Monday, February 27, 2012

Off With Their Heads!

Comment: Punish managers, not shareholders, for corporate crimes

Ian Williams says it can’t be right that managers who defraud investors keep their jobs (and bonuses), while regulators confiscate shareholder funds to punish the company

Two years ago, a divided US Supreme Court ruled that corporations are persons and that their ‘personal’ First Amendment right to free speech invalidates laws designed to achieve a measure of financial fairness in elections.

Ironically, the key text invoked – the post-Civil War Equal Rights Amendment – was for decades used to justify segregation and disenfranchisement of former slaves and their dependants, so such perversion of its use is hardly novel.

But no one, not even the most fervid intelligent designer, has suggested that the Supreme Being has breathed a soul into these ‘persons’ to make them real people.

In effect, that means a corporate person is more equal than the rest of us. As the bumper sticker would have it: ‘I’ll believe corporations are people when Texas executes one.’

How should they pay?

So how do you punish a corporation that has committed mayhem, killed miners, polluted the oceans or bankrupted a country? If corporations did have souls, they might burn in Hell. But they don’t, so instead we have fines and ‘settlements’.

Perhaps fired up by the Occupy Wall Street protestors, New York Judge Jed Rakoff lifted the stone of the SEC settlement in the latest Citi case and found underneath many solemn pledges not to repeat past sins.

As he noted, they always do, which is contempt of the court that authorized the settlements. Yet no one has been brought back to the dock.

The $700 mn settlement between the SEC and Citi for its dodgy mortgage portfolio was supposed to be punishment for defrauding shareholders. Legally, however, the shareholders own the company. Talk about moral hazard!

Senior management members defraud investors, keep their jobs and award themselves big bonuses for it; meanwhile, the SEC confiscates shareholder funds to ‘punish’ the company.

The computation is as dodgy as subprime loan evaluation. Punishing the victims, employees and investors while rewarding the malefactors is a bit like a court finding Lizzie Borden guilty but then ordering her father’s estate to buy her a new axe because the thickness of his skull blunted her previous one.

Fire the managers

‘Off with their heads!’ must be the answer. Not literally; rather the removal of the head honchos at offending companies, given that they are the real offenders, setting their companies on a life of crime and mayhem.

At the very least, we should see the dismissal of senior executives, corporate counsel, CFOs, presidents and chief executives. And perhaps also the dissolution of entire boards that failed in their elementary task of supervising management.

I would suggest bringing back the pillory for the offenders, but shaming the shameless would be futile. Impoverishing the greedy, on the other hand, offers both justice and deterrence, so let’s roll with confiscation instead.

Instead of company treasuries’ paying those settlements, senior management should stand proxy, serving prison time and having their personal fortunes confiscated.

We will let them keep their BlackBerrys and a bicycle to look for another job, and give them a paper cup to stand collecting loose change near Wall Street.

They could shout out warnings to budding future executives that there are snakes as well as ladders in the boardroom.

Saturday, February 25, 2012

Rocky Road to Damascus

Ian Williams


by Ian Williams
Saturday, February 25th, 2012
One thing sure about the parlous situation in Syria is that in their religious obtusity none of the Republican candidates have anything coherent or useful to say about it. But to be fair, Pharisaical hypocrisy is the dominant global mode for Syria. While we can, and indeed we should, deplore the Russian and Chinese vetoes of the United Nations Security Council resolution on Syria that they had already negotiated down to platitudinous inefficacy, the United States condemnation of Russia comes strangely from the record holder for UN vetoes, most recently of a resolution expressing the President’s own declared position on Palestine.
And if President Bashar al-Assad’s half-life is as short as it looks at the moment, Moscow committed not just a crime, but a spectacular long-term financial and diplomatic blunder.
Among the few to emerge with ­redibility have been the UN Secretary General Ban Ki Moon and the High Commissioner for Human Rights Navi Pillay who were prepared to condemn the Ba’athist violence against their own ­people, just as they have condemned ­sraeli behaviour against Palestinians. In that context, after the veto in the Security Council, and Pillay’s Human Rights ­Council report, the Americans supported a procedural innovation: an immediate UN General Assembly resolution reiterating the points in the vetoed Security Council attempt. However, the support was undercut with constant ­references to the “non-binding” nature of General Assembly resolutions.
This is an oblique homage to the Palestinian habit of taking Security ­Council resolutions vetoed by Washington to the General Assembly under the ­“Uniting for Peace” procedure that the US had pioneered during the Korean War in order to by-pass Moscow’s veto. Hypocrisy often disappears up its rectum like that.
Similarly pushing for the Assembly resolution are Saudi Arabia and Bahrain, each with their own culturally specific ways of dealing with unarmed protestors, not to forget Morocco, 40 years into its illegal occupation of Western Sahara. Perhaps most outstandingly Sudan, whose president is under indictment by the International Criminal Court over Darfur, still voted for the resolution.
It is Assad’s proximity to Iran that ­impels the sundry oil-kings into common ground with the pro-Israel neo-conservatives and, almost mind-bogglingly, al Qaida. Such a rogues’ gallery lined up against him is almost enough to make you suspect Assad of hidden virtues until you look at the admirers of Slobodan Milosevic, Saddam Hussein and Muammar Gaddafi lionising him.
Taking their cue from Moscow, opponents of international action against Assad also complain that insurgents are now fighting back, as if there were some moral equivalence between heavily-armed professional forces and a handful of deserters and rebels who only took up arms after year of one-sided repression.
George Orwell famously said: “There is hardly such a thing as a war in which it makes no difference who wins. Nearly ­always one side stands more of less for progress, the other side more or less for ­reaction.” In the complex web of parties ­involved in and around Syria, Assad clearly represents reaction. However, it could be hard to unequivocally categorise all the insurgents as on the side of progress.
But for progress, Assad surely has to go – and soon. The longer he lingers, the more danger there is that Syria slides into a sectarian mess. So far, no one has suggested a referral to the International Criminal Court, which would have sent a message to the regime and its supporters. On the other hand, that offers an escape route. One could almost foresee a palace in the Gulf in the Assad family future.
In any case, the international community needs to offer protection to the Alawites and other minorities against the risk of pogroms and to supervise a transition to an elected government. At least the US and the West realise that it can’t be them, but Moscow and Beijing still have an opportunity to become part of the solution instead of perpetuating the problem. A public withdrawal of support might persuade the regime that it was time to stop the shooting.
In the end, the UN Security Council, for all its faults, is the only body that could legitimately direct whatever belated ­peacekeeping process comes together.

The UN Before it was Founded

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With Dan Plesch on Catskill Review of Books 1900 EST http:\\  on US and UN-3 yrs before 1945!  And see AP report

Friday, February 03, 2012

My interview with Mike Mayo