'Dark Money' Hits $172 Million In 2012 Election, Half Of Independent Group Spending

Original Link: http://www.huffingtonpost.com/2012/07/29/dark-money-2012-election_n_1708127.html

By Paul Blumenthal

In May, the conservative nonprofit group Crossroads GPS, founded by famed political strategist Karl Rove and other leading Republican operatives, ran a television ad showcasing a fictional mother who had supported Barack Obama in 2008. The mom was disappointed in Obama's performance, saddled as she was with two adult children who had moved back in with her due to the stalled economy. The ad was the centerpiece of a $25 million campaign -- one of the biggest ad buys so far in the 2012 election cycle.

Despite the fact that the ad's central message was the failure of the president, it wasn't considered a campaign ad under election laws. Although the group spends tens of millions of dollars on ads targeting Democratic candidates, Crossroads GPS is organized as a "social welfare nonprofit" under section 501(c)(4) of the tax code and therefore not subject to the rules governing political organizations.

Whereas super PACs are required to register with the Federal Election Commission and disclose their donors -- people like Sheldon Adelson, the casino magnate who has given millions of dollars to conservative groups so far this election cycle -- nonprofits like Crossroads GPS and trade associations like the U.S. Chamber of Commerce are allowed to keep their donors secret. As a result, there is a great flood of campaign spending this election cycle for which there is no official paper trail.

"Clearly there's a market for people who want to influence elections without identifying themselves," said University of California-Irvine election law professor Rick Hasen. "For every Sheldon Adelson, who wants to show how important he is, there are many people who want to keep their identity secret."

Through July 26, politically involved groups that do not disclose their donors have spent at least $172 million on campaigns that include television, radio and Internet advertising, according to a Huffington Post review of FEC reports, advertising buys, press releases and news stories. Total spending by these groups is likely far greater, since they are required to report only a fraction of their spending to the FEC. Politically involved independent groups that publicly disclose their donors, including super PACs, have spent $174 million so far this election cycle.

"For this cycle, we know almost nothing," said Center for Responsive Politics communications director Viveca Novak, referring to those behind the spending of non-disclosing groups.

Crossroads GPS is the biggest spender, with $85.9 million in spending in announced advertising since the beginning of 2011, according to its press releases.

About three-quarters of that money -- $65.2 million -- is reported to have gone solely into ad campaigns targeting President Obama in swing states or on national cable. Another $11.5 million has specifically targeted Democratic Senate candidates facing tough elections. Crossroads GPS reported one $7 million campaign that was split between attacks on Obama and five Senate candidates.

Other groups that do not have to disclose their donors have also peppered swing states with TV ads.

Americans for Prosperity and the American Energy Alliance, both linked to the billionaire business titans Charles and David Koch, have waged multimillion-dollar advertising campaigns. The conservative American Future Fund has also dumped millions into attacking President Obama.
Non-disclosing groups on both sides of the aisle -- including the conservative American Action Network, American Commitment and Chamber of Commerce and the liberal Patriot Majority USA, Citizens for Strength & Security, League of Conservation Voters and Planned Parenthood -- have taken aim at Senate and House races.

More than 90 percent of the $172 million reportedly spent came from conservative groups.

THE FLOODGATES OPEN

The amount of undisclosed-donor money spent in federal elections jumped from 1 percent in the 2006 election to 25 percent in the 2008 election, according to the Center for Responsive Politics, after the Supreme Court lifted some restrictions on spending by nonprofit corporations. Spending by non-disclosing groups then skyrocketed to 44 percent of all reported spending in the 2010 election, after the court's January 2010 Citizens United decision lifted bans on independent electoral expenditures by corporations, including nonprofits, and unions. This occurred despite the Citizens United ruling's strong support for transparency in campaign money.

The Internal Revenue Service's refusal, so far, to question Crossroads GPS' status as a tax-exempt social welfare nonprofit was another spark that lit the fire of undisclosed spending, according to Hasen.

"Once [Karl Rove] set up his affiliated Crossroads GPS, a 501(c)(4) group, he saw a big uptick in his contributions," Hasen said. Rove founded the group in 2010. "When they succeeded without any legal repercussions, the floodgates flew wide open for anonymous contributions."

A joint study by the Center for Public Integrity and the Center for Responsive Politics concluded that non-disclosing groups outspent disclosing groups, like super PACs, by a 3-2 margin in the 2010 election.

Few details have emerged about the sources of the $172 million the non-disclosing groups have pumped into the 2012 election.

"It's sort of like finding a needle in a haystack," said Novak. "There is no systematic way to figure out who gave, especially corporations and individuals."

Politico reported that casino mogul Steve Wynn, who once claimed to have voted for Obama in 2008, has given millions to Crossroads GPS and even flew Rove and his new wife, Karen Johnson, in a private jet for a vacation in Italy. The Huffington Post revealed that Adelson, the biggest casino operator and top donor to super PACs, will contribute money to the efforts of the Koch brothers, who founded and fund Americans for Prosperity.

Major corporations have also been among the secret donors to social welfare groups and trade associations in this election cycle, as well as past ones. Health insurer Aetna accidentally disclosed in a year-end regulatory filing with the National Association of Insurance Commissioners that, in 2010, it had given $4.5 million to the Chamber of Commerce and $3.5 million to the American Action Network.

Hasen thinks that Aetna's disclosure hints at a broader pattern of hidden corporate giving. "It's hard for me to believe that Aetna is an outlier on this," he said.

A Huffington Post review of IRS records and voluntary disclosures found that corporations contributed millions of dollars in 2010 and 2011 to groups running political attack ads.

Companies including AFLAC, Chevron, Dow Chemical, eBay, Intel, MetLife, Microsoft, Prudential, Southern, Target, U.S. Bancorp, WellPoint and Xcel Energy reported giving a combined $4.5 million to the Chamber of Commerce. Much of it was earmarked for non-tax-exempt activities, including lobbying and advertising.

According to the IRS records covering 2010, Pharmaceutical Research and Manufacturers of America (PhRMA), the chief lobbying organization for the prescription drug industry, contributed to a number of groups, including $4.5 million to the conservative American Action Network, $3.375 million to the liberal Citizens for Strength & Security and $2 million to the liberal America's Families First.

Piecing together information from companies' voluntary reports and annual IRS forms, however, produces only a partial picture of the secret money being spent on the 2012 election. Most documents that would include any information for 2011 won't be publicly available until after this year's election, and reports for 2012 won't be public until 2013.

PUSHING TO REVEAL

To counter the surge of undisclosed-donor money, Democrats in Congress have pushed legislation that would require the disclosure of donors to any group that spends $10,000 or more on campaign-related expenses, including television ads. The legislation, known as the Disclose Act, failed to clear a Republican filibuster in the Senate by one vote in 2010 and faced another two successful Republican filibusters in July 2012.

"It's a very troubling pattern that more money is going underground and being funneled through organizations that keep the sources of funding secret," said Rep. Chris Van Hollen (D-Md.), the champion of the Disclose Act in the House of Representatives.

Van Hollen won a federal court decision in March directing the FEC to rewrite its rules to require groups spending money on "electioneering communications" to disclose all donors. (An electioneering communication is an ad that mentions a candidate within the period immediately prior to an election, but does not call for her victory or defeat.)

The decision is forcing politically involved "social welfare" nonprofits to shift their strategies in order to keep their donors' names hidden.

Since the new rules governing electioneering communications (which are retroactive to March 30) apply only to ads that run within 30 days of a primary or a party convention and within 60 days of a general election, Crossroads GPS has been pumping up its spending on ads that fall outside that window.

In 2010, when the Chamber of Commerce led all independent groups in spending $36 million on the election, all of its ads were classified as electioneering communications. Now the trade group is shifting to "independent expenditures" -- direct appeals to elect or defeat candidates -- which are not covered by the court decision. In the final two weeks of July, the Chamber announced a $7 million advertising buy to help 11 Republican Senate candidates in tough races, part of its pledge to spend more than $50 million in 2012.

"There are organizations that are going to try and twist themselves into pretzels to try and avoid telling the public who is funding their campaign ads," Van Hollen said.

Three Big Lies Perpetuated by the Plutocrats and Their Congressional

Original Link: http://thelonggoodbye.wordpress.com/2012/07/23/fantasy-summer-wallpaper-three-big-lies-perpetuated-by-the-plutocrats-and-their-congressional-republican-minions/

By Paul Buchheit

1. Higher taxes on the rich will hurt small businesses and discourage job creators

A recent Treasury analysis found that only 2.5% of small businesses would face higher taxes from the expiration of the Bush tax cuts.

As for job creation, it’s not coming from the people with money. Over 90% of the assets owned by millionaires are held in a combination of low-risk investments (bonds and cash), the stock market, real estate, and personal business accounts. Angel investing (capital provided by affluent individuals for business start-ups) accounted for less than 1% of the investable assets of high net worth individuals in North America in 2011. The Mendelsohn Affluent Survey agreed that the very rich spend less than two percent of their money on new business startups.

The Wall Street Journal noted, in way of confirmation, that the extra wealth created by the Bush tax cuts led to the “worst track record for jobs in recorded history.”

Covered here and in various places before. Taxes will be low enough for conservatives when people starve rather than get food assistance. When grandma dies instead of getting Medicare. When millions of Americans die because conservatives have repealed health care reform (the ACA, New study finds 45,000 deaths annually linked to lack of health coverage). Taxes will be low enough when the federal government cannot stop mining companies from putting 12 year olds back to work in mines. Taxes will be low enough when the gov’mint cannot stop the Koch brothers from poisoning your family. When cannot really say these things. These basic truths because gosh they sound so mean. What political movement would stand for such things. The broadcast media certainly is not going to call out Republicans on the substance of their agenda. Matt Lauer for example, seems like a nice guy and that is the problem, he and every other “news” host in the morning is more worried about being popular and getting ratings than calling a radical agenda, a radical agenda. This is an example of what happens when conservatives paint a target on your back, Thanks to Michele Bachmann(R-Minn.) Hillary Clinton aide Huma Abedin Gets Extra Police Protection. I’ve heard that HBO’s The Newsroom has its fans and critics, but imagine that kind of reporting on the morning infotainment shows or what is euphemistically called the evening news. Instead we have the watered down tripe of conservative bedwetter’s dreams. An ignorant citizenry is a good citizenry as far as Republicans are concerned.

2. Individual initiative is all you need for success.

President Obama was criticized for a speech which included these words: “If you’ve been successful, you didn’t get there on your own…when we succeed, we succeed because of our individual initiative, but also because we do things together.”

‘Together’ is the word that winner-take-all conservatives seem to forget. Even the richest and arguably most successful American, Bill Gates, owes most of his good fortune to the thousands of software and hardware designers who shaped the technological industry over a half-century or more. A careful analysis of his rise shows that he had luck, networking skills, and a timely sense of opportunism, even to the point of taking the work of competitors and adapting it as his own.

Of course one has to have some initiative to start a business, but no one has ever done so without the kind of modern civilization made possible by the wealthy paying their share of the burden. A Fox news host recently made the argument, wow, the rich pay forty percent of the taxes. So what. They should be paying more. A millionaire whose income comes mostly from capital gains has a tax rate of 15%. That is lower than a Wisconsin teacher who makes $40k a year. There is a third myth, but let me insert this poll first, The Hill Poll: Majority of voters blame president for bad economy

Two-thirds of likely voters say the weak economy is Washington’s fault, and more blame President Obama than anybody else, according to a new poll for The Hill.
It found that 66 percent believe paltry job growth and slow economic recovery is the result of bad policy. Thirty-four percent say Obama is the most to blame, followed by 23 percent who say Congress is the culprit. Twenty percent point the finger at Wall Street, and 18 percent cite former President George W. Bush.

[ ]…While voters feel Obama carries a greater portion of the blame than others, the poll found almost 6-in-10 are unhappy with the actions of Republicans in Congress who have challenged the president on an array of policy initiatives.

Fifty-seven percent of voters said congressional Republicans have impeded the recovery with their policies, and only 30 percent overall believe the GOP has done the right things to boost the economy. ( Obama also has more confidence among independents, bad news for Mittens)

The thing is that Wall Street, corporate America, the bankers are enjoying a full economic recovery. The jobs just are not there and Republicans in the House, where they have a majority will not vote for an job creation bills – they have voted to repeal the ACA 33 times. Even though Democrats have a slight majority in the Senate, Republicans threaten to filibuster everything so again, no jobs bills – there is a very slim chance of Democrats in the Senate getting a super majority of 60, thus killing the parliamentary obstruction of Republicans.

3. A booming stock market is good for all of us

The news reports would have us believe that happy days are here again when the stock market goes up. But as the market rises, most Americans are getting a smaller slice of the pie.

In a recent Newsweek article, author Daniel Gross gushed that “The stock market has doubled since March 2009, while corporate profits and exports have surged to records.”
But the richest 10% of Americans own over 80% of the stock market. What Mr. Gross referred to as the “democratization of the stock market” is actually, as demonstrated by economist Edward Wolff, a distribution of financial wealth among just the richest 5% of Americans, those earning an average of $500,000 per year.

Think of the US economy as a value producing machine. Labor goes in and capital comes out. When the plutocrats divide up that capital they’re trickling down on the American labor force, and conservatives like it that way. I did a recent post on the subject of who were the real capitalists, but this one has a lot more statistics and charts, Democrats Crush Republicans as Capitalists in the White House

From the internet rag known non-ironically, as Hot Air (Michelle Malkin and her posse), Flashback: Obama praised welfare work requirements his administration just gutted. posted at 4:01 pm on July 20, 2012 by Rob Bluey

During his run for the presidency in 2008, Barack Obama praised the work requirements that were the centerpiece of welfare reform — the very requirements his administration just gutted last week.

[ ]…Obama’s administration last Thursday gutted the work requirements that were part of reforms to the Temporary Assistance for Needy Families (TANF) program in 1996. The welfare reform law became a signature accomplishment for President Bill Clinton and the Republican-led Congress.

Bob is too lazy to do his research or he is lying. Anyway it good that they bring up the subject at all. It is an embarrassment to the internet trolls and Fox News who spread the urban myth about federal giveaways where people can live in luxury at government expense. TANF has a forty hour work week requirement. You can only collect it for a total of five years out of your entire lifetime. You literally cannot own anything to get it. If you still live in a house and drive a twenty year old beater, you’re most likely disqualified. Another factoid that ruins this Obama is giving free tax payer stuff away narrative is that the changes in TANF are good for the states, business, the unemployed and even right-wing hero Gov. Haley Barbour of Mississippi likes it, Stimulus Jobs on State’s Bill in Mississippi

“I applied for everything, found nothing,” said Ms. Bolton, 37.

That finally changed when the two were hired by a paper-napkin factory here last month, placing them in the vanguard of a new approach that Mississippi and a growing number of states are taking to get people working again. Their salaries will initially be paid by the State of Mississippi, which is tapping into a relatively small pot of welfare money in last year’s stimulus package that can be used to subsidize jobs directly.

Now they are being trained on the machines here at the Hattiesburg Paper Company, learning to turn mammoth rolls of paper into folded dinner napkins and toilet paper. The general manager, Steve Swiggum, said the state’s offer to subsidize the salaries helped push the company to accelerate its hiring.

[ ]…If the idea of subsidized jobs is seen as liberal in some circles, it seems to have bipartisan appeal at the state level. Gov. Haley Barbour of Mississippi, one of the nation’s most prominent Republicans, said he saw the state’s program as being in the spirit of the welfare overhaul.
“It’s welfare to work,” he said.

The state can spend up to $43 million on the program, which officials estimate could create as many as 3,500 jobs — the equivalent of several factory openings, but only a small dent in the problem for a state that had 133,000 unemployed residents in December. Only a few dozen workers have been hired since the program began last month after receiving federal approval.

Mississippi’s decision to pay for jobs in the private sector means that the public is paying to create jobs that will provide little public benefit. But Mr. Barbour said he believed it to be the best way to improve the economy.

The last program similar to this one was signed into law by President Richard M. Nixon, ended during the Reagan administration. That one did go on for too long and became abused toward the end, but it did put people to work. Again, the amount of money involved is a drop in the bucket compared to the subsidies, tax breaks and giveaways to big business.

Preview: Chris Hedges on Capitalism’s ‘Sacrifice Zones’

BILL MOYERS: Fit this all together for me. What does the suffering of the Native American on the Pine Ridge Reservation have to do with the unemployed coal miner in West Virginia have to do with the inner-city African-American in Camden have to do with the single man working for m– minimum wage or less in Immokalee, Florida? What ties that all together?

CHRIS HEDGES: Greed. It’s greed over human life. And it’s the willingness on the part of people who seek personal enrichment to destroy other human beings. That’s a common thread. And I think when you use the word “complicit,” it’s true. We — in that biblical term — we forgot our neighbor. And because we forgot our neighbor in Pine Ridge, because we forgot our neighbor in Camden, in Southern West Virginia, in the produce fields, these forces have now turned on us. They went first, and we’re next.

 

Super rich hold $32 trillion in offshore havens

Original Link: http://news.yahoo.com/super-rich-hold-32-trillion-offshore-havens-090225488--sector.html

By Chris Vellacott

Rich individuals and their families have as much as $32 trillion of hidden financial assets in offshore tax havens, representing up to $280 billion in lost income tax revenues, according to research published on Sunday.

The study estimating the extent of global private financial wealth held in offshore accounts - excluding non-financial assets such as real estate, gold, yachts and racehorses - puts the sum at between $21 and $32 trillion.

The research was carried out for pressure group Tax Justice Network, which campaigns against tax havens, by James Henry, former chief economist at consultants McKinsey & Co.

He used data from the World Bank, International Monetary Fund, United Nations and central banks.

The report also highlights the impact on the balance sheets of 139 developing countries of money held in tax havens by private elites, putting wealth beyond the reach of local tax authorities.

The research estimates that since the 1970s, the richest citizens of these 139 countries had amassed $7.3 to $9.3 trillion of "unrecorded offshore wealth" by 2010.

Private wealth held offshore represents "a huge black hole in the world economy," Henry said in a statement.

Five Reasons the Super-Rich Need Government More Than the Rest of Us

Original Link: http://www.nationofchange.org/five-reasons-super-rich-need-government-more-rest-us-1342445298

By Paul Buchheit

Wealthy individuals and corporations want us to believe they've made it on their own, without the help of government or the American people. Billionaire financier Sanford Weill blustered, "We didn't rely on somebody else to build what we built." He was echoing the words of his famous predecessor, the formidable financier J. P. Morgan, who spouted, "I owe the public nothing."

That's the bull of Wall Street. There are at least five good reasons why the wealthiest Americans need government as much as the rest of us, and probably more.

1. Security

In his "People's History," Howard Zinn described colonial opposition to inequality in 1765: "A shoemaker named Ebenezer Macintosh led a mob in destroying the house of a rich Boston merchant named Andrew Oliver. Two weeks later, the crowd turned to the home of Thomas Hutchinson, symbol of the rich elite who ruled the colonies in the name of England. They smashed up his house with axes, drank the wine in his wine cellar, and looted the house of its furniture and other objects. A report by colony officials to England said that this was part of a larger scheme in which the houses of fifteen rich people were to be destroyed, as part of 'a war of plunder, of general levelling and taking away the distinction of rich and poor.'"

That doesn't happen much anymore. Of course, the super-rich aren't taking any chances, with panic shelters and James Bond cars and personal surveillance drones. But the U.S. government will be helping them by spending $55 billion on Homeland Security next year, in addition to $673 billion for the military. The police, emergency services, and National Guard are trained to focus on crimes against wealth.

In the cities, business interests keep the police focused on the homeless and unemployed. And on drug users. A "Broken Windows" mentality, which promotes quick fixes of minor damage to discourage large-scale destruction, is being applied to human beings. Wealthy Americans can rest better at night knowing that the police are "stopping and frisking" in the streets of the poor neighborhoods.

2. Laws and Deregulations

The wealthiest Americans are the main beneficiaries of tax laws, property rights, zoning rules, patent and copyright provisions, trade pacts, antitrust legislation, and contract regulations. Tax loopholes allow them to store over $1 trillion in assets overseas.

Their companies benefit, despite any publicly voiced objections to regulatory agencies, from SBA and SEC guidelines that generally favor business, and from FDA and USDA quality control measures that minimize consumer complaints and product recalls.

The growing numbers of financial industry executives have profited from 30 years of deregulation, most notably the repeal of the Glass-Steagall Act. Lobbying by the financial industry has prolonged the absurdity of a zero sales tax on financial transactions.

Big advantages accrue for multinational corporations from trade agreements like NAFTA, with international disputes resolved by the business-friendly World Bank, International Monetary Fund, and World Trade Organization. Federal judicial law protects our biggest companies from foreign infringement. The proposed Trans-Pacific Partnership would put governments around the world at the mercy of corporate decision-makers.

The euphemistically named JOBS Act further empowers business, exempting startups from regulatory accounting requirements.

There are even anti-antitrust measures, such as the licensing rules that allow the American Medical Association to restrict the number of doctors in the U.S., thereby keeping doctor salaries artificially high. Can't have a free market if it hurts business.

3. Research and Infrastructure

A publicly supported communications infrastructure allows the richest 10% of Americans to manipulate their 80% share of the stock market. CEOs rely on roads and seaports and airports to ship their products, the FAA and TSA and Coast Guard and Department of Transportation to safeguard them, a nationwide energy grid to power their factories, and communications towers and satellites to conduct online business. Private jets use 16 percent of air traffic control resources while paying only 3% of the bill.

Perhaps most important to business, even as it focuses on short-term profits, is the long-term basic research that is largely conducted with government money. Especially for the tech industry. Taxpayer-funded research at the Defense Advanced Research Projects Agency (the Internet) and the National Science Foundation (the Digital Library Initiative) has laid a half-century foundation for technological product development. Well into the 1980s, as companies like Apple and Google and Microsoft and Oracle and Cisco profited from the fastest-growing product revolution in American history, the U.S. Government was still providing half the research funds. Even today 60% of university research is government-supported.

Public schools have helped to train the chemists, physicists, chip designers, programmers, engineers, production line workers, market analysts, and testers who create modern technological devices. They, in turn, can't succeed without public layers of medical support and security. All of them contribute to the final product.

As the super-rich ride in their military-designed armored cars to a financial center globally connected by public fiber optics networks to make a trade guided by publicly funded data mining and artificial intelligence software, they might stop and re-think the old Horatio Alger myth.

4. Subsidies

The traditional image of 'welfare' pales in comparison to corporate welfare and millionaire welfare. Whereas over 90% of Temporary Assistance for Needy Families goes to the elderly, the disabled, or working households, most of the annual $1.3 trillion in "tax expenditures" (tax subsidies from special deductions, exemptions, exclusions, credits, and loopholes) goes to the top quintile of taxpayers. One estimate is $250 billion a year just to the richest 1%.

Senator Tom Coburn's website reports that mortgage interest and rental expense deductions alone return almost $100 billion a year to millionaires.

The most profitable corporations get the biggest subsidies. The Federal Reserve provided more than $16 trillion in financial assistance to financial institutions and corporations. According toCitizens for Tax Justice, 280 profitable Fortune 500 companies, which together paid only half of the maximum 35 percent corporate tax rate, received $223 billion in tax subsidies.

Even the conservative Cato Institute admitted that the U.S. federal government spent $92 billion on corporate welfare during fiscal year 2006. Recipients included Boeing, Xerox, IBM, Motorola, Dow Chemical, and General Electric.

In agriculture, most of the funding for commodity programs goes to large agribusiness corporations such as Archer Daniels Midland. For the oil industry, estimates of subsidy payments range from $10 to $50 billion per year.

5. Disaster Costs

Exxon spokesperson Ken Cohen once said: "Any claim we don't pay taxes is absurd...ExxonMobil is a leading U.S. taxpayer." Added Chevron CEO John Watson: "The oil and gas industry pays its fair share in taxes" But SEC documents show that Exxon paid 2% in U.S. federal taxes from 2008 to 2010, Chevron 4.8%.

As if to double up on the insult, the petroleum industry readily takes public money for oil spills. Cleanups cost much more than the fines imposed on the companies. Government costs can run into the billions, or even tens of billions, of dollars.

Another disaster-prone industry is finance, from which came the encouraging words of Goldman Sachs chairman Lloyd Blankfein: "Everybody should be, frankly, happy...the financial system led us into the crisis and it will lead us out."

Estimates for bailout funds from the Treasury and the Federal Reserve range between $3 trillion and $5 trillion. That's enough to pay off both the deficit and next year's entitlement costs. All because of the irresponsibility of the super-salaried CEOs of our most profitable corporations.

Common Sense

Patriotic Millionaires recently addressed the President and Congress: "Given the dire state of our economy, it is absurd that one-quarter of all millionaires pay a lower tax rate than millions of working, middle-class American families...Please do the right thing for our country. Raise our taxes."

It's good to know somebody gets it right. Taxes, for the most part, are not unfair. They represent payment for society's many benefits, which get bigger and better as people get richer.

Corporation That Paid Nothing In Taxes For Four Years Tells Congress It Pays Too Much In Taxes

Original Link: http://thinkprogress.org/economy/2012/07/20/558931/corporation-that-paid-nothing-in-taxes-for-four-years-tells-congress-it-pays-too-much-in-taxes/

By Travis Waldron

Over a four years period from 2008 to 2011, Corning Inc. was one of 26 companies that managed to avoid paying any American income taxes, even though it earned nearly $3 billion during that time. In fact, according to Citizens For Tax Justice, the company received a $4 million refund from 2008 to 2010. That didn’t stop Susan Ford, a senior executive at the company, from telling the House Ways and Means Committee this week that America’s high corporate tax rate was putting her company at a disadvantage:

American manufacturers are at a distinct disadvantage to competitors headquartered in other countries. Specifically, foreign manufacturers uniformly face a lower corporate tax rate than U.S. manufacturers, and virtually all operate under territorial systems which encourage investment both abroad and at home.

Ford told the committee that Corning paid an effective tax rate of 36 percent in 2011, but as CTJ notes, she is counting taxes on profits earned overseas that haven’t yet been paid and won’t be unless the company decides to bring the money back to the United States. Corning’s actual tax rate in 2011, according to CTJ’s analysis, was actually negative 0.2 percent.

The territorial system Ford testified in favor of would actually encourage the offshoring of profits earned by American companies, thereby reducing the amount they pay in taxes even more. And rather than helping remove a disadvantage that prevents companies from creating jobs, an economic analysis of such a tax system found that it could actually cost the United States as many as 800,000 jobs.

The United States does, indeed, have one of the highest marginal corporate tax rates in the world. In reality, however, few corporations pay it, and the nation’s effective tax rate is far lower than the rate in other developed countries.

Karl Rove, Kochs Plan $1 Billion to Put Romney in White House

Original Link: http://veracitystew.com/2012/06/07/karl-rove-kochs-plan-1-billion-to-put-romney-in-white-house/

By Deb Della Piana

In 2012, the GOP Will Prove Citizens United a Disaster for Democracy.

It’s not that corporate entities and special interest groups never spent money on presidential elections before. It’s just that they had to circumvent the system in order to get it done. Not anymore. Now corporate America is out of the closet, so to speak, and is free to spend at will. It’s time for a moment of silence for the passing of Democracy, because the GOP is going to prove just what a disaster the Citizens United ruling is for our country.

It has recently come to light that GOP Super PACs – under the guidance of none other than the evil trifecta of Karl Rove, the Koch Brothers, and Tom Donohue of the U.S. Chamber of Commerce – intend to spend a whopping $1 billion to put Mitt Romney in the White House come November. Of the total, it is expected that the Koch Brothers will put up about $400 million to build a sophisticated network of operations in what are likely to be considered key states. Of course, Super PACs are used on both sides of the aisle. It’s just that the $100 million projected to be raised in support of Barack Obama by the Priorities USA Action Super PAC seems, well, a little bit anemic to be quite honest.

Outrageous amounts of money were spent by Super PACs during the GOP primary season. That’s because these groups can raise unlimited amounts of cash and replenish their coffers more easily than candidate committees, which are limited to $2,500 per donor during the primaries. To show you the order of magnitude difference between the two, Restore Our Future, a Romney Super PAC, aired ads 2,098 times in Alabama during the primaries, while Romney’s campaign only ran 279 spots. Overall, through March 2012 the Romney campaign spent $16.7 million on TV advertising, while ROF spent $33.2 million. In a recent article I wrote for Veracity Stew, I outlined the right-wing billionaire donors to Mitt Romney and how much they’ve already spent during primary season. You can bet they’ll be opening their wallets even wider when it comes down to the final show.

There’s no question that the almighty dollar was instrumental in Scott Walker’s recall win (although I truly think there were other factors in play). Walker outspent Tom Barrett by a margin of 7 to 1. Wisconsin state law allowed Walker to raise unlimited amounts of money very early on, which means that he was hammering home his message before the recall effort took shape. Walker raised a total of $30.5 million, with about 66% coming from out of state donors. Barrett raised a mere $3.9 million. With that kind of differential, it doesn’t much matter where Barrett’s money came from. Mother Jones put together an amazing graphic that outlines some of the biggest donations to Scott Walker:

Many of them are members of – wait for it – the Koch Brothers million dollar donor club. In addition, the Koch’s Tea Party group, Americans for Prosperity, spent $10 million back in January convincing people in Wisconsin that Walker’s policies were working. These guys make no bones about buying elections, and now it’s all legal.

The GOP has a master plan and it doesn’t just include the White House. They want the whole enchilada. Here’s how the GOP money is likely to break down in the race for the White House and beyond:

• Groups under the spell of Charles and David Koch will spend the most, split between issue and political advocacy. It will be somewhere in the range of $400 million.
• Rove’s American Crossroads and Crossroads Grassroots Policy Strategies (GPS) will spend two-thirds of its money on advocacy relative to the presidential race.
• The U.S. Chamber of Commerce will focus on congressional races, raising about $100 million. However, it will spend significant money attacking Obama’s health care plan and that can only benefit Romney.
• The YG Action Fund will raise about $30 million. In case you’re interested, the “YG” refers to “young guns” Eric Cantor (R-VA) and Kevin McCarthy (R-CA). Oh brother.
• The American Action Network (chaired by former senator Norm Coleman) raised $30 million for congressional runs in 2010. It is expected to match that in 2012.
• The Congressional Leadership Fund, supported by Speaker John Boehner and other House GOP leaders, has reportedly already raised $5 million.

Finally, Restore Our Future – which is the only Super PAC dedicated to putting Mittens in the White House – is expected to raise $50 to $100 million.

You can bet your life that the Democrats will be operating at a fiscal disadvantage moving into the home stretch. I know that it’s still early, but a new group of national polls now show Obama trailing Mitt Romney. Free-market billionaires and corporations will be pouring money into the GOP coffers because Barack Obama is viewed as openly hostile to capitalism.

For rational Americans, that is a scary thought.

House GOP Super PACs Tap Sheldon Adelson To Raise $6.6 Million

Original Link: http://www.huffingtonpost.com/2012/07/16/sheldon-adelson-super-pac_n_1677456.html

By Paul Blumenthal

Two super PACs closely linked to the Republican House majority raised a combined $6.6 million in the second quarter of 2012 thanks to contributions from well known mega-donors, according to reports filed Sunday with the Federal Election Commission (FEC).

YG Action Fund, which is run by former staffers of House Majority Leader Eric Cantor (R-Va.), accounted for a large portion of the total raised by the two groups thanks to a $5 million infusion from casino magnate and top super PAC donor Sheldon Adelson.

The Congressional Leadership Fund, which launched late in 2011 with a press conference featuring the entire House Republican leadership, pulled in $1.28 million. Texas home builder and third biggest super PAC donor Bob Perry gave $1 million to the group.

The combined total of the two House Republican super PACs puts them ahead of the Democrats' House Majority PAC, which raised $4.3 million in the second quarter. In total, the major Republican super PACs -- including the two House leadership groups, the pro-Mitt Romney Restore Our Future and the Karl Rove-linked American Crossroads -- appear set to beat the $25 million raised by their Democratic counterparts in the second quarter by at least $10 million.

Other donors to the Congressional Leadership Fund in the second quarter include the corporations White Castle, Blue Bell Creameries, Huntington Bancshares, Borden Dairy Company, The Anschutz Corporation and Alpha Natural Resources.

Hedge fund executive Bruce Kovner and his wife, Suzanne, donated $250,000 to YG Action Fund.
Adelson had previously donated $5 million to the Congressional Leadership Fund in the first quarter of the year.

The Power of the Wealthy Few to Silence the Majority

Original Link: http://veracitystew.com/2012/07/18/the-power-of-the-wealthy-few-to-silence-the-majority/

By Robert Love

Citizens United and the subsequent campaign finance ruling, SpeechNow.org v Federal Election Commission, currently pose the greatest threat to our democracy. Citizens United struck down a century-old ban on corporate political spending, allowing corporations to spend unlimited amounts of money from their treasuries to influence our elections. The latter decision, SpeechNow.org v FEC, created Super PACs. The amount of money that a handful of people, such as the Koch brothers and Sheldon Adelson, can pour into our elections could take away our right to vote. There is no way the average American can compete for attention from our elected officials with these big-money interests, and unless these court rulings are reversed, a handful of very wealthy individuals in our country will have the ability to buy our elections.

Liberals need to shut up and stop criticizing President Obama for giving the nod to Democratic Super PACs. President Obama does not think these groups should have a role in our election. However, as long as they do exist, it is political suicide for any national candidate to shun them. House Minority Leader Nancy Pelosi (D-Calif.) said that President Barack Obama chose to embrace so-called “super PACs” (political action committees) for his re-election campaign so that billionaire philanthropists Charles H. Koch and David G. Koch would not decide the next President:

“The president made a decision, which I think was a wise one, that he was not going to unilaterally disarm and leave the field to the Koch brothers to decide who will be president of the United States and would control the Congress, and his commitment was for full disclosure.”

President Obama is in complete agreement with the liberals who are unhappy about the role Super PACs have in our elections. To anyone who is angry at the President over his use of Super PACs, my question is this: What is worse: President Obama using a Super PAC in this election, or President Obama losing this election for taking the high road?

For the record, I stand side by side with those who think Super PACs have no business in our elections. These supposed non-profit groups are even more dangerous. It works like this. A wealthy individual, corporation, or even government can write a check to one of these non-profit organizations, such as Karl Rove’s Crossroads GPS, which can then spend up to half of that money on independent expenditures. They are required to spend the other half on “issue ads.” The problem with these groups is that they aren’t required to disclose their donors. As Sherrod Brown pointed out on Rachel Maddow recently, we have no idea where these groups are getting their money from. For all we know, China could very well be deciding which of our political parties is going to control the Senate next year.

WATCH (story continues below the video):

An even bigger problem with Super PACs is that they have essentially removed the individual contribution limit on our political campaigns. One man could, in effect, decide (in secret) who is elected to the US Senate, or even the White House. Don’t believe me? Newt Gingrich’s candidacy was kept alive in the Republican primary this year by one man: Sheldon Adelson. If Adelson (through himself and his family) had not given Gingrich’s Super PAC $10 million before South Carolina’s primary, Gingrich would have had to drop out of the race months before he actually did. The last polls taken before Adelson’s donation all had Gingrich down by double digits in South Carolina. Gingrich went on to trounce Mitt Romney by double digits. Sheldon Adelson bought the South Carolina primary.

Think it can’t happen on a national stage? Think again. No one’s net worth has increased more under the Obama Administration than Sheldon Adelson’s. Forbes estimates his net worth to be around $25 billion. He makes around $3.3 million an hour. The magazine points out:

“Adelson could personally fund an entire presidential campaign—say, $1 billion or so—and not even notice.”

It is entirely possible for someone like Mr. Adelson to spend more money on this election than the Obama campaign, Romney campaign, and all of the liberal and conservative Super PACs combined. It is perfectly legal. What’s more: Adelson could spend that type of money without making any changes in his lifestyle.

Whatever your opinion may be about the constitutionality of allowing individuals to give unlimited amounts of money in our elections, or about the effect that this kind of spending has on our elections, we should all agree on one thing: the American people have the right to know where every dollar being spent in their elections is coming from.

His Man in Macau: Inside the Investigation Into Sheldon Adelson’s Empire

Original Link: http://www.pbs.org/wgbh/pages/frontline/criminal-justice/his-man-in-macau-inside-the-investigation-into-sheldon-adelsons-empire/

By Matt Isaacs Lowell Bergman, and Stephen Engelberg

A decade ago gambling magnate and leading Republican donor Sheldon Adelson looked at a desolate spit of land in Macau and imagined a glittering strip of casinos, hotels and malls.

Where competitors saw obstacles, including Macau’s hostility to outsiders and historic links to Chinese organized crime, Adelson envisaged a chance to make billions.

Adelson pushed his chips to the center of the table, keeping his nerve even as his company teetered on the brink of bankruptcy in late 2008.

The Macau bet paid off, propelling Adelson into the ranks of the mega-rich and underwriting his role as the largest Republican donor in the 2012 campaign, providing tens of millions of dollars to Newt Gingrich, Mitt Romney and other GOP causes.

Now, some of the methods Adelson used in Macau to save his company and help build a personal fortune estimated at $25 billion have come under expanding scrutiny by federal and Nevada investigators, according to people familiar with both inquiries.

Internal email and company documents, disclosed here for the first time, show that Adelson instructed a top executive to pay about $700,000 in legal fees to Leonel Alves, a Macau legislator whose firm was serving as an outside counsel to Las Vegas Sands.

The company’s general counsel and an outside law firm warned that the arrangement could violate the Foreign Corrupt Practices Act. It is unknown whether Adelson was aware of these warnings. The Foreign Corrupt Practices Act bars American companies from paying foreign officials to “affect or influence any act or decision” for business gain.

Federal investigators are looking at whether the payments violate the statute because of Alves’ government and political roles in Macau, people familiar with the inquiry said. Investigators were also said to be separately examining whether the company made any other payments to officials. An email by Alves to a senior company official, disclosed by The Wall Street Journal, quotes him as saying “someone high ranking in Beijing” had offered to resolve two vexing issues — a lawsuit by a Taiwanese businessman and Las Vegas Sands’ request for permission to sell luxury apartments in Macau. Another email from Alves said the problems could be solved for a payment of $300 million.
There is no evidence the offer was accepted. Both issues remain unresolved.

According to the documents, Alves met with local politicians and officials on behalf of Adelson’s company, Las Vegas Sands, to discuss several issues that complicated the company’s efforts to raise cash in 2008 and 2009.

Soon after Alves said he would apply what he termed “pressure” on local planning officials, the company prevailed on a key request, gaining permission to sell off billions of dollars of its real estate holdings in Macau.

Las Vegas Sands denies any wrongdoing. But it has told investors that it is under criminal investigation for possible violations of the U.S. anti-bribery law. Adelson declined to respond to detailed questions, including whether he was aware of the concerns about the Foreign Corrupt Practices Act when he directed payment of the bill from Alves’ law firm.

The documents depict Adelson as a hands-on manager, overseeing details of the company’s foray into Macau, which is now the world’s gambling capital.

They show that Alves helped the company address a crucial issue: Adelson’s frayed relations with officials in Macau and mainland China.

Alves met with prominent Macau officials on Las Vegas Sands’ behalf, emails show. When Adelson made a three-day trip to Beijing, Alves accompanied him, billing more than $18,000 for his services.
Alves promoted himself to Adelson as someone “uniquely situated both as counsel and legislator to ‘help’ us in Macau,” according to an email written by a Las Vegas Sands executive.

The then-general counsel of Las Vegas Sands warned that large portions of the invoices submitted by Alves in 2009 were triple what had been initially agreed and far more than could be justified by the legal work performed.

“I understand that what they are seeking is approx $700k,” the general counsel wrote to the company’s Macau executives in an email in late 2009. “If correct, that will require a lot of explaining given what our other firms are charging and given the FCPA,” the Foreign Corrupt Practices Act.
Adelson, described by Forbes Magazine as the largest foreign investor in China, ultimately ordered executives to pay Alves the full amount he had requested, according to an email that quotes his instructions.

Alves holds three public positions. He sits on the local legislature. He belongs to a 10-member council that advises Macau’s chief executive, the most powerful local administrator. And he’s a member of the Chinese People’s Political Consultative Conference, a group that advises China’s central government.

Alves did not respond to detailed questions from reporters about his activities on behalf of Las Vegas Sands, saying in an email that the work he had done — “legal services” — was unrelated to his government positions. “I would never use my public offices to benefit the company, nor have I been asked to,” Alves wrote.

Several Las Vegas Sands executives resigned or were fired after expressing concerns about Alves’ billings. These include Las Vegas Sands’ general counsel and two top executives at Sands China, its Macau subsidiary.

Alves briefly severed his relationship with the company in early 2010, according to internal documents, but was rehired months later as outside counsel, a role he still plays.

The internal Las Vegas Sands documents were obtained by reporters working for the University of California’s Investigative Reporting Program as part of an ongoing collaboration with ProPublica and FRONTLINE.

The documents include dozens of emails, billing invoices, memos and reports that circulated among top executives of Las Vegas Sands and its attorneys. The documents were provided by people who had authorized access to them. They offer important glimpses of the company’s dealings in Macau and China, but are not a complete archive.

One invoice, for example, notes that Alves billed $25,000 for “expenses” in Beijing with no further explanation.

The documents shed new light on an issue separate from Alves’ work: the company’s difficulties in avoiding contact with Chinese organized crime figures as it built its casino business in Macau.

Nevada law bars licensed casino operators from associating with members of organized crime. State investigators are now assessing whether Las Vegas Sands complied with that rule in its Macau operations, people familiar with the inquiry said.

William Weidner, president of Las Vegas Sands from 1995 to 2009, said he understood from the beginning that opening casinos in Macau meant dealing with “junkets” — companies that arrange gambling trips for high rollers.

Gambling is illegal in mainland China, as is the transfer of large sums of money to Macau. The junkets solve those problems, providing billions of dollars in credit to gamblers. When necessary, they collect gambling debts, a critical function since China’s courts are not permitted to force losers to pay up.

Weidner said junkets are a natural result of China’s controls on the movement of money out of the country, channeling as much as $3 billion a month from the mainland to Macau.

“To Westerners, the junkets mean money laundering equated with organized crime or drugs,” he said. “In China where money is controlled, it’s part of doing business.”

Weidner resigned from the company after a bitter dispute with Adelson.

Nevada officials are now poring over records of transactions between junkets, Las Vegas Sands and other casinos licensed by the state, people familiar with the inquiry say. Among the junket companies under scrutiny is a concern that records show was financed by Cheung Chi Tai, a Hong Kong businessman.

Cheung was named in a 1992 U.S. Senate report as a leader of a Chinese organized crime gang, or triad. A casino in Macau owned by Las Vegas Sands granted tens of millions of dollars in credit to a junket backed by Cheung, documents show.

Cheung did not respond to requests for comment.

Another document says that a Las Vegas Sands subsidiary did business with Charles Heung, a well-known Hong Kong film producer who was identified as an office holder in the Sun Yee On triad in the same 1992 Senate report. Heung, who has repeatedly denied any involvement in organized crime, did not return phone calls.

Allegations about the company’s dealings with Alves as well as its purported ties to organized crime are prominently mentioned in a 2010 lawsuit filed by Steven Jacobs, former CEO of Sands China.
In the suit, Jacobs contends he was fired after multiple disputes with Adelson, which included the continued employment of Alves and the company’s dealings with junkets.

Las Vegas Sands declined to respond to detailed questions about the emails, billing invoices or purported relationships with organized crime figures including Cheung and Heung. Nor would it comment on the federal or Nevada investigations.

Adelson told investors last year that the federal investigation was based on false allegations by disgruntled former employees attempting to blackmail his company.

“When the smoke clears, I am absolutely not 100 percent but 1,000 percent positive that there won’t be any fire below it,” he said, adding that what investigators will ultimately find “is a foundation of lies and fabrications.”

At least one prominent Republican has expressed concern about the source of Adelson’s campaign contributions. “Much of Mr. Adelson’s casino profits that go to him come from his casino in Macau,” Sen. John McCain noted in an interview last month with the PBS NewsHour.

“Maybe in a roundabout way, foreign money is coming into an American political campaign,” said McCain, an Arizona Republican.

The questions raised by McCain and others have not prevented Adelson, the self-made son of a Boston cabdriver, from emerging as a powerful political figure in both Israel and the United States. A longtime backer of Prime Minister Binyamin Netanyahu of Israel, Adelson created a free daily newspaper, now Israel’s largest, that supports the policies of Netanyahu’s Likud Party.

His family’s $25 million in contributions kept Newt Gingrich in the presidential race. He has been widely reported as donating $10 million to a super PAC supporting Mitt Romney. A “well-placed source” recently told Forbes Magazine that Adelson’s willingness to financially support Romney was “limitless.” A filing with the Federal Election Commission last night shows that Adelson and his wife, Miriam, gave $5 million to the “YG Action Fund,” a super PAC linked to House Majority Leader Eric Cantor, a Virginia Republican.

* * *

Macau’s emergence in the 21st century as the biggest gambling center in the world, with $33.5 billion in annual revenue — four times that of Las Vegas — is a matter of history and geography.

A former Portuguese colony, the tiny peninsula was handed over to China in 1999. It has its own legislature, laws, court system and chief executive, all of which exist under the umbrella of Chinese control.

For generations, profits from Chinese gambling flowed primarily to a single local company. But after China took control, authorities agreed to let foreign companies get a piece of the action.

Las Vegas Sands was among more than a dozen companies to apply for a license. Its plans were among the most expansive, calling for an American-style complex of hotels, casinos, shopping malls and luxury apartments.

The first of four Las Vegas Sands casinos, the Sands Macau, opened its doors in 2004. It was immediately successful as well-heeled gamblers from the mainland flocked to the tables.

Over the next several years, the company pushed ahead with its multibillion-dollar construction projects on a strip of reclaimed land known as Cotai.

But in the summer of 2008, Las Vegas Sands faced a cash crunch. The global economic slowdown hit revenues at its casinos in Nevada. And gambling slowed in Macau after China’s central government abruptly cut down on the number of visas it granted for travel to the region. Suddenly, the company was struggling to make payments on billions of dollars in long-term debt.

Executives at Las Vegas Sands began looking at ways to raise cash in Macau. To do this, the company would need some help from local officials.

It wasn’t clear they would get it.

In China, relationships, or guanxi, can make or break an empire. Adelson’s relationships in Macau and China were frayed. George Koo, a member of the Las Vegas Sands board of directors, wrote in a confidential memo that Adelson’s behavior had offended political figures in both Macau and China.

Koo quoted a prominent Macau official as saying Adelson had “slapped the table in front of Edmund Ho,” Macau’s chief executive. “Supposedly, Ho has said that he will not see SGA anymore,” the memo said, using Adelson’s initials.

Accompanied by Alves, Koo met with the Macau chief executive over lunch. According to Koo’s memo, Ho expressed his regret that Adelson “has burned so many bridges with Beijing,” the memo said.

According to Koo’s account, a top Chinese official overseeing Macau named Liao Hui was so angry at Adelson that he refused to meet with him. It is not clear from the memo what caused the rupture, but Koo said Adelson turned to “the Israeli military to arrange a meeting with Liao” who initially agreed but then said he would only send his deputy. No meeting ever took place, the document says.

Weidner, who resigned as president of Las Vegas Sands in March 2009, said in an interview that Adelson was “out of his element” dealing with Chinese officials.

Weidner recalled struggling to explain Adelson’s style to the Chinese, once comparing his boss to a famous emperor who became angry with China’s scholars and buried them alive with their books. “I would tell them: ‘He is brilliant. Sometimes, like the emperor, he is brutal.’”

Leonel Alves seemed to be an ideal person to smooth relations.

A Macau native, born of a Portuguese father and a Chinese mother, the attorney had been a fixture in the local scene for decades, and was nimble in the face of shifting political tides.

In the years leading up to Portugal’s handover of its onetime colony to China in 1999, he was among a select group of local residents chosen to serve on the transition team.

Alves became a Chinese citizen and dedicated himself to learning China’s official dialect, Mandarin, to complement his fluency in Portuguese, English and Cantonese. His legal practice was already successful. He boasted to local reporters of his car collection, which included a Ferrari and a BMW M3.

Las Vegas Sands put Alves’ law firm on retainer in midsummer 2008, naming him as an outside counsel. Documents show his firm was to be paid $37,500 a month for 80 hours of work, with additional hours to be billed at a rate of more than $550 an hour.

Over the years, the Justice Department has made it clear that American companies can employ foreign officials. But companies have been told they must take great care and create safeguards to prevent such officials from using their position or political standing to gain commercial advantage.

T. Markus Funk, a partner at the Perkins Coie law firm and co-chair of the American Bar Association Global Anti-Corruption Initiatives Task Force, declined to discuss the specifics of the Las Vegas Sands inquiry. But he said companies generally avoid hiring sitting local officials as lobbyists or representatives because of the risk that they will improperly end up wielding their influence.

“It would be a huge red flag,” said Funk. “If you are paying someone because you think they are going to have a questionable backroom discussion, essentially a quid pro quo relationship, that’s a no-no. You can get yourself in big trouble pretty quickly.”

In response to written questions, Alves said in an email that his political career has never conflicted with “my profession as a lawyer.” He said his office had “been scrutinized by the Chinese and American authorities like few have in Macau, and no authority has ever had any suspicion.”

Alves noted that his multiple government posts did not “confer to me any executive and administrative power” or the ability to “influence” what he described as “the relevant authorities.”
U.S. companies sometimes ask the Justice Department in advance for an opinion on whether a particular hire constitutes a violation of the law. It is not known if Las Vegas Sands posed such a question about Alves. Funk, a former federal prosecutor, said that a company following “best practices” would look closely at both the size of the proposed payments and the procedures put in place to assure compliance.

“I’d want to make sure the individual is getting paid an appropriate scale,” Funk said. “I’d want to get some assurance he was familiar with the FCPA and had agreed to abide by its terms. I’d want a code of conduct in place and I’d want to see detailed billing statements.”

One of the first issues Alves addressed was Las Vegas Sands’ request for permission from local authorities to sell a mall and 300 luxury apartments it had built next to one of its casinos, the Four Seasons Macau.

The company’s original agreement with the government did not allow it to break up the property into separate pieces for sale. If Sands could amend the agreement, it would open the way to raise billions.
On Aug. 12, 2008, Alves wrote an email to Luis Melo, who was then Las Vegas Sands’ in-house counsel in Macau. He wrote that he was planning to meet with local officials to “monitor and apply pressure” to what he called the “revision process” of the “land concession contract.” It is not known whether the meeting took place or what, if anything, Alves said to other officials in the government.
In late September, the secretary of Macau’s Land, Public Works and Transport Bureau declared that Las Vegas Sands had to abide by its original contract with Macau, which did not permit the property to be sold separately.

“The terms in the concession contract are very clear and any move must be according to what is written in the contract,” he said, according to a report in The Macau Daily Times.

That statement came at a critical moment for Las Vegas Sands. With the collapse of Lehman Brothers in the United States, even the most solvent companies were finding it impossible to borrow. At the end of September, Adelson staked his company $475 million of his own money.

In October, planning officials handed Las Vegas Sands much of what it was seeking. They said they would allow the property to be divided into four parts: the casino, the apartment complex, the mall and a parking garage. Each could be sold separately. In their decision, Macau officials said they were trying to help Las Vegas Sands address its need for more capital.

The company portrayed the decision as a victory and said it “paves the way” for the sale of the 300 luxury apartments.

The company’s financial condition continued to worsen. It halted construction on its massive projects in Cotai. In November 2008, Adelson kicked in another $525 million of his own money. That month, the company told investors it was in danger of defaulting on $5.2 billion in loans. Such a default,
auditors warned, could threaten the company’s survival.

Ultimately, Las Vegas Sands did not sell the apartment building or mall. (It continues to seek final permission to sell individual apartments.) The company moved to raise capital through another route: an initial public offering of stock on the Hong Kong exchange that, it was hoped, would bring in billions of dollars.

Once again, local law posed challenges to the company’s plans. And once again, Alves stepped forward to help.

* * *

One key to Las Vegas Sands’ survival in Macau was its ability to whisk customers from Hong Kong to the doors of its casinos. The long-established ferry route unloads its passengers in downtown Macau, about a three-mile drive from Adelson’s casinos in Cotai.

Las Vegas Sands had created its own ferry service, Cotai Waterjets, which dropped gamblers at a dock just a short shuttle ride from its casinos.

But the future of Cotai Waterjets was unclear. A competing ferry service had filed a complaint alleging the government had improperly awarded the concession to Las Vegas Sands without competitive bidding.

In February 2009, a Macau court agreed, voiding the contract.

Alves set to work. In the spring of 2009, he arranged what a billing invoice from his firm describes as “meetings and contacts with the Macau Government.”

On Oct. 19, 2009, Alves met with Edmund Ho, Macau’s chief executive, and Fernando Chui Sai On, Ho’s soon-to-be successor. (Ho was the Macau official who had purportedly refused to meet with Adelson.)

It is not known what was discussed. Alves billed Las Vegas Sands for two hours of his time, according to his invoice.

Also that day, Alves billed for more than an hour of phone calls with company executives, his invoices show.

Las Vegas Sands was explicit about what was at stake, telling Hong Kong investors in a public filing that loss of the ferry concession “could result in a significant loss of visitors to our Cotai Strip properties.” This would have a “material adverse effect on our business,” the company said.

Within days of Alves’ meeting with Ho, Las Vegas Sands won a stunning victory. Ho issued an administrative regulation that allowed ferry contracts to be awarded without competitive bidding. The court rulings against the company were moot. Las Vegas Sands retained control of its route and ultimately obtained several new ones.

Attempts to reach Ho were unsuccessful.

The initial public offering launched in late November 2009, raising $2.5 billion for Las Vegas Sands.
Alves remains a member of the Executive Council. He declined to discuss his interactions with Ho or the council.

* * *

Just as Sands was resolving several of its thornier legal issues, a dispute erupted among its executives over Alves that had far-reaching consequences.

It began on Oct. 20, 2009, shortly before the ferry decision was announced, with a seemingly routine event: Alves’ firm submitted bills for its recent work.

The firm said it was charging at triple the previously agreed rate to account for the work it had done on the public offering, scheduled for the following month. In an email, Las Vegas Sands’ in-house lawyer in Macau, Luis Melo, objected, noting the invoices were “not in accordance” with the letter which spelled out the financial terms of Alves’ retainer.

The issue reached the desk of J. Alberto Gonzalez-Pita, general counsel at Las Vegas Sands headquarters in Nevada. In an email, Gonzalez-Pita expressed concern about a sudden request for more money from an outside lawyer who was also a foreign official, saying such a payment would require “a lot of explaining.”

With the bill still unpaid, Alves submitted his resignation effective in February 2010.

An internal email shows he continued to report privately to Adelson, delivering at least one message from the company’s chairman and CEO to Macau’s government.

Separately, he also pushed to return to Sands China.

In March, Alves submitted a new proposal, asking to be paid $125,000 a month with no obligation to provide billing details, internal records show.

Gonzalez-Pita, the Las Vegas general counsel, rejected the idea. “It’s outrageous,” he wrote. “Our corporate retainer with Paul Weiss is almost three times less per month,” he said, referring to the company’s outside counsel, New York-based Paul, Weiss, Rifkind, Wharton & Garrison.
Gonzalez-Pita elaborated a week later.

“I continue to believe this proposal to be inappropriate, unrealistic, extraordinarily expensive and way above market,” he wrote to Jacobs, the CEO of Sands China who had originally been recruited to handle the IPO. “Been a long time since I’ve seen a lawyer or a firm make as naked a power play as has LA,” Leonel Alves. “He sure has chutzpah.”

Jacobs decided against rehiring Alves. “Let’s talk about a replacement for outside counsel,” he wrote in a March 10, 2010, email to Melo, Sands China’s general counsel in Macau.

“The transition will not be easy … and has a high probability of becoming messy … but it is the right thing to do for the business,” he wrote.

Jacobs told Alves that he would not be retained, emails show.

The same day, Jacobs informed colleagues that he had paid the disputed invoices after Alves submitted a more detailed account of the work he had done on the public offering. Jacobs wrote to Gonzalez-Pita that he had been “instructed by SGA and MAL to pay and close out the matter.”
The initials SGA and MAL are used within the company to refer to Sheldon G. Adelson and Michael A. Leven, the president of Las Vegas Sands.

“I am sorry that this was not communicated to you but I am glad that FCPA outside counsel did not highlight any substantial issue with the payment,” Jacobs wrote.

Gonzalez-Pita replied that Jacobs was mistaken and that the company’s outside lawyer had identified the payments as a possible violation of the U.S. anti-bribery law.

“Unfortunately,” Gonzalez-Pita wrote to Jacobs: “FCPA counsel did highlight a problem” with paying Alves anything more than his normal fees “plus a commercially reasonable premium.”

“While I can appreciate that you received instructions to make the payment,” Gonzalez-Pita wrote on March 12. “I wish you would have advised me so I could have intervened.”

Gonzalez-Pita resigned from the company in April 2010.

On July 23, Las Vegas Sands fired Jacobs. A month later, the company dismissed Melo and the rest of the legal team in Macau, according to the lawsuit Jacobs subsequently filed in Nevada.

In that action, Jacobs said he was dismissed for refusing Adelson’s “illegal demands,” including an order that he fire Melo and replace him with Alves. Las Vegas Sands said in court briefs that it fired Jacobs for disobeying orders and working on unauthorized deals.

The company rehired Alves as outside counsel in the fall of 2010, a position he still holds. It is not known how much he is being paid.

In April of this year, Sands China opened Cotai Central, the $4 billion project it had temporarily abandoned in 2008, when the company stood at the brink. Within six hours of the opening, Sands China reported, more than 84,000 people pushed through the new casino’s doors.

Sheldon Adelson, GOP Mega-Donor, Investigated for Bribing Chinese Government Officials

Original Link: http://www.prwatch.org/news/2012/07/11656/sheldon-adelson-gop-mega-donor-investigated-bribing-chinese-government-officials

By Laura Stiegerwald

Sheldon Adelson, Las Vegas casino magnate and GOP mega-donor, is being investigated by the U.S. Justice Department under suspicions he violated the Foreign Corrupt Practices Act (FCPA) while dealing with the Chinese government and his Macau casino ventures. The FCPA, introduced in 1977 by U.S. Senator William Proxmire (D-WI), prohibits American companies from bribing foreign government officials.

Emails leaked by ex-company employees prompted the investigation and the breaking story by ProPublica and PBS's Frontline. Adelson allegedly instructed a top executive to make a $700,000 payment to Leonel Alves, a Macau legislator, member of the advisory board to the chief executive of Macau, and lawyer whose law firm was helping Adelson's Las Vegas Sands casino set up shop in Macau. Adelson and Las Vegas Sands had sought Alves' help in resolving two issues -- a lawsuit by a Taiwanese businessman and permission to sell luxury apartments in Macau -- and he apparently came through. Approximately two-thirds of Las Vegas Sands' income now comes from Macau.

Emails from 2009 obtained by ProPublica showed that Las Vegas Sands executives viewed Alves as "uniquely situated both as counsel and legislator to 'help' us in Macau," but the company's then-general counsel warned that Alves' legal fees were triple his normal rates, which could raise concerns under the FCPA.

"I understand that what they are seeking is approx $700k," the general counsel wrote to the company's Macau executives in late 2009. "If correct, that will require a lot of explaining given what our other firms are charging and given the FCPA."

The FCPA bars American companies from paying foreign officials to "affect or influence any act or decision" for business gain.

Despite warnings from Las Vegas Sands' general counsel that the payment could run afoul of the FCPA, Adelson apparently instructed executives to pay the full amount, according to an email quoting his instructions obtained by ProPublica.

Other documents also suggest improper dealings. One email from Alves indicates some of the issues could be resolved with Chinese officials for $300 million (although there is no evidence this was paid). An invoice from Alves showed that he charged $18,000 to accompany Adelson to Beijing. Another shows he billed $25,000 in "expenses" with no further explanation.
Adelson's investments in Macau have been the source of much of his wealth (his personal fortune is estimated at $25 billion).

And this election cycle, he has been using that wealth to back Republican candidates.

Adelson and his family gave $25 million to prop-up Newt Gingrich's failed presidential run. He has reportedly given $10 million to the SuperPAC supporting Mitt Romney (and his willingness to continue supporting Romney is said to be "limitless"). Adelson and his wife have also given $5 million to Eric Cantor's SuperPAC, the "YG Action Fund." An individual search on the Federal Election Commission website shows Adelson contributed over $14 million of "soft money" to PACs.