Category Archives: corruption

A farewell to smarm


I have to admit that I wrote this post mostly so I could to link to a Rand Corp. report named with an awful play on a Hemingway book title. Yes, gird yourself, here it comes: For Whom the Whistle Blows. And I truly do not recommend that you plow through the entire report, which is written with all the panache for which Rand prose is famous. No Robert Jordan or his rabbit in the rucksack here.

Still, the report does offer a nice reminder of one good thing that came out of the Obama administration’s reaction to the 2008-09 financial meltdown, which is this:

In July 2010, President Barack Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act, a lengthy statute that included a new mechanism for offering bounties to internal corporate “whistleblowers” who report instances of fraud to the SEC. Under the statute, such whistleblowers are entitled to an award (or “bounty”) of between 10 and 30 percent of any penalties or fees imposed in amounts greater than $1 million. … Perhaps the single most contentious feature of the new Dodd-Frank whistleblower regime is that the rules do not require that a corporate insider first make use of his or her company’s internal reporting channels as a prerequisite for access to the SEC and any potential award under Dodd-Frank.

Giving insiders a cut of the recovery if they rat out big-time, white-collar crooks is good, smart policy. So I suppose Rand’s focus on the poor, poor corporate leaders who will no longer be able to keep whistleblowers in-house, where they can be tortured and discredited more directly and efficiently than might be possible if they get to the SEC first, might irritate some of you. I just found it humorous, and a good sign that the plutocrats are scared of a law that, if it is to work to keep the investment banking industry from bankrupting the world, needs to be very, very scary to plutocrats.

Oh, about that “farewell” in my headline: I do indeed promise to refrain from Hemingway puns and wordplay. For at least a month.

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How the state of Louisiana deals with its best and brightest


You could put this one in the “no good deed goes unpunished” file, or simply roll your eyes, sigh and mutter “Louisiana” on the exhale. If you read my last post, you know my brother in law, Folwell Dunbar, is a public-interest hero. While working at the Louisiana state agency that regulates charter schools, Folwell reported being offered a $20,000 bribe by someone apparently connected to Abramson Science and Technology Charter School in New Orleans, which he was in the process of auditing. Folwell turned down the bribe and did exactly what a good public servant should do — he wrote a report documenting the offer, and he reported the attempted bribe to the police. During the audit, he found the school had been grossly mismanaged and recommended that the state board of education take away its charter.

The state did nothing for a year, but then the New Orleans Times-Picayune dug up Folwell’s report via a public records request and wrote a story about it. Suddenly, the state decided it was time to suspend the school and investigate its performance.

But because this is Louisiana, Folwell did not receive the award or promotion he deserved for doing his job well and ethically and bringing a problem to light in the proper way, so it could be dealt with. Instead, a few days after the original Times-Picayne report (which, by the way, Folwell had no role in inspiring), he was fired with no real explanation. Here’s how the Times-Picayne put it:

Folwell Dunbar, a state education official who warned of problems at Abramson Science and Technology Charter School more than a year ago, confirmed Thursday that he was fired this week along with his boss at the department, Jacob Landry. The two were let go amid a new state investigation at Abramson prompted by fresh revelations about what Dunbar and other experts found during an audit of the school carried out in April and May of 2010. State records show Dunbar let his colleagues know last year that someone associated with the school tried to offer him money during the audit, an incident that brings to light the connections that Abramson apparently shares with Turkish-run businesses and charter schools in other states. He concluding [sic] that Abramson was at the very least “terribly mismanaged” and recommended that the state board of education take away its charter. … [Acting state Superintendent Ollie] Tyler provided few details behind her decision to fire two department officials this week. She did not mention their names and only cited a need for “new direction and leadership” at the department’s charter school office.

Although what I’ve described looks bad enough, there is more here than meets the eye. This Abramson outfit  seems to be part of an odd operation in which a number of apparently connected Turkish groups have gotten approval to run charter schools across America, some 120 of them. The New York Times has been investigating this remarkable indication of the international superiority of Turkish educational practices. I have heard indications that the FBI is investigating, as well, and if it isn’t, it should be.

Folwell Dunbar is a highly educated, deeply experienced, enormously dedicated educator and exactly the kind of person America needs in the trenches as it attempts to retool its educational systems to serve the country in an age of technological flux and international competition. In responding to this inappropriate and senseless firing, he has been his usual classy self, issuing a polite statement that says he is “terribly shocked and disappointed” by the way he’s been treated but proud of the post-Katrina education reform efforts he’d helped institute in Louisiana. He also called on the state to improve oversight of charter schools in a number of specific ways, all of which are desperately needed.

What’s happened here is an outrage, and I’d be saying so even if Folwell weren’t a brother-in-law and friend. But what’s an outraged person to do? Well, this post could be passed all around the social media web, so more people learn of the outrage, so more brains can think about good ways to respond. Also, as of this writing, the comments section under the Times-Picayune story on the firing is still open, and although I hate to attack messengers, the paper has not done its job well in reporting this grotesque firing, failing to push state officials (all the way up to Gov. Bobby Jindal) hard enough for an explanation and then failing to quote any kind of a good-government expert or group as to their thoughts about this obviously unethical retaliation. Of course, an outraged person and his friends might also fill up the email in-boxes and voicemail caches of Gov. Jindal — who keeps riding a reputation of being some kind of Mr. Clean in the swamp — with complaints about the hypocrisy of an administration that claims a reform agenda but cynically punishes the best and brightest of those who are trying to make reform a reality.

But I’m sure you can think of a response that’s even more effective than any of these. You’re smart. You read my blog. Thanks for your help on this.

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Brother in law in the public interest


There’s a strange and still-mysterious scandal in which some number of apparently connected Turkish groups have gotten approval to run charter schools across America, some 120 of them. The unusual nature of the “Turkish school” movment made the big-time news first in Texas, courtesy of the New York Times, which noted that although much of the opposition to the Turkish charters was based on good old-fashioned American xenophobia — the schools tend to employ Turkish teachers — the trend also raised financial questions. Those questions are a bit more prominent now because of an estimable package of stories in the New Orleans Times-Picayune about Turkish charter schools in Louisiana. The package is not just estimable, it has one of my relatives cast in the role of public-service hero, brother-in-law Folwell Dunbar (picture below). Here’s the bottom line from the T-P:

Inci Akpinar, the vice president of a company called Atlas Texas Construction & Trading, sat down with an official from the Louisiana Department of Education a little more than a year ago and made him an offer. As the state official, Folwell Dunbar, recalled in a memo to department colleagues, Akpinar flattered him with “a number of compliments” before getting to the point: “I have twenty-five thousand dollars to fix this problem: twenty thousand for you and five for me.”

At the time, Dunbar was investigating numerous complaints against Abramson Science & Technology Charter School in eastern New Orleans, which shares apparent ties to Akpinar’s firm as well as charter schools in other states run by Turkish immigrants. In fact, state auditors had already turned up startling deficiencies at Abramson. The records they kept of unannounced visits to the campus, as well as interviews with former teachers, paint a chaotic scene: classrooms without instructors for weeks and even months at a time, students who claimed their science fair projects had been done by teachers, a single special-needs instructor for a school of nearly 600.

Dunbar — having declined to take money from Akpinar — recommended more than a year ago that the state board of education yank Abramson’s charter. But the board ultimately stopped short of closing down the school, giving it a year to shape up under a “corrective action plan.”

Folwell also reported the bribe attempt to New Orleans police, and now the state has finally agreed to close the school and investigate. Those who haven’t dealt intimately with government have no idea how hard it is to do the right thing in these types of circumstances. All the peer pressure pushes in the direction of inaction and going and getting along. And let’s not forget, this happened in Lousiana. Ordinarily, because I try not to miss a chance to give Folwell a hard time, I’d make a sardonic brother-in-law joke here. This time, I think I’ll just sit back, read the story again, and be proud.

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A grand jury for Clarence Thomas


I don’t know that having 100,000 people do something via the Web is that big of a deal any more. I’m particularly not a fan of the “string him up” mob mentality that animates much of the left and right lobes of the ideological blogorrheasphere. I do, however, think there’s more than enough reason for the FBI to begin an investigation of the finances of Supreme Court Justice Clarence Thomas and his wife. I therefore am glad to see Credo Action’s petition drive seeking Thomas’ resignation garner the support of 100,000 netizens — not because I think Thomas should resign on Credo’s say-so, but because I think the progressive group’s petition may force federal law enforcers to do their jobs, investigate the Thomases and set the precedent for probing justices when there is good cause. For too long federal judges — and particularly The Nine — have behaved as small gods entirely immune to the laws they administer. A grand jury subpoena for a decade of the Thomases financial records would help deter such behavior in the future.

But why, you ask, should the Thomases be investigated? Basically, Justice Thomas “forgot” to include income his wife earned over the decades on his financial disclosure forms. It’s a hell of a large amount of forgetfulness, as outlined late in May by Mother Jones investigative reporter Stephanie Mencimer:

Following a time-honored Washington tradition of dumping required but embarrassing information on a Friday night before a major holiday, Supreme Court Justice Clarence Thomas finally released the details of his wife’s income from her year or so working for the tea party group Liberty Central, which fought President Obama’s health care reform law. His new financial disclosure form indicates that his wife, Virginia, who served as Liberty Central’s president and CEO, received $150,000 in salary from the group and less than $15,000 in payments from an anti-health care lobbying firm she started.

The disclosure was apparently prompted in part by Rep. Anthony Weiner (D-N.Y.), who had been needling Thomas (including on Twitter) for months to disclose how much money his wife earned from Liberty Central. That’s because challenges to Obama’s health care reform law are likely to end up before the Supreme Court sooner rather than later, and if Thomas and his wife benefited from her income working against the bill, the justice has an enormous conflict of interest in hearing any legal challenge. Thomas had failed to disclose Virginia’s income on his financial disclosure forms for 20 years; under pressure from Weiner and others, he had recently amended old disclosures to reflect hundreds of thousands of dollars she had earned working for the Heritage Foundation, the conservative think tank that also opposed Obama’s health care plan.

For the few extremely naive people among my readership: Wilfully submitting a false government document is a crime. It is a time-honored American tradition to influence and sometimes bribe public officials through their kinfolk. Have the Thomases broken a federal law? I have no idea. But the available public information certainly raises questions, and I’d like the Justice Department to answer them.

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California corruption roundup


I grew up in Chicago, with its legendary history of colorful corruption that continues to this day, Rod Blagojevich’s hair having recently been acquired by the museum that holds the mummified remains of Capone, Ness, Daley I,  and too many congress- and aldermen to count. I reported for a long time in Houston, which has had its own cast of larger-than-life sleazebags down through time, crossbred, of course, with the Texas Legislature, whose absurd venalities made Molly Ivins famous.

I suppose Chinatown should’ve tipped me off, but I really wasn’t ready for the scale of the take-anything-not-nailed-down culture when I came to California. More than a decade in the Bay Area and the Southland, however, have made me an avid watcher of the can-you-top-this performances of the actors involved in California’s greed and corruption industry. By now, you’ve no doubt heard of the city of Bell, where city officials paid themselves so much that they won the L.A. Times a Pulitzer Prize. But the corruption hits just kept coming this week, with the former administrator of the city of Vernon, who in his last year made $911,000 in salary, pleading guilty to misuse of city funds. Prosecutors had accused Bruce Malkenhorst of “illegally reimbursing himself for expenses such as golf outings, massages and meals — including paying off his personal Visa credit card — and getting the city to pay for his political donations.” With the guilty plea, he got two years’ probation and had to pay $95,000 in fines and restitution — but he gets to keep his $500,000 annual retirement package. This, as the current Vernon government twists and turns, trying to keep the state from disincorporating the town of less than 100 citizens, almost all of whom live in city-owned housing. Half a mil that can’t be touched, every year — Bruce Malkenhorst, take a bow!

But now, get off the stage, because the star has arrived. That would be Blue  Shield of California CEO Bruce Bodaken, who made $4.6 million last year. The lowdown from the L.A. Times:

In its report to the state, Blue Shield said that its 10 highest-paid executives earned more than $14 million total last year. The insurer identified the executives only by number, saying each earned $749,643 to $4,601,226. The top earner was listed as “chief executive officer,” Bodaken’s title.

The Times story gradually descends into wonderful deadpan comedy as Blue Shield officials try this, that and the other line to defend Bodaken’s salary, which has turned Malkenhorst into a footnote and sparked a private convocation of Chicago aldermen who have developed a sudden interest in the health care industry. If you consider public greed and corruption to be the most engaging spectator sports in America — and I certainly do — you should read this piece right to the bitterly funny end.

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A BS news decision about UBS


When people say they hate the media, they really mean they hate that the media focus on trivia, pop culture and political sideshows and minimize institutionalized corruption and the stranglehold that wealth has over U.S. government at, essentially, all levels. A prime example is this story, “UBS to pay $160 million to settle bid-rigging case,” which was writ very short and buried in the print newspaper I subscribe to, The Los Angeles Times, and which has this astounding lede:

Switzerland’s biggest bank, UBS AG, has agreed to pay $160 million to settle charges that it rigged the bidding process for investment contracts with cities and towns in 36 states.

The story goes on to explain that UBS folks paid kickbacks to city workers who were responsible for investing bond funds. Sometimes the kickbacks were meant to steer those funds to UBS; sometimes, apparently, UBS was supposed to be acting as an adviser to the municipalities, but used kickbacks and its expertise to steer business to other banks. Bid-rigging across the U.S. by the biggest bank in Switzerland seems, to me, to be kind of a big story. And it’s made even bigger by the story’s kicker: UBS won’t face criminal prosecution because it “admitted to the conduct and cooperated.” I’m sure this outcome — pay a tiny sum of money in the UBS scheme of things, suffer no real public humiliation and avoid criminal prosecution — will deter UBS and every other bank that interfaces with American government from ever paying a kickback again.

I’m not necessarily criticizing the prosecution decisions here; making public corruption cases is difficult, and sometimes less-than-optimum settlements are the best that can be gotten. I am criticizing the LA Times and other so-called mainstream newspapers for grossly underplaying this and other stories that illustrate the sickening power of wealth in the American political system. That tendency to minimize wrongdoing by wealth and power is bad for the country, of course — but it’s even worse for the media. It suggests to readers and viewers that media outlets are not protectors of the people but part of the country’s power structure. It says, loud and clear, that elite journalism is not part of the solution, but part of the problem.

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