29 June 2008

Trendlines, those pesky trendlines

The following is a white paper for The Jacksonian Party.

Now, I will point out that I do get wrong predictions, but I don't mind being wrong in some instances if things head in the general way expected. So, while the New Iraqi Army did not get a hold of the situation by the end of 2006 as I expected, it was beyond predicting the sort of incident that could set off a last and largest wave of post-war bloodshed in that country. The trendlines, however, pulled together with the Anbari tribes getting disgusted of al Qaeda and banding together with Coalition support to start ousting them there.

That said a bit of analysis later is one that I have stuck to in the overall term of things:

In Iraq the trend-lines have been going solidly in our favor since the standing up of the New Iraqi Army, and there is not a single trend-line pointing to defeat. Failure by lack of political will is possible, but as the trends continue, it will be harder and harder to justify leaving Iraq to fall into chaos. And the naysayers should be warned, the Jacksonians just *left* the political scene after the betrayal of Vietnam... this will bring them back with fire in their eye as treachery will be seen.

And the trend lines in the US Population is demonstrating this as the MSM falls further and further downwards and both political parties hover in the Used Car Salesman area of trustworthiness. Like any supersaturated solution, it looks extremely stable until just one minor thing happens... and then there is a sudden change of state as a new form crystallizes nearly instantly.

THAT is where the electorate stands today.

Just one little thing.

It doesn't take much to change the state of a supersaturated solution to one of crystalline with the water being forced out of it, or from solute to a sudden gelatinous state completely with just one minor disturbance. Dust, vibration, the smallest change in temperature that is just a bit too rapid and you go from something liquid to something definitely not liquid.

Trendline analysis is a very useful tool, so long as you don't fetishize on a single trend. The global warming crowd seem to fetishize on carbon dioxide concentrations in the atmosphere, ignoring the overall point that the planet is in one of the lowest points for that in its entire history. And when pointing at a miniscule century of temperatures, they ignore the 800 million year climate record found by geologists over decades. Concentrating on the wrong scope, wrong numbers, wrong time-frame and, finally, ignoring that the data, itself, is being undercut by processing errors and instrumentation errors doesn't help. When you want to analyze trendlines, like say Iran's oil production and its capacity to export, you not only have to ask yourself 'what do the trends signify?' but then ask yourself 'what are the things pushing these trends?'. From Roger Stern's article released online at 26 DEC 2006 on The Iranian petroleum crisis:

You don't get the capability to leave things out, but as the idea of how to get oil out of the ground, transport it, refine it, sell it, and then look at marginal expansion are *all* far more than a century old (and since the oil industry is an offshoot of mining, that puts those concepts back thousands of years to the first human mining experiences) you do not get to wave your hands around claiming much and citing little. A process of under-investment, over-utilization and subsidies on refined products all leads in one direction for energy use and the ability to export: the variables are known, the trendlines obvious and the ability to counter them requires years if not more than a decade.

When talking about a larger society, however, the trendlines are not in any one place: society covers a wide gamut of human interactions and trying to see if a suite of them has any sort of defining impact is difficult. So, when looking at the trends of the US starting in the Vietnam era and onwards, I take a broader sweep of things, due to the inability to actually *measure* these trends in any objective way. There is no thermometer reading for foreign policy or nationalism amongst a population, no wind-force scale for popular opinion to compare across eras, and no Richter scale to measure the impact of events on a society as a whole. If there *were* I would use *them*. So the empirical and 'high water mark' sort of evidence is necessary:

The death toll that accrued to America's unwillingness to stand for her values, stick by an Ally and retreat with mere scratches when entire societies were threatened was enormous. The media conveniently under-reported such things and so retreat was seen as a 'low cost option' against military aggression in far off lands. Mind you, the mightiest economy of the planet was expending less than 10% of its economy and more on the order of 8% to deal with this, continue a build up of thermonuclear weapons, heavily increase its industrial capacity, raise its standard of living by leaps and bounds, put a new era of agriculture in place that would further reduce the manpower needed to feed the Nation, and put forth new science and technology at a phenomenal rate. The USSR, meanwhile, was spending 15-25% of its economy on war material, creating substandard housing, inventing very little, and repressing its people continuously through secret police, gulags and imprisonment without fair trial for stating 'political dissent'. The layer of 'Mutual Assured Destruction' was used to cement the 'balance of power' in place and KEEP IT THERE. Those who had put forth that Foreign Policy had so inculcated the power structure of the West to it, that there was no other option ever put forth that got a hearing on trying to do something different. Grand Strategy had, indeed, become based on fantasy and those holding wonderful reports from the CIA in the late 1980's about how the USSR would be around at least until 2010 and most likely 2030-50 should have been seen as *frauds*: they had so weakened the Nation to respond to *any* attack and counter threats to the Friends and Allies of the United States that the US was no longer seen as a reliable power of any sort.

The loss of identity of the American People to its Foreign Policy strategy is not new. It is traced directly back to Korea and Vietnam where the disenchantment of the American People with supporting dictators, appeasing aggressors and, generally, giving up the ideals of Liberty and Freedom to a 'balance of power' that they started to walk out on the system ITSELF. By the late 1970's the mass movement of the American People was no longer along standard political and ideological axes, but was a growing disenchantment with the political system that would *support* the deterioration of National Sovereignty and the Preceptual belief in the Declaration and the limitation of Government seen in the Constitution. The end of the Cold War did not start this trend which was in full swing by that point in time. The American People believed that the Nation should stand up for some things and the political class was telling it that those things were not worth standing up *for* or doing anything to *continue* them. To have a sense of the lost security on the Global Scale one must first *start* with that sense which America has not had since the middle of the Cold War.

After Vietnam, the destruction of Cambodia, Laos, and the reprisals taken against South Vietnam were huge with death tolls as a result of American cowardice rising into the tens of millions. The USSR saw this as a vital way to undermine the West and the very conception of Western Liberty because their sympathizers in the West had shown an ability to redirect outlook away from Preceptual basis to one of 'no blood now for any reason, ever'. This was not helped by the US non-response to the overthrow of Iran by Islamic Fundamentalists, the botched hostage rescue attempt, the Embassy bombing in Beirut, the Marine Barracks bombing in Beirut, the Second Embassy bombing in Beirut, the Pan Am Lockerbie bombing, the Berlin Disco bombing... The continuous hit parade against the US and its Allies by foes both Communist backed, like the various 'Red' factions/legions and the Pan-Arab to Islamist groups led to further deterioration in the concept that the US would actually address anything outside of herself. The retaking of Kuwait was seen as a validation *of* that because the US would no longer dare to act *alone* in her own interests. And promises given to people wanting to over throw a dictator were not fulfilled and so 300,000 Shia Arabs died due to Saddam Hussein because they actually had this strange belief that the US would actually stand FOR anything it said.

Those are the trendlines of disenchantment of the American people with its government, political class, foreign policy institutions and, in the end, self-alienation from the concept of a Nation supporting liberty and freedom both at home and abroad.

A fertile place to examine how trends can be seen is via 'alternate history' or 'counter-factual history' which both utilize things that did not happen and then look and see what the ongoing trends across societies and nations were and how they would be effected by them. This I did in my piece looking at how Azar Gat postulated a slightly different outcome to world affairs if North America was not that rich in resources or in any given subset of them (say fresh water or iron ore or fertile land). A United States with the natural resources at lesser degrees or far harder to get and support would not have been able to sustain the industrial output necessary to fight two World Wars.

Going a bit further, as I am an alt-history fan, I postulate an even smaller change to Germany pre-WWI that would have long-term and large scale ramifications globally... actually a trivial change historically speaking. The overall analysis, however, is that of 'contingent effects' being predominant in history: things that are unrelated to societal trends, say natural resources or transportation lines, can impact a wide swath of peoples and the course of nations. This goes against Marxist views of 'mass-movement historical trends' because those very same mass movements are based upon contingent effects. Without the basis to get those masses, the movements either don't show up or they show up in a scattered way and exert little overall force.

With any consequential petroleum resources held by Germany and threat to take more of same, plus a stalemate in the Euoropean theater, President Wilson would be forced to put the economic needs of the US aside and join the Allies or to fully fight *all* of the Allies of Germany. There would even be the case made that supporting Germany so as to *influence* it and its allies was in the US interest for the long-term spread of democracy and liberalization of those regimes. That was a case hard to put forth with Germany relatively isolated, but a Germany with more resources and active in the Middle East then puts Germany combat expertise in support of the Ottoman Empire.

World War I was not foreordained to be the US coming in to save the Alliance bacon and then fouling up its handling of the Middle East for 90 years thereafter. With one relatively simple shift in outlook, one that the Kaiser could easily have taken umbrage to, the entire geo-strategic basis for World War I would have changed and harshly. If the Aussies had problems at Gallipoli with Ottoman Turks there, imagine the problems they would have with Germany supported Ottoman troops with more modern weapons and tactics. And securing victory against the Ottomans by the British from the south would have to be concentrated on attempting to regain natural resources and be faced with German troops attempting to isolate Persia and threaten Arabian oil supplies and other Middle Eastern natural resources. Not to speak of the Suez Canal.

One minor rail line that was discontinued but near completion just before the war, could have changed the entire history of WWI with the pre-war plans adjusted to that economic parameter: Germany was very capable of doing that. The trends of war, in that case, would not be 'mass movement' affairs predicted by socialists, but highly variable affairs based on tiny accidents of history. Some broader sweeps do happen, say the shift to agricultural societies, but the final forms of those societies winding up into anything like our modern world are not pre-ordained. If the volcanic island of Thera had not exploded for an additional century, the movement of that early civilization based on Crete and Thera would have been able to thwart Mycenaean attempts to overcome them. Without that you get no Trojan War. Indeed, a more highly coherent multi-island society becomes a palpable force with time to spread and the entire history we know after the dawn of the Bronze Age would not have happened as it would shift Egypt and Babylon, too, via trade and intellectual discourse. Given a century, that early civilization with hot and cold running water to individual homes, indoor siphon based plumbing and other things that would have to wait until Roman times, would have spread faster. Greater public health via good sanitation saves countless lives daily, and is a simple thing to do. With agriculture, sanitation and time to build up trade, our world would not be here as we know it... probably we all would be speaking some form of Greek.

That is a contingent effect having a mass movement outcome: it is a necessary mental tool for trendline analysis to be able to postulate a minor change (a change in outcome that is randomly distributed) so that a wider spectrum of subsidiary changes can be examined using our knowledge of how such changes have impacted other societies. With that being said, when large scale trends do start moving societies, then they continue moving until something else acts upon them. That is part of the supersaturation concept. And my best trendlines are actually measurements, although they are direct, like the declining export capability of Iran, they are a bit darker because of what they are showing:

The above taken from US Census datasets.

Voting requires that one be over 18, a citizen of the US and not otherwise stopped from voting via previous convictions for crimes. We have concepts, in a representative democracy, that include words with attendant ideas:

Majority - the majority of the voting population.

Plurality - a large segment of the voting population that is sub-majority, but not minority.

Minority - generally sub-plurality, to the point where it is non-competitive with a plurality, generally placed under 40% and usually under 30%.

For representative democracy, starting in 1964 for Presidential cycles, the Majority came out to vote in numbers that would allow the winners to claim Plurality status. In the years between 1976 and 1992 the ability to claim a Majority voting is still in effect, but the resultant government could no longer claim Plurality status and can be considered a Minority with Majority voting. These are given considering non-'landslide' elections where contests are in the 52% winner and 48% loser arena. Most elections have been closer to 50/50 with the Nixon and Reagan 'landslides' the exceptions. The historical trendline for Presidential election years has been downwards with a spike in 1992 and an upward trend between 1996 to 2004, but with 2004 being a high water mark for absolute turnout though a relatively low turn-out considering the 1964 high in that area. We have not had anyone who can even claim to be a Plurality President since 1972 with the sole exception of President Clinton barely clearing that in 1992 and then falling into Minority status in the next election cycle.

If all underlying societal circumstances remain the same over this period for commitment to representative democracy, then the overall trend can be said to indicate a drifting from utilization of the franchise right by a minority, at first, and then by a Plurality. With the exception of 1992, the Plurality of Americans who can vote have voted with their feet and non-exercise of their franchise as a demonstration of their commitment to representative democracy. Or in this case non-commitment to that concept. That underlying trend, if it has no mitigating factors would then trend for the next Presidential election cycle to 'regress towards the mean' or average indicated by the ongoing trend downwards. I examine that concept of how a mean or average trend via a slope in a graph depicting such things as batting averages, average temperatures and other things has a powerful mathematical backing to it.

Here the interim Congressional election cycles demonstrate the operative slope clearly, with the 1966 high water mark for Congressional turnouts being in 1966 with a slight fall-off in 1970, allowing Congress to claim Majority turnout but to be Minority in representation with close elections as an operative concept. Starting in 1974 and with every subsequent interim election, there has been a Plurality turnout with Congress moving into pure Minority status for representation. Dropping below 45% in 1998 and subsequently has cemented that Minority representation and would indicate a decided lack of support from the American voting population. A slope on the Congressional graph, only done by eye and pure estimation, sees a 12% drop over 9 interim elections after the start of the graph or a general 1.3% drop per interim election cycle election cycle on the Congressional side. A similar slope dropping approximately 20%, again done by eye, over 10 Presidential election cycles after the start of the graph yields a general 2% voter turnout decline per cycle. Not having the 2006 turnout information handy for Congress I can't say if that holds up, but as there was no indication of a massive spike in voting that would draw inordinate media attention, the norm may have held. For the next Presidential cycle that slope would indicate a 54%-56% turnout to return the turnout rate to its declining slope to its mean.

That latter is worrying as, to truly get back in synch with the slope, the amount of area covered by the variation would have to be made up by actually going under 54%. If the mean has a draw to it then that would seem to be indicated, giving the highly spikey turnout changes in Presidential election years. For that to happen, both parties would need to nominate individuals that would depress their own voter turnout and the turnout of 'independents'. A 2% total percentage drop-off would be a minimum expected with a mean drawing the percentage back to historical turnout declines, while a 4% would be the average drop off (thus to just over 54%) and 6% would start to bring the overall trend back into line for a slight recover in 2012. What happens at 6%, however, is that nearing the 50% turnout line starts to dance with the turnout rate changing from Majority to large Plurality. A drop to between 50% to 52% starts to be a test of the actual adherence of the American voting age population to representative democracy. For a representative democracy to claim any legitimacy under majoritarian standards, then a Majority must turn out for elections to be considered as 'representative'. A slight drop to Plurality turnout then calls into question the actual validity of a representative democracy as representing the 'will of the people' when their will has been demonstrated by not voting.

There is no 'out' in that function: if you believe in the concept of representative democracy, then there is no plea to 'only the interested vote' or the 'smarter people voting represent those who don't'. That is patently not the case as the former is actually citing that representative democracy is not working and the latter is suggesting some form of authoritarian outlook by a Minority to rule the Majority. The glib answers like that must end when representative democracy founders with such low turnouts. If there is no interest in common government, then government is no longer able to serve the common man and must guess at what that common man wants. And do notice that every social program, every educational program, every pork barrel project, every enticement, every bribe, every payoff to the people with their own money has not brought out more people to actually *support it*.

The longer term artifacts of this have been showing up in other, derivative data sets based on Congressional votes. Looking at that in Running the numbers: Polarized America, I found the following:

What is more troubling than that, and being witnessed this election season, is the two parties fielding presumptive candidates that are, inherently, starting to cause party faithful to waiver. If candidates in both parties cause a minor drop in their own base participation, say 10%, then the percentage voting drops very close to 50%, just nudging over it by a bit. At 15% it drops just below 50% turnout. At that point representative democracy goes from plurality government to true minority government, representing a sub-part of plurality. Even with minority government status being reached de facto for many years, the absolute shift where true plurality of the voting age assent is given is no longer in hand.

Gridlock is actually not a problem but the solution being given by the political center in the US: it is the only ready means at hand to keep the two parties in mutual check so that they can not run an activist government. The ability to actually be wealthy and not have that pathway to wealth put in danger is a sub-marking point of the larger demographic shift by the center. As government is a user of wealth, not a creator of it, the political center is now saying to both parties that what they created during the Depression to mid-1970's is not what is wanted by them, and they are willing to let the two parties drift hard apart from each other by not participating in representative democracy. We hear much from the two party activists, but the quiet and dead silence from the middle is attempting to marginalize both parties into ineffectual stalemate.

For all the activism being seen, those very same activists ignore the fact that more and more people are no longer voting. If said activist views towards government 'helping people' were correct, turnout would have been on the rise for the last four decades, and yet just the opposite has happened. That growing Plurality is using its right NOT to vote as a negating power by pitting activists against each other into 'gridlock'. If that Plurality had wanted *either side* to dominate, it would dominate, and yet we have 'gridlock'. That 'gridlock' indicates a bankrupt outlook by the two parties that has gotten worse and continues to do so, on average, for every election since 1964. There is also no support for 'bipartisanship' as the polarizing process has driven that out of the political arena: it has not served a purpose to this growing plurality and so it is nearly gone from politics. Bipartisanship has not yielded something useful to the non-voting Plurality and so they continue to grow in numbers as more and more are turned off by 'bipartisanship' and party 'activism' for 'causes'.

As I said way back when: things in Iraq have good trendlines and have seen those increasing since 2006, while things in the US have been going downwards for decades heading into troubled waters. You start to see this effect now being cited by a few others, like Ralph Peters in an article at the NY SUN on 28 JUN 2008, looking at the lies told by the political elite and the media about Iraq, terrorism and the condition of things in the US and globally:

Every single significant indicator, from Iraqi government progress through the performance of Iraqi security forces to the plummeting level of violence, has changed for the better - remarkably so.

If current trend-lines continue, it may not be long before Baghdad is safer for Iraqi citizens than the Washington-Baltimore metroplex is for US citizens. Iraq's government is working, its economy is booming - and its military has driven the concentrations of terrorists and militia from every one of Iraq's major cities.

While the US is trying to ignore a growing insurgency problem south of the US border.

Not that either of the two parties will address that, nor the spillovers that are now happening in the US because of it. The first teams of hitmen roaming the Southwestern US have already started to arrive. But 'activist' candidates won't address that.

Which is a symptom of failing democracy in the United States.

25 June 2008

Plans aren't policy

Just a little bit of fun with the Presidential candidates from their websites:

Energy Plans

Sen. John McCain

Greenhouse Gas Emission Targets And Timetables
2012: Return Emissions To 2005 Levels (18 Percent Above 1990 Levels)
2020: Return Emissions To 1990 Levels (15 Percent Below 2005 Levels)
2030: 22 Percent Below 1990 Levels (34 Percent Below 2005 Levels)
2050: 60 Percent Below 1990 Levels (66 Percent Below 2005 Levels)

The Cap And Trade System Would Allow For The Gradual Reduction Of Emissions.
The cap and trade system would encompass electric power, transportation fuels, commercial business, and industrial business – sectors responsible for just below 90 percent of all emissions. Small businesses would be exempt. Initially, participants would be allowed to either make their own GHG reductions or purchase "offsets" – financial instruments representing a reduction, avoidance, or sequestration of greenhouse gas emissions practiced by other activities, such as agriculture – to cover 100 percent of their required reductions. Offsets would only be available through a program dedicated to ensure that all offset GHG emission reductions are real, measured and verifiable. The fraction of GHG emission reductions permitted via offsets would decline over time.

Sen. Barack Obama

Cap and Trade: Obama supports implementation of a market-based cap-and-trade system to reduce carbon emissions by the amount scientists say is necessary: 80 percent below 1990 levels by 2050. Obama's cap-and-trade system will require all pollution credits to be auctioned. A 100 percent auction ensures that all polluters pay for every ton of emissions they release, rather than giving these emission rights away to coal and oil companies. Some of the revenue generated by auctioning allowances will be used to support the development of clean energy, to invest in energy efficiency improvements, and to address transition costs, including helping American workers affected by this economic transition.

The question is: if 'greenhouse gases' are NOT causing 'global warming' then why do we need any 'cap and trade' system?

Both plans seek to 'regulate' such emissions, but the question is why is the federal government the best one to do that? If such emissions are demonstrated not to be linked to any 'global warming' and, indeed, fluctuate independently of global surface temperature, then the entire bureaucracy set up to do such things would have to be dismantled. Now considering that the federal government took a century or so to remove taxation on telephone use to help pay for the Philippine-American War, why would it be expected to be any quicker in getting rid of this bureaucracy?

While both Candidates have 'plans' to 'mandate' technologies, isn't it the marketplace that is best set up to determine economically viable technologies and their use? Who gave these candidates such wisdom of the ages to determine these things?

And for those thinking that Sen. McCain's is any more 'friendly' to small businesses, what he is doing is setting up a huge gap of regulation between small and large businesses and effectively ensuring that NO small business covered under his regulatory system will ever BECOME a large business. Sen. Obama at least wants to wipe out the small businesses instead of having them around by applying it equally to everyone to 'ensure the burden' is spread evenly so that the smaller businesses can't cope with them.

Which is better?

Government ensuring that the large polluters can never be challenged properly or Government ensuring that small businesses get hit the hardest and have a truly nasty uphill slope to climb while larger firms just absorb the cost and pass it along to consumers? Either way the small business sector becomes more limited for those areas covered by regulation.

Both Presidential candidates want larger government intrusion into a market that has ALREADY met ALL commitments that anyone would have wanted from the US out of Kyoto without doing a damned thing. Why regulate it AT ALL? It is outperforming every other Nation on the planet signed on to Kyoto. Strange by not signing on we meet standards, while others that sign on can't meet them through centralized regulation....

Next up:


Sen. Barack Obama

  • Obama's Plan to Cover Uninsured Americans: Obama will make available a new national health plan to all Americans, including the self-employed and small businesses, to buy affordable health coverage that is similar to the plan available to members of Congress. The Obama plan will have the following features:
    1. Guaranteed eligibility. No American will be turned away from any insurance plan because of illness or pre-existing conditions.
    2. Comprehensive benefits. The benefit package will be similar to that offered through Federal Employees Health Benefits Program (FEHBP), the plan members of Congress have. The plan will cover all essential medical services, including preventive, maternity and mental health care.
    3. Affordable premiums, co-pays and deductibles.
    4. Subsidies. Individuals and families who do not qualify for Medicaid or SCHIP but still need financial assistance will receive an income-related federal subsidy to buy into the new public plan or purchase a private health care plan.
    5. Simplified paperwork and reined in health costs.
    6. Easy enrollment. The new public plan will be simple to enroll in and provide ready access to coverage.
    7. Portability and choice. Participants in the new public plan and the National Health Insurance Exchange (see below) will be able to move from job to job without changing or jeopardizing their health care coverage.
    8. Quality and efficiency. Participating insurance companies in the new public program will be required to report data to ensure that standards for quality, health information technology and administration are being met.
  • National Health Insurance Exchange: The Obama plan will create a National Health Insurance Exchange to help individuals who wish to purchase a private insurance plan. The Exchange will act as a watchdog group and help reform the private insurance market by creating rules and standards for participating insurance plans to ensure fairness and to make individual coverage more affordable and accessible. Insurers would have to issue every applicant a policy, and charge fair and stable premiums that will not depend upon health status. The Exchange will require that all the plans offered are at least as generous as the new public plan and have the same standards for quality and efficiency. The Exchange would evaluate plans and make the differences among the plans, including cost of services, public.
  • Employer Contribution: Employers that do not offer or make a meaningful contribution to the cost of quality health coverage for their employees will be required to contribute a percentage of payroll toward the costs of the national plan. Small employers that meet certain revenue thresholds will be exempt.
  • Mandatory Coverage of Children: Obama will require that all children have health care coverage. Obama will expand the number of options for young adults to get coverage, including allowing young people up to age 25 to continue coverage through their parents' plans.
  • Expansion Of Medicaid and SCHIP: Obama will expand eligibility for the Medicaid and SCHIP programs and ensure that these programs continue to serve their critical safety net function.
  • Flexibility for State Plans: Due to federal inaction, some states have taken the lead in health care reform. The Obama plan builds on these efforts and does not replace what states are doing. States can continue to experiment, provided they meet the minimum standards of the national plan.

Sen. John McCain

John McCain Will Reform Health Care Making It Easier For Individuals And Families To Obtain Insurance. An important part of his plan is to use competition to improve the quality of health insurance with greater variety to match people's needs, lower prices, and portability. Families should be able to purchase health insurance nationwide, across state lines.

John McCain Will Reform The Tax Code To Offer More Choices Beyond Employer-Based Health Insurance Coverage. While still having the option of employer-based coverage, every family will receive a direct refundable tax credit - effectively cash - of $2,500 for individuals and $5,000 for families to offset the cost of insurance. Families will be able to choose the insurance provider that suits them best and the money would be sent directly to the insurance provider. Those obtaining innovative insurance that costs less than the credit can deposit the remainder in expanded Health Savings Accounts.

John McCain Proposes Making Insurance More Portable. Americans need insurance that follows them from job to job. They want insurance that is still there if they retire early and does not change if they take a few years off to raise the kids.

John McCain Will Encourage And Expand The Benefits Of Health Savings Accounts (HSAs) For Families. When families are informed about medical choices, they are more capable of making their own decisions and often decide against unnecessary options. Health Savings Accounts take an important step in the direction of putting families in charge of what they pay for.


John McCain Proposes A Number Of Initiatives That Can Lower Health Care Costs. If we act today, we can lower health care costs for families through common-sense initiatives. Within a decade, health spending will comprise twenty percent of our economy. This is taking an increasing toll on America's families and small businesses. Even Senators Clinton and Obama recognize the pressure skyrocketing health costs place on small business when they exempt small businesses from their employer mandate plans.

CHEAPER DRUGS: Lowering Drug Prices. John McCain will look to bring greater competition to our drug markets through safe re-importation of drugs and faster introduction of generic drugs.

CHRONIC DISEASE: Providing Quality, Cheaper Care For Chronic Disease. Chronic conditions account for three-quarters of the nation's annual health care bill. By emphasizing prevention, early intervention, healthy habits, new treatment models, new public health infrastructure and the use of information technology, we can reduce health care costs. We should dedicate more federal research to caring and curing chronic disease.

COORDINATED CARE: Promoting Coordinated Care. Coordinated care - with providers collaborating to produce the best health care - offers better outcomes at lower cost. We should pay a single bill for high-quality disease care which will make every single provider accountable and responsive to the patients' needs.

GREATER ACCESS AND CONVENIENCE: Expanding Access To Health Care. Families place a high value on quickly getting simple care. Government should promote greater access through walk-in clinics in retail outlets.

INFORMATION TECHNOLOGY: Greater Use Of Information Technology To Reduce Costs. We should promote the rapid deployment of 21st century information systems and technology that allows doctors to practice across state lines.

MEDICAID AND MEDICARE: Reforming The Payment System To Cut Costs. We must reform the payment systems in Medicaid and Medicare to compensate providers for diagnosis, prevention and care coordination. Medicaid and Medicare should not pay for preventable medical errors or mismanagement.

SMOKING: Promoting The Availability Of Smoking Cessation Programs. Most smokers would love to quit but find it hard to do so. Working with business and insurance companies to promote availability, we can improve lives and reduce chronic disease through smoking cessation programs.

STATE FLEXIBILITY: Encouraging States To Lower Costs. States should have the flexibility to experiment with alternative forms of access, coordinated payments per episode covered under Medicaid, use of private insurance in Medicaid, alternative insurance policies and different licensing schemes for providers.

TORT REFORM: Passing Medical Liability Reform. We must pass medical liability reform that eliminates lawsuits directed at doctors who follow clinical guidelines and adhere to safety protocols. Every patient should have access to legal remedies in cases of bad medical practice but that should not be an invitation to endless, frivolous lawsuits.

TRANSPARENCY: Bringing Transparency To Health Care Costs. We must make public more information on treatment options and doctor records, and require transparency regarding medical outcomes, quality of care, costs and prices. We must also facilitate the development of national standards for measuring and recording treatments and outcomes.

Yes, I am greatly abbreviating these monster proposals.

Both plans are set upon subsidizing health insurance. I have some bad news for the Senators, but when you subsidize a good or service it gets used uneconomically thus driving up the overall cost or lowering the overall availability or BOTH. This is a central understanding of healthcare as practiced since the start of WWII and is a direct consequence of the 'New Deal' requiring individuals to *retire* just as labor was desperately needed in factories. As John Stossel points out on 21 SEP 2007:

America's health-care problem is not that some people lack insurance, it is that 250 million Americans do have it.

You have to understand something right from the start. We Americans got hooked on health insurance because the government did the insurance companies a favor during World War II. Wartime wage controls prohibited cash raises, so employers started giving noncash benefits like health insurance to attract workers. The tax code helped this along by treating employer-based health insurance more favorably than coverage you buy yourself. And state governments have made things worse by mandating coverage many people would never buy for themselves.

Competition also pushed companies to offer ever-more attractive policies, such as first-dollar coverage for routine ailments like ear infections and colds, and coverage for things that are not even illnesses, like pregnancy. We came to expect insurance to cover everything.

What is not accounted for in any mention of healthcare 'plans' is the cost of overhead for 'insurance'. Insurance is bought on a provisional basis that you are expecting something to happen to you and the insurer is betting that it will not: it is a wager system in which the one accepting the risk of the gamble, namely the insurer, sets the price on the wager. Healthcare, unfortunately, because it has been subsidized has been over used and abused by the American public, thus distorting the cost of healthcare.

Using government 'mandates' then becomes an effort to shift accountability out of the hands of patients, no matter how 'market oriented' a mandate is, and to meeting 'standards' set by a regulatory body that is appointed, not elected. As Mr. Stossel points out the average doctor utilizes 14% of their income to deal with *paperwork*, and even with most of that being electronic it requires the hiring of non-medical staff to handle insurance 'oversight' and paperwork. What you pay *into* health insurance becomes a fraction of what is paid out: you subtract of insurance company overhead, overhead of that burden on doctors who must change pricing due to it, and the increased cost of 'controls' and 'accountability' by the insurance company against fraud and just keeping track of the records. If you consider that 14% to be a baseline, just on the medical overhead side, then what is the baseline for the insurance company just to manage paperwork? 1% seems unlikely. 5% if it was run extremely well. In fact for most industries the non-work portion of the day for employees is considered at 20% and that is without profit added in.

If the insurance part is 20% and you throw in, say, a generous 12% profit... even 8% to be low... and you add in the cost of increase to doctors to keep track of the paperwork and pass that cost along, just what part of this 'insurance' is actually going to pay for medical expenses? You know, the stuff you use like doctor's visits and purchasing medications? 70% seems relatively fair, in that realm. So, if 15% of your overall budget goes to healthcare via insurance and you get a 70% useful return on that 15% you are actually spending, yes, 10.5% for healthcare. And that of your grandparents who didn't have insurance, back in the day when that was possible? I've read figures as high as 6-8% and as low as 3%.

That cost delta is lost money due to government mandates, regulations, tax subsidies and generally interfering with your health.

Weaning an addict off of their addiction is a slow process, but if you don't do it that addict begins to spend more and more for their addiction and get less and less return. That is the problem of Canada, which has across the country the same number of MRI machines as Philadelphia metro area. A country that is closing hospitals, even though there are sick people needing beds and where, in some towns, if you have an emergency, it will have to wait for a doctor. Or get flown to the US.

That is from a country that is always cited as having well managed government healthcare. A couple of years ago in France the death toll due to sick and elderly in the summer from doctors taking a month of vacation *mandated* by government shows how much worse things can go along that route. If subsidized insurance is so good, then why are the UK and Canada looking to slowly move away from it?

I would move on to education, but let me put forward something that no one likes: local education is not the business of the federal government. That comes from the US Constitution:

Amendment IX

The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.

Amendment X

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

As the 'right to get educated' is not delegated, by the Constitution to the federal government, it is reserved for the States and the people. As it is not a federal responsibility but a wholly local one, and not enumerated in the Constitution it is not to be disparaged nor controlled by the federal government. That exact, same, argument goes for healthcare and 'greenhouse gases' as these are not a power reserved to the federal government. At each point in these things when the government has stepped in the results have been the same: performance has decreased across the market, markets turn into un-economic zones where government determines who can enter and who can't by raising the barrier to entry, and from those the people end up paying more. Lots more.

One of my earliest ideas was on education reform, and it did point out that since the book Why Johnny Can't Read came out, the reading scores across the US have remained absolutely flat:

That from Jerry Pournelle's site. Since 1958, I believe it was, the rate of Poor Johnny's reading has remained, for all the billions upon billions spent by the federal government, dead flat. Notice that the billions spent have not changed that one jot. You want better reading scores? Perhaps more money isn't the answer, as it certainly seems to be not helping when you DO add money in... and what was my cure for that? Ok, here is something that none of the 'change' folks will stomach, which is change away from something that is proven not to work:

If you want reading, writing, mathematical and other basic abilities to improve, you must *not* hand off responsibility to the Federal government for it. That is an abdication of your responsibility to exercise your rights as a citizen in the US. You, the voter, have signed it over to them by not asking for accountability, clear and precise objectives, a rewards system for actually achieving the goals of teaching children to learn *how* to learn. And then the *expert* educational people come in and tell you that they can do so much *more*... if you would just pay them... continually... and not hold them accountable... ever.

To anyone who reads this, and who thinks that the Federal government is the place to put the responsibility for teaching children, go look in the mirror and you will see the source of the problem. For nearly three generations the responsibility for the right of education has been handed over to *experts*, *qualified professionals*, politicians, bureaucrats and the ever loving school board you never voted for because you couldn't get *involved*. Three generations of parents have abdicated their responsibilities for exercising their rights and being held accountable. And then have the temerity to whine... 'But Johnny Can't Read!' Well, that is what you got: a set of institutions devoted to keeping illiteracy alive and at a steady rate.

There *is* an American answer. It is the *only* answer that will work in the long run. Not in one year. Not in five years. But certainly in time. And it will cost you time, precious time of your life... to learn about your children... to shoulder the true responsibilities of raising a child... and to *not* letting the 'Village' do it for you! And for those that feel that there is some collective need to help children from the highest level, I offer you this humble methodology.

  1. Eliminate the Department of Education at the Federal level
  2. Establish the goal of meeting the top academic scores in the world and set that as the 100% mark.
  3. Take 2/3 of the money given to the Department of Education and Block Grant it out to the states. The states may not use this for anything other than education of children for those things being tested.
  4. Each state will get funds based on that State's overall percentage score to the 100% mark for all of their students.
  5. No school that refuses children based on race, gender, religion or other otherwise means tests children will be eligible for this money.
  6. Children may not be instructed in religion with this money and all instruction related to Federal funds must be clearly separated from religious instruction and enrollment may not be held as contingent upon religious instruction.
  7. Homeschoolers get paid directly the portion allotted to their child based on performance in standardized tests.

What this does is very simple: it removes the question of supporting religion with Federal funds from the equation. If Catholic Schools have a better methodology of teaching those basics needed for excellence in education, they may not require a student attend religious courses to get such schooling. Similarly, if a group of Satanists find a wonderful way to up test scores via teaching methodology, they are not to be barred from it. And at for those that perform *over* the 100% mark, they will get additional Federal funds as that would prove a sound investment for society, no matter how the teaching was done. And the public schools will be forced to *compete* and start to rely upon and lobby those people who can most *help* them: Parents.

It is far too easy to say to a Congressman: 'We are doing so poorly because we do not have enough money'... it is far harder to tell a parent living near that school the exact same thing, and keep that parent's children at your school. You have to offer *solutions* to parents or ask them to *help* in solving the problems. And if a school is falling apart, has students with failing grades, disinterested parents, sky-high property taxes and an apathetic school board... well... why exactly *should* they get more money?

Education cannot be the right of everyone and the responsibility of bureaucrats.

Yes, equal treatment under the law, set real standards, pay for performance and block grant the money. Public Schools *compete* against Private Schools, and money is given out to those who teach well via international standardized tests that everyone likes to point to. If you can teach children well, you should damned well get paid well FOR THAT. And if you CAN'T, then why should you get paid well AT ALL?

Would you pay to get your car repaired like we pay for education? No? Why not? Don't like lowest common denominator car repairs with subsidies going to those who don't repair cars well? Mind you, this is just the next generation of the Nation we are talking about, not like they will make life and death decisions based on poor schooling paid for by lackluster voters who can't be bothered to care about the future anymore...

So, if the federal government isn't a good steward of education, where else has it proven to be less than able?

Consider the problem of what the domestic, small producer oil companies faced in the 1990's when profits were low, supply plentiful and there was a problem of keeping our own, internal, oil production solvent as seen by Steve Layton, President and CEO of Equinox Oil Company, part of the Independent Petroleum Association of America in testimony given to the US Senate Committee on Energy and Natural resources in 1999:

Today’s hearing is intended to examine the current state of the petroleum industry. I must say at the outset that I have never seen the domestic petroleum industry facing a more complicated and potentially devastating set of problems than it now does. The industry has faced a low oil price crisis for the past year, but today’s problems are very different and far more threatening than the ones that began the problem.

A year ago, the price crisis was started by a combination of eventsthe collapse of Asian economies, a warmer than normal winter in the northern hemisphere, and ultimately a market share fight between Venezuela and Saudi Arabia. The events created a surplus of oil in the international market and prices fell. The production most at risk was marginal oil wells in the United States – wells that produce about 20 percent of America’s domestic production, an amount equivalent to our imports from Saudi Arabia. And, I might add the wells from which I make my living.

Now, we have experienced a year of low oil prices – historically low prices that threaten the very heart of U.S. oil production. Domestic oil production is divided into three general areas – the onshore lower 48 states, offshore, and Alaska. The onshore lower 48 states account for about 60 percent of total domestic oil production. The Energy Information Agency has released a recent report that over 60 percent of this onshore lower 48 production comes from independents, a percentage that has increased by ten percent over the past ten years. It reflects an irreversible trend. Major oil companies are leaving the onshore lower 48 states. Particularly since 1986 when the last price crisis occurred, major oil companies have turned their attention away from the onshore lower 48 states shutting in or selling off their production. They have concluded that these wells do not produce the volumes they need to meet the return on capital that they seek. Majors now operate in the United States primarily in the offshore and Alaska, but more and more they are seeking their new production overseas.


In fact, we would submit that Iraq now controls world oil prices. We would submit that the current U.N. sanctions program has failed on two counts. First, it has failed in its primary mission to provide humanitarian aid to the Iraqi people. Second, it has handed Saddam Hussein the victory he lost in the Gulf War. He invaded Kuwait to control oil prices; now he does and he is penalizing his enemies.


First, world oil prices are essentially set by the last barrel sold. A year ago, Iraq exported about 700,000 barrels/day. In December 1998, it exported about 2.3 million barrels/day. By March it will have another 500,000 barrels/day of capacity on line. Iraq was the only OPEC country to boost its oil revenue in 1998. As other OPEC countries have reduced production to stabilize oil prices, Iraq has become the swing producer of world oil. The swing producer sets the price.

Second, Saddam’s objectives differ from other oil producers. He wanted higher oil prices when he invaded Kuwaitmoney he needed to build his military forces. Now, he can’t spend money to buy arms. But, he can – by keeping oil prices low – punish his enemies, first by reducing the income to Saudi Arabia, Kuwait, Iran, and others; second, by driving critical U.S. production to be shutdown and plugged forever.

Third, looking purely at demand and productive capacity, today’s surpluses should not drive prices to their historic depths. We estimate that worldwide production capacity currently exceeds demand by about 4 percent.

Nobody cared about the lack of support for oil producers when the cost of gasoline was low, and yet the small producers saw what was happening and reported on it to the US Senate: market manipulation happening during a price war between Saudi Arabia and Venezuela.

America has a problem: we only care about things when they become a 'crisis' and don't care that our internal policy is so skewed that it creates crises because of our 'crisis' driven mentality.

The problem with the 'plans' of the candidates is that they are NOT POLICY: they are legislative views towards a branch of government that does NOT create legislation. Each of these candidates is depending on getting legislation PASSED by Congress when they BOTH sit in the very institution that does that. And as their plans have a high degree of accord, why don't they work NOW to get them passed?

Could it be that the plans of both are *losers* and can't get a majority to agree with them? That no amount of 'bipartisanship' can get them even *started* in Congress?

If these two cannot show Leadership in the very place that starts legislation, then why should a change of venue to an office that doesn't start these things *help*? Yes, some Presidents do get a 'honeymoon' period, which lasts far less than a year, these days, and my guess is the next President, no matter *who* is elected, will not even get a few weeks.... to get started a legislative process they have had YEARS to address.

I am supposed to find a difference between these two non-performers?

If the difference is between Big Government and Bigger Government, just how can I choose for someone that will, actually, represent my beliefs and ideals for how government is supposed to be run from the Executive branch and actually get a Smaller Government? Because they are not running to be Super-Duper Senator or Uber-Legislator, although that is what their 'plans' imply, but for running to be Head of the Federal Government, Head of State, Commander in Chief and Final Pardoner. And none of those things are looking at Education, Healthcare or even energy production. That power isn't given to the Executive, Legislative or Judicial branches.

And if you try to cite some emanating penumbra' from the Preamble, may I suggest that I read the Preamble damned differently and don't see one jot or tittle handed to government there?

They both want to take more from me, you and all of our fellow citizens in the way of rights and responsibilities. I am supposed to like or even admire that in either candidate? Vote for one? Which one is it that is running to be President?

If these two suckers can't even figure out what a policy *is*, then why should I seek to entrust either with the highest office in the land? One is less worse? Less worse than *what*, praytell? The other? They aren't even running for the job of President but as Super Legislator as they don't understand the difference between the two. Even worse is that neither can do their present job in a way to secure liberty, not remove it.

As a responsible voter trying to safeguard my Nation and my liberty, and ensure that both of those get passed along undiminished to those that follow me, then voting for a candidate who promises to diminish my liberty is a non-starter. And they are *both* doing that in different areas and promising us the same old nostrums of some lovely government that actually can figure things out, with all proof for multiple decades and, indeed, a century or so, pointing out that the federal government is the worst place to put faith for doing anything with the powers not handed to it by the Constitution. Unfortunately we have been doing so for a long time, and the last time this country faced a government that felt it could dictate to the people what the people should do, there was a Revolution.

'Government mandated free market' is an oxymoron, in case it has escaped anyone's attention.

And yet that sort of comment can be upheld as being a great idea, profound even, if either of these individuals speak it.

The more I look at these two candidates the more I am disgusted by them.

The First Rule of Blogs

Actually there are a number of them! First rules of blogs from the 'there are no rules' to 'never attack Steve Jobs or Apple Computer' to 'only write about blog focus' to 'spelling doesn't matter'.

There are, however a couple of salient ones that are part of the blogging culture, and one is actually the hyperlink set-up of the net and 'pull' interest. So I will hit the second one first, as it is the unstated rule of all hyperlinked articles, paraphrasing from commentary TrentD left at Engadget:

If you are not interested, don't click the link. And you should certainly NOT comment about just how uninterested you are in the article.

That is absolutely red letter for those finding commentary or blog posts about themselves. It is a damned difficult thing to take, that 'misguided blog post' about YOU. It is a two-part rule and the first is the 'pull' part - you are asking for something to be handed to you and are prepared for what follows. As an individual you may not like it, may not enjoy it, and may even find that if you are the subject of the post that the individual has YOU all wrong.

As blogging is a relatively 'flat' media, for all of it having video, audio, pictures and words... lots of words... the Theodore Sturgeon Law comes into play (taken from Everything2, which gets it from The Jargon File by ESR):

Sure, 90% of science fiction is crud. That's because 90% of everything is crud.

It is the Law of Information - 90% of it is crud. Sifting through the crud to find anything of interest is damned difficult, and when you click on a link there is a 90% chance that it will be crud. And if you comment about crud there is a 90% chance that your comment will be crud. Lets face it, our minds are not all that well honed and even when they are, the crud is overwhelming when compared to the non-crud content. Even better is that I expect that 90% of everything I WRITE is crud: that is the inherent nature of information production and weeding out the non-crud to deliver it is exceedingly difficult.

And I apply that exact, same rule to EVERYTHING I READ. Even from people I LIKE.

Then I apply my own rules to the what I write, as I consider them to be 'crud-filters':

1) No personal attacks

2) The Mommy Rule

3) Civility

4) Proposed actions must be do-able, conform to laws, treaties and The Law of Nations.

5) Moderation

I also apply my own, very personal rules of research, which includes checking information sources of finding if more than one source conforms to a given piece of information or data. That is difficult and some crud slips through perforce: 0.9 x 0.9 = 0.81.

That is a derivative of Sturgeon's Law by using percentages - 90% of what you read is crud and anyone backing a given piece of information has a likelihood of 90% crud, but the resultant information only has an 81% chance of being crud. Yes, cross-checking yields a 9% reduction in crud level!

Math, you gotta love it.

These rules do have backing, however, as pointed out by Thomas Lifson on 29 DEC 2004, looking at Nick Coleman's personal attack on a blogger at Powerline, and decided that a personal and scurrilous attack was in order on that blogger at Powerline. What then starts, and has now plagued Nick Coleman ever since, is "career suicide by blogger". Like 'death by cop' where a criminal wishes to die so he rushes police officers while attacking them, this sort of attack is personal and the career diminishment permanent.

The next rule is one that I don't stick to, as the media of blogs often leads to blog-to-blog posting about topics in a post/rebuttal or commentary system outside of direct commentary. Bloggers who read other blogs of interest may find that the best place to comment is *not* in the comments section of a blog post but on their own blog. This does, however, leave the blog-less about out of things, and that also means that they have problems actually addressing the international free media of blogs in a coherent fashion. So, as I like the rule, from larimdame's Gene on 20 DEC 2004:

The First Rule Of Blogs Is That You Never Talk About Blogs

Yes, to those who see that it seems asinine, these folks posting stuff that is so wrong-headed that it needs to be addressed. And yet it comes from its own first rule that has been around for far longer than it, coming from George Bernard Shaw:

I learned long ago, never to wrestle with a pig, you get dirty; and besides, the pig likes it.

From that you get the idea that if you wrestle with a blogger, where 90% of everything is crud, you will get cruddy perforce. No two ways about it, which is why a number of bloggers consider themselves to be 'muckrakers', which rakes through the muck to see what crud turns up and see if other crud is similar enough to it to, perhaps, be non-crud. Newspapers as pointed out over at Knox News by Michael Silence, is clueless on how this media actually works, which is more than just 'muckraking' but a concerted effort by people interested in topics actually examining those topics.

Of course most of that is crud.

Even worse is that the MSM and those who think by its past-terms of working don't realize that they are also in the crud production business, but with higher overhead. And one of the foremost clearinghouses for looking at the crud production system is Glenn Harlan Reynolds at Instupundit, the author of Army of Davids. He also had a number of links on the Nick Coleman affair and many others, so I will add in a few links to give an idea of how the crud/blogger internet system works:

Take his post and links on 22 JUL 2007 on how MSM misquoting people is the NORMAL course of affairs because stories are all about 'narrative' not facts. That is, really, too true for words, but words can be spilled on the topic.

Going on a Denial of Service attack against a blogger, like Jeff Goldstein, is extremely counter-productive and gives vindication to his viewpoints by having opponents so petty and puerile that they want to shut him up while attacking him personally. Which Insty documents on 08 JUL 2006. This is the 'never talk about blogs' rule and 'wrestling with pig rule' in force, along with the reason against personal attacks.

Documenting attacks by Glen Greenwald, on 23 MAR 2008, who doesn't realize he is committing career death by blogger.

More pertinent is when the powerful, be they government or otherwise, try to silence a blogger, the pig wrestling and attention garnered are counter-productive to the one who seeks to enforce power over opinion and commentary. On 08 OCT 2006 Insty covers this and this sort of attack has been, more or less, part and parcel of the blogging career of Patterico as soon as he started looking at misdeeds inside and outside of government.

The reason I am talking about this is that a previous post of mine on Nadhmi Auchi has gotten a response from him... well his UK solicitors, actually, wanting me to take it down. They wished for that attack on my freedom of speech to be kept quiet as to the exact contents of the letter, but the overall intent and its contentions of truths is actually something that I have gotten from a few scattered individuals now and again. Twice, maybe. Yes 630 some-odd posts here, another few handfuls at my Party site and a few humorous bits elsewhere and that is my negative feedback: a few calling me misguided, and a couple not understanding that quoting sources via fair use of content without seeking monetary gain is allowable. Hey! 90% of it is crud by Sturgeon's Law, even getting it down to 8!% ain't that hot, and I approach the feedback in the same way.

The request to pull down said post falls into the latter 'unable to recognize an analysis using multiple sources with quotations'. And as I can't talk about the direct points, as they have asked me to, I will talk about general intent and the necessary skills to actually read a post rife with quotations, source links and otherwise complex material. The use of multiple sources, independent of each other, is to get that crud level down, although it will never, ever disappear. It is that cross-analysis from multiple viewpoints that allows an individual to draw conclusions separate from any, single one of them. Further, as many sources have overlapping areas of insight, points self-reinforce even between news organizations from Russia, UK, US, France and international media do in that post. By looking at a broader sweep of a career, across multiple venues and trying to trace back as far as possible and then see how that career coincides with other analysis on related careers and networks, what happens is a consideration of those networks of individuals, the events around them and how those individuals act and interact.

Those individuals and institutions that attempt to stifle such examinations have an extreme problem in the modern world: so much is written and search engines makes indexing and cross-indexing an easily utilized tool for analysis. Not all facts and analyses are equally important, and the job of an analyst is to try to present those things that are considered to be relevant by that analyst and explain why they are important. Trying to disentangle a web of public and private interests that can cross legal bounds usually fell into the categories of 'muckracker', trained criminologist or 'conspiracy theorist' when the tools and availability of sources were low. The last thrived on that, while the first did what they could with limited data and extrapolation. I am not a trained criminologist but a self-taught systems engineer - anything that has a series of inputs, actions, activities, outputs and results is a system that can be examined. I lack specialized tools for things like network analysis of TCP/IP networks beyond the basics of how they work, but for sociological networks the availability of information and tools has changed the very foundation of how one can analyze the actions of people and institutions.

What that does is attempt to create a fact-based analysis, from multiple sources, to examine those patterns as they arise.

I do not seek 'truth' and leave that for theologians. Seeking 'truth' has gotten the rest of the media up to the point where they can no longer report on simple 'facts' and present them, and I detest that in their attempt to make facts fit to 'truthiness', as Jeff Goldberg has put forward. Truth without facts (that being documentary evidence, official records, cross collated interviews with multiple individuals, or simply doing a search on financial/criminal/public records across various sites) turn into this thing known as 'assertions'.

I am always open to factual evidence: point me to it and I will do an analysis on it, and ensure that it has a representation of some semblance of actual facts/events/etc.

When I present analysis and commentary, I move from the examination qualifiers, of how things look to be holding together, to a broader look across all events, connections, interactions and persons to try and derive something that is factually grounded. In doing that I try, desperately, to stay away from conspiracy theorist sites (and they are legion out there), fraudulent reporting (as in ungrounded commentary speaking about personal 'truths' or 'narrative'), and just the crud reporting that abounds. Uh-huh, I have my own internal 'crud list' that has demarcation dates for some areas where they went into 'truths' and 'narrative' and stopped doing factual examination.

As I try to leave some nuggets of useful information for those trying to deal with apparently scurrilous postings on blogs about subjects you know and love, which may happen to be yourself, there is a simple thing to do: ignore them.

They get lost in the noise and takes damned hard research to FIND them, and then, when found, you have the fact that an individual wants to 'pull' information and that 90% of it is crud as an understanding at the start. Giving any credence by trying to silence those putting them out, especially if there is a huge disparity in income or position in government or industry, is a very strange form of elevating said target and making them sympathetic. Even if you *win* you lose by having the worst PR possible: attacking someone who, if left alone, will not harm you.

The number of industrialists, politicians, and criminal figures who have had their reputation sullied by individuals are legion: Carnegie, Rockefeller, Capone, LaGuardia, Daley, Gates, Soros... near endless in its length. Very few of those would ever seek to confront those attackers as they made things worse for themselves if they did. And even those that they did silence had the final word in history, as those attempts to shut them up would cause a deeper examination of events, just as those doing the examination *wanted*. It was those that tried to leave a legacy to rehabilitate their good names that would, even if not particularly liked, would be respected. And at least Capone got the trash picked up on time.

Hire a PR firm if you have worries - they get paid to deal with making reputations shine and do some mud wrestling, although they understand that isn't much of a help. Otherwise your visibility is so low you are living by Brendan Behan's rule and no one wants to be seen as *that* desperate:

There is no such thing as bad publicity except your own obituary.

22 June 2008

Currency and Corruption

For my previous articles on the Red Mafia and its allies:

Red Mafia and its connectivity

The Shockwaves of 5%, where jihad meets economics

The other source of change in Kenyan politics

Natural gas, crime and destruction

After the fall of Trans World Commodities

Nadhmi Auchi, connecting the dots between the candidates

The Bank of New York scandal and concordant Clearstream scandal and its ties through BNP/BNP-Paribas to the Al Mahdi and Al Taqwa banking systems had set up the largest financial system for the movement of illegal funds by putting them through legitimate channels that has ever been seen. To this day the complexity of Simon Reuben's system for financial movements amongst various off-shore havens through front accounts is one that stymies investigators. And yet its fallout continues to play through in various cases.

One of these is in the telecom industry as seen at RUSTELE in a report on a German probe into a Bermuda based fund, on 02 DEC 2005:

German prosecutors probing an alleged money-laundering scheme linked to a Bermuda-based fund are seeking judicial assistance for their probe from counterparts in other jurisdictions, according to The Wall Street Journal.

Friday’s newspaper report cited letters from prosecutors in Frankfurt. They mention suspicions that Russian telecommunications minister Leonid Reiman was involved in a plan to milk Russian state owned companies for cash or divert their assets elsewhere. Mr. Reiman is a close ally of President Vladimir Putin.

The prosecutors suspect Mr. Reiman “illegally enriched himself through a series of transactions”, and then set up a network of shell companies and trusts to secure and conceal more than $1 billion in assets, according to the report.

The Russian Telecommunications Ministry yesterday denied the reports and demanded an apology from the Journal.

The prosecutors are examining whether employees of Commerzbank AG may have helped the scheme. A bank board member has already resigned because of the Germany investigation and four other current and former officials of the bank including chief executive Klaus-Peter Muller are under suspicion for money laundering. A Commerzbank spokesman told the Journal that the bank fully backs its CEO believes no current staff are guilty of illegal activity in connection with the case.

The Journal reported that investigators are also probing whether the New York offices of Barclays Plc acted as middleman moving funds between firms in Cyprus and Bermuda.

Mr. Reiman, who has always maintained that he has done nothing wrong, says the allegations stem from a battle over a disputed stake in Megafon, Russia’s third largest mobile phone operator.

As previously reported in The Royal Gazette, billionaire Mikhail Fridman’s Alfa Group is fighting Jeffrey Galmond’s Bermuda-based fund IPOC for the Megafon stake. A former Galmond employee who is a convicted felon and Anthony Georgiou, who is Mr. Reiman’s former business partner, have given sworn testimony in the case although both acknowledge they have agreements to receive compensation from the Alfa Group or its allies.

Yes, organized crime fighting it out for a stake in a cellphone operator in Russia! That doesn't give one 'warm and fuzzies' when it comes to thinking about secure telephone calls routed through such a carrier. The IPOC fund, as the article goes on, serves as a system for accumulating funds for the takeover of Megafon, amongst other things, and is Bermuda based putting it outside of normal regulatory channels in the US and Europe. Mr. Galmond stood up IPOC to facilitate Mr. Reiman's movement of funds out of Russia so as to escape regulatory oversight there and in Europe by going through a series of fronts that are unregulated. In this case mostly in the Caribbean basin and Cyprus:

Mr. Galmond, the former Commerzbank executives and Vidya Sharma are the key suspects in the German probe. Mr. Reiman is not a criminal target of Western prosecutors since they do not have jurisdiction over the alleged crimes, which occurred wholly in Russia. The Journal said Russian authorities have reviewed some of the transactions and found no significant legal violations.

Mr. Reiman is named in search warrants and requests for international judicial assistance since prosecutors have “substantial evidence” that he participated in the initial crimes of stealing assets of the Russian companies and paying bribes to Russian officials, a spokeswoman for the German prosecutors told the Journal.

The German probe has caused similar probes in the US, Cyprus and Switzerland. The US Justice Department has begun its own investigation into the shell companies and the business dealings of the New York office of Barclays, which moved funds and converted currencies in many of the deals between firms in Cyprus and the Bermuda Commercial Bank which handles most of IPOC International Growth Funds operations in Bermuda, the newspaper said.

One of the prime ways to move funds is either through unregulated fronts pre-setup offshore via a legitimate source, hiding funds under much larger transactions (as was done in the BoNY scandal originally), by flying 'under the regulatory radar' through small fund transfers that are distributed across many outlets, or via the person-to-person banking systems like the hawala or Black Market Peso Exchange system. Here the legitimate source and multiple fronts are used to mask these transfers not only from the US but from Russia.

The WSJ would publish its article on 19 JAN 2006 (via RUSTELE)and examine the entire affair, starting with David Hauenstein, the IPOC fund manager in Switzerland, and his report on the fund:

Mr. Hauenstein’s affidavit said Mr. Galmond’s earlier sworn statements claiming sole ownership of the fund “could give a misleading impression”. But he added that he doesn’t know for certain whether Mr. Reiman is an owner of the fund, IPOC International Growth Fund Ltd.

In an emailed statement, Mr. Reiman said, “I have no relation to IPOC,” adding that, while he used Mr. Galmond’s law firm in the 1990s, “we are not linked by any business relationship at present.” He added that “it distresses me that because of someone’s poorly thought-out, possibly unprofessional actions, my name is mentioned in a conflict with which I am in no way connected.”

Mr. Galmond, in an interview this week, repeated his assertions that he is the sole owner of the fund and that the telecom minister doesn’t stand to benefit financially from any IPOC-affiliated trusts and companies.

He acknowledged his Denmark-based firm sent a letter to a Liechtenstein bank in June 2002 describing Mr. Reiman as “the ultimate beneficial owner of IPOC,” as well as “the economic beneficiary” of some Galmond-controlled companies, but he said the statements were made by his staff in error. Liechtenstein police seized the document from the bank and seized a similar document from a Liechtenstein law firm. The contents of the documents were described in the Hauenstein affidavit, though the documents themselves haven’t been introduced in court.

Mr. Galmond also disputed the accuracy of a 2001 internal memorandum that police seized from the office of Liechtenstein lawyer Daniel Kieber, which is also described in the affidavit. Mr. Hauenstein states that the memo claims Mr. Galmond himself, or one of his partners, “indicated that Leonid Reiman was the ‘economic beneficiary’ “ of three different trusts later used to set up IPOC. Mr. Galmond’s legal partner, F. Michael Boemke, who the memorandum said was also at the meeting, declined to comment.

This is a very strange sort of 'clerical' error to be made and affirmed multiple times by an organization and its owner, and then disputed by that same owner some years later. But the kicker comes as to why the thing starts to fall apart:

The fund’s legal retreat also followed the emergence of a previously undisclosed trust that Mr. Galmond set up in 1996 to benefit Mr. Reiman called Meridium. The Hauenstein affidavit alleges that, in meeting with an associate in 2001, Mr. Galmond “represented Leonid Reiman to be the economic beneficiary of Meridium”.

In at least five depositions or affidavits totalling thousands of pages that Mr. Galmond has filed in the past three years regarding IPOC and Mr. Reiman, he never disclosed the existence of Meridium. In the interview, Mr. Galmond said he had forgotten to disclose the trust and that it never paid any money to Mr. Reiman. At a separate press briefing, he publicly apologised to Mr. Reiman for any embarrassment he has caused Mr. Reiman.

The criminal inquiries grew out of a civil-court dispute between IPOC and Russian conglomerate Alfa Group over ownership of a stake in Russia’s third-largest wireless firm, OAO Megafon. Alfa has claimed in court filings that Mr. Reiman and Mr. Galmond are illicitly depleting Russian state telecom assets to fund a private telecom empire.

That is normally called 'embezzlement' amongst other epithets and legal terms attached to it. It is via a similar system that Semion Mogilevich was able to use the penetrated BoNY/Clearstream system to move funds via off-shore financial institutions to his Cyprus based Highrock Holdings and then from there into Ukraine via Dmitri Firtash, a holder in Highrock, to invest in the natural gas industry not only there but in places like Turkmenistan. Here the funds were taken from various sources, mostly Russian telecom, filtered through exterior systems or via stock holding in the US through Barclay's, and then into different mechanisms that then led to IPOC International Growth Funds in Bermuda and into Meridium. From there Mr. Rieman and Mr. Galmond could utilize those funds to go after the cellphone system of Megafon in contest against Mikhail Fridman's Alfa Group.

Over at Dirty Money Digest on 02 APR 2007 the source of this scheme is put into the context of utilizing the BoNY system, and for this the original Red Mafia article I did will stand you in very good stead:

Reiman triggered a process of privatising the St Petersburg phone company, creating a private company called Telecominvest in 1994 with the aid of his lawyer, Jeffrey Galmond. In the course of the privatisation, Reiman apeared to have acquired ownership of a large portion of the company.

His acquisition of the stock has not been fully explained or documented for understandable reasons. It would be alleged in subsequent litigation that he used his political position to steal the stock directly from institutions under his direct control in Russia. But others would say he acquired it at a market price from a third party for personal enrichment.

Galmond piloted the transfer of Telecominvest across many jurisdictions and companies. The company would be owned by Danish and Luxembourg vehicles, while the Russian state’s stake was reduced and Reiman’s increased.

The company made a particularly important stop-over in Germany. The German conduit for the assets was Commerzbank, a leading German institutional and corporate bank. Commerzbank calls itself ‘the creative relationship bank for the successful German Mittelstand, for major corporates and institutions in Europe as well as multinationals from all over the world.’ Galmond introduced Reiman to the bank, and the bank’s manager agreed to make a public statement to the effect that the bank had entered the Russian telecoms market on its own account.

In the course of negotiations, it would be made clear that secrecy in the transfer of beneficial ownership from Reiman to Galmand was essential. Reiman could clearly not be seen to hold the stock himself. He would not only have to explain how he had bought the stock on a ministerial salary, but also how, as minister, he could be a neutral arbiter when he owned a large share of the sector. The appointment of Commerzbank as his proxy was very attractive to the Minister and his advisers.

Commerzbank appears to have been untroubled by its client’s request for a fictional ownership structure. Revelations made long after the events in question show that the bank knew that a document declaring Reiman to be the beneficial owner was in existence. This triggered an investigation of the bank’s role by the German authorities. The bank’s head of Eastern European operations took responsibility and departed.

The asset’s final destination was Bermuda. Galmond had set up a mutual fund, of which he was declared the beneficial owner. This fund is called IPOC International Growth Fund Ltd and it is said to have stakes in Russia worth $1 billion. IPOC is a mutual fund, but with a single investor-- an unusual structure in itself. The fund was initially run by Vidya Sharma, a convicted fraudster, who had served time in a German prison for fraud. Sharma was a far from reliable employee as later litigation would reveal he had been bribed with over $1 million to give evidence against IPOC.

Vidya Sharma's bribers were, most likely, the very same Mikhail Fridman and the Alfa Group, just so you don't get a feeling that any of the players are inexperienced in the ways of these things:

Galmond had ridden the laundering roundabout with his IPOC fund for a number of years, no doubt earning considerable fees in the process, before his scheme hit an obstacle. This was the Russian oligarch Mikhail Fridman who decided to challenge his claim to ownership of a stake in a mobile phone company.

Fridman is the majority owner of a company called Alfa Group, which is today known as Altimo. Alfa owns stakes in VimpelCom, in a mobile phone operator in Ukraine and in Russia’s fixed line operator, Golden Telecom. Fridman made one early fortune by selling an interest in his oil business (originally acquired from US commodities trader, Marc Rich) to BP Amoco for $6.75 billion. He is no stranger to controversy. His company faces a lawsuit from the Canadian energy company called Norex, which alleges that Alfa issued invoices for fabricated services that were performed by offshore shell companies. Alfa has also been accused of bribing Ukrainian officials and is black-listed by the European Bank for Reconstruction and Development.

Alfa Group is assisted by two controversial characters. The first is Pyotr Aven who has allegedly been engaged in various misdeeds, including drug trafficking. The other is Hans Bodmer who allegedly worked with Fridman and Aven to send instructions to IPOC to wire money through banks in New York. Bodmer recently pled guilty to the criminal conspiracy to launder money and conspiracy to violate the United States Foreign Corrupt Practices Act in connection with a scheme to bribe foreign leaders.

Fridman is ably abetted by Leonid Rozhetskin a former investment banker who managed the New York listing of mobile phone network operator VimpelCom, part of the Alfa stable of telecoms interests. Rozhetskin is also a colourful character. He is an American-educated lawyer, who appeared on the cover of the Russian edition of Forbes, under the headline ‘The Most Dangerous shark in our waters.’

Rozhetskin’s activities threw a spoke into Galmond’s wheel. According to a suit brought by IPOC vs Leonid Rozhetskin, Mikhail Fridman, Pyotr Aven, Alfa Group Consortium, Alfa Capital Markets Inc, Alfa Telecom (n/k/a Altimo) and Hans Bodmer in the United States District Court for the Southern District of New York, June 8 2006, Rozhetskin’s company LV Finance was touting around an option to buy a stake in a nascent Russian telecoms company called Sonic Duo. The funds were to be used as seed capital, and Galmond made an initial payment to LV of $15m in early 2001. He put further money into the business over the course of the year, bringing his investment to $40m. The result was the creation of a company called MegaFon which was formed by bringing together IPOC and a communications company called TeliaSonera, a merger of Finnish and Swedish interests.

That should give the flavor of the goings-on between Rieman/Galmond and Fridman/Altimo & friends. Suddenly it is a corrupt Russian Minister against a corrupt Russian Oligarch, and things no longer look as nice as, whoever wins, it will be a corrupt institution. And just look at that list of names, groups, companies, funds and various exchange groups! How about Marc Rich, the man who sold Iranian oil during the Hostage Crisis... oh, wait, he was *pardoned* for his past misdeeds by President Clinton. Bet all the rest got cleared up by an act or two of Congress, right?

Remember, post-2001 things are supposed to be so much better, but most of the triggers for this come after 2001 and due to greed by the individuals involved and not due to US banking and financial regulations. The question then starts to arise: did 2001 do much of anything to help things out?

Leaving that question up to the individual to decide, lets start out with the smallest fish, the mercenary 'testimony for bribery' individual of Vidya Sharma, as it usually helps to get a handle on a smaller player to understand what is going on with the larger ones. The Guardian would look at this story on 07 DEC 2003 as the initial lawsuits started to be presented and try to puzzle its way through IPOC, Alfa and MegaFon, and come up with this little bit on Vidya Sharma after looking at the mess that unfolds:

IPOC claims it agreed to buy 25 per cent of MegaFon from Russian-based investor LV Finance in 2001, and has since handed over around $74m in transfers and loans towards the purchase. But Alfa, it is alleged, bought LV Finance in August, and transferred the stake into its own portfolio. Alfa challenges this version of events, insisting it is the rightful owner of the shareholding.

Already there have been legal skirmishes in Bermuda, the Bahamas, Rotterdam and elsewhere. In the British Virgin Islands, IPOC secured a court order appointing receivers to take control of Alfa's assets in the jurisdiction. Who owns what will only be fully decided at an international arbitration in Switzerland, which starts this month but could take years.

Nor is ownership the only issue. Under MegaFon's shareholder agreement, Alfa is prevented from taking control of the 25 per cent stake because it has a significant investment in Vimpelcom, one of the company's industry competitors. Alfa is trying to overturn the shareholder agreement in a Moscow court, arguing that since it is governed by Swedish law it should be rendered null and void in Russia.

If the court accepts this argument, says IPOC's general manager Roland Bopp, it will leave all international investors in Russia without proper legal protection. 'We believe the integrity of contracts with Russian companies is at stake,' Bopp said.


Aspersions have also been cast on some IPOC executives. Its co-founder Jeff Galmond used to advise Telecominvest, another major player in the sector, but Bopp denies the firm has any relationship either with Telecominvest or with its former president Leonid Reiman, who is now Russia's Telecoms Minister.

More damaging was the revelation in October that Vidya Sharma, a former Merrill Lynch banker and IPOC's former president, had a conviction for fraud. Bopp says IPOC had been unaware of the conviction and that Sharma left the firm on the day it emerged.

Glad such a guy left Merrill Lynch... and if you had any dealings with them prior to 1992 you might want to think about the fact that some of that may have gone through him, as we will see a bit later. Caribbean Net News on 24 NOV 2004 has a look at some of the ongoing legal matters and the actual testimony of Vidya Sharma:

The written ruling was a response to concerns raised by defendants in the case, including members of the Alfa Group, that the $40 million security deposit paid by IPOC could be the proceeds of money laundering. Defendants didn’t want to incur the risk of accepting any funds that themselves could become the subject of future litigation because their origin was unclear. Justice of Appeal Gordon noted that Vidya Sharma, former president and director of IPOC, gave evidence that IPOC was “part of a sophisticated money-laundering scheme that has been taking illegitimately obtained money out of Russia and cleaning that money for reinvestment into Russia.” Furthermore, Justice of Appeal Gordon cited Alfa’s concerns that “IPOC has demonstrated a marked reluctance to disclose details of who its beneficial owners are.”

Justice Gordon acknowledged that in making the decision, the court took into consideration that “the evidence indicated that these alleged acts of criminality had been on-going for nearly a decade.” Affidavits and “17 or 18 large ring binders struggled to contain” evidence entered for the court’s consideration, he noted.

Yes, ongoing for at least a decade by 2004, which makes this a pretty nasty affair even as it started to unravel in 2001. Also note that this case involves the banking and financial laws of: British Virgin Islands, Cyprus, Russia, United States, United Kingdom, Germany, Sweden, Norway, France, Ukraine, Netherlands, and lovely little Switzerland. I am, probably, leaving out a few countries as it is always necessary to cross up as many financial regulations as possible amongst as many Nations as possible to obscure financial wrong-doings. And by placing this starting in the 1991-1994 era, that places it pretty close to the founding of the BoNY scandal in the US.

Another look at Vidya Sharma, and a bit more revealing, comes from the Times Online (UK) on 09 NOV 2003, just as Vidya Sharma turned on IPOC:

Roland Bopp, general manager of IPOC and a former chief executive of Deutsche Telekom America, says: “We expected the shares to be delivered in August and were shocked to find out that they had apparently been sold to companies belonging to Alfa Group. You cannot sell the same stake twice.”


But Fridman will say that IPOC’s only major stake is in Megafon and, rather than being backed by Western investors, it is a vehicle for unnamed Russian interests. Its only other holding appears to be a $2m stake in a Kyrgyzstan telecoms company called Bitel.

Until recently the president and director of IPOC was Vidya Sharma, described in the court documents as “a former executive vice-president of Merrill Lynch”. Sharma left Merrill Lynch in December 1992 after “exceeding his powers”. It has emerged that he was jailed in Germany in the late 1990s for fraud and embezzlement. On Friday it was revealed that Sharma has now left IPOC.

One of the other IPOC directors is David Hauenstein, described as a Swiss banker and certified accountant. But his only recorded ownerships are a cheese shop in Zug, Switzerland, and an interest in a transport firm called Speedy Ant Transport.

The routes that corruption will go through are various and often a bit strange, not only a cheese shop but 'Speedy Ant Transport'! From the mundane to the quaint, you cannot get away from how such activities as embezzling funds to re-invest at a later time and being opposed by normal criminals all have the feeling of operating in an atmosphere not only far removed as in the banking laws, but in the everyday. You just never know *who* is funding that cheese shop, do you?

On 31 JAN 2006 the KYC News would take a look at the Bermuda part of the case in its Offshore Alert newsletter as the Bermuda Minister of Finance would hire KPMG Financial Advisory Services to look into this as one of KPMG FAS' employees was named in the civil lawsuit put in the US District Court for DC by IPOC. The briber was Diligence LLC characterized as a DC intelligence gathering firm headed by a former UK MI5 director and employing former directors of the CIA and FBI. The Royal Gazette on 20 OCT 2006 would summarize the Offshore Alert article:

Several other local businesses have also been linked by Offshore Alert to the scandal, including Bermuda Commercial Bank and/or its affiliates and the law firm of Wakefield Quin and/or its affiliates, including Roderick Forrest, Wakefield Quin's 'Senior Counsel, Corporate' who served not only as a director of at least five IPOC firms but also as vice president of IPOC International Growth Fund.

In addition, a US intelligence firm has agreed to pay $1.7 million in damages to settle an allegation that it corrupted KPMG's investigation into IPOC, according to Miami-based OffshoreAlert.

The newsletter said Diligence LLC, which settled the civil suit brought by KPMG, Mr. Butterfield and Mr. Morrison in June, had been accused of using bribery, deception, and computer hacking to obtain confidential information about the investigation into alleged money laundering by IPOC and 11 Bermuda-registered affiliates.

Businessweek would look at the connection between Diligence LLC and IPOC on 26 FEB 2007 in Spies, Lies & KPMG:

In the spring of 2005, Guy Enright, an accountant at KPMG Financial Advisory Services Ltd. in Bermuda, got a call from a man identifying himself in a crisp British accent as Nick Hamilton. Hamilton said he needed to see Enright about matters of utmost importance.

Over the course of two meetings, Hamilton led Enright to believe he was a British intelligence officer, according to a person familiar with the encounters. He told Enright he wanted information about a KPMG project that Hamilton said had national security implications for Britain. Soon, Enright, who was born in Britain, was depositing confidential audit documents in plastic containers at drop-off points designated by Hamilton.

But Nick Hamilton was not an agent of Her Majesty's secret service, and the documents never found their way to the British government.

Nick Hamilton was in fact Nick Day, now 38, a onetime British agent and co-founder of Diligence Inc., a Washington private intelligence firm that counts William Webster, former director of the CIA and FBI, among its advisory board members. Diligence's client was not Britain's Queen, but Barbour Griffith & Rogers, one of the most formidable lobbying firms in Washington. Barbour Griffith represented a Russian conglomerate whose archrival, IPOC International Growth Fund Ltd., was being audited by KPMG's Bermuda office.

A 2006 scandal involving Hewlett-Packard Co. (HPQ ) put the issue of corporate espionage in the headlines. Diligence's methods, revealed in court documents and interviews by BusinessWeek, show how far some in the corporate investigation business will go.

Q: How do you go from Russian organized crime to Hewlett-Packard?

A: Through a company has an ex-Director of the FBI and CIA William Webster on its advisory board.

That is known as being 'mercenary': hiring yourself out to a lobbying firm fronting for the Alfa Group and, yes, that is how I view 'lobbying groups' - they are 'front organizations' only given a fancy name on the legal side. Now, how much did Barbour, Griffiths & Rogers get to be such a front organization? Popping over to Open Secrets, one can get a look at their 2006 numbers and find Alfa Bank, that lovely Russian banking group gone international with Mikhail Fridman on the Board of Directors, at $580k. Looking at them, and they only go through BGR, we can get their rundown: 2004 - $360k, 2005 - $680k, 2006 - $580k, 2007 - $420k, 2008 - $110k.

For its cash to BGR and getting Diligence LLC to do some corporate espionage against KPMG FAS, the entire thing would unravel:

Diligence was paid handsomely for its work. An invoice produced in a federal court proceeding in Washington involving IPOC and Diligence shows that Barbour Griffith was billed by Diligence "For Bermuda report and Germany work--A Telecom." Diligence was paid $25,000 a month, plus $10,000 a month for expenses, according to documents reviewed by BusinessWeek and an interview with a person familiar with the matter. The company was also paid a $60,000 bonus for acquiring the first draft of KPMG's audit of IPOC. Diligence's total take couldn't be determined.

The undercover Project Yucca ended after someone--it remains unclear who--dropped a bundle of papers at the Montvale (N.J.) office of KPMG on Oct. 18, 2005. The papers included Diligence business records and e-mails with details of Project Yucca.

On Nov. 10, 2005, KPMG Financial Advisory Services sued Diligence for fraud and unjust enrichment in U.S. District Court in Washington. On June 20, 2006, the case settled. Diligence paid KPMG $1.7 million, according to a person familiar with the settlement.

On June 15, 2006, IPOC sued both Diligence and Barbour Griffith & Rogers in the same District Court, alleging civil conspiracy, unjust enrichment, and other misdeeds. That case is pending. Gavin Houlgate, a spokesman for KPMG, declined comment, as did attorneys for KPMG at the New York law firm Hughes Hubbard & Reed. Kirill Babaev, a vice-president at Alfa's telecom arm in Moscow, said in a statement when asked about Alfa's involvement in the Diligence operation: "We are...not a party in any litigation with IPOC, and therefore cannot comment on any rumours or speculations in this regard."

Barbour Griffith & Rogers' most famous co-founder is Haley Barbour, who is now governor of Mississippi. Barbour left the lobbying firm in 2003, before the Diligence operation began. Another Barbour Griffith co-founder, Ed Rogers, was an early investor in Diligence. The lobbying firm rented space at its Pennsylvania Avenue offices to Diligence. Edward MacMahon, a lawyer for Barbour Griffith, says the firm has done nothing wrong and that no one affiliated with Barbour Griffith currently has an equity stake in Diligence. A person familiar with Diligence says the firm's shareholders are CEO Day, former U.S. Ambassador to Germany Richard Burt, Edward Mathias of Washington-based private equity firm Carlyle Group, and Buenos Aires private equity firm Exxel Group. Burt confirms he is Diligence's chairman but declines to discuss Project Yucca. Mathias confirms he is an investor in Diligence but says he is unaware of the Bermuda events. Exxel Group lists Diligence among its portfolio companies on its corporate Web site but did not respond to an e-mail seeking comment.

It's unclear whether Diligence broke any British or American laws. In an interview at his Washington office, Day says he and his firm always stay within the law but have learned much since 2005: "As an organization we've changed a lot as a result of everything we've been through in the last year." He says Diligence has "spent a lot of time training our staff as to what they can and cannot do."

Now, I think I can do a bit of selective pulling of names without doing any harm to the Offshore Alert newsletter as they are the names of those associated with Diligence LLC with just a bit of re-formatting to make it easier to read:

The firm’s senior management includes

  • Richard Burt, Executive Chairman, who is described as a former Assistant Secretary of State and U.S. Ambassador to Germany who “served as the chief arms control negotiator in the first Bush Administration”, and
  • Nick Day, CEO, who is described as “a former officer of Britain’s Security Service (MI5) and a member of the U.K. Special Boat Service”.

Diligence’s “Advisory Board” includes

  • Judge William Webster, “former Director of the CIA and the FBI”;
  • Lord Charles Powell, “former advisor on foreign affairs and defense to British Prime Ministers Margaret Thatcher and John Major”;
  • Robert Blackwill, “former Deputy National Security Advisor and U.S. Ambassador to India”;
  • Thomas F. McLarty, formerly “President Clinton’s Chief of Staff and then Special Envoy to the Americas”;
  • Rockwell Schnabel, “former U.S. Ambassador to the European Union and earlier, Deputy Secretary of Commerce”;
  • Ed Rogers, “former deputy assistant to President George H. W. Bush”; and
  • Arnaud de Borchgrave, formerly “Newsweek magazine’s long-term chief foreign correspondent”.

There, that is much easier to read! Yes, a tangled web that gets to something pretty simple when you get down to it: Russian corruption both in government and outside it vying for control of a major telecom player inside Russia utilizing off-shore resources to ensure their funding and fight each other over control of said organization, with the Oligarchs going through a front firm in the US to get spies in the US private sector to get information on the other groups holding as they are being investigated in Bermuda. Easy, no?

Now its time to backtrack to Bermuda, having taken a look at how Russian corruption can spread to the US in... well... not easy steps but quick ones. Looking at the Bermuda Commercial Bank, mentioned in Offshore Alert and another place or two, it is interesting to see their connections to a man by the name of John Deuss. Mr. Deuss is a Dutch oil tycoon who got picked up on money laundering charges according to an al-Reuters report at Caribbean Net News on 16 OCT 2006:

HAMILTON, Bermuda (Reuters): A Dutch businessman and oil tycoon wanted in Europe for questioning about money laundering and other illegal activities has been arrested in Bermuda, authorities said on Saturday.

They said police in the British mid-Atlantic territory took John Deuss, 64, once considered one of the world's most important independent oil traders, into custody on Friday.

Deuss recently stepped down from the board of Bermuda Commercial Bank and Bermudan prosecutor Kulandra Ratneser said the warrant for his arrest, originally issued by authorities in the Netherlands, seeks his extradition for questioning about alleged handling of stolen property, money laundering, and belonging to a criminal organization.


Deuss supplied the South African apartheid regime with oil in the 1980s. He has also traded in Russian oil, before and after the collapse of the Soviet Union.

Deuss stepped down as chairman and chief executive officer of Bermuda Commercial Bank last month after it became public the bank's leading shareholder, First Curacao International Bank, was being investigated for money laundering in the Netherlands and on the Dutch Caribbean island of Curacao.

First Curacao International is wholly owned by Deuss, who has had a home in Bermuda for about 30 years.

First Curacao International linked to the Bermuda Commercial Bank by being its leading shareholder and its owner being John Deuss. But his involvement in things actually goes far further back than just the recent money laundering scandal, and stretches across a few continents. From Russia Intelligence on 26 OCT 2006 there is The Strange Case of Banker John Deuss, that looks at that history:

Deuss is widely known in international oil circles for having excelled as a trader in the early 1970s, working in particular with the USSR and handling part of Soviet petroleum exports until the late 1980s. Reputedly close to American and British intelligence services, he won renown in the 1980s for flouting the oil embargo on South Africa through his companies Transworld Oil and JOC Oil. In the 1990s, he acted as “manager” of Oman’s oil operations and, in that capacity, took part in a number of major operations that included construction of the Caspian Pipeline Consortium, the famous CPC.

The owner of two banks, one in Bermuda (Bermuda Commercial Bank) and the other in Curacao in the Netherlands Antilles (First Curacao International Bank), Deuss lived the life of a financial high flyer in recent months, with homes in Bermuda and Holland, a stud farm in Canada, two private jet aircraft and the“Fleurtije,” the biggest yacht in Bermuda where yachts tend to be big. Over those months, however, the Dutch and British authorities were beavering away to investigate fraud involving the recovery of VAT on exports. The scams, which normally resulted in ill-gotten gains landing in offshore banks (the Netherlands Antilles and British territories in the Caribbean) are said to cost the finance ministries of European Union countries a cool $50 billion a year. They involve vast networks that import and re-export goods such as cellular telephones and operate through front companies that end up by recovering VAT on the transactions. In the space of two years, the assets of Deuss’ bank in Curacao are said to have soared from $60 million to $25 billion, with the cash being spread among several thousand accounts.

That would make Simon Reuben proud, to know that someone had decided to one-up him by getting several thousand accounts spread globally to hide such funds... although it is probably electronically tracked unlike what Mr. Reuben did. This starts to tie a few things together, though: the Transworld Oil connection with the Caspian Pipeline Consortium and the cellular telephone scam showing the ability to link into the entire MegaFON affair in Russia.

In fact these definitely tie in as Russia would actually try something different this time:

By a strange coincidence, it so happens that Russia, which fears it could be contaminated by this type of crime, has been cooperating with the concerned EUnations, and particularly with the Netherlands (which has also just been invited to take a stake in the Nord Europe gas pipeline project alongside Gazprom). It also so happens that Deuss’ banks harboured considerable amounts of Mikhail Khodorkovsky’s money just before the boss of Yukos was arrested in October, 2004. Deuss was a close friend of Stephen Curtis, a British lawyer who held power of attorney over most of the offshore affiliates of Menatep and Yukos, in direct league with Khodorkovsky and his partner, Leonid Nevzlin. Curtis was killed in the spring of 2005 in a helicopter crash in southern England. Is there a link between these elements and could Deuss be the victim of Russian revenge, with the Dutch acting as stand-ins for Moscow ? There is no evidence to back that possibility for the moment even though Deuss’ friends believe it could well be the case. Russia Intelligence will obviously keep a close eye on developments.

Yukos, the neverending story of how one representative in Texas can have the entire assets of a Russian business considered to be under US law, for all the fact that their sole ownings are a house in Texas. You have to love that concept! Beyond that, however, is the money from the Reiman/Galmond/IPOC funds winding up going through the Bermuda bank *owned* by John Deuss. And as Reiman was part of the "Yeltsin Group", or those coming to financial and ministerial success under Boris Yeltsin (although not loyal to him) a certain kind of connectivity starts to show up of similar people doing similar things through same institution all knowing the same people. Not necessarily a 'conspiracy' but, perhaps, more of a 'business operational agreement' given how much was being looted out of Russia during those years being far more than what *just* a conspiracy could do.

Looking at his Russian contacts is Kommersant which has an article from 17 OCT 2006 on John Deuss and his work in the USSR and then Russia:

Although Russia does not figure in the missing trader schemes, the Deuss case is likely to have an impact here as well. Deuss owned companies that were active in the USSR, Russia and the CIS from the 1970s through the 1990s. Deuss was involved in the foundation of the Caspian Pipeline Consortium as the head of the Omani company Oryx, which has a 7-percent share in the consortium. That company is now controlled by the Omani government. He was also involved in the conflict over SIDANKO. Deuss' relations with the Soviet Union are even more interesting. He guaranteed deliveries of part of the Soviet oil that entered the world market and was taken to court by the Soviet government on accusations of stealing $122 million on one of his contracts. The USSR reached an out-of-court settlement with him and his companies continued exporting oil from the former USSR through the beginning of the 1990s. Deuss is known around the world for the activities of his company JOC Oil, which sidestepped the OPEC embargo to deliver oil to the United States in 1980 and 1981. It also evaded U.S. and EU embargoes of the Republic of South Africa. Deuss, a multimillionaire, has been a permanent resident of Bermuda for several years and heads offshore banks around the world.

John Deuss, then, is out not to support anyone but himself, easily playing 'both sides' of any game to look for his own advantage. Very few people actively tried to cheat the USSR, and yet he would get through that and *still* maintain his contracts with them. This takes us back to the RUSTELE site for another article on 02 DEC 2005 on the topic looking a bit more at the US side of things, especially Barclay's:

The chief money-laundering suspects named in the German probe include Mr. Galmond, who denies any wrongdoing, the former Commerzbank executives, who also have denied any improper conduct, and Vidya Sharma, who served time in a German prison for fraud before being hired to run Mr. Galmond's Bermuda mutual fund. Mr. Sharma's lawyer didn't respond to a phone call seeking comment.

Mr. Reiman is named in search warrants and requests for international judicial assistance, German prosecutors' spokeswoman Doris Moller-Scheu said. That's because prosecutors have "substantial evidence" that he participated in the initial crimes of stealing assets of the Russian companies and paying bribes to Russian officials, she said.

Commerzbank allegedly helped finance the expanding empire and conceal its true ownership, while Barclays handled many of the suspect transactions between its numerous offshore entities, according to investigators. A spokesman for Barclays in London said the bank can't comment on any law-enforcement matters.

A Commerzbank spokesman says the bank fully backs its CEO, Mr. Muller, who is one of the suspects, and it believes no current staff are guilty of illegal activity in connection with the case.

The U.S. Justice Department has begun its own investigation into the business dealings of the banks and shell companies, according to people familiar with the inquiries. It declined to comment.

The New York office of Barclays, the focus of the U.S. inquiry, acted as the middleman moving funds and converting currencies in many of the deals between firms in Cyprus and Bermuda, transaction records show. The bank acts as a "correspondent" bank for the Bermuda Commercial Bank Ltd., which handles most of Mr. Galmond's operation on Bermuda. John Deuss, chairman of Bermuda Commercial, declined to comment.

The Galmond fund in Bermuda, IPOC International Growth Fund Ltd., has been under investigation by the Bermuda government, which is looking into whether it violated regulations that require mutual funds to have many shareholders. Mr. Galmond acknowledges he is secretly the primary owner of IPOC, but the fund denies any impropriety.

So, what are the chances that having Red Mafia ties with some parts of the Yeltsin Group, that Mr. Deuss would not know of a large scale money laundering system going through a bank that he owns? To me those are down to two - slim and none. Where this will take us is to the MI5 and the unfortunate death of Stephen Curtis. An article at OffshoreNet looks at this by Thomas Catan on 14 MAY 2004 for the Financial Times entitled Before the Crash, examining how Stephen Curtis went from being a a retiring millionaire to the business of the Russian Oligarchs:

Today they are among the richest people in the world. But, in the early days, many used dubious means to reach their goals, causing Russians to fear that communism had been replaced by a form of "gangster capitalism".

During those days, Curtis was very much in evidence in Russia. As one western money manager with lengthy experience investing in Russia explained, the Russians in the early days were very unsophisticated and were grateful for the services he provided. Or, as a British lawyer who sometimes crossed paths with him said, Curtis was "a bag-man for the oligarchs".

Documents obtained by the FT show that for clients such as Yukos, Curtis set up a dizzying array of shell companies in tax havens around the world apparently to conceal money from prying eyes.

His partner in many of these schemes was Peter Bond, a financier based on the Isle of Man who has been investigated - but not prosecuted - by the FBI and other law enforcement agencies in connection with suspected money-laundering schemes around the world. He is facing disqualification proceedings by financial regulators on the Isle of Man after admitting to hiding millions of dollars for clients at the trial of a US stock promoter convicted of money laundering and fraud. Bond was granted immunity from prosecution by the US authorities in exchange for his testimony.

Inquiries and public records searches have revealed close links between Bond's company, called Valmet, Curtis's law firm and Khodorkovsky's Menatep Group. Just how close was made clear at an encounter between Curtis and Bond on June 1 1999, at Curtis & Co's elegant London offices at 94 Park Lane. A confidential "attendance note" of the meeting, obtained by the FT, shows that Curtis and Bond created a financial structure involving a web of shell companies stretching from Gibraltar to Cyprus and the Isle of Man.

The purpose, the documents strongly suggest, was to conceal profits from the sale of Russian oil so that they would not appear on Yukos's balance sheet. This would allow the company's principal Russian shareholders to avoid paying taxes and could also be used to deceive the minority shareholders - often western investors. The structure, one of several referred to in the documents, was codenamed "Jurby Lake" after a place on the Isle of Man.

Stephen Curtis would parlay his skills and law practice for the Yeltsin Group, Yukos and Bank Menatap, the latter of which was involved with Mogilevich and the BoNY penetration. What Khodorkovsky and others sought was to compromise the western financial institutions to hide money gained from Yukos and other enterprises via Stephen Curtis and Peter Bond. This was explicitly stated:

Did the Russian oligarchs know what Curtis and Bond were doing on their behalf? It seems very likely that they did - indeed, that both Khodorkovsky and Lebedev had personally authorised the creation of this financial structure. In a letter to a Yukos lawyer, also obtained by the FT, Curtis outlined a potential conflict of interest raised by his ownership stake in two shell companies involved in his financial structure. In the process, he made clear that his work had been authorised at the highest levels of the Yukos hierarchy.

"You, Mr Lebedev and Mr Khodorkovsky," he wrote, "were made aware of this conflict at a very early stage and kindly indicated that you did not believe it would prevent me in assisting in preparing this Structure."


Two other officials are mentioned in the minutes of the meeting and in personal correspondence from Curtis: Viktor Prokofiev, then a Menatep official, and Vasily Alexanyan, a lawyer for Yukos. A Menatep spokesperson said Prokofiev no longer worked at the company. Alexanyan, who now represents the interests of the principal shareholders, could not be reached for comment. Questions submitted to him via Yukos were not replied to.

While Mogilevich was interested in getting hard cash out of the US and Canada, and the BoNY system used to shift fraudulently earned money out, Stephen Curtis and Peter Bond were involved with Menatap seeking to shield oil money, also hard currency, from the record sheets so as to avoid taxation and distributing fair value to smaller stock holders in Yukos. The parallels to shield Trans World, YBM Magnex and the other Oligarchs through the BoNY/Reuben structure looks very similar to the work being done in the case of Yukos for the reason of needing the same obscurity through diversity of off-shore financial institutions.

Here is a bit of a look further on at how that worked in this case:

The work that Curtis and Bond performed for Khodorkovsky and the principal Menatep shareholders in Yukos was wide-ranging and extensive, and the relationship between them deep and long- standing. This helps to explain why Curtis was appointed managing director of the Russian billionaire's main holding company at a time when the Russian government was aggressively moving against its principals. Curtis was one of the very few people who knew his way through the maze of Menatep's complicated finances. Naturally, because he had helped to create it.

Following the complex trail of shell companies that hop- scotch from one secretive offshore haven to another shows that both Curtis & Co and Valmet have had important ties to Menatep, as well as to each other. In some cases, they have shared office space; in others, directors or shareholders. But behind both Valmet and Curtis & Co, Russian billionaires on the run from Russia's government can very often be discerned.

For example, Curtis & Co is mentioned in the UK registration information for Totbest Ltd, a now-liquidated company that has had all the key Menatep shareholders in Yukos on its board. The office for Yukos UK is based at Curtis & Co's Park Lane premises. And Curtis's number two, James Jacobson, sat on the Yukos UK board until 2002, when the company moved to Cyprus "for tax purposes". Jacobson declined to be interviewed for this article, referring questions to a public relations representative from APCO Worldwide. "[Jacobson] is not doing any media at the moment," said his spokesman, Simon Whitehead. "He's just sorting out his affairs and Stephen's affairs and making sure that things are running [at the office]."

This is the 'trust network' concept used by multiple organizations to hide finances: Becs and Benex shared the same individuals controlling them, while Benex and Blond Management shared office space. That said, because numerous individuals in a given network can be used on a global basis, such as how Nadhmi Auchi parlayed a few high ranking Ba'athists and cousins into a global financial misdirection system called the Al Mahdi, and it would include the al Qaeda Al Taqwa system, the HAMAS/Citibank joint venture, and contacts with the Menatap group via Marc Rich and others. To accomplish these things each of these organizations cast its own set of front companies, fraudulent financial vehicles, bank accounts and even couriers to get around the financial 'safeguards' put in place in the banking exchange system. The penetration of the Clearstream clearinghouse for financial transactions to Europe by Menatap and Auchi would mean that the SWIFT system, used to clear other transactions, would also be used to clear *these* transactions.

In this case the Valmet company name would be deployed in many places, and yet retain the same cast of characters wherever it showed up:

Valmet has also had long-standing links with Menatep, guiding its emerging billionaires through the complicated maze of offshore havens. An old Menatep prospectus lists Valmet (Bermuda) as a subsidiary, and company documents show that Menatep has held a 20 per cent stake in the overall Valmet Group. Bond's former partner at Valmet, Christopher Samuelson, told the FT that Menatep held shares in Valmet until 2001.

Completing the triangle between Khodorkovsky, Curtis and Bond is a series of factors linking Curtis & Co with Valmet. They have shared directors: Samuelson, who ran Valmet with Bond, was also a director of another Curtis company, 94 Park Lane Ltd. And the registration documents of 94 Park Lane Ltd reveal that its ultimate holding company is Valmet Holdings Ltd in Gibraltar. In fact, so close was Valmet to Curtis that its former marketing director, Branson Bean, told the FT that "we actually had offices in his building at one point".


While at Valmet, Bond worked on several controversial deals for Yukos and its principal shareholders at Menatep. Western investors, led by the reclusive US financier Kenneth Dart, launched lawsuits in 1999 contending that Valmet had been instrumental in a bare-faced scheme by the majority Russian shareholders to defraud them. Dart successfully sued in the Isle of Man to halt a secret effort to transfer Yukos's prize assets out to a wide array of dummy companies in jurisdictions around the world. Several of them had been set up or were operated by Valmet. Valmet later claimed that the transaction never got beyond the "early stages of contemplation", according to The New York Times.

Bond was also involved in a second dispute between Menatep and western investors, which again involved Dart. After buying a huge Russian titanium producer called Avisma from Menatep in 1997, the investors alleged in lawsuits on the Isle of Man and in Ireland that they were being swindled on a massive scale. They said they had discovered that tens of millions of dollars a year in profits were being drained by an offshore company called TMC, which was owned and operated by one Peter Bond. The investors claimed that the profits were finding their way back to Menatep. In 1998, the investors got a judge on the Isle of Man to freeze $20m that TMC was holding at Barclays Bank. TMC was forced to settle the case, returning some $8m to investors.

Back to Barclays, are we? This is proving to be an interesting bit of work, really, how multiple fraud schemes revolve around a set of financial institutions that appear again and again. Just as BNP-Paribas would support Oleg Deripaska in his pursuit of getting the assets of Trans World Commodities with the same limited suite of financial institutions, here this larger web concentrates on a few key institutions that have either lax practices or strict practices externally but lax ones internally. This scheme was part of the larger BoNY scandal:

Partly because of its role in the Avisma case, Valmet was also one of the first companies that US and Swiss investigators looked at during the Bank of New York money laundering scandal that erupted in August 1999 after more than $7bn in suspect Russian funds was found to have been funnelled through the venerable bank. It didn't help that Valmet had been moving the funds alleged to have been looted from Avisma though accounts at the bank.

Avisma, as of late, has been on the receiving end of help in Ukraine from Group DF, Dmitri Firtash's institution parlayed together after its deals with Gazprom which the primaries had been able to get in place three separate and continuous times, under different organizational names. The outlook, internally to such organizations is plain, and Peter Bond would testify about them under immunity, here about Robert Brennan a shady US stock promoter:

In the courtroom, Bond was remarkably candid about what he did, while never admitting wrong-doing himself. He testified that he set up dozens of dummy companies around the world to shield tens of millions of dollars for Brennan. On one occasion, Bond said he received $4m in bearer bonds which Brennan was hiding from creditors. "It was a very bizarre experience," he said, recalling his return trip to Britain holding the suitcase stuffed with bonds. "You think about putting it down in the gents toilet and losing it," he told the court. Bond testified that he had kept $1.7m in fees and expenses for setting up the dummy companies for Brennan. The latter's lawyer's roundly attacked Bond's credibility as a witness.

Curtis's connection to Bond helped him to get work managing offshore money for Arab clients and, increasingly, the emerging Russian oligarchs. Curtis worked for Boris Berezovsky, the Russian billionaire who was granted political asylum in Britain last September and, according to friends, enjoyed a close personal relationship with him. Last year Curtis worked to prevent Berezovsky's extradition to Russia, where he was wanted on charges of fraud. Curtis was one of two people to financially guarantee that Berezovsky would not flee while the extradition hearing was going on. Berezovsky has told friends that Curtis's death proves his contention that it is unsafe for him to return to Russia, for reasons that are unclear. Berezovsky declined to be interviewed for this story. There is no evidence to suggest that Curtis did anything improper for him.

Bond and Curtis would also work to help Roman Abramovich with Runicom. That said Curtis also held an interest in the Israeli Haaretz and the Ikea franchise in Israel, plus the ISC private investigation firm. Even though the oligarchs were starting to realize that bad reputations and PR was hurting them, the change to a more 'open' view would not, of necessity, shield them from their past works. In the days before his death in a helicopter accident, it became apparent that Stephen Curtis may have been trying to safeguard himself, or secure a position on 'both sides' of the board:

In the days before his death, he had been assigned to a handler at the UK's National Criminal Intelligence Service (NCIS), which collects information about organised crime in Britain. "My sense," someone close to British intelligence told me, "was that he was fearful of being prosecuted by the Russian authorities for being party to assisting in the capital flight and that he thought that going to the UK authorities would give him some sort of top cover."

Curtis was likely to have needed a great deal of cover. For the 45-year-old lawyer had found himself in the middle of one of the highest stakes contests between state and private power in the world - between Russia's most powerful man, President Vladimir Putin, and its wealthiest man, Mikhail Khodorkovsky.

This would not be the last of the deaths to follow the Red Mafia around in the UK, but it was one that marked the power of its influence there and more globally. And one which continues to influence markets, companies and Nations in many ways.