Monday, March 28, 2011

Blind Trust & Pie Fraud (2000)

FROM THE ARCHIVES, March 28 - This originally appeared in a 2000 issue of Punk Planet. It's not a particularly graceful chunk of writing (I definitely don't use as many parenthetical asides these days). And it seems strange to remember that there was once a time when Halliburton wasn't as globally recognized as the Nazi army.

Smart businesses maintain cash reserves for emergencies. Businesses run by bozos, as is mine, maintain scheme reserves. When times get tight, previously ridiculed fundraising plots get dusted off for fresh inspection. A few years back, for example, a lease on a cheap and charmingly decrepit office space required that I buy one million dollars in liability insurance ($11 a month to cover me in the event of a UPS driver pulling a knuckle joint on my doorknob). One afternoon, reading over the insurance document with my lone employee, we discovered that the insurance covered lawsuits resulting from acts of "defamation, slander, harassment and humiliation". We came up with what is looking more and more like a credible business plan. Namely: on videotape, I order my employee to drop his pants, then smash him in the face with a pie and howl with laughter. He sues, an outraged jury awards the humiliated employee the million from my insurance company and we split the winnings down the middle. Although the scheme would probably result in a rate hike, it could be worth the risk. "Humiliation" is a hard thing to disprove. In essence, my intentions would need to be gauged, and there's no exit port for these intentions but whatever comes out of my mouth.

In August, GOP vice presidential candidate Dick Cheney accepted a choice retirement package, certain points of which are making me misty for that pie fraud scheme all over again. For services rendered to Halliburton - the Texas based oil services company he's served as chairman and chief exec these last five years - Dick walks away with $20 million in stocks and cash, instantly doubling his paper worth. A few editorials cried foul at the general, big-picture unfairness of the payout (thousands of employees were laid off during Cheney's watch), but of course the story is so legal and routine in today's economy that it doesn't go far except maybe as exhibit 884-J in the ongoing, stupifyingly obvious epic of US campaign finance corruption. And yet, wrapped up in Cheney's bonus is a puzzle distantly related to my proposed humiliation lawsuit. How would a hypothetical vice president Cheney handle the conflict of interest? How can the man's true intentions be gauged?

To handicap their immense advantages in contacts and insider information, high level public officials are bound by strict laws when reentering the business world. There are lag times, for example, of one to five years before starting at any company whose interests intersect with their old post. Rules are murkier when someone travels in reverse, from business back into government. The "Chinese Wall" - procedures used by investment firms to avoid illegal use of inside information - grows much more complex in an org as large and ridiculous as the U.S. government (statement of disclosure - I encountered the Chinese Wall in 1988 during a very tense 37 minutes of employment on Wall Street as a "cold caller", a job whose description still eludes me. My new boss took me aside and, in hushed tones, pointed down two hallways; left for soda machines, right for "off-limits, sensitive information that won't be in the Wall Street Journal until tomorrow morning" I nodded reverently, veered left, bought my Pepsi and sprinted in disorientation out of the building). The president and vice president, for example, are required by law to address any conflicts arising from their financial holdings, usually by establishing a "blind trust". Someone else handles their investments and doesn't give them any details. If Clinton knows not that he owns 800,000 shares of Exxon, the theory goes, the less likely he'll be to manipulate national policy to influence the value of those shares (although this first family allegedly waited 6 months before setting up their own blind trust).

Bush says he and his running mate would set up blind trusts if elected, which is nice because they'll have to on account of they're both mega-rich and it's the law. Cheney says he'll sell his stock if he gets elected. But not until then, which already gives us some insight. Even issues raised on the campaign trail can theoretically affect stock prices, which can affect how much money this guy gets. Cheney's candidacy is one of the most conflict-seeped of the last half century. If you don't count Perot (whose company wasn't publicly traded) or Forbes (on the grounds of his being a mutton barely able to propel himself about under his own volition), we have to dig back to Wendell Willkie's entanglements with utility companies in 1940. But Cheney's pretty versed in this stuff. He's already profited hugely off US foreign policy he himself was responsible for. Grateful Saudi and Kuwaiti sheiks "saved" by then-Defense Secretary Cheney's prosecution of the Gulf war welcomed Dick with open arms on recent lobbying trips. Halliburton, a company that was pulling in hundreds of millions before his arrival, was working in the billions by this summer. War gave Cheney "clout", one of the great unquantifiables. How much more clout will his candidacy bring? And Big Oil (of which Halliburton is a component, although not an actual oil company itself) also operates with its own interests. Playing dual sides of the fence, both domestically (Cheney lobbied for and won the $900,000,000 Kosovo cleanup contract from the Clinton administration last year) and abroad (Cheney lobbied on behalf of lifting sanctions to oil rich "despot countries" Iran and Libya, and has, at times, had to align himself with OPEC's price hikes, supporting a massive monopoly that'd be illegal under US antitrust laws) is part of Cheney's background. Bush W.'s main advisor Karl Rove took $150,000 from Philip Morris while dishing up the counsel, and Rove's shrug-off of any apparent conflict of interest sums the mode. Bush and Rove "never discussed it", case closed. That's the beauty of conflicts of interest. In essence, Cheney's intentions need to be gauged, and there's no exit port for these intentions save whatever comes out of Cheney's mouth.

Weird questions of causality arise. Al Gore receives about $20,000 in royalties off a Tennessee zinc mine every year, an amount too small to trigger a blind trust. Would a blind trust be required if he made $40,000? $100,000? If a hypothetical President Gore invaded zinc-rich Namibia and inched US zinc prices that much higher, would we really be able to gauge his full intentions? (Punchline: the Gores own 25 times this amount in Occidental Petroleum stock.) Even Ralph Nader owns over three million dollars in technology stocks, companies whose fortunes could be deftly manipulated in a series of lunchtime phone calls from the office he seeks (statement of disclosure - I was fired from Nader's NY Public Interest Research Group in 1986 after a very tense 3 days of employment, and the episode has left a hardened kernel of rage in my heart for all time). Nader was actually accused of conflicted interests 30 years ago, when he issued a report blasting an IT&T merger, then profited off IT&T stock he sold short two days before the merger was approved. "Mere coincidence" he told a reporter, which is accused corporation shorthand for Prove It.

This will be my mantra during the civil case against my alleged acts of humiliation. And when an enraged attorney thrusts a copy of this very column in my face, I'll huff, "mere coincidence". Nearby, a single tear will silently roll down my humiliated employee's cheek.