Welcome to another Texas vs. California update!
Archive for the ‘Waste and Fraud’ Category
Time for another Texas vs. California update:
Here’s a potentially huge scandal that’s just unfolding now:
An unprecedented leak of more than 11 million documents, called the “Panama Papers”, has revealed the hidden financial dealings of some of the world’s wealthiest people, as well as 12 current and former world leaders and 128 more politicians and public officials around the world.
More than 200,000 companies, foundations and trusts are contained in the leak of information which came from a little-known but powerful law firm based in Panama called Mossack Fonseca, whose files include the offshore holdings of drug dealers, Mafia members, corrupt politicians and tax evaders – and wrongdoing galore.
The law firm is one of the world’s top creators of shell companies, which can be legally used to hide the ownership of assets. The data includes emails, contracts, bank records, property deeds, passport copies and other sensitive information dating from 1977 to as recently as December 2015.
It allows a never-before-seen view inside the offshore world — providing a day-to-day, decade-by-decade look at how dark money flows through the global financial system, breeding crime and stripping national treasuries of tax revenues.
There’s 2.6 terrabytes of data released, including Donald Trump’s favorite Russian dictator:
The most extraordinary allegations in the archive revolve around Putin’s closest associates, including Sergey Roldugin, a close friend since the late 1970s when Putin was a young KGB agent.
Roldugin is a cellist for the St Petersburg orchestra, yet his name appears as the owner of offshore companies that have rights to loans worth hundreds of millions of dollars. A Russian news service report in 2010 disclosed that he owned at least three per cent of Bank Rossiya, Russia’s most important bank.
When Mossack Fonseca helped open a bank account in Switzerland on behalf of Roldugin, the application form asked if he had “any relation to PEPs (politically exposed persons) or VIPs.”
The one-word answer was, “No.” Yet, Roldugin is godfather to Putin’s daughter Mariya.
“Roldugin is, by his proximity to a serving head of state, clearly an exposed person,” Mark Pieth, a former head of the Swiss justice ministry’s organized crime division, told the ICIJ team.
The documents show how in 2008 a company controlled by Roldugin had influence over Russia’s largest truck maker Kamaz, joining with several other offshore companies to help another Putin insider acquire majority control of the company. They wanted foreign investment, and German carmaker Daimler later that year bought a 10 per cent stake in Kamaz for $250 million.
The offshore company that connects many Putin loyalists is Sandalwood Continental Limited in the British Virgin Islands. Roldugin was a shareholder until 2012, as was Oleg Gordin, a little-known businessman whom incorporation documents describe as linked to “law enforcement agencies.”
The files also mention a company co-owned by Putin friend Yury Kovalchuk, the largest shareholder of Bank Rossiya. Kovalchuk was among those targeted by US sanctions in 2014 in retribution for Russia’s invasion of Crimea. Another friend, Arkady Rotenberg, Putin’s judo partner and a billionaire construction mogul, openly obtained companies through Mossack Fonseca. The US Treasury Department, when sanctioning him in 2014, suggested that the oligarch acted on behalf of “a senior official.”
That was widely believed to mean Putin, whose fingerprints were not on any offshore company.
The fact that Putin is lining the pockets of himself and his cronies is hardly shocking, but having concrete proof of it is a different thing altogether.
Strangely, the web page for the papers run by the International Consortium of Investigative Journalists, doesn’t seem to have any Americans fingered by the papers yet. There’s a good chance that could change.
Been a while since I did a Texas vs. California update, due to Reasons, so here’s one:
While all the numbers are constantly in flux, in 2014-15, the California Public Employees’ Retirement System saw its status fall from 76.3 percent funded to 73.3 percent, likely due to the fact that investment returns fell far below expectations. The long-neglected California State Teachers’ Retirement System, as of June 30, 2014, was 69 percent funded. Combined, the systems report unfunded pension promises of more than $160 billion.
The current budget shows steep and consistent increases in state funding to the two systems. Whereas CalPERS is set to receive $4.3 billion in state contributions in the 2015-16 fiscal year, which ends June 30, it could receive $4.8 billion the following year. CalSTRS is to receive $1.9 billion this year and about $2.47 billion next year.
In comparison, CalPERS and CalSTRS received $3.1 billion and $1.26 billion, respectively, in 2011-2012.
While it is perfectly reasonable for costs to rise over time, the rate that costs have risen for the two giant pension funds is mainly a consequence of California trying to play catch-up for years of inadequate forecasting and planning, aggravated by investment losses. But because the pension systems are run for public employees – CalPERS’ board is full of former public employee union leaders – the necessary changes and adjustments have been made far too late to avoid calamity.
(Hat tip: Pension Tsunami.)
California has given us three new truths about government.
One, the higher that taxes rise, the worse state services become.
Two, the worse a natural disaster hits, the more the state contributes to its havoc.
And three, the more existential the problem, the more the state ignores it.
California somehow has managed to have the fourth-highest gas taxes in the nation, yet its roads are rated 44th among the 50 states. Nearly 70 percent of California roads are considered to be in poor or mediocre condition by the state senate. In response, the state legislature naturally wants to raise gas taxes, with one proposal calling for an increase of 12 cents per gallon, which would give California the highest gas taxes in the nation.
In California, costs to run a business are higher than in other states and nations largely due to the states tax and regulatory policies and the business climate shows little chance of improving. It is understandable that from 2008 through 2015, at least 1,687 California disinvestment events occurred, a count that reflects only those that became public knowledge. Experts in site selection generally agree that at least five events fail to become public knowledge for every one that does. Thus it is reasonable to conclude that a minimum of 10,000 California disinvestment events have occurred during that period….For about 40 years California has been viewed as a state in which it is difficult to do business. Gov. Jerry Brown’s Administration’s less than candid approach regarding the business climate has misled the Legislature, the news media and the public about the flight of capital, facilities and jobs to other states and nations.
The study also shows that Texas had the most new facilities opening up in the nation in 2014, with 689. California, despite being the most populous state, tied for 12th with 170.
Finally, some news from California that doesn’t involve radical islamic jihadis killing innocent people…
The Census Bureau’s 2012 decision to begin releasing an alternative measure of poverty that included cost of living has appeared to have far-reaching effects in California as politicians, community leaders and residents react to the new measure’s depiction of the Golden State as the most impoverished place in America.
The fact that about 23 percent of state residents are barely getting by has helped fuel the push for a much higher minimum wage and prompted renewed interest in affordable housing programs. It’s also put the focus on regional economic disparities, especially the fact that Silicon Valley and San Francisco are the primary engine of state prosperity.
While the tech boom and the vast increase in housing prices it has triggered in the Bay Area are national news, prompting think pieces and thoughtful analyses, the poverty picture in the state’s largest population center isn’t covered nearly as fully. Although the fact is plain in Census Bureau data, it’s not commonly understood that Los Angeles County is the capital of U.S. poverty. A 2013 study by the Public Policy Institute of California and the Stanford Center on Poverty and Inequality based on 2011 data found 27 percent of the county’s 10 million residents were impoverished, the highest figure in the state and the highest of any large metro area in the U.S.
“Though Texas legislators did an excellent job by holding the total budget below population growth plus inflation during the last session, the state’s weak spending limit remains a primary cause of excessive budget growth during the last decade,” said Heflin. “Legislators can strengthen the limit by capping the total budget, basing the growth on the lowest of three metrics, and requiring a supermajority vote to exceed it. These reforms would have helped keep more money in Texans pockets where it belongs.”
It’s been a big week for Democratic Party corruption.
First, Democratic Speaker of New York’s Sheldon Silver was convicted of all the corruption charges against him:
“The Democratic speaker of the state Assembly for more than 20 years, Mr. Silver was found guilty by a 12-person federal jury in Manhattan of four counts of honest-services fraud, two counts of extortion and one count of money laundering.”
For years, New York State has ranked among the most litigation-friendly places in America. (Those unlucky enough to get caught up in the state’s civil justice system call it “Sue” York.) Lawsuit reform has bypassed New York largely because one of the state’s most powerful politicians, former assembly speaker Sheldon Silver, was himself a plaintiff’s attorney who benefited from the system he helped create. Over the years, Silver not only blocked attempts to change unique features of New York’s civil justice system, but he also appointed other trial lawyers to key legislative positions, including on the crucial Assembly Judiciary Committee. So it’s not shocking that when Silver himself finally fell from grace, the case revolved around state grants Silver arranged to a cancer researcher, who then referred mesothelioma patients back to the former speaker’s law firm so that they could become clients in the lucrative asbestos-litigation business.
Silver thought the people’s money was his money. For years, he helped lead a regime in which legislators from both parties received millions of dollars to distribute as “earmarks”—money handed out directly by elected officials to favored organizations outside of the state’s regular contracting or granting process. The New York Times dubbed Silver the “king of earmarks” because he used them as a way of exercising power over members of his political caucus. In doing so, Silver was accountable to no one. He handed out millions of dollars of state money, for instance, to the Metropolitan Council on Jewish Poverty, an organization run by William Rapfogel, the husband of Silver’s longtime chief of staff. Judy Rapfogel sat in on meetings about funding for her husband’s group, according to press accounts. In 2013, William pled guilty to stealing some $3 million over a nearly 20-year period from the largely government-funded Met Council. He served 14 months of a 3- to 10-year sentence in an upstate prison and recently entered a supervised work-release program.
In New York, the earmark process is so corrupt that politicians can create their own nonprofits and then finance them with taxpayer money—a remarkably blatant display of conflict-of-interest.
Meanwhile, in Rahm Emmanual’s Chicago:
THERE’S been a cover-up in Chicago. The city’s leaders have now brought charges against a police officer, Jason Van Dyke, for the first-degree murder of 17-year-old Laquan McDonald. But for more than a year, Chicago officials delayed the criminal process, and might well have postponed prosecution indefinitely, had it not been for a state court forcing their hand.
They prevented the public from viewing crucial incriminating evidence — first one police car’s dashboard camera video; now, we learn, five such videos in total. And these senior officials turned a blind eye to the fact that 86 minutes of other video surveillance footage of the crime scene was unaccountably missing.
The video of a police shooting like this in Chicago could have buried Mr. Emanuel’s chances for re-election. And it would likely have ended the career of the police superintendent, Garry F. McCarthy.
And so the wheels of justice virtually ground to a halt. Mayor Emanuel refused to make the dash-cam video public, going to court to prevent its release. The city argued that releasing the video would taint the investigation of the case, but even the attorney general of Illinois urged the city to make it available.
Then the city waited until April 15 — one week after Mr. Emanuel was re-elected — to get final approval of a pre-emptive $5 million settlement with Mr. McDonald’s family, a settlement that had been substantially agreed upon weeks earlier. Still, the city’s lawyers made sure to include a clause that kept the dash-cam video confidential.
“Health investigators with the state of Texas went into Planned Parenthood’s clinic in San Antonio, Houston, and Dallas Thursday morning, but declined to say why.”
“Earlier this week, the [Texas Health and Human Services Commission] alleged that Planned Parenthood “committed and condoned numerous acts of misconduct captured on video that reveal repeated program violations and breach the minimum standards of care required of a Medicaid enrollee.”
I’m sure Planned Parenthood’s backers will soon tell us why abortion is such an important and fundamental right that the organization should be allowed to commit Medicaid fraud at will…
Time for another Texas vs. California update: