghan people and enabling the government of this country to serve its citizens. This is victory. This is what winning looks like.”

US officials have long considered the ability of Afghan forces to fight without foreign help as critical to the Obama administration’s exit strategy and pending decisions on how large of a residual force to leave in the county once most U.S. troops leave next year. There are 70,000 U.S. troops there now, of which 1,800 are assigned to the NATO training mission.

At last year’s NATO summit in Chicago, Sopko noted in his report, countries contributing to coalition forces in Afghanistan agreed to set a goal of a 228,500-strong Afghan security force in 2017, which they considered more financially viable than any higher number. But the Obama administration rejected that suggestion and insisted that a force of 352,000 would give the U.S. military more flexibility and could be maintained through 2018.

Whether a force of even that size is enough to meet the West’s ambitions remains controversial. On March 22, for example, the Pentagon’s inspector general reported that the extensive U.S.-led coalition effort to develop the Afghan National Army’s command-and-control capabilities, which are crucial in executing counterinsurgency operations on its own, “had produced a marginally sufficient” system.

The Afghan National Army “did not yet have the ability to plan and conduct sustained operations without U.S. and Coalition support,” the DOD IG report said. “To date, the ANA had only been effective in conducting offensive operations of short duration . . . with heavy reliance on U.S. and Coalition support.”

The IG’s report credited both the Afghan army and police for demonstrating “initiative, coordination and resilience” in responding to insurgent attacks in Kabul on Aril 15, 2012. The actions by security forces “were encouraging and timely,” the report said. But it warned that the progress “may be hampered or even reversed. . . if high-risk challenges are not properly addressed and resolved,” including the removal of ineffective senior officers, an ability to use complex technology, and “the significant reliance on U.S. and Coalition enablers.”

A Government Accountability Office report released in February said further that a claimed improvement in the effectiveness of Afghan security forces has been partly due to the lowering of standards by U.S.-led forces. In August 2011, U.S. military officials changed the highest possible rating for Afghan units from “independent,” meaning they could operate without help from U.S. or coalition troops, to “independent with advisors,” the GAO said.

The Pentagon acknowledged that the changes to the rating levels “were partly responsible for the increase in ANSF units rated at the highest level,” GAO said.

Feds 'listen' for sounds of Medicare billing abuse

Baltimore,Maryland,United States — 2013-05-03T10:28:43-04:00

When news broke last September that some doctors and hospitals could be using electronic health records to overbill Medicare, top government officials swung into action.

U.S. Health and Human Services Secretary Kathleen Sebelius and Attorney General Eric Holder fired off a stern letter to five prominent medical groups threatening criminal prosecution for applying the technology to bill for more complex and costly services than merited — a practice is known as “upcoding.”

But the Centers for Medicare and Medicaid Services, which reports to Sebelius, is taking a much less confrontational stance as it opens a “listening session” this morning in Baltimore on the digital billing controversy.

The agency has lined up nearly a dozen health industry speakers representing mostly hospitals, doctors and the software industry to give their take on fair and honest billing and coding standards to impose as medicine wires up. No one at the meeting will represent patients or others who pay medical bills.

A CMS spokesman called the meeting "another step toward ensuring appropriate use" of electronic records, which are "critical to our efforts to reform the health care delivery system, lowering costs while improving the quality of care.”

The initial reaction from Sebelius and Holder came on the heels of the Center for Public Integrity’s “Cracking the Codes” series, a year-long investigation which showed that thousands of medical professionals billed sharply higher rates for treating seniors over the last decade — adding $11 billion or more to their fees. The findings suggested billing abuses could be worsening as doctors and hospitals switch from paper to electronic health records.

As the government has made good on plans to invest some $35 billion helping doctors and hospitals convert from paper to digital records, hundreds of technology firms have jumped into the market — often by promising doctors and hospitals that their gear can significantly boost the bottom line.

Most manufacturers and medical users contend the software merely allows them to more efficiently bill for their services, which in the past was often done by hand.

Critics argue, however, that with a flick of the wrist the devices can create a finely detailed medical file that’s often difficult for auditors to verify. Sebelius and Holder noted that in some cases, the machines can “cut and paste” information from previous doctor visits “in order to inflate what providers get paid.”

Sue Bowman, of the American Health Information Management Association, said her testimony in Baltimore would recommend research to figure out the precise role — if any — electronic records are playing in encouraging errant billing. “Like any tool (electronic health records) can help us be more efficient, but it can also be misused,” she said in an interview.

The Baltimore session takes place amid rumblings in Congress — at least among Republicans — that the multi-billion dollar initiative has veered off course.

Last month, six Republican U.S. Senators called for an overhaul of the plan, citing a range of concerns from patient privacy to stepped-up Medicare billing fraud.

Their report noted that many medical experts believe the digital systems can reduce health care costs and enhance medical quality by reducing wasteful testing and cutting down on harmful errors. But it also cited “troubling indications that some providers are using this technology to game the system, possibly to obtain payments to which they are not entitled.”

Florida enacts ethics and campaign finance package

Florida,United States — 2013-05-02T13:41:49-04:00

Florida Gov. Rick Scott signed a package of reform bills Wednesday night, bringing final approval for the first major overhaul of the state’s ethics laws in more than three decades. The two bills give significant new powers to the state’s ethics commission, extend a ban on lobbying for lawmakers after they leave office and rework the state’s campaign finance limits.

The new ethics legislation will address at least some of the weaknesses responsible for Florida’s overall grade of C- from the State Integrity Investigation, a state-by-state ranking of ethics and accountability released last year by the Center for Public Integrity, Global Integrity and Public Radio International. In the specific category of ethics enforcement, the Sunshine State had received an F.

The measures, which the legislature passed last week, had been top priorities for Senate President Don Gaetz and House Speaker Will Weatherford, both Republicans. Watchdog groups followed the bills’ passage closely and largely praised the ethics bill.

“There’s been a 36 year drought of meaningful ethics reform legislation going anywhere in Florida,” said Dan Krassner, executive director of Integrity Florida, a statewide watchdog group. “The fact that our state leaders prioritized ethics reform and dedicated time and resources to serious debate and policy improvements on the issues is historic.”

Some reform advocates and lawmakers criticized aspects of the bills, however, particularly the campaign finance provisions. Those provisions eliminate a type of committee—called committees of continuous existence— that candidates have used to raise unlimited funds before transferring the money elsewhere, obscuring the source of the cash. But the bill will allow another form of committee—so-called political committees—to raise unlimited funds instead. The only improvement, advocates say, is that the money will be spent by the same committee that raised it, making it easier to track who is paying for what. The measure will also require more frequent reporting from candidates.

But in exchange, the bill raises the limits on donations to candidates and leaves in place loose restrictions on campaign committees, allowing them to continue to raise and spend unlimited quantities of money and report their finances less frequently than candidates.

“They’ve kind of used a spigot to turn the gush of money to a new direction,” said Deirdre Macnab, president of the League of Women Voters Florida. Her group had urged Scott to veto the campaign finance bill. “At the end of the day, the Florida voter is no winner by any stretch.”

Candidates for statewide office will now be able to accept donations of up to $3,000 from individuals, with all other candidates able to accept up to $1,000. Previously, the limit for all candidates had been $500. Gov. Scott, who is up for reelection next year, had opposed raising the limits.

”No one has shown me a rational for raising these limits,” Scott told reporters after the legislature approved the bills last week. But when asked why he decided to sign the bill yesterday, Scott simply said that he’d listened to advice from across the state and determined the legislation was “in the best interests of the state.”

Proponents of the measure, including Krassner, have said that overall, the bill will improve campaign finance transparency.

The ethics bill, which passed both chambers of the legislature unanimously, reaches far and wide. It will prevent lawmakers from lobbying government for two years after leaving office. Previously, they were barred from lobbying the legislature but could petition the executive branch—an allowance the previous speaker of the house, Dean Cannon, is currently using. The measure gives additional powers to the ethics commission to collect unpaid fines and allows the body to initiate investigations based on referrals from law enforcement agencies or the governor’s office. Until now, the commission could investigate only after receiving a sworn complaint directly. It will also put into law a ban on voting on bills that could affect lawmakers’ finances.

But the measure contains a couple of provisions that watchdog groups say actually loosen oversight and transparency. Lawmakers who submit incomplete or inaccurate financial disclosures will now have 30 days to correct them before the ethics commission can issue a fine. “It’s what I would call a ‘get out of jail free’ card,” Macnab said.

The bill also allows legislators to put their investments in blind trusts. But Philip Claypool, who in 2011 retired as the executive director of the state’s ethics commission, said the provision fails to put in place standard safeguards that other states and the federal government use for such trusts. The result, he said, is that lawmakers will be able to drop investments such as real estate holdings in or out of the trusts in order to vote on a measure that may affect the investment, without having to disclose anything.

Despite the complaints, however, even the strongest critics of the reform package say the bill signed Wednesday will improve the laws on the books.

“These are some really good things,” Macnab said. “While it doesn’t go quite as far as we would have liked, we think it’s a good bill for Florida.”

Mixed martial arts take fight to Capitol Hill

2013-05-08T10:18:03-04:00

Once mired in blood and disrepute, professional mixed martial arts now ranks among the world’s fastest growing sports. And its advocates are likewise ramping up their activity in another combative arena: Capitol Hill.

Ultimate Fighting Championship, MMA’s leading promotion company, last year spent $620,000 lobbying on a variety of issues affecting its business, making it the No. 3 spender among sports leagues and recreational entities and eclipsing the government affairs efforts of other well-established and conventional industry contemporaries, according to the Center for Responsive Politics.

UFC outspent former heavy-hitters such as Major League Baseball ($310,000) and the National Basketball Association ($125,000) last year. The National Football League remains the top lobbying spender in the live entertainment industry, but the league’s total spending fell from $1.6 million in 2012 to $1.4 million in the previous year, according to federal disclosures.

UFC is continuing its aggressive advocacy this year, spending $80,000 on federal lobbying in the first quarter of 2013, records filed with the U.S. Senate indicate.Video piracy is among UFC’s chief concerns.

Though some of UFC’s live competitions — in which fighters spar for victory in an octagonal cage — are now available with a basic cable subscription, the company still relies on pay-per-view broadcasts for much of its revenue. When bootleggers surreptitiously film and post fights to the internet for free, UFC loses money, according to Makan Delrahim, an attorney at the Washington office of Brownstein Hyatt Farber Scheck who represents UFC.

“Or even worse, [copyright law violators] are charging $9.99,” for access to the illegally-captured fights, Delrahim said. “My clients are deprived of the economic benefit that intellectual property laws allow.”

Before lobbying on behalf of the UFC, Delrahim served as deputy assistant attorney general to the Department of Justice’s anti-trust division and chief counsel to the Senate Judiciary Committee.

“Anybody who believes in property rights supports this issue,” he said, “It’s a bipartisan issue."

And MMA, it turns out, attracts a bipartisan fan base. Senate Majority Leader Harry Reid, a Nevada Democrat, and U.S. Reps. Duncan Hunter of California and Jim Jordan of Ohio, both Republicans, are fans, according to Delrahim.

UFC has also lobbied on Internet gambling regulation— the group is now sponsoring an online poker tournament, with a grand prize of trip to Las Vegas to watch a UFC fight in July — and educating members of Congress about mixed martial arts, federal records show.

“We just want to be sure that people who may not be watching it every night know what it is,” Delrahim said. “And don’t react in an immediate kneejerk reaction, thinking that it’s some sort of nefarious sport.”

Mark Gonzalez, managing partner at the Washington-based One World MMA, a much smaller outfit that hosts professional and amateur fights , said his operation has opted to influence legislation on a more grassroots level.

It takes “big money in order to lobby anybody here in DC,” Gonzalez said. Instead of traditional routes, Gonzalez said he works directly with DC Boxing and Wrestling Commission to influence the safety regulations and licensing rules that affect his organization.

Several other emerging or niche sports and recreation brands have also recently doubled down on federal lobbying.

Feld Entertainment — the company that produces the Ringling Brothers and Barnum & Bailey circus, Monster Jam monster truck shows and Disney On Ice — also outspent both MLB and the NBA last year. the $350,000 it spent places it No. 7 on the list of top lobbying spenders among sports and recreation outfits.

Just this past quarter, Feld Entertainment spent $35,000 to lobby Congress, the U.S. Department of Agriculture and the Food and Drug Administration on laws related to the conservation of endangered species — namely the elephants and big cats that star in the company’s traveling circus. Ringling Bros. in particular has been a target of animal rights activists, who accuse the circus of animal cruelty.

Feld Entertainment lobbied against the Traveling Exotic Animal Protection Act, a House bill introduced last year that would have banned animals performing within 15 days of travel, which the company argued would effectively dismantle its circus’ operation. Ringling Bros. currently gives its animals anywhere from 24 to 72 hours of rest between travel, said Tom Albert, the company’s vice president of governmental affairs.

“Our point is that there was no science behind it,” he said of the bill, which has not been reintroduced in the current Congress. “It was sort of an arbitrary number that was picked precisely because it would keep animals from performing.”

Feld Entertainment’s past lobbying efforts helped pass the Asian Elephant Conservation Act of 1997, which set a up a federal fund to support faltering elephant populations. That law established a model for funds supporting other endangered species, Albert said.

“Given the very difficult economic and budgetary climate, our little coalition has been remarkably successful in advocating for support for those funds,” Albert said.

Though hardly a niche sport, NASCAR has also stepped further into the political fray in recent years, increasing its total federal lobbying expenditures to $150,000 in 2012 from $90,000 in the previous year, according to the Center for Responsive Politics.

Lobbying is “not a terribly active space for us,” NASCAR spokesman Marcus Jadotte asserts, although the association did spend $30,000 in last year to block a bipartisan amendment that would have slashed the military’s budget for sponsoring professional sports.

NASCAR — and the military recruiters whose logos still whiz past fans in Daytona and Dover — won that race in a close 216-202 vote.

NASCAR does not plan to rev up its political involvement any further by forming a PAC or endorsing candidates.

“Absolutely not,” Jadotte said. “As a business, we’re not involved in endorsing candidates."

While UFC has changed its rules over the past decade to make the sport safer, more athletic and more palatable to a broader fan base, its intense violence and that it is not a team sport has impeded its reach beyond a niche audience, according to Marie Hardin, associate director of the John Curley Center for Sports Journalism at Penn State University.

“You have to wonder if part of this is simply the growing pains of a very fast growing sport in the United States,” Hardin said.

As MMA grows in popularity, there will be “more legislative eyeballs” monitoring the sport, she said.

“It’s going to come under more scrutiny.”

Correction: The article originally stated that Rep. Duncan Hunter represents a North Carolina district. The congressman represents a California district.

'Retail exemption' shields some fertilizer facilities from stringent safety inspections, rules

Texas,United States — 2013-05-03T11:16:41-04:00

The Texas fertilizer plant that blew up on April 17, killing at least 15 people, appears to have been claiming an arcane exemption that allowed it to avoid targeted workplace inspections and safety requirements and enter a “streamlined prevention program” with environmental regulators, a government spokesman confirmed.

The owner of the facility near Waco, West Chemical and Fertilizer, apparently determined that the exemption — a few words advocated by industry groups, including The Fertilizer Institute, as part of a 20-year-old regulation — applied. In the wake of the deadly blast in West, Texas, last month, the Occupational Safety and Health Administration is investigating whether this claim was justified, an OSHA spokesman said.

By claiming the exemption, the company became subject to other, less stringent requirements and avoided certain OSHA and Environmental Protection Agency rules.

West Chemical and Fertilizer did not respond to requests for comment.

The interlocking web of company-claimed exceptions has implications beyond a small town in Central Texas. Sites across a host of industries housing large amounts of dangerous chemicals could claim they sell primarily to end users and avoid stricter regulation, though the number of facilities invoking this exemption is unclear. A representative for a company storing toxic chlorine gas, for example, wrote to OSHA in 2005 to clarify that the exemption applied to the site.

“It’s a major flaw,” said Bryan Haywood, an Ohio consultant who advises companies on the safe use of dangerous substances. “This incident’s going to get a lot of people’s interest into how people are squirming out of [stricter requirements].”

Closely related OSHA and EPA rules require facilities using large quantities of hazardous substances to take preventive steps and plan for accidents. West Chemical and Fertilizer had enough anhydrous ammonia — a chemical that attacks the eyes, skin and respiratory system — to require it to follow OSHA’s Process Safety Management standard, issued more than two decades ago.

But the standard contains what is known as the “retail exemption.” The Fertilizer Institute spoke out in favor of the exemption while the rule was being developed. Soon after the rule became final, the institute asked OSHA to confirm that it would not apply to facilities that store and blend fertilizer and sell it primarily to end users, often farmers.

OSHA responded that a fertilizer facility could indeed avoid the strictures of the rule as long as more than half of the company’s sales were to end users. OSHA, however, does not check on the validity of an exemption unless it inspects the site, an agency spokesman confirmed.

The Fertilizer Institute said in a statement to the Center for Public Integrity that it agreed with OSHA when the agency concluded in 1992 that retail facilities “did not present the same degree of hazard to employees as other workplaces covered by the proposal.”

But the institute added, “While the cause of the West, Texas, explosion has yet to be determined, we will re-examine our stance if necessary when the report on the cause is made final.”

OSHA is also investigating whether the West plant was covered by a legislative rider that makes sites with fewer than 10 employees in industries with low reported injury rates off-limits for regular inspections, an agency spokesman said. The site had not been inspected since 1985.

Invocation of the “retail exemption” can begin a chain reaction of less stringent standards. The EPA’s program for designating the risk posed by a facility relies, in part, on the site’s standing with OSHA. The amount of anhydrous ammonia stored at West Chemical and Fertilizer normally would have placed the facility in the EPA category requiring extensive preventive measures and accident-response plans. But because the site claimed the OSHA exemption, it qualified for a “streamlined prevention program” under the EPA’s Risk Management Plan program, known as RMP.

The agency said in a statement that it “reviewed the RMP from the facility to determine the RMP was complete and correct.” Asked whether it verified the basis for placing the site in a lower-risk category — its exemption from the OSHA rule based on its sales records — the EPA did not respond.

This EPA designation, along with the site’s lack of a history of accidents or recent inspections, removed it from a list of facilities subject to an OSHA special inspection program targeting locations using large amounts of hazardous substances, such as anhydrous ammonia.

It is unclear how many facilities enjoy more relaxed regulation as a result of their self-designation as retailers, but Haywood said the number could be large. “A lot of these businesses like in West, Texas, they’re everywhere,” he said. “They’re in every small farming community in the country.”

All the presidents' debt

2013-05-02T11:40:10-04:00

Former House Speaker Newt Gingrich dubbed the national debt a "burden for our children for life."

Ex-Rep. Dennis Kucinich vilified Republicans for adding, by his calculations, $4 trillion to it.

Rep. Michele Bachmann, meanwhile, predicted debt will precipitate a future of "indentured servitude to foreign lenders."

What unites these and other presidential candidates is that they themselves are in debt. Campaign debt.

It's a dubious distinction shared by Democrats and Republicans, eccentric nonagenarians and White House occupants.

Such debt isn't really hurting anyone but creditors — certainly not the nation nor its creditworthiness.

But it is a reminder that despite candidates' soaring rhetoric about fiscal responsibility, they often fail to follow their own prescription for sound budgetary management amid the relentless rush to remain competitive with political rivals during election seasons that are longer and more expensive than ever.

Until the debts are paid, the federal government requires former candidates in most cases to keep their campaign committees open and, technically, active, meaning some of the indebtedness stretches back decades.

Following are the nation’s top presidential campaign deadbeats who still find themselves at least $100,000 in the red, according to a Center for Public Integrity analysis of disclosures filed with the Federal Election Commission:

1.) Former House Speaker Newt Gingrich, R-Ga.

Election year: 2012

Debt: $4,595,394

The back story: For a moment in December 2011, Gingrich appeared to have requisite momentum in his bid to capture the Republican presidential nomination. And then, the moment passed. That didn't stop the former House speaker from continuing to spend lavishly on his flagging campaign, which finally petered out in April 2012 when it became clear rival Mitt Romney would capture the GOP banner. Among the dozens of debts totaling nearly $4.6 million the Newt 2012 presidential committee still owes as of March 31: more than $983,000 to Moby Dick Airways for chartered air travel and more than $413,000 to the Patriot Group for private security services. Gingrich's campaign also owes Gingrich himself about $647,500. Other vendors waiting for Gingrich to pay them back include Twitter (nearly $13,000 for a media buy), Herman Cain Solutions (more than $16,500 for "strategic consulting/travel”) and Verizon Wireless ($862 for cell phone service). The committee also disputes about $130,000 worth of bills from vendors. Gingrich has of late attempted to raise money to pay down his debt by renting the personal information of his supporters to data companies. But the income has barely made a dent in his obligations, which at one point reached nearly $5 million. Gingrich has also created the Committee for America, a federal joint fundraising committee that states it’s raising money for the dual purpose of retiring his presidential committee’s debt and funding a separate political action committee he runs — the American Legacy PAC, which most recently reported about $60,000 in available cash after having spent most of its money late last year on telemarketing expenses. Gingrich officials did not return requests for comment, although a former spokesperson R.C. Hammond last year explained: "Our preference is obviously not to have gone into debt. If we could eliminate the debt overnight, we would. But realistically, this will take years."

2.) Lyndon LaRouche, Democrat

Election years: 1984, 2000, 2004

Debt: $3,230,438

The back story: An eight-time presidential candidate who attracts a passionate, if fringe following, the 90-year-old LaRouche never paid many of his 1984 campaign's phone, rent, legal and data bills, which are now almost 30 years old, according to federal filings. The campaign committee also hasn't settled dozens of small, unsecured loans made by individuals to the campaign. In all, the 1984 campaign alone owes $1.22 million. It's probably no wonder: LaRouche served more than five years in federal prison after a federal jury convicted him of fraud and conspiracy. He exited prison in 1994 and again ran for president in 1996, 2000 and 2004, with his final campaign committee owing about $1.06 million. Two other LaRouche presidential committees report smaller debts. Representatives for LaRouche, who today leads the LaRouche PAC political action committee, could not be reached for comment. Democratic Party officials say they have no comment on LaRouche’s debt, as they maintain no association with LaRouche or his past campaigns.

3.) President Barack Obama, Democrat

Election year: 2012

Debt: $3,101,117

The back story: Obama may have won re-election in November, but for a campaign that raised more money than any in U.S. history, there are still some books to balance. As of March 31, it still owed more than $3.1 million to a variety of vendors, including telephone companies, media consultants, insurance firms, computer businesses and attorneys, among others. The two largest single debts the Obama campaign has yet to clear are with Maryland-based Hargrove, Inc., which is owed nearly $627,000 for "staging, sound, lighting" services, and Washington, D.C.-based New Partners Consulting, Inc., which is owed $501,000 for telemarketing services. The debt won't likely linger, however, as Obama's political machine is unmatched in its ability to quickly generate cash. It also has plenty of assets to sell and rent. During early 2013, for example, it earned $350,000 just from renting its supporters' personal information to the committee coordinating the presidential inauguration. And tens of thousands of dollars in personal contributions continue to flow in. The committee also reports almost $591,000 cash on hand. “The campaign will take care of all outstanding vendor debt as it continues to wind down,” Democratic National Committee Communications Director Brad Woodhouse promised. Vanquished Republican rival Mitt Romney turned out to be a fiscal conservative after all. His own campaign committee is debt free.

4.) Former New York City Mayor Rudy Giuliani, Republican

Election year: 2008

Debt: $1,756,988

The back story: Giuliani ultimately couldn't translate his popularity as "America's mayor" into a presidential candidacy most Americans supported, and he made a surprisingly early exit from the 2008 GOP primary while finding himself more than $2.7 million in the red. More than five years later, the campaign committee still owes money to about two-dozen vendors — including two Giuliani-related companies — while also owing its namesake candidate a quarter-million bucks. Verizon Wireless (about $236,000) and AT&T Inc. (nearly $107,000) also crack six figures. But this will soon change, Giuliani says. "We're at the point now where we have agreements with almost every vendor on settlement amounts — maybe one or two to go," Giuliani said by phone. The next step, he said, will be to submit a settlement plan to the Federal Election Commission for approval so that he may terminate his presidential committee. The plan will be submitted "optimistically, by the end of the month, and worst-case scenario, by the middle of next month," Giuliani said. He noted that he's fronted about $1.2 million of his own money to pay off debts to smaller vendors so to "take care of anyone in a difficult situation first." Ultimately, Giuliani said, "we'd like to get this done by the end of the year ... we've been working on this for two years to get this done and get it right."

5.) The Rev. Al Sharpton, Democrat

Election year: 2004

Debt: $925,713

The back story: Who doesn't the bombastic preacher and civil rights activist-turned-MSNBC program host owe? That might be the better question to ask of Sharpton, whose quixotic 2004 presidential campaign remains deep in debt as of Dec. 31 to entities ranging from the U.S. government (for campaign violation penalties) to a laundry list of former staffers (for back wages and repayments). Sharpton is himself also owed money from unsecured loans he made to his campaign. Sharpton's campaign debt has actually grown in recent years thanks largely to fines federal regulators slapped on the campaign. “He does intend to do a series of fundraisers around his birthday in October,” spokeswoman Rachel Noerdlinger said. “He’s also been talking with the Federal Election Commission about reaching a settlement” on the fines. At the end of 2004, weeks after George W. Bush secured a second term, Sharpton's campaign found itself in better shape than it does today, owing creditors about $567,000.

6.) Former Sen. Rick Santorum, R-Pa.

Election year: 2012

Debt: $619,629

The back story: Like Gingrich, Santorum continued to deficit spend in hopes of keeping his dwindling presidential aspirations alive into the spring of 2012. He hung in until April before finally bailing out — owing a variety of creditors nearly $2.3 million. Santorum has steadily improved his financial lot in the year since, although he still owes 11 vendors back payments, including more than $430,000 to Pennsylvania-based consulting firm Brabender Cox for media placement and consulting services. The campaign committee also still owes $12,500 to Front Row Motor Sports as part of its sponsorship of driver Tony Raines' NASCAR car. Santorum, a vocal advocate of a federal balanced budget amendment, initiated attempts to retire his debt almost immediately after quitting the race, writing to supporters that he “cannot be free to focus on helping defeat [Obama] with this burden. I am asking you to consider one more contribution.” The former senator is now leading (and raising money for) a 501(c)(4) nonprofit group called Patriot Voices, which describes itself as dedicated to protecting “faith, freedom, family and opportunity.” Santorum aides did not reply to requests for comment.

7.) Former Rep. Dennis Kucinich, D-Ohio

Election year: 2004, 2008

Debt: $546,413

The back story: When Kucinich received permission in February to terminate his 2008 presidential campaign committee, he still reported owing money to nine different creditors, including $45,000 for legal services to McTigue & McGinnis LLC of Columbus, Ohio. The Federal Election Commission noted that Kucinich's committee, while is no longer required to file regular reports, "does not relieve the committee of any legal responsibility for the payment of any outstanding debt or obligation." That’s not, however, Kucinich’s biggest problem: The former congressman still owes $493,910 from his 2004 presidential bid. Donald J. McTigue, Kucinich’s lawyer and campaign treasurer, is due most of it. “The committee recognizes it has a debt, and if and when it becomes possible to work on the debt, it will,” McTigue said. Does he ever expect to see his money? “I’m always hopeful,” McTigue said. “Who knows what the future holds?”

8.) Herman Cain, Republican

Election year: 2012

Debt: $450,000

The back story: Forget 9-9-9. The former pizza executive, who soared to the top of the 2012 Republican presidential ranks only to fall away just as quickly, has a much larger number to recoup — one just south of half-million dollars. But in contrast with most other presidential committees, the Friends of Herman Cain presidential committee owes what it owes to its own candidate: It's failed to reimburse Cain for $175,000 in travel expenses and hasn't paid back $275,000 in cash Cain loaned the committee. Scott F. Bieniek, who served as the committee’s general counsel, said he’s no longer affiliated with the committee and directed questions to Treasurer Mark Block, who couldn’t be reached for comment. Added Bieniek: “I certainly think very highly of Mr. Cain and hope that the committee is able to raise the funds necessary to repay any personal money that he loaned to the campaign.”

9.) Former Sen. John Edwards, D-N.C.

Election year: 2004

Debt: $331,586

The back story: You might expect an Edwards’ debt stems from the former senator's 2008 presidential run, during which federal prosecutors alleged he used campaign cash to hush up a staffer-turned-mistress who secretly gave birth to his love child. The tawdry tale ostensibly ended Edwards' political career, but he nonetheless beat the rap and avoided jail time. Edwards' 2004 presidential run, meanwhile, is the culprit for his continued financial indebtedness. Credit a lion's share of the more than $331,000 his 2004 campaign committee owes — about $226,000 — to unpaid legal and consulting fees billed by Washington, D.C.-based law firm Ryan Phillips Utrecht & McKinnon. Edwards' campaign debt has effectively remained the same since late 2006. “We’re working on that,” campaign treasurer Lora Haggard said of the debt, “but I don’t have any more information at this time.” During the 2004 campaign, Edwards once promised he’d “get us seriously back on the road to fiscal responsibility” if elected president. Edwards' 2008 presidential campaign committee? It finally shut down this month and doesn't owe anyone a cent after itself owing more than $2 million at one point.

10.) Former Ambassador Alan Keyes, Republican

Election year: 2000

Debt: $301,144

The back story: Keyes collected about 5 percent of all votes during the 2000 Republican presidential primary and never seriously challenged neither eventual winner George W. Bush nor Sen. John McCain. His legacy? More than $300,000 in debt owed to a dozen campaign vendors, with about half owed to Virginia- and California-based consulting firm Politechs. Keyes appears to be in little hurry to pay off any of it: A full decade ago, his committee's debt stood at about $337,000. Keyes also sought the presidency in 2008. His campaign committee from that cycle has no debt and actually maintains a small surplus. Keyes aide Carla Michele said campaign officials are “doing everything they can” to retire the debt, although she didn’t have additional details.

11.) Former Rep. Bob Barr, Libertarian

Election year: 2008

Debt: $158,450

The back story: As a minor-party candidate, Barr, who once served in Congress as a Republican from Georgia, had about a libertine's chance in North Korea of leading the nation. Nevertheless, Barr ran and lost, and in doing so, left a mess of unpaid obligations in his wake. Among them: $47,000 to Maryland-based author James Bovard, who ghost-wrote a book for Barr and didn't get paid. (As a presidential candidate, Barr once called for a "surge in federal fiscal responsibility.") Debt or no debt, Barr is eyeing a return to the U.S. House, having announced last month he'll seek a congressional seat in Georgia — as a Republican. Will Barr move to quickly pay his old debts off? “The team associated with the 2008 campaign has worked to retire the debt from $214,221 to about $150,000,” Barr campaign manager Jeff Breedlove said. “They continue to do so in a professional and dedicated manner.”

12.) Rep. Michele Bachmann, R-Minn.

Election year: 2012

Debt: $127,996

The back story: Days after Bachmann quit the presidential race after the January 2012 Iowa caucuses, her campaign reported being more than $1 million in debt with less than $166,000 in available cash. In the 15 months since, Bachmann has been able to whittle her debt down to less than $128,000, as of March 31. “That said, we are in communication with our venders and are working to pay the residual remaining balance off in the near future," Bachmann for President finance chairman James L. Pollack said. Nahigian Strategies in Alexandria, Va., is owed more than half that amount for campaign management services. And Bachmann owes more than $6,200 to law and lobbying firm Patton Boggs for legal services. Smaller, stranger debts include $688 to a golf cart supplier in Omaha, Neb., and $47 to a general store in West Des Moines, Iowa. Bachmann's campaign committee has found itself particularly crosswise with the golf cart rental set, as one Iowa-based supplier sued Bachmann — and won — after her campaign allegedly damaged several contracted vehicles, then failed to pay the bill. Bachmann ultimately paid up.

13.) Gary Bauer, Republican

Election year: 2000

Debt: $108,557

The back story: While few folks even remember Bauer's long-shot presidential candidacy, the Internal Revenue Service certainly does. That's because Bauer's campaign committee still owes the tax man more than $10,000, according to its latest federal disclosure filing. The campaign committee for Bauer, who today leads the conservative Campaign for Working Families organization, also has yet to pay its bills from four direct mail and list rental firms. “The plan is to pay it off little by little over time,” Bauer aide Kristi Hamrick said. “As soon as possible is the time frame.” At a rally last year against now-Sen. Joe Donnelly, D-Ind., Bauer railed against the national debt. “America is drowning in red ink,” he said. “Obama and his Democrat allies in Congress have added trillions of dollars to the national debt and raised taxes by hundreds of billions through Obamacare,"

14.) President Bill Clinton, Democrat

Election year: 1996

Debt: $100,080

The backstory: One might reasonably assume that after 17 years, the former leader of the free world, who presided over Israelis and Palestinians signing the Oslo Peace Accords, could settle a disagreement with campaign creditors. Apparently not. The Clinton/Gore '96 Primary Committee, which technically remains open and active, still owes more than $100,000 to three firms for consulting and polling fees. Clinton's committee disputes the charges, and the debts from a year when the Macarena topped the music charts, remain unresolved. Clinton aides did not return requests for comment. Hillary Clinton? She cleared her once massive 2008 presidential debts earlier this year.