Secret documents reveal that global banking giant HSBC profited from doing business with arms dealers who channeled mortar bombs to child soldiers in Africa, bag men for Third World dictators, traffickers in blood diamonds and other international outlaws.

The leaked files, based on the inner workings of HSBC’s Swiss private banking arm, relate to accounts holding more than $100 billion. They provide a rare glimpse inside the super-secret Swiss banking system — one the public has never seen before.

The documents, obtained by the International Consortium of Investigative Journalists (ICIJ) via the French newspaper Le Monde, show the bank’s dealings with clients engaged in a spectrum of illegal behavior, especially in hiding hundreds of millions of dollars from tax authorities. They also show private records of famed soccer and tennis players, cyclists, rock stars, Hollywood actors, royalty, politicians, corporate executives and old-wealth families.

These disclosures shine a light on the intersection of international crime and legitimate business, and they dramatically expand what’s known about potentially illegal or unethical behavior in recent years at HSBC, one of the world’s largest banks.

How the offshore banking industry shelters money and hides secrets has enormous implications for societies across the globe. Academics conservatively estimate that $7.6 trillion is held in overseas tax havens, costing government treasuries at least $200 billion a year.

In many instances the records do describe questionable behavior, such as bankers advising clients on how to take a range of measures to avoid paying taxes in their home countries — and customers telling bankers that their accounts are not declared to their governments.

Highlights from ICIJ's investigation:

The reporters found the names of current and former politicians from Britain, Russia, Ukraine, Georgia, Kenya, Romania, India, Liechtenstein, Mexico, Tunisia, the Democratic Republic of the Congo, Zimbabwe, Rwanda, Paraguay, Djibouti, Senegal, the Philippines and Algeria, among others. They found several people on the current U.S. sanctions list, such as Selim Alguadis, a Turkish businessman alleged to have supplied sophisticated electrical goods to Libya’s secret nuclear weapons project, and Gennady Timchenko, a billionaire associate of Russian President Vladimir Putin and one of the main targets of sanctions imposed on Russian individuals and businesses in response to the annexation of Crimea and the crisis in eastern Ukraine. 

The files reflect a spectrum of royalty, from King Mohammed VIof Morocco to the Crown prince of Bahrain, Prince Salman bin Hamad bin Isa Al Khalifa, to Prince and Princess Michael of Kent, the beloved cousin of Queen Elizabeth II of England, to dozens of members of Saudi Arabia's ruling family. Many were partial or full beneficial owners of accounts. The role of the King of Morocco was not specified.

Business figures and political donors from the U.S. include the billionaire owner of the Victoria’s Secret lingerie chain, Les Wexner, who in 2012 donated $250,000 to a super PAC supporting former Republican presidential candidate Mitt Romney; the Israeli diamond-dealing Steinmetz family, and the financier and philanthropist S. Donald Sussman, whose account predated his marriage to Democratic Congresswoman Chellie Pingree of Maine. 

A representative for Sussman said the account was not his, adding that he had made a passive investment in a technology venture fund. The representative said it was this fund that had the account, the existence of which he learned for the first time when questioned by ICIJ. “Mr. Sussman’s investments were minority interests,” the spokesman said, “and he had no involvement in the funds’ management, investment decisions, or other activities.” 

An analysis of the files by ICIJ shows that many individuals linked to accounts took extra precautions to protect their identities, even though HSBC staff repeatedly assured customers they were already bound by tight Swiss banking secrecy. 

Clinton Foundation Donors

The files show Richard Caring, a major donor to British politics, transferring $1 million to the Clinton Foundation, a nonprofit set up by the former U.S. President Bill Clinton with the stated mission to “strengthen the capacity of people in the United States and throughout the world to meet the challenges of global interdependence.”

The donation to the Clinton Foundation was requested in December 2005. The previous month, Caring funded a champagne and caviar extravaganza at Catherine the Great’s Winter Palace in St Petersburg, Russia, flying in 450 guests to be entertained by Sir Elton John and Tina Turner and addressed by Bill Clinton. The event raised more than £11 million for a children’s charity.

A number of other prominent donors to the Clinton Foundation appear in the files, including the Canadian businessman Frank Giustra and German motor racing superstar Michael Schumacher, a seven-time Formula One champion. A representative of Schumacher, who is listed as a beneficial owner of an account closed in 2002, told ICIJ that he is a long-term resident of Switzerland.

A spokesman for the Clinton Foundation told The Guardian it “has strong donor integrity and transparency practices that go well beyond what is required of U.S. charities, including the full disclosure of all of our donors."

Links to Al Qaeda?

HSBC’s clients’ links to Al Qaeda were first publicly raised in the July 2012 U.S. Senate report, which cited an alleged internal Al Qaeda list of financial benefactors. The Senate report said the list came to light after a search of the Bosnian offices of the Benevolence International Foundation, a Saudi-based nonprofit organization that the U.S. Treasury Department has designated as a terrorist organization.

Osama bin Laden, the mastermind behind the 9/11 attacks, referred to the handwritten list of the 20 names as the “Golden Chain.”

From the moment the names on the Golden Chain list were made public in news reports in the spring of 2003, the Senate subcommittee stated that HSBC should have been “on notice” and aware these powerful business figures were high risk clients.

Though the significance of the Golden Chain list has since been questioned, the ICIJ found what appear to be three Golden Chain names with HSBC Swiss accounts that existed after that date.

Read the full story on ICIJ.org and explore the data.

In August, U.S. Sen. Rand Paul and Iowa Republican state Rep. Bobby Kaufmann drove for an hour together between political events in Davenport and Iowa City, jawing about property rights and eminent domain.

In October, Paul headlined a Kaufmann campaign fundraiser, where nearly 400 attendees chowed on barbecued pork, beans and cheesy potatoes in Kaufmann’s eastern Iowa hometown of Wilton, population 2,800.

And that same month, Paul’s political action committee sent Kaufmann’s campaign a $1,000 check.

Paul’s courting of a 29-year-old chairman of the Iowa House’s government oversight committee who has no national stature is hardly accidental: Should the Kentucky Republican run for president, he’ll desperately need support from local leaders like Kaufmann.

Kaufman, however, hasn’t committed to Paul, who was again visiting Iowa last weekend, or any other potential candidate.

“I’m not endorsing anyone yet,” Kaufmann told the Center for Public Integrity.

Paul’s charm offensive isn’t unique: During 2013 and 2014, potential 2016 Republican presidential candidates gave an outsized share of contributions from their PACs to politicians and political groups from Iowa and New Hampshire, the two states that host the nation’s first presidential nominating contests.

They use their PACs to lay the groundwork for possible campaigns and cultivate relationships on the ground with state officials and party activists long before they officially launch presidential bids.

That means people like Paul, a senator elected to represent Kentucky voters, are spending huge amounts of attention on Iowa, New Hampshire and other states far from their constituents.

During the past two years, six high-profile Republicans collectively spread $340,000 through their PACs — about 25 percent of their overall contributions — to nearly 100 beneficiaries in Iowa and New Hampshire, according to a Center for Public Integrity review of federal filings.

Together, Iowa and New Hampshire are home to about 1.4 percent of all Americans.

Paul, Sen. Ted Cruz of Texas, Sen. Marco Rubio of Florida, former Texas Gov. Rick Perry, Louisiana Gov. Bobby Jindal and former U.N. Ambassador John Bolton are the six potential GOP presidential candidates whose federal PACs each doled out at least $25,000 during the past two years to candidates and political groups in these two states.

By contrast, these men together used their PACs to contribute about $100,000 to politicians and groups in their respective home states.

Other prospective GOP presidential candidates — including New Jersey Gov. Chris Christie and former Florida Gov. Jeb Bush — have, in recent weeks, also launched their own PACs, which they may use in a similar fashion in the months ahead.

By law, potential presidential hopefuls’ PACs can’t fund campaign activities. But these political committees are the perfect tools for providing financial support to like-minded candidates and footing the bill for activities that federal regulators don’t consider campaign expenses.

These PACs are allowed to accept contributions of up to $5,000 per year from individuals, including people who have already donated to the politician’s official campaign committee.

Paul’s PAC alone donated $70,000 — about one-fourth of its overall giving during the two-year period — to candidates and groups in Iowa and New Hampshire.

Cruz’s PAC, likewise, contributed nearly $70,000 to candidates and political groups in either the Hawkeye State or Granite State — more than one-third of its total giving.

Meanwhile, Perry’s PAC trumped them all, unloading nearly 95 percent of its $98,000 in political donations into the accounts of Iowa and New Hampshire politicians — including $1,500 to Kaufmann, the Iowa representative who is also son of the state’s Republican Party chairman.

Success in Iowa could be particularly critical to Perry’s 2016 ambitions. In 2012, his presidential bid fully unraveled there, as he finished fifth in a crowded caucus field and never recovered, quitting the presidential race two weeks later.

Stefan Passantino, treasurer of Perry's PAC, said the group backed candidates who support "limited government, job creation and border security" and that it focused on politicians in Iowa and New Hampshire "because they will be located in the center of the national debate for the next year."

Doug Stafford, the executive director of Paul’s PAC, said its contributions were not “about impacting something [Paul] may do in the future so much as helping people in their races.”

He continued, “Many national figures often help candidates for other offices, with no particular expectations.”

Officials with the other four PACs either declined to comment or did not respond to requests.

Several PAC-money beneficiaries stressed that such transactions occur to advance shared policy interests, not because of some quid pro quo.

But they also said the money helps prospective White House candidates forge relationships with local power brokers who could provide key support during the Iowa caucuses or New Hampshire primary.

“These candidates can raise a lot of money and they want to build relationships here, so that’s why they help with PAC money,” said state Sen. Jack Whitver, the Republican whip in the Iowa Senate, whose campaign received $2,500 from Perry last year.

Whitver specifically praised the former Texas governor for putting “a lot of time and sweat equity into Iowa” during his multiple visits to Iowa ahead of the 2014 elections.

“He saw that if we were able to win control of the state senate, we’d be able to do some really big things here,” Whitver said. “I believe he helped us out in good faith.”

When asked what national politicians expect when they make PAC contributions, Republican state Sen. Russell Prescott of New Hampshire replied: “Exactly what you expect: Hopefully somebody will answer your call.”

Prescott’s campaign last year received $1,000 from Paul’s PAC and $500 from Perry’s PAC.

That sentiment was echoed by Iowa Republican Sam Clovis, chairman of the business administration and economics department at Morningside College who unsuccessfully ran for both U.S. Senate and state treasurer last year.

“It gives them access,” Clovis said of the contributions. “I absolutely will take their calls.”

Clovis was especially popular among possible Republican presidential candidates: His state treasurer campaign received nearly $11,000 combined from the PACs of Cruz, Paul, Perry and former Arkansas Gov. Mike Huckabee, who won the Iowa caucuses when he ran for president in 2008 and is now mulling another White House bid.

Mack Shelley, chairman of the political science department at Iowa State University, says that presidential contenders often dole out PAC money with the hope of receiving “goodwill in exchange for funding,” as well as eventual endorsements.

“This is a way of making a direct appeal for statements in support of a presidential candidate’s campaign well in advance of the Iowa caucuses,” he said.

For now, the possible GOP presidential contenders are still being evaluated by many party leaders, including Prescott, Clovis and Whitver, who all described themselves as — for the moment — neutral.

For his part, Kaufmann, the Iowa representative, says the campaign contributions he has received — and for which he’s grateful —won’t affect which presidential candidate he ultimately supports.

“Regardless of whether someone’s PAC donated to my campaign or not, I still give everybody a chance,” he told the Center for Public Integrity.

“We’ve got a great slate of candidates,” Kaufmann continued. “I want somebody who can get things done and that can win. Those are my two priorities.”

We got a glimpse last week of what would happen to our health care system if Republicans increase their control of Congress and win the White House in 2016.

Gone would be the part of Obamacare that Americans tell pollsters they don’t like: the requirement that they enroll in some kind of health plan or pay a penalty that grows more severe every year. In addition, the GOP would get rid of the provision mandating that employers with more than 50 workers offer subsidized coverage.

But the GOP would also eliminate the existing parts of the law  protecting us from insurance company practices that used to keep millions of us in the ranks of the uninsured and underinsured—and just an illness or accident away from financial ruin.  

Of course the sponsors of the Republican alternative —called the Patient Choice, Affordability, Responsibility and Empowerment Act—or Patient CARE—don’t spin it that way.  In fact, the language they use makes their plan sound like a simple, common sense, no-brainer alternative to the Affordable Care Act (a.k.a., Obamacare.)

"We can lower costs and expand access to quality coverage and care by empowering individuals and their families to make their own health care decisions, rather than having the federal government make those decisions for them," said Sen. Richard M. Burr (R-North Carolina), one of the three authors of the plan. The others are Sen. Orrin Hatch, (R-Utah), who now chairs the Senate Finance Committee, and Fred Upton (R-Michigan.), the chairman of the House Energy and Commerce Committee Chairman.

As always, though, the devil is in the details. The reality is that the GOP plan would take us back to the days when insurers could sell junk policies, charge older folks  more than they can today and calculate premiums based on a person’s health status. This means that a breast cancer survivor or a diabetic or someone recovering from a heart attack—or even a young person born with a disability or congenital disease—would have to pay a fortune for decent coverage if, God forbid, they let their existing policy lapse for two months or longer.

The Republican sponsors say their plan would restore freedom of choice they claim was taken away by Obamacare.  There is some truth to that. The Affordable Care Act requires health insurance policies to cover 10 essential benefits, ranging from preventive care to prescription drugs and a stay in the hospital. People no longer have the freedom to buy policies so skimpy they have to pay almost all of their medical bills out of their own pockets. The Patient CARE Act would restore that freedom.  And it would also restore to insurance companies the freedom to set annual limits on coverage.

The health insurance exchanges would disappear in most if not all states because the federal funding to help run them would evaporate under the GOP plan. One of the benefits of the exchanges is the ability it gives us to shop online for coverage and compare features and costs of one plan versus another. Health insurance agents and brokers would probably love to see those features disappear,  but their gain would be our loss.

To increase competition, the GOP lawmakers say they would allow insurers to sell coverage across state lines. They made no mention of the fact that health insurance is regulated largely at the state level and that federal law doesn’t bar insurers from crossing state lines today. 

The Medicaid expansion under Obamacare would also go away, as would the federal subsidies available to help low-income families and individuals pay their premiums and cover some of their out-of-pocket expenses. Under the GOP plan, the states would receive block grants from the federal government to help finance their Medicaid programs, meaning the feds would have far less say as to how the states provide coverage to the poor.

The GOP plan would also provide aid only to people making up to three times the federal poverty level—and in the form of refundable tax credits—as opposed to four times the poverty level via federal subsidies under Obamacare.  

As a result, many—probably millions—of low- to moderate-income people who were able to buy coverage as a result of Obamacare would once again find the cost of health insurance prohibitively expensive.

Many folks in their 40s, 50s and early 60s would also be dumped back into the ranks of the uninsured or underinsured. Against the wishes of insurance industry lobbyists, Congress restricted insurers’ ability to charge older folks more than three times as much as younger people for the exact same coverage when it passed Obamacare. The industry wanted to be able to charge them at least five times as much. The GOP plan would grant that wish.

It’s important to note that the Patient CARE Act is not really a piece of legislation.  If it were a bill instead of just a “vision,” as Burr, Hatch and Upton refer to their ideas, the Congressional Budget Office would have to assess the effect it would have on the budget and our health care system. That would not be pretty. So don’t expect the Patient CARE Act to become a bill anytime soon.  

Wendell Potter is the author of Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR is Killing Health Care and Deceiving Americans and Obamacare: What’s in It for Me? What Everyone Needs to Know About the Affordable Care Act.

A network of secretive banks and offshore tax havens was used to funnel $182 million in bribes to Nigerian officials in exchange for $6 billion in engineering and construction work for an international consortium of companies that included a then Halliburton subsidiary.

In 2010 Nigeria indicted former U.S. Vice President Dick Cheney, who was CEO of Halliburton before he was elected, only to later clear him when Halliburton worked out a $35 million settlement. 

Leaked records from HSBC, a huge global bank based in London, reveal new details about the bank’s role as a conduit for the bribes — and new details about how British lawyer Jeffrey Tesler operated. The files, obtained by the French newspaper Le Monde and the International Consortium of Investigative Journalists, a project of the Center for Public Integrity, show ties between Tesler and high-ranking Nigerians not previously named publicly in connection with the scandal, raising the possibility of renewed questions about Nigeria’s handling of the affair.

Tesler pleaded guilty to U.S. corruption charges for his role in what became known as the Halliburton Bribery Scandal. The cash was destined for Nigeria’s ruling party via the state-owned oil and gas company, the Nigerian National Petroleum Corporation (NNPC), according to an official Nigerian report.

The leaked files reveal that Tesler had financial ties to two former Nigerian officials: now-retired Major General Chris Garuba, chief of staff to former Nigerian president Abdulsalami Abubakar who himself allegedly received bribes as president; and Andrew Agom, a senior government official who was killed in an attack on a motorcade.

Switzerland’s famous bank secrecy laws encouraged Tesler to use the country as a base for moving bribe money. And HSBC Private Bank (Suisse), with offices near luxury hotels in Geneva and Zurich, was his preferred bank.

When U.S. authorities seized 12 of Tesler’s Swiss accounts in 2013, five were with HSBC — more than any other bank.

Continue reading at ICIJ.org

The exchanges between staff and clients of HSBC Private Bank (Suisse) reveal damning evidence of tax evasion and wrongdoing by certain of HSBC’s clients. These conversations, which were never supposed to be made public, go to the heart of Swiss Leaks.

The leaked files, based on the inner workings of HSBC’s Swiss private banking arm, relate to accounts holding more than $100 billion. The documents were obtained by the International Consortium of Investigative Journalists (ICIJ), a project of the Center for Public Integrity, via the French newspaper Le Monde and they provide a rare glimpse inside the super-secret Swiss banking system — one the public has never seen before.

But the candid comments recorded by bank employees about their interactions with clients also reveal personal sides to the relationships between employees and clients of a bank that, in HSBC’s own words, was “typically used by wealthy individuals to manage their wealth in a discreet manner.”

While many client notes were business-like, describing simple transactions or investment instructions, other, more intimate exchanges were liberally scattered throughout the leak. These notes ran the gamut of human experience and emotion, and served as a constant reminder that, behind the dollar amounts and the intricate accounts, both clients and their account managers were real people, with every-day issues (albeit often very “First World problems”), observances, and inclinations.

The below excerpts are just a handful of interesting comments made by bankers, revealing their own feelings about clients (whether in words or syntax), as well as giving an insight into how some clients valued the service provided by the bank.

Problem clients

• “I AGAIN INDICATED THAT WE WERE NOT TAX INSPECTORS AND THAT IT WAS NOT MY FAULT HE WAS CANADIAN IN NATIONALITY. I INDICATED THAT I WAS UNABLE TO WORK MIRACLES….I AM NO LONGER WILLING TO KEEP MAKING AN EFFORT FOR SUCH A PERSON. THE PROBLEMS ARE ALL HIS MAKING AND RESULT FROM INSECURITY.” 
• “I tried my best to calm this client but he was disappointed and angry that nothing could have been done at this stage. I felt that he had to loose his anger on somebody.” 
• Very difficult client! He will travel to Moscow and Kiev and spend 2 months there to produce a film on Russian girls wanting to emigrate!!!!!!

Discreet clients

• “We are prohibited from calling the client in Belgium. It’s always him who calls us. He telephoned today. He introduces himself under the name of a footballer (Zidane, Cruyf ...); wants to know the “price of caviar,” which means the total value of his assets. 
• “Mentioned they are very concerned with confidentiality and security, his wife has already been kidnapped right after their marriage and was found by the police…brother has also been kidnapped.” 

Generous clients

• “Client handed over red packet containing HK$ 4'000 [$513] …as a rule, I cannot refuse such a gift but will donate all proceeds to … & b) Child's Dream.” 
• “For our client, who is Cinderella in person, from a poor Greek family who married a wealthy man with whom she was very happy, it is quite understandable that, with no offspring, she wishes to pass assets that she has to less privileged members of her family.” 
• “He was positive and although he indicated that his business was down he was still developing the luxury spa where we eat.” 

Expansive clients

• “She explained to us a little of their history. He asked her to marry him three times when they were young. She always refused. They’ve stayed good friends. But he’s never wanted to know any of her successive husbands (she’s had three).” 
• “He has been a ‘workaholic’ all his life and has trouble slowing down. He doesn’t have any hobbies but loves Europe and Paris in particular.” 
• “A huge disagreement exists with his wife, and it’s possible there will be a divorce. The wife has no idea about anything to do with the account.” 
• “He shared with us his concerns about the ongoing divorce proceedings. His (ex)wife harasses him. She’s denounced him to the taxman.” 

Editor's note: These comments are verbatim from the HSBC Swiss Leaks files, however ICIJ has corrected spelling errors and removed names or identifying features.

Federal prosecutors are reportedly considering opening a new criminal investigation into global banking giant HSBC after thousands of files released this week revealed that the company’s Swiss branch had apparently helped individuals and companies worldwide hide their money from tax authorities.

U.S. government officials, who declined to be identified, told The Guardian newspaper they are examining HSBC’s activities after the International Consortium of Investigative Journalists, a project of the Center for Public Integrity, released information on thousands of accounts held at the bank’s Swiss subsidiary until 2007. The files include details of more than 8,600 accounts tied to U.S. citizens that were worth more than $13 billion.

The new information, released on Sunday by ICIJ, has thrown the future of Attorney General-nominee Loretta Lynch into question because Lynch spearheaded an earlier prosecution of the British megabank that ended in 2012 with a cash settlement, but no criminal charges against individuals.  

The revelations about HSBC have resonated in Washington, where the Justice Department has often been accused of going easy on banks and bankers. The department has entered into several multi-billion dollar settlements in recent years with banking giants like JPMorgan Chase & Co. and Bank of America, but has not criminally prosecuted any of their top executives.

“The new allegations that HSBC colluded to help wealthy people and rich corporations hide money and avoid taxes are very serious,” said Sen. Elizabeth Warren, D-Mass. “If true, the Justice Department should reconsider the earlier deferred prosecution agreement it entered into with HSBC and prosecute the new violations to the full extent of the law.”

Other members of Congress also weighed in.

“I will be very interested to hear the government’s full explanation of its actions — or lack thereof — upon learning of these allegations in 2010,” said Sen. Sherrod Brown, D-Ohio. “I intend on pressing regulators, the IRS and the DOJ for answers.”

Justice Department spokesman Brian Fallon did not respond to multiple requests for information regarding the possibility of a new investigation. Betsy Feuerstein, a spokeswoman for the U.S. Attorney for the Southern District of New York, which often prosecutes financial institutions, said she would not confirm or deny the existence of a fresh probe into HSBC.

HSBC also declined to comment. “We have nothing to say about additional investigations,” spokesman Rob Sherman said in an email to the Center for Public Integrity.

HSBC was charged in 2012 with helping drug dealers launder money and with illegally completing transactions for clients in Iran, Libya, Syria and other countries under U.S. economic sanctions. On the same day, the bank entered into a deferred prosecution agreement in which it forfeited $1.26 billion and paid another $665 million in penalties. The company also replaced all of its senior management at that time, and has been working under a court appointed monitor. The agreement could be terminated if the bank commits further crimes.

Lynch, in a statement to the Senate Judiciary Committee on Monday, said the punishment at that time was considered “significant, and in some respect extraordinary.” And Lynch added that she “carefully considered sufficient admissible evidence to prosecute an individual and whether such a prosecution otherwise would have been consistent with the principles of federal prosecution.”

Lynch’s statement was in response to dozens of written questions submitted by members of the Judiciary Committee following her two-day confirmation hearing last month. The questions were sent to her last week but she wrote her response specific to the HSBC inquiry after the ICIJ report was released on Sunday.

Lynch said the agreement she reached with the company does not preclude the Justice Department from pursuing more charges against the company.

“The [deferred prosecution agreement] explicitly does not provide any protections against prosecution for conduct beyond what was described in the statement of facts,” she wrote. “Furthermore, I should note the DPA explicitly mentions that the agreement does not bind the Department’s tax division, or the fraud section of the criminal division.”

Lynch’s nomination is scheduled to be considered by the Judiciary Committee on Thursday. 

It’s unclear whether the Justice Department in 2012 had the files that ICIJ released on Sunday.

The Internal Revenue Service obtained the information from the French government in 2010, according to court records. IRS spokeswoman Julianne Breitbeil declined to say whether the agency shared the information with the Justice Department, citing a federal law that bars her from discussing such matters. She did not respond to a question regarding exactly which law she was referring to.

Doug Shulman, who was IRS commissioner from 2008 to 2012, did not immediately respond to a request for comment that was routed through his current employer, Bank of New York Mellon.

Lanny Breuer, who was the head of the Justice Department’s criminal division and participated in the 2012 HSBC prosecution, declined to say whether his agency had the ICIJ files at the time. 

“I really can’t comment given my role as Assistant Attorney General,” he said in an email. When pressed about why there were no tax related charges in 2012, he said: “I really can’t speak to what the Tax Division did.”

U.S. officials aren’t alone in examining HSBC’s practices.

India’s finance minister promised to investigate all the accounts held by Indian citizens in the HSBC files, according to The Times of India. In Switzerland, a former foreign minister and vice president called on authorities to open a judicial inquiry into HSBC Private Bank (Suisse), the Tribune de Geneve reported. Switzerland ironically is also seeking to prosecute Herve Falciani, the former HSBC employee accused of originally stealing the files.

Authorities in Germany, Greece, Finland, Norway and Denmark have also told reporters that they would ask French officials, who were the first to obtain the files, for more information.

The nation’s top election regulator advertised today’s rare, daylong public hearing as an opportunity to address a recent Supreme Court ruling that allowed people to contribute money to an unlimited number of federal politicians.

Instead, liberals and conservatives used the Federal Election Commission’s forum to argue for their pet political money agendas while routinely, if politely, talking past one another.

Big money has become “a source of cynicism for our elections," argued Lisa Gilbert, director of Public Citizen’s Congress Watch project, who joined a host of other liberals and reformists in demanding that politically active groups be required to disclose their funders.

“We don't need less money in the political process, we need more,” said lawyer Dan Backer, who successfully represented plaintiff Shaun McCutcheon in the McCutcheon v. FEC case that was supposed to be the subject of today’s meeting.

Other conservatives and advocates of a laissez-faire campaign finance system expressed fear that the FEC’s three Democratic appointees will try to regulate political speech on the Internet and reveal the identities of donors to politically active nonprofit groups.

The forum, which began at 8:15 a.m. and lasted well into the afternoon, laid bare the vast divide in the public and on the commission between those who want more transparency and controls on political spending and those who believe spending money on behalf of political candidates is sacred free speech.

The absence of intense debate about the McCutcheon decision appeared to annoy Republican National Committee Chief Counsel John Phillippe Jr., who had been called to testify on the topic. Channeling 1992 Reform Party vice presidential candidate James Stockdale, he mused, "Who am I, and why are we here?"

FEC Chairwoman Ann Ravel, a Democrat, reveled in the hearing, which she called “historic.”

That's hardly surprising, as Ravel intends to spend this year speaking out about what she considers the "grave problem" of "politically active nonprofit organizations — many conservative, but some liberal — together fueled by hundreds of millions of dollars from donors who aren't publicly known.

Ravel is also looking to make the FEC less insular and esoteric, having already conducted wide-ranging public forums in Chicago, Denver and Atlanta.

The forum turned into a debate about the Supreme Court's seminal Citizens United v. FEC decision, which allowed corporations and unions to spend unlimited amounts of money on advertisements that call for the election or defeat of candidates, nearly as much as the McCutcheon decision.

When speakers did address the McCutcheon decision, the issues that arose seemed comparatively small bore, such as tweaking rules governing contribution earmarks or joint fundraising.

In a rather meta twist, McCutcheon himself spoke most pointedly about the decision that bears his name.

“We can’t punish rich people just because they have money … we have the right to make reasonable contributions to as many people as we choose,” McCutcheon, an Alabama businessman, told FEC commissioners.

The McCutcheon decision allowed citizens to make the maximum campaign contribution to as many candidates and political parties as they want. Such contributions were previously capped under the so-called “aggregate limit” rule.

Political contributions made after McCutcheon remain subject to standing federal disclosure rules, which generally require political committees to report the name, address, employer and occupation of donors who give more than $200 during an election cycle.

Today’s hearing alone was an achievement for the FEC, which has been rendered largely non-functional in recent years because of partisan bickering.

Ravel struck a deal last fall with Republican commissioners in which she agreed to create long-awaited agency rules addressing the Citizens United decision. In exchange, the agency's GOP commissioners agreed invite public comment on the McCutcheon decision, and conduct today's hearing on potential ways to regulate it.

Ravel's compromise angered some Democrats, who'd like to see the Citizens United decision overturned or watered down, not formally accepted by the FEC.

Whether today's hearing will change any of the commissioners' minds on campaign money issues great or small is unclear. Commissioners at least appeared ready to look for ways to work together despite ideological differences.

Vice Chairman Matthew Petersen, a Republican, told the Center for Public Integrity that while some election law issues raised are "clearly in Congress' court," not that of the FEC, "hopefully we will use today to see where we can find consensus on some issues before us."

Republican Commissioner Lee Goodman, meanwhile, said he'll "reserve judgment" on what actions, if any, today's hearing will prompt the commission to take. "I hope this starts the year off on good footing for us working together where we can," Goodman added.

But Commissioner Caroline Hunter, also a Republican, expressed frustration with the affair when describing spending money on politics as a right protected by the U.S. Constitution’s 1st Amendment.

“A theme to me for the day is ‘it’s OK for some people to speak, but not others. It’s crazy to me, it’s favoring some speakers over others,” Hunter said.

Democratic Commissioner Ellen Weintraub, who frequently took to Twitter during the hearing, has long advocated for strict rules limiting the influence of big money in politics and requiring comprehensive disclosure of contributions and expenditures.

"Public commenter rightly asks: Whose side are you/we on? Who will we stand up for?" Weintraub tweeted during a late morning period when the commission invited several students, businesspeople and other people never seen at FEC proceedings to offer testimony.

She later called the hearing a “landmark” affair that took advantage of the agency’s ability to “take the public’ temperature on issues like corruption and transparency in political spending.”

Among the hearing's more recognizable speakers were Don McGahn, a former FEC chairman who today represented the Koch brothers-connected Freedom Partners Chamber of Commerce and Freedom Partners Action Fund; former FEC Chairman Dave Mason; former FEC Chairman Brad Smith; Zephyr Teachout, a law professor and 2014 New York gubernatorial candidate; Elisabeth MacNamara, president of the League of Women Voters and former Rep. Ernest Istook, R-Okla.

Despite coming under intense scrutiny in recent years, the federal agency charged with investigating the nation’s most serious chemical accidents remains dogged by allegations of severe mismanagement, illegal conduct, and unfinished investigations.

Now, the White House says it is going to take a look at the embattled Chemical Safety Board.

The board is supposed to investigate industrial chemical accidents to help avoid future tragedies. But as the Center for Public Integrity reported in 2013, the number of findings and safety bulletins from CSB has fallen precipitously since 2006. That has left families of workers involved in accidents with unanswered questions.

At the board’s last public hearing, it terminated three investigations that had been open for at least five years. New board member Manny Ehrlic said there was “no realistic opportunity to issue a CSB report” for the cases. The three investigations were for the following accidents:

• a flash fire in January 2009 – seriously injuring four people -- and a hydrogen explosion in November 2009— damaging nearby homes — at the Silver Eagle Refinery in Woods Cross, Utah;
• a release of toxic hydrofluoric acid that left a worker critcally injured at the Citgo refinery in Corpus Christi, Texas in July 2009;
• a fire that killed two workers at the Horsehead Holding Company zinc refinery in Monaca, Pa. in July 2010.

A former CSB employee said that the decision to drop these cases points to deeper issues plaguing the board.

“The underlying cause is not workload or the age of the cases, but rather gross mismanagement of the investigations by the chairman and managing director,” said the former employee, who asked not to be identified. “This is really a disservice to workers in refineries and communities living near refineries.”

CSB Managing Director Daniel Horowitz said that discontinuing the investigations was necessary given the agency’s lack of resources.

“You have to focus on cases where you think you can have the biggest positive impact for workers. You can’t do everything. That’s always been a fact of life here.”

CSB has approximately 40 employees and a $11 million budget.

Horowitz added that despite closing the cases, the agency issued recommendations after the Citgo refinery accident as well as a preliminary report on the Silver Eagle Refinery accident.

Toxicologist Gerald Poje, who served on the board during the Clinton administration, said he’s hopeful the White House will “sweep clean the agency,” replacing its current leadership.

“It is a system that is terribly, terribly riddled with loss of accountability,” he said.

In addition to closing the investigations, the board gave more authority to the Chairman Rafael Moure-Eraso.

Board member Ehrlich said the changes were long overdue. “I see it as letting the chairman take care of what he’s supposed to take care of and letting the board take care of what it’s supposed to take care of.”

Yet, former board members blame Moure-Eraso for much of the controversy surrounding the agency’s performance.

The Environmental Protection Agency’s Inspector General has been investigating the board officials’ use of personal e-mail accounts to conduct agency business, a violation of the Federal Records Act. He voiced his frustrations at getting information from CSB in a recent statement and in his unreleased report to the White House. Eraso’s five-year term ends this June.

CSB ties for last place among federal agencies in having contented employees, according to the 2014 Federal Employee Viewpoint Survey. A former staff member cited the low morale as factor in the agency’s inefficiency. “Many of the most experienced investigators have left to go work at other federal agencies. The ability to get these cases completed has been greatly impaired,” he said. 

Managing Director Horowitz defended the board’s performance, saying it managed to issue eight reports in the last eight months.

Former board member Poje said major changes will be needed to restore CSB’s credibility, however. “The CSB investigates management failures involving high hazard industries. Well, for the last five years, they’ve been undergoing management failures in their own agency.”

Bobby Elesky, who worked as a civilian Defense Department contractor at Kandahar Airfield in Afghanistan from January 2004 until February 2005, recalls the smelly, smoky burn pit there being the size of nearly three football fields.

Trash would be thrown in as the evenings approached, he recalled in a phone conversation, and then burn and smolder through the next day. "Everything got thrown in there," he said. "Tires, batteries, plastic water bottles. Even complete vehicles."

The U.S. military knew the burn pits at its Afghan bases posed health risks to its personnel, and spent more than $20 million building incinerators meant to dispose of the mountains of trash being produced by its soldiers in the country every day: 440 tons at the height of the surge.

But many of the incinerators were defective and never operated, and U.S. commanders in Afghanistan flouted federal law and military regulations for four years by burning hazardous waste, such as batteries and aerosol cans, in the open pits near military personnel, according to a scathing new federal audit of U.S. operations in Afghanistan.

Tens of thousands of U.S. soldiers and civilians were stationed at the four bases inspected for the report, where burn pits were used as recently as October 2013. At Shindand Airbase in western Afghanistan, for example, about 360 truckloads of the U.S. military’s solid waste were burned in open pits between November 2012 and June 2013, according to U.S. Forces-Afghanistan documents.

Meanwhile, a safer means of waste disposal — eight costly incinerators — sat idle at four of these bases, according to the audit, which was released on Feb. 12 by John Sopko, the Special Inspector General for Afghanistan Reconstruction.

“Unfortunately, in many instances DOD [Department of Defense] officials did not take sufficient steps to ensure the proper management of contracts for the construction of the incinerators,” Sopko said in a letter to Defense Secretary Chuck Hagel, accompanying the report.

“Given the fact that DOD has been aware for many years of the significant health risks associated with open-air burn pits, it is indefensible that U.S. military personnel, who are already at risk of serious injury and death when fighting the enemy, were put at further risk from the potentially harmful emissions,” Sopko said.

The report states that the Defense Department paid for and installed some of the incinerators before determining their practicality and cost-effectiveness. That left base commanders to choose between operating the hulking machines at a huge cost – some required an annual infusion of a million dollars -- or continuing to burn waste in the pits, with known health risks.

They chose the latter.

The pit at Kandahar was located southwest of the base, Elesky said, from which the prevailing winds came. After he returned from Afghanistan and another months-long job at a second military base with a burn pit, located in Balad, Iraq, Elesky was diagnosed with a sinus tumor that turned out to be cancer. Though no doctor has identified its precise cause, Elesky said he thinks the burn pits were a contributing factor.

"Burn pits are huge, they're dirty, they're  nasty. You wouldn't be able to put one of these next to a neighborhood in the U.S. for the simple fact that they know it would make you sick," Elesky said. 

The Pentagon knew before the operation got underway that open-pit burning carried huge risks, Sopko’s report states. He said it did not develop alternatives because of “other operational priorities.”

A U.S. Forces-Afghanistan environmental health survey cited in an earlier inspector general’s report on Shindand Airbase, for example, found that the burn pits on the base had a high potential to disperse toxic aerosols, including some considered likely to cause cancer.

A 2011 U.S. Army memo about air quality at Bagram Air Field said that “throughout the deployment, the burn pit smoke plume drifted over the [Logistics Support Area] exposing Service Members to increased air contaminants,” and warned about the risk of chronic health effects such as reduced lung function or cardiopulmonary diseases.

Sopko’s agency carried out multi-month inspections at four of the bases between 2012 and 2014. His report states that military officials confirmed in 2013 that no bases in Afghanistan were compliant with a 2012 Central Command regulation requiring base commanders to phase out open-air burn pits as the base grew in population.

A spokesman for Sopko, Alex Bronstein-Moffly, said the inspector general is unsure how often burn pits were used after 2009. That’s when Congress passed a law prohibiting the open-air burning of hazardous waste by the military except in cases when the Secretary of Defense certifies that no alternative disposal method is feasible.

In at least two places, Forward Operating Bases Sharana and Salerno in eastern Afghanistan, burn pits continued to be used until the bases closed in late 2013, Bronstein-Moffly said. He added that the agency is not aware of any such U.S. burn pits that are still active.

Curtis Kellogg, spokesman for U.S. Central Command, said he would need more than one day to offer comment on the report, because of the technical nature of its information. Although the Command was given an advance draft of the report, it did not submit written comments to the inspector general.

Other military branches did. In a written response to the report’s claims that U.S. Army Corps of Engineers officials paid contractors for incinerators despite noting problems with the equipment, USACE Transatlantic Division Chief of Staff Richard Heitkamp wrote that “all of the incinerators turned over to customers were operational” with only “minor deficiencies.”

Sopko’s report said however that the deficiencies were not minor and that “DOD must do a better job of holding contractors accountable.” Taxpayers, he said, “deserve better than what they received for the money spent on incinerators in Afghanistan.” Sopko has expressed similar views about other U.S. military expenditures in Afghanistan.

Got a few million bucks you want to protect from the tax man, a nosey spouse or a greedy business acquaintance? Sovereign Management & Legal Ltd. says it has the answers.

Up until recently, it offered on its website the “‘Bullet Proof’ Panama E-Commerce Combo Corporation/Foundation Package” for $3,475. Total price, taxes included. FedEx deliveries, an extra $75 a pop. Lots of alternatives are available, too, for what it terms “Breaking the ‘Paper Trail.’”

The company’s aggressive online marketing has attracted enough customers that the Internal Revenue Service and U.S. prosecutors noticed. In December, they filed a court petition in New York to get records of Sovereign’s customers from HSBC Bank USA and from several delivery and money and wire transfer services, including the Federal Reserve Bank of New York.

And at the end of the year the IRS added Sovereign to its list of firms that trigger higher penalties — from 27.5 percent to 50 percent — for taxpayers who voluntarily disclose previously undeclared offshore accounts. 

IRS agent Randy Hooczko’s declaration, filed in support of the petition, says Sovereign “offers its clients a number of structures and services that can be used for tax evasion purposes.” The idea, the court filings show, is to break through the layers of anonymity Sovereign’s handiwork provides and identify its customers from 2005 through 2013.

Sovereign hasn’t been charged. Calls and email messages to the company seeking comment weren’t returned.

The company’s website amounts to “one stop shopping for money launderers,” said Josh Simmons, policy counsel for Global Financial Integrity, in an interview. The Washington-based nonprofit presses governments to curtail the flow of secret money. 

Though other offshore firms offer services like Sovereign’s, “what’s surprising” is how comprehensive and “how blatant they are,” he said.

And they’ll even help you register your yacht.

Continue reading at ICIJ.org

Despite coming under intense scrutiny in recent years, the federal agency charged with investigating the nation’s most serious chemical accidents remains dogged by allegations of severe mismanagement, illegal conduct and unfinished investigations.

Now, the White House says it is going to take a look at the embattled Chemical Safety Board.

The board is supposed to investigate industrial chemical accidents to help avoid future tragedies. But as the Center for Public Integrity reported in 2013, the number of findings and safety bulletins from CSB has fallen precipitously since 2006. That has left families of workers involved in accidents with unanswered questions.

At the board’s last public hearing, it terminated three investigations that had been open for at least five years. New board member Manny Ehrlic said there was “no realistic opportunity to issue a CSB report” for the cases. The three investigations were for the following accidents:

• a flash fire in January 2009 — seriously injuring four people — and a hydrogen explosion in November 2009— damaging nearby homes — at the Silver Eagle Refinery in Woods Cross, Utah;
• a release of toxic hydrofluoric acid that left a worker critcally injured at the Citgo refinery in Corpus Christi, Texas, in July 2009;
• a fire that killed two workers at the Horsehead Holding Company zinc refinery in Monaca, Pa., in July 2010.

A former CSB employee said that the decision to drop these cases points to deeper issues plaguing the board.

“The underlying cause is not workload or the age of the cases, but rather gross mismanagement of the investigations by the chairman and managing director,” said the former employee, who asked not to be identified. “This is really a disservice to workers in refineries and communities living near refineries.”

CSB Managing Director Daniel Horowitz said that discontinuing the investigations was necessary given the agency’s lack of resources.

“You have to focus on cases where you think you can have the biggest positive impact for workers. You can’t do everything. That’s always been a fact of life here.”

CSB has approximately 40 employees and a $11 million budget.

Horowitz added that despite closing the cases, the agency issued recommendations after the Citgo refinery accident as well as a preliminary report on the Silver Eagle Refinery accident.

Toxicologist Gerald Poje, who served on the board during the Clinton administration, said he’s hopeful the White House will “sweep clean the agency,” replacing its current leadership.

“It is a system that is terribly, terribly riddled with loss of accountability,” he said.

In addition to closing the investigations, the board gave more authority to the Chairman Rafael Moure-Eraso.

Board member Ehrlich said the changes were long overdue. “I see it as letting the chairman take care of what he’s supposed to take care of and letting the board take care of what it’s supposed to take care of.”

Yet, former board members blame Moure-Eraso for much of the controversy surrounding the agency’s performance.

The Environmental Protection Agency’s Inspector General has been investigating the board officials’ use of personal e-mail accounts to conduct agency business, a violation of the Federal Records Act. He voiced his frustrations at getting information from CSB in a recent statement and in his unreleased report to the White House. Eraso’s five-year term ends this June.

CSB ties for last place among federal agencies in having contented employees, according to the 2014 Federal Employee Viewpoint Survey. A former staff member cited the low morale as factor in the agency’s inefficiency. “Many of the most experienced investigators have left to go work at other federal agencies. The ability to get these cases completed has been greatly impaired,” he said.

Managing Director Horowitz defended the board’s performance, saying it managed to issue eight reports in the last eight months.

Former board member Poje said major changes will be needed to restore CSB’s credibility, however. “The CSB investigates management failures involving high hazard industries. Well, for the last five years, they’ve been undergoing management failures in their own agency.”

The Senate Judiciary Committee has delayed a vote on the nomination of Loretta Lynch to become U.S. attorney general amid questions about how she handled the money laundering prosecution of British banking giant HSBC in 2012.

The delay comes after revelations that the Swiss arm of the bank may have helped individuals and companies worldwide hide their money from tax authorities.

Sen. David Vitter, R-La., was among the senators who asked that the committee vote on Lynch’s nomination be delayed at least two weeks while lawmakers ask her additional questions. Vitter said he was concerned about the 2012 HSBC settlement.

“The investigation found that HSBC had violated many anti-money laundering statutes,” Vitter said during today’s committee meeting. “The settlement was a fine — a significant fine, but a fine. No criminal action, nothing more serious.”

The International Consortium of Investigative Journalists, a project of the Center for Public Integrity, released information this week on thousands of accounts held at HSBC’s Swiss subsidiary until 2007. The files include details of more than 8,600 accounts tied to U.S. citizens that were worth more than $13 billion.

The revelations have raised questions as to why the Justice Department did not charge the bank with any tax-related infractions and has also drawn additional scrutiny to the 2012 settlement spearheaded by Lynch, who was U.S. attorney in Brooklyn.

“It’s very reasonable and incumbent on us, in fact, to get the details of this settlement,” Vitter said. “I’m certainly working on that.”

The bank was charged in 2012 with helping drug dealers launder money and with illegally completing transactions for clients in Iran, Libya, Syria and other countries under U.S. economic sanctions.

On the same day, the bank entered into a deferred prosecution agreement in which it forfeited $1.26 billion and paid another $665 million in penalties. The company also replaced all of its senior management at that time, and has been working under a court-appointed monitor. The agreement could be terminated if the bank commits further crimes.

No HSBC executives were criminally charged.

Lynch, in a statement to the Senate Judiciary Committee on Monday, said the punishment at that time was considered “significant, and in some respect extraordinary.”

Lynch added that she “carefully considered sufficient admissible evidence to prosecute an individual and whether such a prosecution otherwise would have been consistent with the principles of federal prosecution.”

She said the agreement she reached with the company does not preclude the Justice Department from pursuing more charges.

“The [deferred prosecution agreement] explicitly does not provide any protections against prosecution for conduct beyond what was described in the statement of facts,” she wrote. “Furthermore, I should note the DPA explicitly mentions that the agreement does not bind the Department’s tax division, or the fraud section of the criminal division.”

The newly revealed files were stolen by an HSBC employee who turned them over to the French government. According to court files, French authorities shared the files with the U.S. Internal Revenue Service in 2010 but it’s not clear whether the IRS turned the information over to the Justice Department.

IRS spokeswoman Julianne Breitbeil declined to say whether the agency shared the information with the Justice Department, citing a federal law that bars her from discussing such matters.

The files reveal that global banking giant HSBC profited from doing business with arms dealers who channeled mortar bombs to child soldiers in Africa, bag men for Third World dictators, traffickers in blood diamonds and other international outlaws.  The files covered accounts up to 2007, with more than 100,000 individuals and legal entities from more than 200 nations.

The Guardian newspaper reported this week that federal prosecutors are examining HSBC’s activities.  Justice Department spokesman Brian Fallon did not respond to several emails and phone calls seeking confirmation of the fresh probe.

While Lynch’s confirmation will be delayed at least two weeks, it appears that the judiciary committee is likely to approve her nomination when it reconvenes on Feb. 26.  Several senators, including Orrin Hatch, R-Utah, said they would support her.

As the Medicare Advantage industry scrambles to stave off proposed government funding cuts, federal prosecutors in Florida are pursuing an unusual criminal fraud case that’s likely to raise new concerns that some of the health plans for seniors may be overcharging for their services.

The criminal case, believed to be among the first to take aim at Medicare Advantage billing tactics, centers on a South Florida doctor affiliated with Humana Inc., one of the biggest players offering the privately run Medicare Advantage plans.

A federal grand jury in West Palm Beach, Fl. indicted the doctor, Isaac Kojo Anakwah Thompson, on eight counts of health care fraud last week. He’s accused of cheating Medicare out of about $2.1 million by claiming his Humana-enrolled patients were sicker than they actually were. Thompson, 55, was arrested Feb. 4 and is free on a $1 million bond. Through his lawyer, he declined comment.

The indictment does not accuse Humana of wrongdoing. Company spokesman Tom Noland said in an email that the Louisville, Kentucky-based insurer is “cooperating fully with the authorities.” He said Thompson was never employed by the company and is “no longer a participating physician with Humana.” Noland said Humana has repaid the government, but declined to say how much.

Still, the case is likely to draw heightened scrutiny to potential billing fraud and abuse in Medicare Advantage as well as questions about the effectiveness of government oversight of the fast-growing industry, which costs taxpayers more than $150 billion a year.

“Every criminal indictment raises the stakes on Medicare Advantage fraud,” said Patrick Burns, co-director of Taxpayers Against Fraud in Washington. “It’s clear that the noose is tightening, and the risk equation is shifting.”

Whistleblowers have filed a half-dozen other federal court cases alleging systematic over-billing by Medicare Advantage plans. 

Medicare Advantage plans offer seniors an alternative to standard Medicare, which pays doctors for each service they render. By contrast, the health plans are paid a set fee monthly for each patient based on a complex formula known as a risk score. Essentially, the government pays higher rates for sicker patients and less for those in good health.

But overcharges, intentional or not, have cost taxpayers billions of dollars in recent years, as the Center for Public Integrity reported in a series published last year.

The Florida indictment comes as the Medicare Advantage industry mounts a major advocacy and public relations offensive in Washington to stave off proposed budget cuts. The Centers for Medicare and Medicaid Services, or CMS, is set to propose rates that the health plans will be paid for next year on Feb. 20. The Obama administration’s 2016 budget seeks to cut some $36 billion from Medicare Advantage plans over the next decade related to oversized risk scores.

Two advocacy groups are leading the charge to nullify the proposed cuts, including the Better Medicare Alliance,which calls itself “the leading advocacy organization” for Medicare Advantage. Its sponsors include Humana and UnitedHealth Group, which together cover about 40 per cent of the 16 million people on Medicare Advantage.

Interim executive director Krista Drobac said the alliance “was launched to focus on the value proposition of Medicare Advantage and to build support for protecting and strengthening the program. With 16 million seniors (one third of Medicare beneficiaries) now in Medicare Advantage, we think this effort is timely and needed,” she wrote in an email.

Drobac added that the group “focuses on research, communications, social media, alliance building and grassroots. We have no plans to lobby,” she said.

A second group called the Coalition for Medicare Choices, which was set up by the insurance industry trade association America’s Health Insurance Plans and boasts 1.8 million members, also is “mobilizing” to pressure Congress and the White House to back off. It pleads its case in a video ad.

The insurance industry trade group also has held briefings on Capitol Hill designed to tout the benefits of Medicare Advantage and solidify support in Congress. In the past, the group has persuaded many lawmakers to call for a roll back of funding cuts mandated by the Affordable Care Act.

While the industry fights to preserve its funding, there’s growing concern over risk score abuse and resulting overpayments.

CMS officials concede that billions of tax dollars are misspent every year when Medicare Advantage plans exaggerate how sick their patients are, a practice known as “upcoding.”  The Government Accountability Office, the watchdog arm of Congress, also is auditing Medicare Advantage billing practices. Results are due later this year.

And some members of the Medicare Payment Advisory Commission or MedPac, which advises Congress on eldercare issues, have suggested the Medicare Advantage risk scoring system triggers overcharges the federal treasury can ill afford. At a December 2014 meeting MedPac chairman Glenn M. Hackbarth said the group had seen “empircal evidence” of upcoding by some Medicare Advantage plans.

The Center for Public Integrity has previously reported on several of the whistleblower lawsuits, including one filed by a Miami doctor against Humana, that allege upcoding. In that case, Olivia Graves alleges that a Humana medical center had diagnosed abnormally high numbers of patients with diseases such as diabetes with complications that boosted Medicare payments — diagnoses that “were not supported by medical records.” Graves alleges that Humana knew about the overcharges but took no action to stop them. Humana has denied the allegations in the civil suit.

In a second case, a former manager at a California firm that does medical home visits alleges that the process was abused to inflate risk scores. A third case brought by a former Bush administration health official accuses a Medicare health plan in Puerto Rico of cheating Medicare out of hundreds of millions of dollars through diagnoses that were not backed up by medical records. All of the companies have denied the allegations.

These civil cases, even if they result in large judgments, may have minimal impact. Bringing criminal charges, as prosecutors in Miami have done for the first time, raises the stakes dramatically because convictions could bring maximum prison terms of up to ten years. Though South Florida has long been a hotbed of health care fraud, officials said the Thompson case is their first criminal action related to Medicare Advantage billing.

“We believe it is the first case of its kind to be prosecuted in the Southern District of Florida,” Marlene A. Fernandez-Karavetsos, a spokeswoman for the U.S. Attorney’s Office in Miami, wrote in an email.

According to the grand jury, Humana paid Thompson, who ran medical centers in Delray Beach and Boynton Beach, about 80 percent of the money it received from CMS for treating patients. In exchange, the medical center was responsible for paying for all of the members’ medical care. Many Medicare Advantage plans sign similar contracts with community physicians who treat their patients.

Humana used records coded by its doctors to justify each patient’s risk score. Certain medical conditions deemed expensive to treat raise the score and thus the government payment for that patient. How accurate those scores were is at the heart of the case against Thompson.

Thompson allegedly reported “false and fraudulent” diagnoses to Humana, which then passed them on to Medicare for payment. The indictment cites eight patients with three medical conditions, including four people said to have “ankylosing spondylitis,” a disease of the spine that can cause abnormal bone growth.

The indictment states that from January 2006 through February of 2010 Thompson submitted to Humana “false and fraudulent diagnoses of Medicare beneficiaries enrolled in Humana Medicare Advantage plans, when in truth and fact the beneficiaries did not suffer from the diagnosed conditions.”

According to the grand jury, other phony diagnoses included “inflammatory polyarthropathy,” in which five or more joints in the body are inflamed or swollen, and “major depressive affective disorder.” That’s a severe form of depression that involves a “loss of contact with reality,” according to the indictment.

The indictment states that as a result of the inflated risk scores Medicare made “excessive payments” of at least $2,114,332.33. Humana passed about 80 percent of that amount to Thompson’s medical center. The grand jury did not say what happened to the remaining money.

But Humana spokesman Noland wrote in an email: “Humana has reimbursed the government to ensure that both the 20 percent and the 80 percent were paid back in full, thus making the government whole.”

Congress created Medicare Advantage in 2003 to encourage private insurance companies to jump into the senior care market without hesitation. Since then, the program has proven popular with seniors because it can cost them less out of pocket than original Medicare. Patients generally have no way of finding out what their risk scores are because neither health plans nor the government tells them. The Center for Public Integrity has sued CMS under the Freedom of Information Act to make public a wide range of agency records on risk scores.

CMS expects to propose 2016 payment rates on Feb. 20 and then give the industry 45 days to make its case to roll back any cuts.

Drobac said that’s a goal of the Better Medicare Alliance: “We will be working in support of stable funding for MA (Medicare Advantage) because we believe more cuts will harm beneficiaries,” she said.

In 2009, while at The Chicago Reporter, I took a deep look at racial disparities in the quality of care in nursing homes in Chicago, Illinois and nationally. For a project that the Center for Public Integrity published in November 2014, I brought together Medicaid cost reports, self-reported staffing figures, testimonies from advocates and lawyers, and personal stories from nursing home residents and their families to address a simple question: how much care is a loved one actually receiving at a nursing home? The conclusion? Nursing homes serving minorities offer a lot less care than those predominately housing whites.

Story genesis

The three-part series began with a leftover.

Toward the end of my reporting on The Chicago Reporter story I brought together self-reported staffing levels on Nursing Home Compare, a government website the public uses to compare and evaluate nursing homes, with the average daily levels of care I calculated by looking at Medicaid cost reports.

I found that the self-reported data was higher than the daily figure from the cost reports in many more than half of the facilities.

Intrigued, I spoke to advocates and lawyers who said the finding suggested that nursing homes “staff up” for inspections.

Toward the end of 2013 I submitted FOIA requests for four additional years of Illinois cost reports. I repeated the analysis and found similar results that convinced me the first year was not an aberration.

David Donald, then the data editor at the Center for Public Integrity, encouraged me to locate cost reports for all 50 states in order to tell a national story.

Finding the data

Fortunately, the website for the Centers for Medicare and Medicaid Services (CMS) had this information as the Affordable Care Act required that all skilled nursing facilities submit cost reports.

But finding the data presented a real challenge as the first person with whom we interacted told us that the data we wanted was not kept in the cost reports.  We looked through the nearly 100-page data dictionary before we found that was not true.

From there we needed to tackle the data.

At more than 14 million records, the file was the largest I had ever analyzed. It took me days before I could connect the data fields with their corresponding values in the dictionary.

I filtered the data with statistical software SPSS before getting a quantity of them I could analyze in Excel.

I located a 2007 peer-reviewed paper about over-reporting of staffing levels in Texas nursing homes. Guided by lead author Bita Kash and assisted by Charlene Harrington, a longtime national authority on nursing home staffing, I conducted the national analysis of more than 14,000 nursing homes.

Crunching the data

The analysis took weeks. Guided by our desire to find out if the gap we had identified in Illinois between self-reported staffing levels and the average daily level we found through the cost reports was national, we used Access to bring together the data sets, Excel to perform a preliminary analysis and SPSS to determine if we found had any statistical basis.

The gap was systematic, cutting across all ownership types, geographies and positions. Among the three direct care positions of certified nursing assistant, licensed practical nurse and registered nurse, the latter stood out by far.

More than 80 percent, or about five in six nursing homes, had higher registered nurse staffing levels on Nursing Home Compare than the daily average we calculated through the cost reports.

For more than 25 percent, the Nursing Home Compare figure was at least double the one we calculated through the cost reports.

These staffing discrepancies mattered for a number of reasons. They suggested that what a potential consumer thinks their loved one will receive in daily care is often much higher than the actual daily level of care. The discrepancies happened after more than a decade of reports and documents from CMS that said repeatedly that self-reported data from nursing homes are inaccurate. They come at the beginning of the “silver tsunami”, the explosion of aging Americans who could need that nursing home care. They also occurred at a time when the number of standard survey inspections dropped each year from 2008 to 2012, falling six percent during those years. The number of nursing homes decreased just one percent in the same period.

Less government attention only heightened the importance of having accurate data, advocates said. Beyond all that, a provision of the Affordable Care Act required that nursing homes transition from using self-reported to payroll-based data by March 2012. But in late 2011 the agency said it needed more time to implement the provision.

Little had happened since.

We subsequently used SPSS, Excel and Access for a separate story that identified and sought to explain national disparities in the amount of registered nurse care in nursing homes where most residents are black or Latino compared with those where the majority of residents are white.

During this part of the process we spoke with advocates, industry figures, academics and lawyers to identify and find data for as many different variables as possible that could possibly explain these disparities.  We did this because we wanted to rule out any other possible reason for the differences in registered nurse care.  Eventually, we found data about the residents, the level of market competition and the area where the homes were located.

None fully explained the disparities.

Adding human stories

Critical to each story in the project was a series of conversations with people who had been directly impacted by the issues we had uncovered. We met Lisa Sanders through Martha Deaver, president of advocacy group Arkansas Advocates for Nursing Home Residents.

With the help of Deaver and the state’s Long-Term Care Ombudsman, Sanders had helped build one of the largest family councils in the state. She told us her story and introduced us to other families.  All were black. All had loved ones who had spent time and experienced problems  in nursing homes with extremely low registered nurse staffing levels such as dehydration, falls, urinary tract infections and sitting in soiled clothes for long stretches of time.  All the people we interviewed decided that caring for their loved one became a full time job and became increasingly impatient in their interactions with facility personnel. And all articulated a poignant and painful mixture of grief, guilt, helplessness, frustration and betrayal at what they perceived to be the home’s failure to live up to its stated commitment of providing their loved one the care and dignity they deserved. Meeting and learning from these people moved us a lot and reinforced to us the vital importance of of using data and documents to unpack the impact of policy and it’s lack of enforcement on people’s lives.

Publishing the story and its interactive elements

In an effort to reach as many audiences as possible we published the full project in English on the Center for Public Integrity’s website, shorter versions of the two main staffing stories onNBCNews.com, and in Spanish at Hoy Chicago, the Chicago Tribune Company’s Spanish-language newspaper.

We also published a series of photographs on my brother Jon Lowenstein’s Instagram feed, which had close to 100,000 followers. We embedded investigative data, content and findings in the captions and dialogued with people around the world.

The Center for Public Integrity's news apps developer Chris Zubak-Skees used Javascript to build a lookup table in which people could find staffing information for more than 10,000 nursing homes across the country.

We used Google Fusion Tables to build a map of nursing homes that received low-cost, HUD-backed mortgages the month after receiving the lowest possible rating for quality of care from Nursing Home Compare.

Impact and reflections

The project had impact on a number of levels.

It attracted widespread national media pickup in online, television, print and radio formats. U.S. Rep. Jan Schakowsky (D-IL) said it helped shape her thinking for legislation she’ll introduce this year and pledged to take action on each part of the series.  The Office of Inspector General in the Department of Health and Human Services is deciding whether to take action against a Chicago-area chain. A state senator in Illinois said she plans to convene a hearing about the issues raised by the series. A pair of professors at John Marshall Law Schooland a corporate law firm are considering filling a civil rights car against a Chicago nursing home operator.

I presented the work during the plenary session of the annual conference for the National Consumer Voice, the nation’s largest nursing homes advocacy group, and spoke during a monthly conference call to more than two dozen long-term care ombudsmen from around the country. After these presentations I shared and discussed data with advocates, government agencies, long-term care ombudsmen and family members in about a dozen states.

This was the largest investigative project I’ve done so far. Conceiving, bringing it to fruition and seeing it ripple in different arenas was deeply gratifying.

But more leftovers remain.

This story originally appeared on Storybench, a new blog on digital storytelling by Northeastern University's Media Innovation program in partnership with Esquire magazine.

An auditor at the Energy Department has concluded that one of the country’s principal nuclear weapons laboratories improperly disclosed sensitive national security information due to poor workplace practices.

Gregory Friedman, the department’s inspector general, said in a report released on Feb. 2 that Los Alamos National Laboratory, in New Mexico, had “not always adequately protected and controlled classified information.”

His public account was an unclassified summary of a secret document, and did not state precisely which secrets had been revealed by the laboratory or characterize their importance.

But sources say his probe included an examination of allegations that James Doyle, a nuclear security analyst at Los Alamos, disclosed classified information when he published a Feb. 2013 article in an international journal that supported nuclear disarmament. The article was reviewed by classification officials, who approved its release, but Doyle was later told he improperly included classified information.

A Center for Public Integrity investigation last year concluded that the sensitive disclosure in Doyle’s article – which officials have not detailed – was most likely an offhand reference to the existence of Israel’s nuclear arsenal. Israel’s national policy is not to confirm or deny its arsenal, and U.S. policy follows along.

The fact that Israel has nuclear weapons is however undisputed and routinely discussed, except by U.S. government officials, who must tiptoe around the topic by saying that they “assume” or “presume” that Israel has nuclear weapons, or by refusing to comment at all.

As a result, Doyle and other professionals at Los Alamos have said they feel the lab’s security officers were more guilty of overclassification than of improper disclosure. But Friedman did not report finding any instances of overclassification.

Nuclear arms are the principal product at Los Alamos, and after Doyle was first censured over the classification issue and then dismissed from his job in July 2014, Doyle alleged it was done in retaliation for the article’s endorsement of President Obama’s call for a nuclear weapons-free future. Lab officials said Doyle’s dismissal was motivated solely by budget concerns.

Doyle’s treatment provoked protests from scientists and policy experts after the events were disclosed by the Center for Public Integrity. Undersecretary of Energy Frank Klotz subsequently asked the inspector general to probe the dismissal, an investigation that is still underway. In addition, Doyle filed a “whistleblower” lawsuit against the department, which is also pending.

Although Doyle’s case is thus unresolved, Friedman’s report found serious management problems and disarray in Los Alamos’ process of vetting articles to prevent the leak of national security information. It said the classification office acted too slowly to report and correct instances where classified information was available to the public

The report suggested that Doyle and several others who allegedly published classified information had done so because the laboratory’s chief classification officer – whom the report does not name – failed to distribute a specific policy update.

Daniel Gerth was the laboratory’s principal classification officer in charge of reviewing Doyle’s article before it was published. He retired from Los Alamos in May 2014, but when reached this week, rejected the findings in a brief interview.

“The report is in my opinion technically inaccurate,” Gerth said, but declined to comment further.

The report also blamed others. It said that when classification office employees complained about the workplace practices, senior managers dismissed these comments as the whining of a few disgruntled employees. That in turn provoked low morale in the classification office. It said further that there had been a “lack of oversight” by the management of Los Alamos National Security, LLC, the private contractor that runs the lab, as well as the lab’s federal manager.

The report recommended that Los Alamos improve its oversight and ensure that the right guidelines are distributed to employees charged with reviewing documents.

In a written response, Klotz said he concurred with its findings and wrote that “protection of our national security information is a top priority.”

Asked for comment on the report, Doyle said he was disappointed that it did not support his view that his article on nonproliferation was improperly classified after its publication. “I was interviewed for this investigation,” he said, “and I made it clear to investigators that I think mine was a case of over-classification.”

Felicia Jones, a spokeswoman for the Inspector General, wrote in an email that the IG inquiry “was limited to the alleged problems with the management of the classification office” at Los Alamos. “We did not seek to determine whether over-classification, in general, was an issue,” she wrote.

Amid a growing ethics scandal, Oregon Gov. John Kitzhaber announced his resignation Friday, drawing a close to a tumultuous week. The burgeoning conflicts-of-interest scandal involving Kitzhaber’s fiancée, Cylvia Hayes, draws new attention to transparency and accountability issues highlighted by the Center’s State Integrity Investigation.

While Oregon earned an overall grade of C-, placing it 14^th out of 50, the 2012 report revealed numerous loopholes to the state’s ethics laws and gave an F grade for public access to information and a D for executive accountability, finding that conflict of interest rules were particularly ineffective. The State Integrity Investigation was a collaboration between the Center, Global Integrity and Public Radio International. The Center will release an updated report later this year.

In a long statement announcing his resignation, which will take effect Feb. 18, the Democratic governor apologized to his supporters and said he was “confident” he hadn’t broken any laws or acted dishonestly. “Nonetheless, I understand that I have become a liability to the very institutions and policies to which I have dedicated my career and, indeed, my entire adult life.”

Newspapers and state leaders had been calling for the governor to resign after a series of revelations involving Kitzhaber and Hayes, including allegations that Hayes used her relationship with the governor to benefit her professional life. Last week, The Oregonian reported that Hayes had advised state employees on how to implement a new economic policy while she was on contract as a consultant with an advocacy group that had promoted the same policy.

Earlier this week, Attorney General Ellen Rosenblum confirmed she had opened an investigation into the first couple’s dealings. Kitzhaber had just begun his fourth term in office this year. Secretary of State Kate Brown, also a Democrat, will take office immediately after Kitzhaber’s resignation next week.

What do you really know about the way the Internet works?

How did it get to you?

Who built the infrastructure behind it?

Who makes decisions about its future?

These are some of the questions Center for Public Integrity reporter Allan Holmes wanted to answer recently when he traveled to Tullahoma, Tennessee, and Fayetteville, North Carolina, for Reveal radio.

These two cities are battlegrounds, pitting big telecommunications companies against cities that want to build their own high speed Internet service in a fight playing out in State houses, ballot boxes and, ultimately, desktops across the country.

Jared Bennett: So Allan, what is it about the telecommunications industry that's interesting to an investigative reporter?

Allan Holmes: Well on first blush it probably isn’t that interesting but you've got to realize these are some of the largest corporations in the world. They also give some of the largest amounts of money to campaigns; they spend some of the largest amount of money in lobbying. AT&T, Comcast and Verizon spend millions and millions of dollars, so they have a lot of influence. But I think what interests me even as much as that is that these corporations control information we use to live our everyday lives and how we make decisions based on that information.

And this is only going to become more important and they’re going to become more powerful as the Internet of things evolves, which means that everything will have its own URL, even your light bulbs, and we run almost every facet of our lives on the Internet. So this is really important stuff.

JB: What makes the Internet interesting in cities like Fayetteville, North Carolina, and Tullahoma, Tennessee, where you visited and this story’s focus is on?

AH: We looked at these two cities, first of all Tullahoma has a broadband network, Fayetteville has fiber optic cable network underneath the ground but they can’t use it. So you have one city that has broadband and can give it to the residents and businesses and another one that doesn’t, Fayetteville, N.C. So we wanted to juxtapose these two cities. The other thing that's interesting, and this actually happened after we went to these two cities back in the summer when we first started reporting this, is that Wilson, North Carolina, filed a petition to the FCC and Chattanooga filed a petition to the FCC asking the FCC to preempt the state laws that are holding them back from expanding their own city-wide broadband networks, so there’s even an added interest at that level.

JB: Right, in Tullahoma, they have this high speed Internet, but not everyone in the area can access that, is that right?

AH: That’s right. The state law in Tennessee basically says that if you have a municipal broadband network you can’t expand beyond the boundaries. And this is typically into more rural areas but even into subdivisions, and you go to these subdivisions and they look like any subdivision outside of a major city.

JB: So Internet is faster in Tullahoma than it is in other parts of Tennessee and than it is in Fayettevillle … what’s the big deal, what’s at stake?

AH: Well, a lot of people think it’s just a matter of being inconvenienced, that’s the way it’s thought about and presented to people. But really it’s more than that.

What’s interesting is that even the lawmakers who are getting these bills through think that way. For example in North Carolina there’s a representative named Marilyn Avila. She represents Wake County which is where Raleigh, the state capital, is in and she got a bill passed in 2011 and we went to her office in the state legislature there in Raleigh and asked her the very same question, and this is what she told us:

“I know that’s one of the issues that a lot of people have, and particular I hear it with downloading movies and things like that and people want to complain and I'm thinking OK, then don’t download that many.”

But this isn’t really about downloading movies, it’s really about jobs and development and making your community a place where people want to live and are set up for success, and you hear it from almost everyday people working in these communities.

JB: Sounds like it’s a big deal, but fast Internet and slow Internet, those can be abstract ideas so lay things out for me clearly: what can people do in Tullahoma that they can’t do in other parts of the state?

AH: In Tullahoma, there’s a small startup software company called Agisent, it actually moved from South Carolina to Tullahoma because Tullahoma’s very fast, it’s a gigabit network, one of the fastest in the world. For a town of 18,000 that’s pretty impressive. And also it’s very reliable and that’s what this company called Agisent needs. What they do is they provide a web document management service to police departments, prisons, courts typically; they are small to medium sized departments that can’t afford their own IT expert to manage their networks so that’s really important to them that they can do that in Tullahoma.

That’s fine for Agisent. But then you go outside of Tullahoma, you just drive like 3, 4, 5 miles outside of Tullahoma into this suburban area where there are some very nice homes, and they don’t have Internet access. They don’t even have AT&T, U-verse or Charter Communications which is another telecom there who provides service in Tullahoma. They don’t serve this area. And ran into a fellow named Matt Johnson, he is an entrepreneur, he started up a company called Road Rage Gauges, which are gauges that you put in your truck or high performance car to measure how it’s performing so you don’t overtax your engine or damage it in some way. What he did was he spent $2,000 rigging up a system so that he could get wireless access, but that’s just way too slow for him. He has clients in China and South Africa and Germany that he has to talk to and when we visited him at his home, this is what he told us about his experience:

“So I had to point the antennae out of this end of the house because nowhere in the house did I have any signal whatsoever. So I had to put the antennae here, protected, point it towards Tullahoma, towards town. I had to amplify it. I had to direct it and it was all sitting in here on a homemade contraption just to get Internet, so that’s what I had to do.”

JB: In the past the president has framed this as a jobs creation issue. And that’s what it sounds like when you talk about companies like Agisent and Matt Johnson’s company, but is that what you found through your reporting?

AH: Yeah, you even talk to big investors, venture capitalists, about the importance of having broadband in a city and you find out that, yeah, Obama is right. We talked to Cameron Newton in Tullahoma. He was an investment banker in New York and for a very large bank in Charlotte, and now he’s a venture capitalist and we sat down in his office in Tullahoma to ask him about the importance of broadband to a city.

“Manufacturing in the U.S. is very, very different than it used to be, and it’s changing rapidly. And now you’re having much more automation. The next move in manufacturing is to additive manufacturing, which is 3D printing. None of that equipment is going to be isolated so in other words it’s all going to be connected. So if you don’t have broadband accessibility, if you don’t have fiber in your community, where are these manufacturing plants going to go? Well, they are going to go to areas that do have it.”

JB: So if that’s the case, what's the argument big telecommunications companies use against city-run broadband?

AH: Well, first of all they are worried about competing. In a lot of these cities you only have one, maybe two, if you’re lucky three companies competing but mostly it’s one or two.

In Tullahoma, as I said, it’s AT&T and Charter Communications.

In Fayetteville it’s Time Warner cable and Century Link but even they don’t cross over boundaries; they usually separate their areas so they don’t compete.

But what they’re saying is that it’s unfair competition. The government is competing against the private sector, which is unfair because they don’t have to meet the same requirements that a private company does. They don’t have to pay taxes; they don’t have to make a profit; they can borrow money at a much lower interest rate than private companies.

But this is the thing; you ask these cities, “Why don’t they just go with a private company?” And every one of them told us that, “Well, we did ask, the problem is that the incumbent Internet provider didn’t want to upgrade their networks or they didn’t want to expand it out into areas where they weren’t.”

So the cities basically said, “Well, where does that leave us?”

That leaves us, if we want to survive economically because we need to attract businesses and support local businesses, we need this network, so we got to do it.

JB: The people who make policy decisions, the lawmakers, they are on the same Internet that their constituents use, don’t they see limited connection as a problem?

AH: They do see it as a problem but they don’t think that having the government provide the broadband is the best way.

What’s also influencing that decision is the amount of money that’s flowing.

For example just at the national level there was $88 million spent last year on lobbying by the telecom industry and since 1996 the telecom industry has spent $167 million in giving to campaign donations.

Now these lawmakers have told us, of course that doesn’t influence the way they vote.

But we asked a number of lawmakers about taking money, and about why they have the positions that they do. 

And one of those people was Glen Casada, he’s the third in line in the leadership in the Republican party in Tennessee, and he’s been involved in helping derail some of the bills that have been introduced that would allow expansion of broadband.

This is what he told us:

“My district is about 2/3 high-speed and 1/3 non-high-speed. So I do hear a lot of that, and I talk to several of those providers: ‘we need help, what’s the solution?’ and their retort is, ‘Well, we can’t afford to go to the southeast corner of your county because we would lose money and lose money hand over fist.’

And I said, ‘We’ve got to figure this out, and real quick, because if we don’t figure it out, then we’re going to have to go with a solution that may not be palatable to the free market system.’

So there is an answer, I contend we have to work it out and figure it out so that the free market solves it, because if a government-run entity solves it, it’s got long-term negative implications.”

JB: What are the possible long-term negative effects that he’s talking about here?

AH: Well first of all it's competition and that the private companies will lose jobs. But mostly what people point to is that cities don’t know how to run these networks and that they’ll get into financial trouble and eventually that the taxpayers will have to bail out the losses. When we talked to Marilyn Avila about this she pointed to a very large thick binder basically showing that there isn’t any municipalities that are making money in the U.S. and many have failed. She mentioned for example Provo, Utah’s, Utopia which went bankrupt, true, but the interesting thing is that this study was put together by a law firm in North Carolina that is a lobbyist for the telecom communication.

But not everybody believes that. When we talked to Jim Baller, he’s the lawyer that is representing Chattanooga and Wilson, North Carolina, and the FCC for their petitions to preempt the state laws there, toallow them to expand their broadband. He had this to say about municipalities not making money:

"The large majority are doing just fine. They are recovering their costs, they are benefiting the community. The handful of projects that have struggled we hear about them over and over and over again as if repeating the same name 20 times means there are 20 failures."

JB: The worry that politicians have, it's pretty understandable, that failures will be passed on to the taxpayers and that they’ll have to foot the bill, is that right?

AH: Well, it's how these laws are put together and the provisions that are in them. What's interesting is that some of these laws, especially like North Carolina's, they only give cities one option to fund the building of the networks and that’s called general obligation bonds. That puts taxpayers at risk, they’re on the hook if something goes wrong. But there's other ways to finance these networks, and one is called revenue bonds where investors are paid based on the amount of revenue that’s being generated off the networks from being sold to businesses and to residents and the only people who are at risk to that are the people who chose to buy the bonds, it's not the taxpayers.

JB: Did you run into anything about how telecommunications regulations work that would surprise the average customer?

AH: While people aren’t really happy with their service, the telecommunication companies, the Internet service providers, rank almost dead last in customer service in most surveys. But they don’t know why, and when you tell them the amount of money that’s involved in the state legislatures that are funding these bills, that are influencing or at least part of the whole play of lawmaking there, they are surprised. And this isn’t just relegated to the average person on the street, the state lawmakers aren’t aware of the amount of money that’s going to their colleuges and what might be motivating them, they’re surprised.

JB: Why should I care about municipal broadband laws in other states if I live in an area where my Internet runs smoothly and it's running as it should?

AH: Well first of all I don’t know if it's running smoothly and as it should, I think there are still some problems in the other 30 states that don’t have these type of laws. That said, they should be very interested in this because if municipalities are allowed in these states to create broadband networks or expand them, it's going to create more competition, which leads to more innovation which will then spill over into their states.

A heavy smoker for much of his life, former Sen. Wendell Ford, D-Ky., died last month at age 90 after a lengthy battle with lung cancer.

Among Ford’s many distinctions: He was the longest serving Democratic Senatorial Campaign Committee chairman in the organization’s history.

So it’s with some curiosity that on Jan. 29, two days after Ford’s funeral, tobacco giant Altria’s political action committee donated $15,000 to his beloved but beleaguered DSCC.

Nothing suggests the timing of Altria’s contribution to the DSCC is anything but coincidental.

Altria Group Inc. spokesman David Sutton, who declined to comment on this specific donation, accurately noted that the company’s PAC has previously contributed to the DSCC — and a host of other political committees run by Democrats and Republicans alike.

The largest seller of tobacco in the United States, Altria’s policy is to support politicians who understand “the “legislative and regulatory issues related to Altria’s businesses,” according to its website. Its products include such brands as Marlboro, Parliament and Black & Mild.

Altria’s transaction nevertheless stands as an example of how political committees’ hunts for financial fuel — and special interests’ willingness to provide it — is all but unyielding, even during times when such activity would have not long ago seemed ill-timed, even uncouth.

Today political campaigns no longer wax, then wane: They are effectively permanent and ever-present.

Just ask Rep. Ted Deutch, D-Fla.

An outspoken campaign finance reform advocate, Deutch last month challenged his congressional colleagues to join him in political fundraising abstinence during February.

He reasoned that February is the year’s shortest month, the next general election is 21 months away and legislators have better things to do these days than beg for campaign cash — like legislate.

Deutch had no takers.

“It shows how deeply ingrained the race for money is in Congress and that there’s an ever-increasing focus on money,” Deutch told the Center for Public Integrity. “The fundraising is dominating the process.”

These days, if political machines don’t begin spooling up for the next election immediately after one ends, “they get in real trouble,” said Lindsay Mark Lewis, who served as the Democratic National Committee’s finance director from 2005 to 2006.

“They’re under intense pressure to show in the first few months, ahead of that first [campaign finance] filing of the year, that they’re financially viable,” continued Lewis, now executive director for the Progressive Policy Institute, a liberal think tank in Washington, D.C. “That just didn’t happen 20 years ago.”

Since 2015 began, the DSCC, which exists to elect Democrats to the U.S. Senate, has indeed been on a fundraising tear, gobbling up dollars from whomever they can in a bid to compete with their Republican counterpart, the National Republican Senatorial Committee.

It’s very relevancy is at stake: The DSCC ended 2014 having lost a Senate majority and awash in red ink, reporting nearly $21.4 million in debt versus less than $1 million cash on hand, federal records show.

The NRSC also ended last year with a deficit, albeit a significantly smaller one, reporting $10 million in debt against $2.7 million cash on hand.

As part of its strategy for generating income ahead of 2016 elections, the DSCC has conducted a series of in-person fundraisers early this year.

It includes one co-hosted this month by lobbyist Jake Perry, a former aide to Senate Minority Leader Harry Reid, D-Nev. Atop his laundry list of lobbying clients is Altria.

Lobbyist Heather Podesta also this month co-hosted a big-dollar affair for the DSCC at her Washington, D.C., office, according to an invitation obtained by the Sunlight Foundation.

Podesta’s firm represents more than three-dozen clients, according to the Center for Responsive Politics.

They range from upstarts Snapchat and Fitbit to old-line energy companies Marathon Oil and Oxbow Carbon — the latter oil firm being led by William Koch, the lesser-known brother of Charles and David Koch, two of the Republican party’s wealthiest backers.

William Koch, both personally and through his companies, primarily contributes to conservative political interests, but has also supported some liberal ones.

The DSCC has also blasted supporters with incessant fundraising emails, as has become the norm for most political committees.

Vice President Joe Biden attempted to gin up dollars by lamenting how the “GOP has already gone after Social Security, a woman’s right to choose and President Obama’s immigration plan.”

Sen. Jon Tester, D-Mont., the DSCC’s current chairman, sent a sobering appeal evoking the Koch brothers and touting a “ground-up Democratic electoral movement.”

Even Jon Stewart unwittingly factored into a DSCC solicitation after he announced he’d be quitting Comedy Central’s “The Daily Show.”

“Are you a huge Jon Stewart fan?” a message from the DSCC read. “Then sign our card and thank him for 16 incredible years. Let’s get 100,000 fans in the next 24 hours!”

When one “signs” the card — an email address and ZIP code is all that’s required — a DSCC donation page immediately appears.

While the DSCC may crave your money, it isn't much interested in talking about it: Officials did not respond to numerous inquiries requesting comment.

When members of Congress caved to demands from the insurance industry and ditched their plan to establish a “public option” health plan, the lawmakers  also ditched one of their favorite talking points, that a government-run plan was necessary to “keep insurers honest.”

Getting rid of a government-run insurance option was the industry’s top objective during the health care reform debate. Private insurers set out to persuade President Obama and Congressional leaders that they were trustworthy. Lawmakers were led to believe, for one thing, that insurers could be trusted to offer policies that would continue to give Americans’ access to the doctors they had developed relationships with and wanted to keep.  And they were persuaded that insurers wouldn’t think of engaging in bait-and-switch tactics that would leave folks with less coverage than they thought they were buying.

When he was running for president, Obama regularly talked about the need for a public option. That was one reason why many health care reform advocates supported him instead of Hillary Clinton.

He kept insisting on a public option for months after he was elected. He said on July 18, 2009, “Any plan I sign must include an insurance exchange—a one-stop-shopping marketplace where you can compare the benefits, costs and track records of a variety of plans, including a public option to increase competition and keep insurance companies honest...”

Soon after that, though, he began to waffle. It became clear to me as well as public option supporters in Congress that industry lobbyists had gotten to him. In an effort to keep the public option idea alive, House Speaker Nancy Pelosi invited me to testify during a Sept. 16, 2009, meeting of the Democratic Steering and Policy Committee Forum on Health Insurance Reform.

Knowing the industry as I did, I told the committee that if Congress failed to create a public option to compete with private insurers, “the bill it sends to the President might as well be called “The Insurance Industry Profit Protection and Enhancement Act.” Pelosi insisted that Congress had no intention of doing that.

While Pelosi was able to get a bill through the House with a public option provision, she couldn’t control what was happening in the Senate. Although a majority of Senate Democrats supported the public option, the industry knew it only needed one senator who caucused with the Dems to change his mind and kill it.

A senator from Connecticut, the insurance capital of the world, became the industry’s go-to guy. Insurers had spent years investing in Sen. Joe Lieberman, a former Democrat-turned-Independent. During the reform debate, the watchdog group Public Campaign Action Fund, (now called EveryVoice), called Lieberman an “insurance puppet,” noting that insurers had contributed nearly half a million dollars to his campaigns over the years.

The Democrats needed Lieberman’s vote to get reform passed, and insurers knew it. Shortly before the Senate was set to vote on the bill, Lieberman said he would vote for the bill only if the public option was stripped out.

Lieberman accused public option supporters of having an ulterior motive.

 “A public option plan is unnecessary,” he told Fox News. “It has been put forward, I’m convinced, by people who really want the government to take over all of health insurance.”

In retrospect, the half a million dollars in campaign contributions might have been the best money the industry ever spent. That’s because the Affordable Care Act, for all the good it has done to expand access to health care, has, as I predicted, protected and enhanced the profits of health insurance companies.  As I pointed out last month, health insurers have seen their stock prices double, and in many cases triple, since Obama signed the ACA into law five years ago.

And how trustworthy have those companies been? Not very, in many cases.

Millions of Americans who have signed up for coverage on the Obamacare exchanges are finding out that they will not get any coverage if they continue going to the doctors they’ve been going to for years.

Nowhere is this more of a problem than in New York State.  A friend who recently lost both his job and employer-sponsored coverage told me earlier this month that not only were the physician networks of all the New York exchange plans skimpy, not a single exchange plan offered any coverage for out-of-network care. If he and his wife continued to go to their primary care doctors and specialists, and if they continued to take their kids to their pediatricians, they would have to pay for everything out of their own pockets.

On the other side of the country, California Insurance Commissioner Dave Jones last month issued an emergency regulation after getting a flood of calls from folks who said health insurers had duped them.

"Californians and California businesses deserve better than what they have gotten from most health insurers and HMOs,” Jones said at the time. “Health insurers' medical provider directories have been inaccurate, misleading consumers into signing up with a health insurer for access to a doctor, specialist, or hospital only to learn that these medical providers are not actually a part of the health insurer's network.”

The problems people are facing are not limited to New York and California, as Elizabeth Rosenthal reported last week in a New York Times article headlined, “Insured, but Not Covered.”

Would a public option have kept insurers more honest? Thanks to Big Money from Big Insurance—and Joe Lieberman—we’ll never know. 

Wendell Potter is the author of Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR is Killing Health Care and Deceiving Americans and Obamacare: What’s in It for Me? What Everyone Needs to Know About the Affordable Care Act.

The International Consortium of Investigative Journalists (ICIJ) has won a prestigious Polk Award for its multi-year reporting project “Offshore Leaks” examining tax havens and new ways that wealthy companies avoid taxes around the world. The project was comprised of 120 journalists from 58 countries and 42 news organizations. ICIJ was founded in 1997 by Charles Lewis as part of the Center for Public Integrity.

The award, announced Sunday evening, is the second for the International Consortium of Investigative Journalists. The Polk Awards, given by Long Island University, recognize journalism that “places a premium on investigative and enterprise work that is original, requires digging and resourcefulness, and brings results.” ICIJ’s citation is for business reporting.

“Offshore Leaks” was a three-year investigation focused on tax avoidance practices by companies in the United States, China and the European Union, including some of the most well-known brands like Pepsi, Disney and FedEx. It also revealed the inner workings of the tiny Grand Duchy of Luxembourg and its role in reducing tax bills, how China’s elite hid their own enormous fortunes offshore, and how New York real estate is “just another island haven” for funneling weath. The judges praised the work as it “documented tax dodges at the expense of national treasuries and average taxpayers.”

“The Consortium under the leadership of Gerard Ryle has developed powerful story-telling skills across a global network of committed members,” said Peter Bale, CEO of the Center for Public Integrity. “The Consortium has broken an unrivaled series of stories which go to the heart of the debate about inequality, from Offshore Leaks to the scoop on the epic scale of tax avoidance and wrongdoing known as Swiss Leaks. We are grateful that the Polk Award recognizes the importance of collaborative investigative reporting on this scale.”

The “Offshore Leaks” series includes:

• Exposing global companies’ secret tax deals in the tiny grand Duchy of Luxembourg
   

• New York Real Estate’s lax regulations and no-questions-asked approach make it easy to funnel wealth through high-end Manhattan apartments

• A look at nearly 22,000 tax haven clients from Hong Kong and Mainland China, including the country’s top leaders who have held secretive offshore companies in tax havens

The Polk Awards were established in 1949 by Long Island University (LIU) to commemorate George Polk, a CBS correspondent murdered in 1948 while covering the Greek civil war.

Awardees will be honored at a ceremony at The Roosevelt Hotel in Manhattan on April 10.

Among other winners of Polk awards are the New York Times, Washington Post, Politico Magazine, Chicago-Sun Times, Seattle Times, and Arizona Republic. For a full list, read the press release from Long Island University.

"The excellent work across a variety of media platforms reflected by 558 nominations from news organizations, individual journalists, and members of our advisory panel suggests that journalists are adapting well to a landscape no longer dominated exclusively by print," said John Darnton, curator of the awards.

"LIU is proud to honor excellence in investigative journalism that spans the globe with the George Polk Awards," said Dr. Kimberly R. Cline, president of LIU. "This year's winners are true heroes who risked their lives uncovering the truth behind some of 2014's most incredible stories, and we salute their courage and determination."