Category: Spin Doctors

Editorial Writing At Its Most Pathetic

It might seem incongruous for the conservative San Diego Union-Tribune to advocate putting public pension dollars in Iran.

But that’s exactly what it called for in this overheated editorial in today’s newspaper.

The subject of the newspaper’s ire is a 2007 California law that prohibits CalPERS and CalSTRS, the giant state pension funds, from investing in a company with business operations in Iran.

The fact that CalPERS hasn’t complied with the law was brought to the public’s attention through the efforts of Dave Maass in San Diego CityBeat.

The U-T calls the California Public Divest from Iran Act “political posturing, pure and simple.” The stated goal of the bill’s author La Mesa Assemblyman Joel Anderson — punishing Iran for its support of international terrorism — is dismissed as “nonsense.”

The real targets of the editorial are Jerry Brown and Steve Poizner, two state officials who are running for governor. Brown is guilty of “unadulterated folly” for demanding the giant state pensions comply with state law.

The U-T is entitled to its opinion, but the editorial is misleading, distorting, and just plain wrong on a number of fronts:

The California Public Divest from Iran Act requires CalPERS and CalSTRS “to sell stock holdings in international companies that did business with Iran.”

Not quite. The law bars companies that invest or operate in Iran’s defense and nuclear sectors or develop oil and natural gas resources.

You can still sell soap and medical equipment to Iran.

Is this really so unreasonable?

“And if we believe that the state government should deter investments in nations that are at geopolitical risk, why would Iran be the only nation on the list?”

Well, it’s not.

Current law also requires CalPERS and CalSTRS to sell or transfer investments in Sudan. In the 1980s, the state approved similar measures to allow state entities to divest in South Africa in order to protest its apartheid policies.

“The professionals advising CalPERS and CalSTRS on portfolio strategies were obviously better qualified to evaluate investment danger.”

What professionals are they referring to?

The professionals who lost $1 billion by investing CalPERS assets in LandSource Communities, a bankrupt company that owns raw land in California. Or the professionals who advised the pension fund to put $500 million in Peter Cooper Village in New York, now in foreclosure?

Perhaps they mean the shady, unregistered professional placement agents who collected millions of dollars in payments from fund managers seeking business from CalPERS?

“Among the many respected international firms whose affiliates do business with Iran are Royal Dutch Shell, Siemens AG, Hyundai and Alcatel. Their operations are perfectly legal under U.S. and international law.”

First off, Hyundai no longer has active business operations in Iran, as CalPERS notes in its 2009 report on its Iran investments. Siemens recently announced it is pulling out by mid-2010.

Second, “respected” Siemens AG settled a U.S. Justice Department investigation into the company’s bribery of foreign officials by paying a record fine and admitting systemic violations of the Foreign Corrupt Practices Act.

Third, thanks to the Iran divestment act, we now know about CalPERS’ investments in Chinese state-owned firms:

  1. China Petroleum & Chemical Company (Sinopec), Asia’s biggest oil refiner, which signed four exploration contracts in Iran. 
  2. CNPC Hong Kong Ltd., which has a service contract for the Masjed Soleiman oilfields and is developing gas fields.
  3. CNOOC Ltd., the state-owned Chinese oil firm that was thwarted in its 2005 effort to buy Unocal.

These companies are investing in Iran (and Sudan) to secure reliable energy supplies for China, now the world’s second biggest oil consumer. Sooner or later, that will put them directly at odds with U.S. interests.

If, as the U-T maintains, CalPERS’ investments in these firms aren’t all that significant, then why should we support them with public pension dollars?

Update: CityBeat‘s latest report finds CalPERS is correcting its annual report as it has no holdings in Sinopec.

Forbes on Tom Gores and the U-T

From the Forbes 400 issue I picked up last week:

Gores has his hands full with the San Diego Union-Tribune, which he bought in May for an estimated $30 million, based on current industry multiples. Three days after the deal closed, Platinum laid off 192 people; 112 additional cuts came in August. Gores saw no other way: The newspaper (average daily circulation: 300,000) had less than $10 million in EBITDA [earnings before taxes, depreciation, amortization] on revenue of less than $255 million, down from $100 million on revenue of roughly $360 million in 2005. “The outlook was for an unprofitable 2009,” says a Platinum spokesman.

What makes Gores think he can revive a near-dead enterprise? He likes the market. San Diego is still relatively affluent and culturally conservative; few denizens read the Los Angeles Times. He also prizes the assets — a 500,000 square-foot headquarters and warehouse in Mission Valley, plus 50,000 square feet of offices in La Jolla, San Marcos and Carlsbad.

But, oh, the challenges. The U-T was perhaps the last paper in the U.S. that relied on cut-and-paste layouts; Platinum has spent several million dollars on new publication software. To replace the loss of national advertisers, especially retailers and real estate firms, and classifieds, the paper is refocusing on small businesses. Gores has also updated the Web site with more social media, blogs and podcasts. He has reinstated 401(k) matching and reversed pay cuts by the previous owners, the Copley family. He expects a slight operating profit this year.

Gores plans to buy more distressed media companies. Lately his name has surfaced among potential buyers of the Boston Globe and BusinessWeek. Platinum’s response: “Don’t believe everything you read in the papers.”

For those keeping score at home, Gores is No. 147 with a $2.2 billion fortune.

Pentagon blames FBI in DC for al-Awlaki mixup

Remember the public back-and-forth between the FBI in San Diego and Washington over who dropped the ball on the Fort Hood shooter’s e-mails to a radical cleric in Yemen? CBS’ David Martin (author of the best CIA book evah) has this:

(CBS)   Less than a month after major Nidal Hasan allegedly killed 13 people at Fort Hood, Texas, the Pentagon’s top intelligence officer sent the White House a report detailing an earlier failure to connect the dots. It reads like a dress rehearsal for the Detroit bomber case, reports CBS News chief national security correspondent David Martin.

According to that still-classified report, the terrorism task force responsible for determining whether Hasan posed a threat never saw all 18 e-mails he exchanged with that radical Yemeni cleric Awlaki whose communications were being monitored under a court ordered wiretap.

After the Washington task force decided Hasan was not dangerous, it never asked to see his subsequent communications with Alwaki….

None of the e-mails specifically mentioned Hasan’s plans for a shooting rampage at Fort Hood, but because he was a member of the military the FBI showed them to a Pentagon investigator with the note “comm” written on it. To the FBI that meant “commissioned officer.” The Pentagon investigator thought it meant “communication.”

As a result, there were no red flags that an army officer was e-mailing a radical cleric suspected of being a talent spotter for al Qaeda.

Bottom line: the lessons of the Fort Hood shootings were not learned in time to avert the near disaster on Christmas day.

Bottom line No. 2: The FBI and Pentagon aren’t speaking the language.

The story doesn’t say it but the report is by the Pentagon’s top spook, USDI James R. Clapper.

Pakistani President Ali Zadari on Money Laundering

The International News in Pakistan reports today that President Asif Ali Zardari says he was cleared in a 10-year-old money laundering investigation by the US Congress.

The Presidency has officially claimed that the US Congressional Subcommittee on Money Laundering had cleared Asif Ali Zardari, as it had found no evidence that Citibank or any other private bank knowingly helped Mr Salinas (of Mexico), or any other criminals launder dirty money.

This official statement has been released by the spokesman of the president Farhatullah Babar in response to questions sent to him about the details provided by the Citibank’s top administration to the US Subcommittee on Money Laundering in November 1999.

This comes as a Pakistani anti-corruption agency found that Zardari had accumulated assets of $1.5 billion through illegal means. Zardari, who was known as “Mr. 10 percent,” is the notoriously corrupt widow of the late former Pakistani Prime Minister Benazir Bhutto.

An investigation in 1999 by the U.S. Senate Permanent Subcommittee on Investigations into private banking and money laundering examined that Zardari had three accounts at Citibank Switzerland private bank. Some of the accounts allegedly were used to disguise $10 million in kickbacks for a gold importing contract to Pakistan.

Another of Citibank Switzerland’s high profile clients was Raul Salinas, the infamous brother of former Mexican President Carlos Salinas.

Swiss authorities froze more than  $100 million – allegedly linked to drug trafficking — in Salinas’ accounts. That included  about $27 million Citibank Switzerland private bank.

The Senate subcommittee notes a striking coincidence between the two men: “The Zardari accounts in Switzerland were opened one day before Raul Salinas was arrested.”

Zardari’s accounts were opened February 27, 1995. Salinas was arrested and imprisoned in Mexico on suspicion of murder the following day.

According to the Senate subcommittee report:

On the day following the arrest, a number of telephone conversations took place between private bank personnel in New York, London and Switzerland. The telephone conversations to London were recorded on an automatic taping system. The tape transcripts indicate that the private bank’s initial reaction to the arrest was not to assist law enforcement, but to determine whether the Salinas accounts should be moved to Switzerland to make discovery of the assets and bank records more difficult. This suggestion was made by the head of the private bank at the time, Hubertus Rukavina, and discussed by several employees. It was not acted upon, apparently because it was agreed that London bank records would disclose the funds transfer to Switzerland. Private bank employees also tried to determine whether to require immediate repayment of an outstanding $3 million loan that had been made to Trocca (a Salinas family trust), so that if the funds in the Trocca accounts were frozen by authorities, Citibank funds would not be at risk.

Rukavina also played a role in the Zardari accounts. Specifically, he was involved in the decision to allow a Swiss lawyer to open three accounts on behalf of Zardari.

Rukavina told the Senate subcommittee staff that he did not make the decision to open the accounts but referred the matter to the head of private bank operations in Pakistan, Deepak Sharma.  According to Mr. Rukavina, he never heard whether the accounts were ultimately opened.

A Swiss judge found in 2003 that Zardari was guilty of money laundering, and a Swiss prosecutor closed the investigation last year, saying there wasn’t enough evidence to bring Zardari to trial.

Jihadis have learned from Internet pirates

AP has a story out reporting that the number of Arabic-language jihadi websites has declined markedly since the Sept. 11 attacks from 1,000 to around 50. Meanwhile, the number of English language sites sympathetic to al-Qaida has grown.

This article may fuel the growing hysteria over the Fort Hood shootings. The suspected shooter, Maj. Nidal Hasan, had e-mail contact with a Yemeni preacher who ran an English-language Website and called Hassan a “hero” on his blog.

It is easy to get the wrong impression from the AP story. The jihadis are much more sophisticated than this article implies.

It’s true that radical websites such as al-Qaida’s official site, alneda.com, have been shut down, but Osama bin Laden’s followers have figured out new ways to communicate with audiences in the Arabic-speaking world, which — let’s face it — supplies the overwhelming majority of recruits.

Jihadis have adopted the tools of Internet pirates who illegally share music, movies, software and porn, according to a report from West Point’s Combating Terrorism Center:

 The process works as follows. When a new official jihadist group notice, video or audio file is released, multiple users upload the file to various file-hosting websites, creating hundreds of URL links to where that file can be downloaded. A large list of links, or virtual library of hyperlinks, is then posted on multiple jihadist web forums. Once a user reads the post, they then duplicate the forum posting on another forum. This practice is welcomed and encouraged by the rest of the readers, which allows the original user to gain prestige and continue ascending in the forum’s “roster.”

These files can be easily and anonymously uploaded from Internet cafes to file-sharing sites like Rapidshare. Many of these links expire quickly or are disabled by the file-hosting company, yet the sheer number of hyperlinks uploaded makes it almost impossible to stop the message from spreading.

Read the latest issue of the CTC Sentinel here (.pdf)