Articles on this Page
- 03/23/16--08:08: _Bio-threat protecti...
- 03/24/16--08:52: _Sanders, Clinton wa...
- 03/24/16--12:00: _Forty-two years lat...
- 03/24/16--13:48: _Report: Brussels su...
- 03/25/16--02:00: _E-cigarette laws wr...
- 03/25/16--11:22: _How Big Tobacco lob...
- 03/28/16--02:00: _Dying depositions
- 03/28/16--02:00: _Length of depositio...
- 03/28/16--15:48: _Nuclear Security: A...
- 03/31/16--12:53: _Senators seek bette...
- 04/01/16--08:22: _Defense contractor ...
- 04/01/16--10:29: _Virginia officials ...
- 04/02/16--14:52: _Obama's nuclear sec...
- 04/03/16--21:32: _Massive leak reveal...
- 04/03/16--11:27: _Offshore law firm r...
- 04/04/16--11:29: _Law firm’s files in...
- 04/04/16--12:27: _Center unit, the IC...
- 04/04/16--13:37: _BULLETIN - CPI's IC...
- 04/05/16--14:30: _White House and U.S...
- 04/05/16--14:59: _Bernie Sanders hope...
- 03/23/16--08:08: Bio-threat protections inadequate
- 03/24/16--12:00: Forty-two years later, OSHA OKs rule protecting workers from silica
- 03/24/16--13:48: Report: Brussels suicide bombers sought radioactive materials
- 03/25/16--02:00: E-cigarette laws written with the help of Reynolds American
- 03/25/16--11:22: How Big Tobacco lobbies to safeguard e-cigarettes
- 03/28/16--02:00: Dying depositions
- 03/28/16--02:00: Length of depositions not widely regulated
- 03/28/16--15:48: Nuclear Security: A vital goal but a distant prospect
- 03/31/16--12:53: Senators seek better conflict disclosures for scientific articles
- 04/01/16--08:22: Defense contractor employees give the most money to Hillary Clinton
- 04/01/16--10:29: Virginia officials keep title-loan records private
- 04/02/16--14:52: Obama's nuclear security summits end with unfinished work
- 04/03/16--21:32: Massive leak reveals offshore accounts of world leaders
- 04/03/16--11:27: Offshore law firm runs into trouble in Las Vegas
- 04/04/16--12:27: Center unit, the ICIJ, releases Panama Papers
- The documents feature world leaders who have embraced anti-corruption platforms. The files reveal offshore companies linked to the family of China’s top leader, Xi Jinping, who has vowed to fight “the armies of corruption,” as well as Ukrainian President Petro Poroshenko, who has positioned himself as a reformer in a country shaken by corruption scandals.
- In Iceland, the leaked files show how Prime Minister Sigmundur David Gunnlaugsson and his wife secretly owned an offshore firm that held millions of dollars in Icelandic bank bonds during that country’s financial crisis.
- The records also include 29 billionaires featured in Forbes Magazine’s list of the world’s 500 richest people, plus actor Jackie Chan and soccer star Lionel Messi.
- The leaked documents reveal that the law firm of a member of FIFA’s ethics committee, Juan Pedro Damiani, had business relationships with three men who have been indicted in the FIFA soccer scandal.
- The files also contain new details of offshore dealings by the late father of British Prime Minister David Cameron, a leader in the push for tax haven reform.
- 04/04/16--13:37: BULLETIN - CPI's ICIJ unit has huge impact with Panama Papers
- The video from the ICIJ and CPI teams and supported by the Pulitzer Center which explains why all this stuff matters, how offshore structures allow injustice and even war to be financed.
- This new piece on blacklisted firms and individuals given shelter by the offshore corporate structures.
- The colorful story of an oligarch’s divorce unveiled by the papers
- But really the whole lot of the ICIJ’s work on this is fantastic and it’s all here on a specially built site managed by the team.
- 04/05/16--14:30: White House and U.S. officials react cautiously to Panama Papers
- German Justice Minister Heiko Maas announced plans for a new national register that will put an end to anonymous ownership of companies in a bid to fight tax evasion and financial wrongdoing.
- In the United Kingdom, HM Revenue and Customs promised to act “swiftly and appropriately” to the allegations, and said it was seeking further data from media organizations.
- Dmitry Peskov, a spokesman for Russian President Vladimir Putin, dismissed the revelations as “Putinphobia” and accused the media of attempting to “destabilize” Russia ahead of elections. Peskov also denied revelations his wife held a secret offshore company.
- The Chinese government responded to the Panama Papers with a renewed censorship drive, and banned all media sites from mentioning the investigation in China.
- In France, the Finance Ministry announced an official investigation and President Francois Hollande said: “I can assure you that as information emerges, investigations will be carried out, cases will be opened and trials will be held.” France also put Panama back on their tax haven blacklist, according to Reuters.
- Panama will open an investigation into the law firm at the center of the Panama Papers, Mossack Fonseca. It will be the second time this year the law firm has faced an official probe. Panama President Juan Carlos Varela agreed to cooperate with investigations, and the nation’s attorney general said Panama would comply with requests for assistance from foreign countries launching their own investigations.
- Two Spanish authorities, the Attorney General’s office and the Finance Ministry, announced investigations, and contacted ICIJ and its media partners seeking access to the data.
- The Australian Tax Office confirmed it was targeting 800 high net wealth Australian clients of Mossack Fonseca.
- In Austria, regulators announced an investigation into whether two banks named in Panama Papers stories breached rules on money laundering.
- Belgium’s Finance Minister congratulated the journalists who worked on the Panama Papers, and said Belgium would open an investigation into its findings.
- Indian Prime Minister Narendra Modi asked for a special multi-agency task force to be established to probe the Panama Papers revelations for evidence of tax evasion or wrongdoing by Indian citizens.
- The Swedish Financial Supervisory Authority reached out to authorities in Luxembourg for information as it commenced an investigation into Nordic banking giant Nordea, after revelations the bank helped clients set up secret offshore accounts.
- Norway’s bank regulatory body, the Financial Supervisory Authority, also said it would seek an explanation from Norwegian banks named in the investigation.
- In Mexico, the tax authority said it would review the Panama Papers findings and open investigations against tax evaders. It said it would invoke exchange of information agreements with other countries as it sought more information.
- The head of advocacy group Transparency International’s branch in Chile resigned on Monday following revelations he held a number of offshore companies.
- The Costa Rican government used the Panama Papers revelations to call for law and policy reform to crack down on tax evasion and money laundering.
- Mossack Fonseca has denied wrongdoing, and published its full response to the revelations on its website. Founding partner Ramon Fonseca denounced the Panama Papers investigation as an attack on privacy.
ICIJ and its media partners will continue publishing more findings over the coming days and weeks.
Jared Bennett contributed to this report.
- 04/05/16--14:59: Bernie Sanders hopes ad blast will win Wisconsin
Despite the Obama administration’s repeated warnings about the menace of a widespread contagion within the United States, both lawmakers and independent experts are continuing to give low marks to government initiatives designed to detect, track, and protect against those threats.
In recent years, both the Ebola outbreak in West Africa and the spread of the Zika virus in Latin America have brought the nature of threat into sharp relief.
In the 2015 Worldwide Threat Assessment, Director of National Intelligence James Clapper admitted that the world’s response to Ebola was too slow.
“Gaps in disease surveillance and reporting, limited health care resources, and other factors contributed to the outpacing of the international community’s response in West Africa,” Clapper wrote.
In the most recent Worldwide Threat Assessment, released in February, Clapper issued an ominous warning in regard to the Zika virus, which he said “is projected to cause up to 4 million cases in 2016; it will probably spread to virtually every country in the hemisphere.”
Earlier this month, that assessment was amplified by researchers from the National Center for Atmospheric Research and the University Corporation for Atmospheric Research. In a study published in the Public Library of Science’s journal PLOS Currents: Outbreaks, they warned that at least 50 U.S. cities are at risk for a Zika Virus outbreak this summer.
As the effects of climate change spread worldwide, experts warn more that contagions are on their way. And yet, the two Department of Homeland Security (DHS) programs meant to protect Americans against these biological threats aren’t up to the task, according to the Government Accountability Office (GAO).
One of these programs, the National Biosurveillance Integration Center, or NBIC, was created in 2007 to be a hub of information and coordination for federal agencies tracking diseases and biological threats. But the mission is suffering, a September 2015 GAO report said, because many federal agencies, such as the Centers for Disease Control and Prevention (CDC), are not sharing information with NBIC. Among the reasons, CDC officials said: legal restrictions that compel them to redact data from reports, a labor-intensive process. The report said other federal agencies’ officials did not understand the purpose or value of giving resources to NBIC.
“[NBIC doesn’t] have the access to information and data, they don’t have the trust of partners,” said Chris Currie, director of the GAO’s Emergency Management and National Preparedness Team, in an interview. “What they do provide is good but it isn’t really that useful for the partners.”
DHS did not respond to a request for comment. But in its response to the GAO report, the agency noted that GAO had not surveyed state and local authorities. “DHS believes that NBIC’s products provide these stakeholders significant value,” the agency wrote, adding that NBIC is working on developing tools to facilitate better information gathering.
Nevertheless, Andrew C. Weber, former assistant defense secretary for nuclear, chemical and biological defense programs, is among those who find the status quo unacceptable.
“I think it’s outrageous that any agency wouldn’t feel obligated to share with other agencies just as a matter of course,” he said. “I’ve heard all of the excuses for not sharing and I think they don’t hold up in a world where early detection of biological events can save lives.”
Weber continued: “Data collection, data sharing, data management were a major impediment during the entire Ebola crisis.”
NBIC’s reports during the Ebola crisis did provide biosurveillance information, but those working in government during the crisis recall that it was just another resource, rather than a substantive information clearinghouse. Some experts don’t remember NBIC’s role during the crisis at all.
Recommendations in the aftermath of the crisis include former Ebola Czar Ronald Klain’s suggestion to create a Public Health Emergency Management Agency—a specialized group of people trained to deal with emerging disease outbreaks. His critics counter that another center is unnecessary; instead federal agencies need to work together.
NBIC isn’t the only DHS program facing criticism; officials are also skeptical of BioWatch, a system of about 600 air collectors in 30 cities nationwide that is meant to detect a mass biological event such as a terrorist attack.
The collectors resemble little ice boxes and are meant to “sniff” the air for an intruder such as Anthrax or smallpox. But the air samples are only retrieved once every 24 hours. A local public health official has to manually remove a filter from the ice box and take it to a lab to determine if it matches a known toxin. The entire process is estimated to take between 12 and 36 hours, which experts say is too slow.
Attempts to automate that process failed.
Between 2009 and 2014, DHS spent at least $61 million in an effort to create a more high-tech box that could both collect the sample and analyze it within 4 to 6 hours. That initiative, dubbed “Gen 3,” turned out to be science fiction. DHS cancelled the project in 2014 in the wake of a September 2012 GAO report that found it was billions of dollars over budget.
The GAO subsequently said in October2015 that it wasn’t clear the current BioWatch technology was working either, because DHS had never properly tested the existing air collectors.
“They didn’t really document all of the uncertainties with the system, which you kind of need to know,” Currie said.
DHS largely concurred with that GAO report, but took exception to GAO’s conclusion that DHS had not established proper performance requirements for the system during testing.
Despite the controversy over BioWatch’s effectiveness, the Obama administration is proposing to spend $81.9 million on the program in its fiscal year 2017 budget.
Other experts say the whole Biowatch concept is flawed. Dr. Laura Kahn at Princeton University’s Program on Science and Global Security, an expert on biodefense and pandemics, suggested that money would be better spent tracking animal life, arguing that animals can be monitored as natural biosensors. Other experts agree that collection methods need to evolve to include more animal specimens.
But former DOD official Weber believes that a variety of detection methods must be employed, and then coordinated across the government. At the moment, bio-surveillance programs are spread across numerous federal agencies.
“If there were to be a large aerosol release of say anthrax, the earliest detection would be environmental sensors,” he said. “That’s because animals wouldn’t get sick immediately.” Air sampling, Weber said, is vital to the strategy. “We can’t afford to lose a few days.”
“That’s why I really believe in integrated comprehensive surveillance that includes both environmental and clinical data,” Weber added. “It can’t be stove-piped; we can’t rely on just one aspect,” says Weber.
Congress has put forth a potential legislative fix. The CBRNE Defense Act of 2015 would create a new office within DHS, the Chemical, Biological, Radiological, Nuclear, and Explosives Office, which would place both NBIC and BioWatch under integrated new management.
President Obama’s 2017 budget accounts for this bureaucratic shift even though this legislation has not yet passed in the Senate: the House approved the idea on Dec. 10, 2015.
Members of Congress expressed frustration at the current state of affairs in a February 11 hearing of the House Homeland Security Committee’s subcommittee on Emergency Preparedness, Response & Communications.
“I've grown frustrated, like many, that we seem to be having the same hearings over and over again. At least once every Congress, we ask the department to come to the committee to respond to the latest criticisms of BioWatch and NBIC,” Congressman Bennie Thompson (D-Miss.) said in his opening statement.
And even coordinating NBIC and BioWatch within DHS may not be the answer. The GAO asserted in its testimony at the subcommittee hearing that the White House’s implementation plan and strategy for bio-surveillance falls short, because they do not establish where bio-surveillance fits into the larger biodefense strategy. A separate Blue Ribbon Study Panel concluded in 2015 that the government’s biodefenses needed to be better organized. The panel suggested that the effort be placed under the Office of the Vice President.
March 24, 2016: This story has been clarified.
Campaign finance reform has become a major issue in the presidential race — at least on the Democratic side — but even if Hillary Clinton or Bernie Sanders were able to win the White House, a wholesale overhaul of the current system would take a lot more than a president alone.
"Anyone promising that the world will be completely different immediately is blowing smoke to a certain extent," said Daniel Weiner, a senior counsel at the Brennan Center for Justice, which advocates for campaign finance reform. "Our campaign finance infrastructure and our overall electoral infrastructure turn like an aircraft carrier — slowly and cumbersomely."
Sanders, especially, has made his push to rebuild what he frequently describes as a “corrupt campaign finance system” the centerpiece of his campaign, and he frequently repudiates assistance from super PACs as a sign of his commitment to the issue.
His chances of winning the nomination have faded as Clinton has racked up a nearly insurmountable lead of delegates. Regardless, Sanders has pushed money in politics to the fore of the battle for the Democratic nomination, and will arrive at the convention in Philadelphia with enough delegates to wield some leverage.
He and Clinton have put forth substantially similar proposals on campaign finance, both of which draw from proposals by reform groups and on proposed legislation. But making those agendas a reality will depend heavily on the new president's ability to wrangle cooperation from Congress, other executive agencies and even state legislatures. Complicating matters further, reform advocates are divided about what must be done.
A few measures, such as an executive order requiring federal contractors to disclose all political spending, or appointing new commissioners to the Federal Election Commission who favor increased enforcement, are under the president’s control.
But most of the proposals in both candidates' policy agendas will be a stretch.
Lots of cooperation needed
Both candidates have proposed a public financing system that would amplify small contributions, something that Congress must approve. The impact of such a proposal would depend heavily on its details.
Both have promised to nominate Supreme Court justices who support overturning the Supreme Court’s 2010 decision in Citizens United v. FEC. In addition, they’ve committed to push for a constitutional amendment overturning it — something that would require approval from Congress and the states.
Both have said they would prod federal agencies such as the Securities and Exchange Commission— which are independent, and don’t have to listen — to create new rules requiring political spending disclosure.
"I feel compelled to point out the obvious," said Paul Ryan, deputy executive director of the Campaign Legal Center, a nonpartisan group specializing in campaign finance issues, somewhat dryly. "A president cannot pass a constitutional amendment. A president cannot pass a public financing statute through Congress. A president needs lots of cooperation."
The president would also have to be willing to expend enormous amounts of political capital on changing the campaign finance system.
The new president will have to mobilize a grassroots effort and take steps to highlight the issue immediately upon taking office, said John Bonifaz, the president of Free Speech for People, a Texas-based group that advocates for a constitutional amendment to overturn Citizens United, as well as other reforms.
"It needs to be put down as a marker for what's going to be major priorities of the administration in the first 100 days," he said, via methods such as major policy speeches around the country.
"On these kinds of reforms, it requires all of the American people stepping up" to keep the pressure on, he said.
The ‘intensity gap’
While Clinton and Sanders have substantially similar proposals to reform the system, the former secretary of state is seen by some as being less committed to a campaign finance overhaul. Sanders has fueled the distinction by pointing to her willingness to accept aid from outside groups that can raise and spend unlimited amounts of money.
“I don’t know that there’s a lot of daylight between them on what they propose, but there’s a huge intensity gap,” said Richard Hasen, a professor of law and political science at the University of California at Irvine and an expert on campaign finance.
Clinton has fought back against the suggestion that she isn't committed to changes.
“Hillary Clinton has made campaign finance reform a top priority since day one and regularly talks about it on the trail, in interviews and on the debate stage,” said Josh Schwerin, a spokesman for the Clinton campaign, in an email. “When she first announced her campaign, she framed her priorities as ‘four fights,’ and campaign finance reform was one of those fights.”
The Sanders campaign did not respond to requests for comment.
Some of Clinton and Sanders’ sharpest exchanges have been over matters of money in politics.
In a March debate, for example, Sanders again referred to the nation’s “corrupt campaign finance system,” adding, “instead of standing up to that finance system, Secretary Clinton has a super PAC, which is raising huge amounts … a lot of money from Wall Street and from the fossil fuel industry. I am doing it a different way.”
For her part, in a February speech conceding to Sanders in New Hampshire, Clinton made the case that her opposition to Citizens United— the 2010 U.S. Supreme Court decision that led to the creation of super PACs and "dark money" groups — was deep and personal.
“Now, Senator Sanders and I both want to get secret, unaccountable money out of politics, and let’s remember, let’s remember, Citizens United, one of the worst Supreme Court decisions in our country’s history, was actually a case about a right-wing attack on me and my campaign,” she said. “A right-wing organization took aim at me and ended up damaging our entire democracy. So, yes, you’re not going to find anybody more committed to aggressive campaign finance reform than me.”
The Citizens United ruling came about after Citizens United, the conservative nonprofit group for which the case was named, produced a 90-minute documentary about Clinton that was released during the 2008 primary season. The FEC characterized the documentary as an electioneering communication subject to regulation, and Citizens United sued, precipitating the eventual Supreme Court decision.
Not a bipartisan issue, yet
Both Democrats give campaign finance and their policy proposals prime placement on their campaign websites — a sharp contrast to the three remaining Republican candidates, none of whom highlight it online at all.
That brings up another hurdle.
"The ultimate solutions will be bipartisan and it will be supported by both parties because that's the only way campaign finance reforms ever happen," said Scott Swenson, a spokesman for advocacy group Common Cause.
Although Republican front-runner Donald Trump has criticized the influence of money in politics and other Republican candidates have slammed the currentsystem, none have published detailed reform agendas.
The Republican-controlled Congress has so far opposed measures to change campaign finance laws.
But John Pudner, a former Republican political consultant who now heads a nonprofit group focused on money's role in politics, Take Back Our Republic, said he's seen some encouraging comments from Republican candidates and lawmakers, and he thinks some are considering laying out a platform.
"Campaign finance and money in politics has become such a hot issue that everyone is realizing that if one side is talking about it and the other isn't, that's going to hurt the side that isn't," he said.
Pudner said he thinks there's room for compromise proposals. For instance, Republicans might oppose public financing but support a plan for tax credits, he said.
Still, a consensus proposal isn't imminent.
David Keating, president of the Center for Competitive Politics, a nonpartisan group that describes its mission as promoting First Amendment rights, said the proposals laid out by Clinton and Sanders "are all bad ideas."
Keating said having agencies like the Securities and Exchange Commission police political disclosure distracts from their core missions and forces them outside their expertise, leading to potential problems like the Internal Revenue Service scandal.
In that case, more than 100 groups seeking tax-exempt recognition that were deemed to be potentially political by the IRS waited more than a year for answers from the agency, according to a May 2013 report by the Treasury Inspector General for Tax Administration.
The inspector general’s report prompted multiple congressional investigations and the resignation or retirement of several IRS officials, including Lois Lerner, who led the IRS division responsible for overseeing tax-exempt organizations.
Keating also argues a public financing program that creates a match or incentive for small donations or campaign finance vouchers could be ripe for abuse.
"Anytime the government is handing out $6 for every $1, you're going to see scandals," he said. "It may even result in people having less trust in government than they do today."
Weiner and Ryan, who said they support public financing, said much of the effectiveness of such a proposal would depend on the details of how it is crafted.
Amendment ‘a dreadful idea’
Opposition to a constitutional amendment is even more widespread, with some saying it isn't practical. Others say it would lead to more problems than it solves.
Joel Gora, a Brooklyn Law School professor who, on behalf of the American Civil Liberties Union, worked on campaign finance cases including the landmark Buckley v. Valeo Supreme Court case, called a constitutional amendment to overturn Buckley and Citizens United "a dreadful idea."
Any such amendment, “basically would cut the heart out of the First Amendment," he said.
Other groups, such as the Campaign Legal Center and the Brennan Center, strongly support public financing programs but oppose or haven't taken a position on a constitutional amendment. They say their preferred route would be overturning Citizens United via a new ruling by the Supreme Court.
Several expressed concerns about modifying First Amendment rights and the difficult path an amendment would have to take. Hasen, for example, called it "a political nonstarter."
Ryan called a constitutional amendment "impractical."
Almost everyone who works on campaign finance is skeptical of campaign promises to make money in politics a priority. A common refrain: President Obama's failure to nominate new commissioners to the Federal Election Commission — five of the agency's six commissioners are still serving despite their terms having expired — and decision to not yet issue an executive order requiring government contractors to disclose political spending.
"That's the million-dollar question. Is his successor actually going to prioritize this issue, or is it going to be a replay of this administration, where his successor pays lip service and then ignores it?" asked the Brennan Center's Weiner.
Fred Wertheimer of Democracy 21, another reform group, agreed.
"We would like to see commitments that, if elected, they will take this issue to the country and promote it as a national priority," he said, through steps like including it in high-profile speeches such as the new president's inaugural address and the State of the Union.
Wertheimer, who has worked on campaign finance measures for decades, says he isn't deterred by the difficulty of the task.
"The thing about campaign finance reform is, it's impossible to do until you get it done," he said. "You can't do Logic 101 and come to the conclusion why members of Congress are going to enact a new system that may be not beneficial to them, but we have done it in the past. It's hard work and it takes time, and you have to make sure that when you get reform proposals enacted, they're going to work."
John Dunbar contributed to this story.
March 24, 2016: This story was updated to restore the word "carrier" to a quote from Daniel Weiner. It now says aircraft carrier, not just aircraft.
New workplace limits for a lung-damaging and ubiquitous substance called silica are about to take effect, decades after federal health experts warned that the nation’s existing rule was dangerously lax.
Silica, found in rock and sand, poses a hazard when pulverized to a fine dust and inhaled — a problem on construction sites, during hydraulic fracturing operations and at a variety of other workplaces. The substance can trigger silicosis, a lung-scarring condition that can kill by suffocation, as well as lung cancer and kidney disease.
The Occupational Safety and Health Administration’s new standard— announced today — replaces a rule set in 1971. It reduces the allowable exposure limit to 50 micrograms per cubic meter of air, five times less than the current limit for the construction and shipyard sectors and half the current level for other workplaces.
Industry groups that argued against the change call the rule a job-killer that will cost far more than OSHA anticipates. Worker-safety advocates, disputing that, say silica is a worker-killer and the standard is long overdue. OSHA estimates the rule will prevent about 640 deaths a year.
“The current OSHA standards are woefully out of date,” Peg Seminario, the AFL-CIO’s director of safety and health for the union federation, said by email. The 1971 rule was “based on science from the 1920's, long before many of the health effects of silica exposure — like lung cancer — were known.”
Workers exposure to silica is a prime example of the country’s broken system for protecting Americans on the job, the Center for Public Integrity found in a 2015 investigation. The National Institute for Occupational Safety and Health urged in 1974 — 42 years ago — that OSHA substantially tighten the silica limit. But OSHA, hemmed in by court rulings, corporate resistance and procedures and that have turned the process of setting a single standard into a years-long marathon, has updated few of its 470 exposure limits since adopting them shortly after the agency’s 1971 birth.
The agency itself has warned that many of its exposure limits don’t work as intended — they’re not low enough to protect worker health. Meanwhile, tens of thousands of chemicals made or used in the country have no exposure limits at all.
OSHA proposals often prompt passionate opposition from businesses, which fear the expense or difficulty of complying. A coalition of construction-sector groups said last year that the silica rule would cost their industry $5 billion a year, 10 times more than the agency’s estimate. OSHA says its cost estimates tend to be wrong the other direction – higher than what businesses ultimately pay. It estimates the new rule will cost an average of about $1,520 per affected workplace each year.
Brian Turmail, spokesman for the Associated General Contractors of America, said earlier this week that cost isn’t the only consideration. The group’s members have found that the technology to get silica levels down to the new standard does not exist, he said. A number of firms have trouble complying with the current rule, he said.
“We’ve been anxious to find a way to improve worker health and safety in a way we feel is attainable,” he said.
OSHA said it has offered construction firms a variety of ways to comply and suggested tools to get the job done. Seminario said there are “many proven control measures,” including vacuum systems on tools, enclosed cabs for equipment operations and water to suppress dust.
The proposal was controversial even before it was formally proposed. The White House’s Office of Management and Budget, which scrutinizes would-be rules for cost implications, sat on the silica standard for 2 ½ years — while meeting with opponents — before giving OSHA the go-ahead to officially propose it in 2013.
“Corporate lobbyists meeting with OMB officials consistently outnumbered the labor and public health advocates calling for higher standards,” consumer-rights advocacy group Public Citizen said in a statement this week.
But those delays, if among the more recent, were just the latest in a string of fits and starts. The silica update took so long that New York resident Chris Johnson, born weeks after the 1974 warning that the limit wasn’t protective, grew up, became a mason and nearly died of silicosis — well before OSHA finally proposed the new limit. Johnson was profiled in the Center’s investigation.
The rule will be published in the Federal Register Friday and will take effect 90 days later. Implementation will be staggered with most requirements kicking in within two years.
Celeste Monforton, a lecturer at George Washington University and a former U.S. Department of Labor analyst and adviser, is glad to see a new standard in place. But she worries about the state of the country’s worker-safety efforts.
“Our system for protecting workers is just so stagnant that new regulations to protect workers are such a rare occurrence,” she said. “And yet at the same time, we have new hazards that workers are exposed to, and many of these old ones for which there are no regulations.”
The two brothers who detonated suicide bombs at an airport and subway station in Brussels this week, killing at least 31 and injuring hundreds more, had spied on a senior Belgian nuclear official in the Islamic State’s quest to get radioactive materials for a dirty bomb, NBC News reported Thursday.
Last month, in a story pointing out the historic vulnerabilities of Belgium’s nuclear facilities, The Center for Public Integrity reported on two men caught on camera secretly recording the Belgian nuclear official.
NBC News reported that the two brothers who exploded the bombs — Khalid el-Bakraoui and Ibrahim el-Bakraoui — were the ones doing the taping. Their source was Claude Moniquet, a former intelligence official from France who was hired to investigate terrorist threats to nuclear targets in Europe.
The brothers saw the nuclear official as a way to gain the materials necessary to carry out an unprecedented act of terror.
Instead, they carried out a more conventional attack. Authorities have said Ibrahim el-Bakraoui, 29, detonated one of the two bombs that rocked the airport, and an hour later Khalid el-Bakraoui, 27, set off the lone bomb at a subway station.
The footage was discovered in a home rented by Mohamed Bakkali, who was arrested on suspicion of helping to plot the Nov. 13, 2015, terrorist siege on Paris that killed 130 people and wounded hundreds more. The hours of clandestine video footage focused on a Belgian nuclear official’s home in Flanders.
As the investigation progressed, surveillance cameras in the nuclear official’s neighborhood showed two shadowy figures in the night retrieving a video camera hidden in a bush near the nuclear official’s home before driving away in a car with its headlights off. Moniquet’s remarks suggest that the men shown fetching the camera were the el-Bakraoui brothers.
“The terrorist cell … naively believed they could use [the nuclear official] to penetrate a lab to obtain nuclear material to make a dirty bomb,” Moniquet, chief executive officer of the consulting firm European Strategic Intelligence and Security, told NBC News.
In an email to the Center for Public Integrity, Eric Van der Sijpt, a spokesman for the Belgian prosecutor’s office, wrote, “This information can not [sic] be confirmed.”
The official featured on the cell’s secret video works at the Belgian Nuclear Research Centre, known as SCK-CEN, in Mol, about an hour’s drive northeast of Brussels. He held clearance that gave him extensive access to nuclear materials and radioisotopes for medical and industrial purposes which readily lend themselves for use in a dirty bomb.
That raised concern among leaders of Belgium’s nuclear program that terrorists might have seen the official they targeted as possible leverage to obtain nuclear or radiological materials.
“We can imagine that the terrorists might want to kidnap someone or kidnap his family,” Nele Scheerlinck, a spokeswoman for Belgium’s nuclear regulatory body, told The Center for Public Integrity in February.
On April 4, the Belgian government for the first time deployed armed soldiers to guard nuclear reactors and power stations. The unarmed contract security force that historically had guarded the seven nuclear reactors and two power plants in Belgium had worried President George W. Bush’s administration in 2004, diplomatic cables released by Wikileaks showed.
The U.S. supplies Belgium with highly-enriched uranium, a vital element for nuclear weapons that Belgian plants use to make radioisotopes. Then-Secretary of State Colin Powell privately warned his Belgian counterpart in 2004 that U.S. leaders were uneasy about the weak security at Belgium’s nuclear sites.
Besides physical security, there has been cause for alarm about insider threats at Belgium’s nuclear sites. In 2014, an act of sabotage caused millions of dollars of damage to a nuclear reactor in Doel, 56 miles west of the research center in Mol. The saboteur has not been caught, and terrorism has neither been identified nor ruled out as the motive, according to Van der Sijpt.
That same year, Belgian intelligence officials learned that 26-year-old Moroccan Ilyass Boughalab was killed in Syria fighting for the Islamic State. From 2009 to 2012, he had worked as an inspector of welding at the Doel plant. Boughalab’s job gave him access to highly sensitive and vulnerable areas of the reactor.
Moniquet told NBC News the terrorists’ bid to access the materials necessary to create a dirty bomb failed. A bomb containing radiological materials, though far less deadly than a nuclear weapon, could trigger panic and cause billions of dollars in damage to a major city.
“We know that the threat of nuclear radiological terrorism is not a theoretical risk,” Miles Pomper, a senior fellow at the James Martin Center for Nonproliferation said Wednesday.
Pomper was part of an expert panel from the Fissile Materials Working Group, a consortium of 80 nongovernmental organizations working to secure nuclear materials globally, that held a briefing for reporters at the National Press Club ahead of next week’s Nuclear Security Summit in Washington, D.C.
More than 50 heads of state are expected to attend, but Russia will not be represented. It will be the fourth and presumably final meeting between world leaders with the express purpose of keeping nuclear and radiological materials safe from terrorists.
“The reality is, every country has an interest in making sure the countries that have these stocks protect them effectively, because the stuff could be lifted off from one place and used on the other side of the planet,” Matt Bunn, a professor at Harvard University who’s written more than 20 books and more than 100 articles on topics including nuclear security and terrorism. “Insecure nuclear material anywhere is a threat to everyone everywhere.”
The panelists were in consensus that the summits initiated by President Barack Obama have led to improved security of nuclear and radiological material around the world. But much work remains to be done, and they worry that with the end of the summits, international cooperation will lose momentum.
They also agreed that the possibility of terrorists using a dirty bomb is less a question of if, than of when.
“It is nothing short of a miracle that we haven’t yet seen a dirty bomb in a terrorist attack,” nuclear terrorism expert Andrew Bieniawski, vice president for material security and minimization at the Nuclear Threat Initiative, said. “And so what happened recently in Brussels is really a warning and a wakeup call.”
Tobacco companies have won legislative language in at least 19 states that protects e-cigarettes from tobacco control programs and cigarette taxes. At least 11 of those pull nearly verbatim from template language written by Reynolds American Inc., which sells the VUSE e-cigarette. Below is an excerpt from Reynolds' template, which was obtained by the Center for Public Integrity, together with matching excerpts from the state laws, all of which ban sales of e-cigarettes to minors. Click on the bill titles to see larger versions.
Drew Sikkink contributed to this story.
SACRAMENTO, Calif. — In the Golden State, home to healthy living, progressive politics and one of the lowest smoking rates in the nation, cigarettes can seem like a relic of the past, barred long ago from restaurants, bars and even some city parks.
And yet within the walls of California’s high-domed capitol, tobacco companies continue to wield surprising power. After a recent loss on a slate of tobacco control bills headed to the governor’s desk, they are gearing up for a bigger test looming at the ballot this fall. With money to spend, they have threatened to sabotage a planned ballot measure to raise the cigarette tax.
The battles aren’t just here. Despite the tobacco industry’s tarnished public image, it is operating a powerful and massive influence machine in statehouses from Salt Lake City to Topeka. With a playbook crafted nearly 20 years ago, the tobacco firms use direct lobbying, third-party allies and “grassroots” advocacy campaigns to spread model legislation and mobilize smokers against proposed regulations and tax hikes across the country. And they are taking up the mantle to defend a burgeoning electronic cigarette market as well.
Today, tobacco companies maintain some of the most extensive state lobbying networks in the country, totaling hundreds of lobbyists. Altria Group Inc. and Reynolds American Inc., which control the vast majority of the American tobacco market, are among just 21 entities that had registered lobbyists in every state at one point from 2010 through 2014, according to a Center for Public Integrity analysis of lobbyist registrations collected by the National Institute on Money in State Politics.
They’ve also given at least $63 million to state candidates, committees and ballot initiatives nationwide over the past five years.
Their chief opponents, the American Cancer Society and American Heart Association, also have similarly broad lobbying networks, but the health associations have given hardly any money to state politicians.
With such extensive reach, tobacco companies have continued to fight off the simplest means of cutting smoking rates: higher taxes. Out of 24 states to propose higher cigarette taxes last year just eight passed increases, according to a tobacco industry group. And only Nevada, with a $1-per-pack hike, raised them by more than 50 cents. Health groups say incremental tax hikes of less than $1 are much less effective at cutting smoking rates because tobacco companies can easily counteract them with rebates and discounts.
E-cigarettes are the newest front in this multi-faceted war. While the Food and Drug Administration has announced plans to regulate e-cigarettes, for now it remains up to states to impose any regulations or taxes on the emerging products. So far, e-cigarette taxes have passed in only four states, while proposals have been defeated in at least 21 others. The tobacco industry, which is increasing its share of the new market, has also won language in at least 19 states in recent years making it harder to regulate and tax e-cigarettes under existing anti-smoking laws.
David Sutton, a spokesman for Altria, the parent company of Philip Morris, said his firm is generally opposed to taxes on its products and becomes politically active where necessary. Reynolds declined to answer specific questions for this article, pointing instead to its website, which says the company engages in lobbying and makes lawful political contributions to protect the interests of its business.
“The tobacco companies never give up,” said Stanton Glantz, a professor at the University of California, San Francisco’s Center for Tobacco Control Research and Education. “They’re like the Borg,” the indomitable alien horde of “Star Trek” lore.
‘Where tobacco bills go to die’
Nowhere has the tobacco fight been bigger, or more expensive, than in California, which has attracted at least two-thirds of tobacco companies’ state-level political donations since 2011. Public health advocates here say tobacco companies have used a potent combination of campaign contributions and behind-the-scenes lobbying to win enough friends in key places.
The strategy is most apparent on the Assembly’s Governmental Organization Committee, which oversees an odd combination of issues, including public records, state holidays, gambling, alcohol and tobacco.
Its chairman, Assembly member Adam C. Gray, a Democrat from Merced who has served on the committee since 2013, has accepted $88,100 in political contributions from Altria and Reynolds since he began campaigning for office in 2011, far more than any other member of the Legislature.
The two companies have directed some $390,000 in total to members who sat on that Assembly committee, a quarter of the money they’ve given to all legislative candidates and their committees in California over that period.
The large amount of money given to its members has prompted some to call it the “Juice Committee.” Health advocates call it “the committee where tobacco bills go to die.”
The committee has watered down or killed nearly every major tobacco bill that’s come through it in recent years, anti-smoking advocates say, including a recent attempt in July to regulate e-cigarettes.
In an unusual move, an identical e-cigarette bill and five other tobacco measures were reintroduced in a special session the following month to allow the legislation to sidestep Gray’s committee. They passed the Legislature this month, the first significant tobacco control bills to pass since the 1990s, a marked blow to the usually successful tobacco industry.
“Money has no influence on what goes on with policy. It just doesn’t,” Gray said. “Raising money to get into elected office is a component of what we have to do… And frankly, I’m a pretty aggressive fundraiser.”
Lawmakers and other Sacramento insiders point out that the direct contributions, which are subject to strict limits, are minimal compared to the money spent by independent political groups, which can raise and spend unlimited sums to support or oppose candidates as long as they do not coordinate with the candidates. Tobacco companies have given some $4.8 million to such independent political committees and parties in California since 2011, nearly three times as much as they gave directly to candidates.
“We provide contributions to candidates and elected officials who, in their work legislatively are at work on issues that have an impact on our business,” said Sutton, the Altria spokesman.
Altria and Reynolds have also spent some $5.4 million on lobbying in California since 2011. By comparison, the health groups that supported stronger tobacco regulation have spent some $2.7 million over the same period, though they lobby on many other issues as well.
“There’s a reason people spend money on that,” said Gary Winuk, who served for six years as the state’s lobbying and campaign finance enforcement officer before leaving for private practice last year. Winuk began his career working for a lawmaker on the Governmental Organization Committee decades ago, and said it was the behind-the-scenes maneuvering and power plays he saw there that made him want to work for the state ethics agency.
Preserving tobacco’s role
In 1999, R.J. Reynolds, now a division of Reynolds American, produced a memo describing a strategy to “preserve the company’s role and participation in U.S. commerce.” The document, archived at the University of California, San Francisco, included the company’s state lobbying objectives, chief among which was a plan to hire lobbyists in “as many states as possible,” as the company’s first “line of defense.”
Next was a commitment to make “appropriate political contributions and support key trade groups and allies,” adding, “there is an old saying in politics. ‘Money talks and bullshit walks’… It is especially true when dealing with tobacco issues.”
The third component of the lobbying strategy was to “execute grassroots mobilization of trade groups, smokers and other allies.”
Nearly two decades later, the company is still using the same roadmap. And smoking continues to be the leading cause of preventable deaths, killing nearly half a million Americans every year, according to the Centers for Disease Control and Prevention.
Reynolds and Altria employed a team of more than 450 state lobbyists in 2014, together retaining representatives everywhere but Nevada, according to an analysis of state records and data collected by the National Institute on Money in State Politics. They’ve also continued to work through trade organizations and advocacy groups.
When Kansas Gov. Sam Brownback proposed an increase of $1.50 per pack for traditional cigarettes last year to help fill a budget gap, Reynolds hired David Kensinger, who had served as the Republican governor’s chief of staff until leaving to work as a lobbyist in 2012. Weeks earlier, Kensinger was among a select group of insiders who received advance copies of Brownback’s proposed budget, which included the tax hike, before lawmakers did, according to The Wichita Eagle. Both Kensinger and Reynolds declined to comment on what happened.
Reynolds reported buying more than 350 meals for public officials and giving e-cigarettes to four House members in Kansas last year, according to state lobbying records, while Altria spent $283,000 on advertising and other outreach.
Meanwhile, a group called Citizens for Tobacco Rights, an advocacy campaign run by Altria, blasted emails to its members, in one instance urging them to fight the tax by posting messages on the Facebook pages of their lawmakers. It’s a standard tactic of the group, which claimed to have generated more than 33,000 phone calls and 52,000 emails and letters to legislators in 2014.
Lawmakers eventually approved a tax increase of only 50 cents, a third of the original proposal. Kansas continues to struggle with a $46 million budget deficit this fiscal year.
Protecting a smokeless future
Reynolds, too, has its own “grassroots” advocacy campaign, called Transform Tobacco. And as the name suggests, a new product is increasingly drawing the company’s focus.
The e-cigarette was invented in 2003 in China and started appearing in this country not long after. It’s gained an enthusiastic community of users, and by 2013 some 20 million adult Americans reported trying e-cigarettes, which vaporize a liquid such as propylene glycol mixed with flavorings and usually nicotine, the key addictive chemical in cigarettes that is generally derived from tobacco.
E-cigarettes come in a huge range of varieties. One major brand charges about $10 for a disposable sleek black pen-like device that lasts about as long as two packs of cigarettes. But many “vapers” use so-called mods or tanks, bulkier refillable devices that can cost anywhere from $30 to well over $100. Users then buy separate vials of “e-juice,” with names like Cinnamon Crumble and Unicorn Milk, which typically sell for about $20 per 30-milliliter vial.
Sales of e-cigarettes reached $3.3 billion last year, according to Wells Fargo Securities, and may surpass those of traditional cigarettes within a decade. While tobacco companies still control less than half of this market, they’ve begun buying up or starting their own e-cigarette brands in recent years, rapidly increasing their share.
Reynolds, a leader in the e-cigarette market, has promoted model legislation that says explicitly that e-cigarettes are not tobacco products. The Center for Public Integrity obtained a template copy of the model language that was circulated at one of dozens of youth tobacco prevention “dialogues” that Reynolds has held around the country in recent years for local health officials and advocates. The company offered to pay as much as $1,000, plus lodging, to those who attended, according to invitations the Center obtained.
So far, such model language has passed in at least 19 states, written into laws banning sales to minors. At least 11 of those passed laws that pull nearly verbatim from the Reynolds template, while at least eight others have enacted similar language that health groups say was promoted by Lorillard Tobacco, which Reynolds bought last year.
Although Reynolds’ model language asserts that e-cigarettes are not tobacco products, the company’s own website describes its VUSE e-cigarette as exactly that.
The most immediate effect of the bills is to protect e-cigarettes from existing tobacco control programs and taxes. E-cigarette proponents say the alternate definitions are warranted because the products do not burn tobacco. But health groups warn that the definitions pushed by the industry will harm the public.
“You build this infrastructure for regulating e-cigarettes on a faulty promise that they’re somehow a healthy product,” said Timothy Gibbs, a lobbyist for the American Cancer Society Cancer Action Network in California and a chief shepherd of the tobacco control bills there. “While the scientific consensus is that they may be safer than traditional cigarettes, that doesn’t mean they’re safe.”
It seems likely that “vaping” is less harmful than smoking. The question is by how much. The Centers for Disease Control says e-cigarettes “generally emit lower levels of dangerous toxins” than cigarettes, but can also release carcinogenic compounds and heavy metals. The agency says that e-cigarettes could provide a public health benefit if they lead smokers to quit. But it suggests that isn’t happening — about three-quarters of e-cigarette users also smoke cigarettes — and the products may be harmful if they prolong smokers’ addiction.
State Sen. Mark Leno, a Democrat who sponsored the recently approved California bill that defines e-cigarettes as tobacco products, said their popularity among youth — some 2.4 million middle and high school students were using e-cigarettes nationally in 2014 — means the devices present a new health crisis. He likens today’s fight to what happened with smoking in the mid-20th century, when tobacco companies began a decades-long campaign to discredit the emerging science showing the lethal and addictive qualities of cigarettes.
“They knew 50 years ago what they were doing,” Leno said. “And they’re doing it again today.”
Reynolds declined to answer questions about the model legislation or the dialogues, pointing instead to a company webpage that explains its “transforming tobacco” initiative, which promotes youth prevention programs and argues that smoke-free products, including e-cigarettes, can reduce “the death and disease caused by cigarettes.” Health advocates say the company has insidiously used this campaign in its efforts to win legislation protecting e-cigarettes from harsher regulation.
Altria declined to answer whether it has lobbied in favor of the language.
Vapers fight back
In California, the full weight of state government has gotten behind a campaign to rein in e-cigarette use. Last year, the state public health department warned of the dangers of the product and recommended strict regulations, launching a website and ad campaign called Still Blowing Smoke. This month, with passage of Leno’s bill, the Legislature took a big step in that direction.
Yet the state has met formidable resistance not just from the tobacco industry but also from a fledgling industry of smaller e-cigarette manufacturers and retailers backed by a passionate movement of vapers. Mobilized around the country, these e-cig aficionados have protested in Salt Lake, circulated petitions in Washington state and flown to the nation’s capital to push their position with congressional leaders.
Within hours of the launch of the state’s Still Blowing Smoke campaign last March, for example, another website called NOT Blowing Smoke popped up, using a similar font and logo but blasting the department for peddling misinformation.
Stefan Didak, a 44-year-old software engineer and co-president of the Northern California chapter of the Smoke-Free Alternatives Trade Association, a vaping industry group, had learned that the health department was planning the campaign and spent 36 hours holed up in his home office, a dark room with an array of 12 monitors, 14 computers and a plastic rack holding dozens of e-cigarettes. In a savvy guerrilla tactic, he beat the department to registering social media accounts, so the Still Blowing Smoke Facebook page and Twitter handle lead to content by NOT Blowing Smoke.
“Yeah, that was fun,” Didak said from his split-level home in Oakley, a city on the eastern edge of the Bay Area. Didak, dressed all in black, wore a NOT Blowing Smoke T-shirt and held a black mod e-cigarette, the type preferred by hard-core vapers. The blinds were drawn and the air held the faint sweet odor emitted by his mod, which he sucked on periodically, blowing out thick clouds of “ripe strawberry shortcake” flavored vapor.
SFATA Executive Director Cynthia Cabrera says her group was not affiliated with the counter-campaign. The association hired lobbyists in Sacramento to oppose Leno's bill and has urged Gov. Jerry Brown, a Democrat, to issue a veto.
Didak said that bill would drive small vape shops and liquids manufacturers out of the state — or out of business — by applying the various licensure and regulatory requirements that apply to tobacco. As someone who quit cigarettes thanks to vaping, he said that restricting the industry would harm public health.
Didak and other vapers stress that they are not “big tobacco” and that SFATA does not receive money from tobacco companies. “We don’t regard them as part of us,” Didak said.
In coming months, however, they’ll be on the same side.
A bold threat
Whether Brown signs Leno’s e-cigarette bill, part of the package of six tobacco measures the Legislature passed this month, an expensive fight looms in California’s freewheeling ballot initiative process.
A coalition of health and labor groups, with support from liberal billionaire Tom Steyer, is currently gathering signatures for a ballot initiative that would hike the state’s cigarette tax by $2 and levy an equivalent tax on e-cigarettes. At 87 cents, California’s current tax is well below the national average.
Yet that effort may be in jeopardy.
This month, a lobbyist for Altria sent a bold threat in an email first published by The Sacramento Bee: the company plans to try to repeal some of the tobacco bills it had opposed by putting them before voters in a referendum on this fall’s ballot. In a calculating political move, it also threatened to corner the all-important ballot measure market of professional signature gatherers by paying top dollar. That could price out the health groups from their cigarette tax campaign and imperil all other measures trying to make the ballot, including an extension of a key tax increase known as Proposition 30.
“When we hit the street with referendum paying $10 per signature, Prop 30 is dead as well as $2 a pack tax,” warned Altria lobbyist George Miller IV, son of the former Democratic California congressman. “We will have every signature gatherer on an exclusive. Just letting you know so you can’t say you were not warned.”
The health groups say they could be forced to either up their own prices, which are now about $4 per signature, or rally volunteers instead.
“We’re appalled but not surprised,” said Gibbs, the Cancer Society lobbyist, adding that tobacco companies have a history of particularly ruthless tactics. “They seem to be throwing a fit.”
Miller did not respond to requests for comment. Sutton, Altria’s spokesman, called Miller’s message “simply a friendly heads-up email between long-time colleagues.”
No matter whether Altria follows through on its threat, the coming months are sure to see many millions of dollars spent on all sides. Health groups have already raised $4 million for their campaign. During two previous attempts to raise cigarette taxes at the ballot, in 2006 and 2012, Reynolds and Altria spent more than $113 million and defeated both measures.
Grainy video shot last August shows 75-year-old Nader Kordestani lying in a padded recliner at his home in Calabasas, California, near Los Angeles. Off camera, a defense lawyer asks him if it’s true his health is failing.
Dressed in a gray sweater and covered in a blanket, Kordestani replies in a stilted voice. “That’s correct. I am, believe me, I am dying. I’m not in good shape. I am not going to survive.”
For more than three hours, Kordestani responds to questions between labored breaths and a hacking cough, his eyes at times struggling to stay open. Lawyers argue as the Iranian immigrant is peppered with questions, many repetitive, about events that happened decades earlier.
It is not Kordestani’s first time being deposed while suffering from mesothelioma, a rare and aggressive cancer linked to asbestos. A roomful of lawyers questioned him for more than 17 hours over 18 days in 2013. That year, Kordestani had sued 50 corporations for allegedly exposing him to the fiber while he worked at an Iranian oil refinery, starting in the 1960s. The refinery was built, in part, by American companies, which is why he’s suing in the United States.
Depositions routinely last 20 or more hours in California asbestos cases, lawyers say, far outpacing federal limits and other states where the number of hours rarely exceeds single digits.
The arduous and antagonistic process puts a heavy strain on mesothelioma patients typically given months to live following diagnosis and simultaneously undergoing harsh therapies like radiation. Situations like Kordestani’s raise a thorny question: How much is too much?
Plaintiff’s lawyer Jeffrey Simon, who is licensed to practice in Texas, New York and California, said lengthy depositions have only been an issue in the Golden State. “I do not think that it is appropriate to depose a dying plaintiff for days on end,” Simon said. “That’s every day in California.”
In 2015, his firm handled three California cases in which plaintiffs respectively were deposed for 21 hours over six days; 36 hours over 10 days; and 48 hours over 21 days. Simon and other plaintiff’s lawyers call the drawn-out depositions a stalling technique meant to run out the clock or harass sick clients into dismissing claims. In California, clients must be alive during trial to claim damages for pain and suffering.
Defense lawyers counter that detailed depositions enable companies to adequately defend themselves when millions of dollars are at stake in plaintiff-friendly jurisdictions like California. Mesothelioma settlements, the lawyers say, can range from $1 million to $5 million, with the success of cases often centered on whether plaintiffs can positively identify exposures to specific asbestos-containing materials.
California’s rules on damages, coupled with high standards for case dismissal, gives plaintiffs a leg up, said Anosheh Hormozyari, whose law firm has offices in California, Maryland, and Texas, and whose clients include ExxonMobil and 3M. “They’re able to recoup a lot of money; it's a lot easier to get in California than in other states.”
Hormozyari said plaintiffs are inclined to sue financially-solvent companies–not the ones most likely to be responsible for their asbestos exposures. “You throw the pasta on the wall and see what sticks. That’s kind of how it seems.”
She denied that depositions are extended for any reason other than to gather pertinent facts. “I’ve never seen it purposely stall in the hope that something unfortunate happens to the plaintiff,” Hormozyari said, noting that she and plaintiff’s lawyers had recently agreed to a 26-hour deposition. “The majority of these sick plaintiffs will not make it to testify for trial. You have to find a way to lock [in] the testimony for trial.”
Like most states, New York doesn’t limit the length of depositions, relying on cooperation between opposing lawyers or court discretion to curb testimony. Among those with limits are Texas, which restricts depositions to six hours, and Arizona, which holds them to four.
Only a third of the states have formal limits, according to Stephen Nichols, a defense lawyer who co-authored a paper about asbestos depositions in 2015 called “The Discovery Deposition Conundrum.” Nichols urged shorter, more efficient depositions, advising lawyers against falling into “a ‘groundhog day’ mentality” with witness questioning.
Simon blames local courts in California for allowing defendants to drag out formulaic depositions far longer than what is considered ample time in other jurisdictions. “The cross examinations in California are lengthier, but not better,” he said.
California lawmakers emulated federal courts in 2013 by limiting most civil depositions to seven hours in 2013. An exception was made for complex cases, like asbestos claims, which were given a 14-hour cap.
But lawyers say jurisdictions see the limit as a suggestion, not a hard-and-fast rule. In 2014, the Superior Court in Los Angeles County defaulted to an older, 20-hour guideline after it was sued by a defendant who hadn’t had time to question a plaintiff in an asbestos case. The court also coordinates asbestos cases in San Diego and Orange counties, and has been known to grant additional time beyond 20 hours.
In October, California Superior Court Judge Emilie Elias declined a request to block Nader Kordestani from being deposed further in a case filed by another former worker at Iran’s Abadan refinery, Samad Sarooie. Abadan was among the world’s largest refineries during the late 1940s, producing nearly half a million barrels daily, according to court documents.
The Sarooie case is separate from Kordestani’s own 2013 lawsuit. Though the two men were acquaintances who played basketball occasionally, Kordestani testified that he knew Sarooie “not at all well” and was unable to provide any details on Sarooie’s work history.
“They just drill and drill, they ask the same question 20 times,” Kordestani’s daughter, Neda, said of the August 2015 deposition that was mandated by subpoena. “My dad doesn't even know enough about the facts they are looking for.”
The deposition transcript shows repetitive questions about Sarooie’s work history that Kordestani was unable to answer, as well as detailed questions like whether Kordestani could recall the sizes of crates and boxes he saw in the refinery. The deposition was cut short when Kordestani’s wife became concerned for her husband’s health; he had spent the night before at the hospital.
Neda Kordestani said her father’s health has only worsened since his 2013 mesothelioma diagnosis, with recent bouts of pneumonia and shingles. He has undergone more than two dozen rounds of radiation and chemotherapy and uses an oxygen machine to breathe.
Kordestani can be deposed again for the Sarooie case since his testimony is considered incomplete, but his lawyer and daughter said he has no intention of participating any further in a lawsuit in which he has no stake, regardless of any legal repercussions. “You have someone who is spending their entire existence trying to stay alive,” said the lawyer, Benno Ashrafi.
Erin Carpenter, who represents defendant Amec Foster Wheeler in the Sarooie case, did not respond to several requests for comment. Carpenter had previously deposed Kordestani at length about the Abadan refinery in the 2013 case. His firm subpoenaed Kordestani for the Sarooie case.
“Many of these cases have people who are dying. They have to be subjected through depositions and all of that. It’s a hard thing,” Judge Elias said in court in October. “I understand [Kordestani] is very ill, but if I take the position that very ill people don’t have to have their depositions finished, we will have no depositions taken.”
Elias played down the seriousness of a note from Kordestani’s oncologist that read “any further deposition of Mr. Kordestani will cause immense amount of physical harm to Mr. Kordestani and could shorten his life.”
Said the judge: “It’s not going to cause his death.”
A court spokesperson declined to comment on Elias’s behalf.
This story also appears in the April issue of the ABA Journal.
How long is too long when it comes to depositions? The answer depends on where the case is being heard and which side you’re on.
While federal courts limit depositions to seven hours, most states have no limits on the books. Only a few have enacted restrictions, ranging from three hours in Illinois to 20 in New Hampshire.
A 2015 paper authored by two defense lawyers, “The Discovery Deposition Conundrum,” breaks down which states have limits and which don’t. “At every plaintiff deposition,” it notes, “there is a natural tension created by the right of defendants to understand thoroughly the nature and factual support for the claims against them as well as facts that support their defenses and concern about the health of an ill and often elderly plaintiff.”
In asbestos cases, depositions take on added importance due to the often-frail health of plaintiffs suffering from diseases such as mesothelioma.
Even in states with limits, there’s variation in how the rules are enforced.
California generally follows the federal seven-hour limit except in cases considered “complex,” such as asbestos lawsuits. Some courts routinely allow depositions in these cases to exceed 20 hours.
Depositions in Illinois are formally capped at three hours, though informally questioning can go on longer if the plaintiff is healthy enough to answer, said Perry Browder, president of the Illinois Trial Lawyers Association.
Browder chalked up the uniquely “long and arduous” depositions seen in California to both legal practice and culture. In Illinois, Browder said, a lead defense lawyer typically deposes a plaintiff for about 2 ½ hours, after which other defense counsel are allotted 15 minutes apiece for questioning.
“People are efficient,” Browder said. “You get to the point.”
Most states without formal limits, like New York, have other mechanisms that can help rein in the discovery process, including the length of depositions.
Charles Ferguson, a plaintiff's lawyer in Manhattan, said a court-appointed special master who oversees asbestos discovery helps discovery go more smoothly. The master acts as a quasi-judicial mediator, giving lawyers an alternative outside of court for resolving discovery disputes.
The process isn’t perfect, Ferguson said, but there’s an expectation of cooperation between parties. “There’s an unwritten rule that this deposition is not going to take 20 days,” he said.
New York’s long history of asbestos litigation also has yielded case law outlining which work sites and products carried exposure risks.
“We know who all the potential defendants are and could be,” Ferguson said. “There’s been decades of discovery. There’s no mystery.”
President Obama set a high foreign policy bar five months after his election by describing nuclear terrorism as “the most immediate and extreme threat to global security,” and by promising to lead an international effort to lock down all vulnerable nuclear material worldwide within four years.
In so doing, he rhetorically placed the need to bottle up loose nuclear weapons or their sparkplugs — the fissile materials that make them go bang — even higher on the list of his priorities than slowing climate change, stopping an Iranian nuclear weapon, or brokering a historic Middle East peace deal.
As the Obama administration winds down and the final U.S.-led international summit on this topic nears, it’s a logical moment to consider whether the president kept this promise. And there’s now a broad consensus that, despite some progress, the sweeping ambition he articulated not only remains unfulfilled but out of reach for the foreseeable future.
Why did the effort fall short? Certainly the challenge of ensuring nuclear explosives are not misused has been with us for decades. But why has a goal that seems so ordinary, and so sensible, and so important, and so urgent, been so hard to realize?
Who’s responsible? And how can the world make more progress, faster, before a calamitous nuclear explosion occurs — potentially the first in a populated area in more than 60 years — and makes everyone wish they had taken the issue more seriously, and acted more vigorously, and with more haste?
These were some of the questions we posed when my colleagues and I at the Center for Public Integrity embarked in 2013 on an investigation into the nuclear security outliers — the recalcitrant states, the misguided efforts, and the wasted opportunities that have undermined the decades-long U.S.-led effort to put fissile material genies back into bottles.
The scope of the threat is daunting. The world’s military and civilian nuclear programs have produced some 500 metric tons of pure plutonium, an amount that could fuel tens of thousands of nuclear weapons yet fit into a backyard shed. Countries with nuclear programs continue to add roughly 2 tons to this inventory every year. And yet it doesn’t take much to unleash a catastrophe: A grapefruit-sized bit of plutonium is enough to build a nuclear bomb.
Highly enriched uranium — the other sparkplug of a nuclear blast besides plutonium — is actually the terrorists’ explosive of choice, because it’s a bit easier to handle and use, and there’s more of it around.
Roughly 1,390 metric tons of highly-enriched uranium are still located at hundreds of military and civilian sites in two dozen countries. More grim news: A bomb’s worth could fit in an empty 5-lb sack of flour and emit so little radiation it could be carried in a backpack with little hazard to the wearer. Physicists say a sizable nuclear blast could be readily achieved by slamming two shaped chunks of it together at high speed. The majority of this inventory is in the United States and Russia, but large stocks also exist in the United Kingdom, France, India, Pakistan, China and Japan.
Altogether, the stockpiles could be used in theory to construct 20,000 uranium bombs and nearly 80,000 plutonium weapons. These are not favorable odds for humanity, as Eric Schlosser has so eloquently written about other nuclear weapons-related dangers. They’re a disaster waiting to happen. And this is not my view, or a partisan view. It’s the view of those experts who have seriously studied this issue.
A tiny fraction of the overall defense budget
President Obama certainly hasn’t been a slacker. He’s spoken powerfully about the nuclear terrorism threat before international audiences. He’s organized three summits focused on these risks, each used by his appointees to try to persuade or bludgeon other nations into taking this issue as seriously as nuclear weapons experts do.
The summits have been useful stages for a dozen countries to announce that they’ve had their last nuclear bender. They’ve told the world that they either have sent or will soon send all their nuclear materials back to Russia or to the United States.
The Obama administration, moreover, has invested more than $5 billion in nuclear security programs, according to the Nuclear Threat Initiative, a Washington nonprofit group that advocates tighter control of nuclear explosive materials. That figure includes funds given to Russia and other countries to help secure their weapons, to convert research reactors so they burn fuel composed of materials that cannot be used in weapons, and to improve the physical security and accounting of nuclear explosive materials.
Five billion dollars over seven years is not chump change, but it’s less than one percent of the amount spent on national defense during every single one of the Obama years.
Over the course of his presidency, moreover, Obama has scaled back nuclear security goals and settled for what a senior White House official once described as “the incremental nature of success," rather than throwing his administration’s full weight behind the creation of new global security standards that independent experts say would have had a more lasting and significant impact.
In advance of the 2014 summit, the Department of Energy’s National Nuclear Security Administration, in a document labeled “Official Use Only,” said that while U.S. initiatives under Obama had made the world safer, there are still “serious threats that require urgent attention.” That May 2013 report, obtained by the Center for Public Integrity, said that terrorists were obviously still seeking nuclear weapons or the raw materials to build them.
It noted that hundreds of pounds of weapons-usable uranium are being stored at civilian sites, including in South Africa and Belarus, that experts have described as imperfectly-guarded. Scores of research reactors that use fuel composed of weapons-grade explosives are still operating, including more than 60 in Russia alone, and security precautions at these are lower than at military sites. Meanwhile, global plutonium stocks are rising, the report said, with more than 100 metric tons produced since 1998.
The internal Energy Department report called for removing or eliminating 1.1 metric tons of weapons-grade uranium and 400 kilograms — over 880 pounds — of plutonium from sites around the world. It urged the removal of all highly-enriched uranium — that is, uranium that could be fashioned into a bomb — in eight more foreign countries by 2016. It proposed that the administration undertake a better accounting of existing plutonium stocks, decide the best ways to dispose of it, and persuade other countries to balance production with consumption so that the net global stockpile will finally begin to shrink. It proposed substantially accelerating U.S. efforts to convert research reactors that use weapons-grade uranium to burn a form of uranium that cannot easily be used to fuel weapons — calling for 13 more such reactor conversions by the end of 2016.
None of these deadlines was adopted by the department, or the administration. Too difficult diplomatically, and too costly domestically, the Obama administration’s policymakers decided.
“There wasn’t much interest” in other countries, a former senior official deeply involved in the effort told us, and the political benefits for the administration turned out to be more limited than initially anticipated.
Nuclear weapons modernization gets a higher priority
Moreover, as the administration was debating how much to invest in nuclear security in 2014, “there were debates,” said Matthew Bunn, a nuclear weapons expert who formerly worked at the White House, in June of that year. “Should they provide more money for nonproliferation, or more money for weapons? It’s clear that weapons won that debate.” Proposed spending since then has well fallen short of earlier projections.
So where do we stand now?
Japan, India, Pakistan, the Netherlands, North Korea, and the United Kingdom are increasing their stocks of “weapons-usable” nuclear materials, a circumstance that only adds to the burdens of locking them safely away.
While four nuclear weapons states — France, the United Kingdom, the United States and Israel — signed a useful agreement at the 2014 U.S.-led summit entitled “Strengthening Nuclear Security Implementation,” three other key nations — Russia, China, and Pakistan — declined. (India declined then but more recently has indicated it may sign the agreement later this month.) The agreement asked for little more than a commitment to follow International Atomic Energy Agency nuclear security guidelines.
Along with India and Russia, Japan still plans to build a new energy system based on advanced plutonium-burning reactors. In Japan, the fuel would be supplied by a factory at Rokkasho that will be the world’s largest for making plutonium. It has a security system that U.S. experts consider too casual, making its imminent opening a sore point in that country’s nuclear-related discussions with Washington for at least the past decade.
South Korea has expressed a similar interest in plutonium production to supply reactor fuel, pointing explicitly to Japan as a precedent. Saudi Arabia, Egypt, Algeria, and Indonesia could also follow Japan’s example. Experts also worry about Turkey, Vietnam or Egypt.
Already, Japan has 9.3 metric tons of plutonium stored at Rokkasho and nine other sites in the island nation; about 35 tons of plutonium are stored in France and the United Kingdom. Once Rokkasho opens, the size of its stockpile could easily double in five and a half years, because by the government’s own forecast Japan is at least 20 years from completing the first of the commercial reactors designed to burn the plutonium that Rokkasho will produce.
Building such large factories for nuclear materials poses special risks. Experts say the International Atomic Energy Agency will likely be able to track 99 percent of the plutonium as it moves through the Rokkasho plant. While 99 percent might sound good, the plant’s annual output will be so high that a one-percent error rate means roughly eighty kilograms of plutonium a year could be untraceable — enough for 26 bombs. Critics worry as a result that the sizable uncertainties will open the door to diversion attempts by insiders.
India, meanwhile, completed in 2011 a reprocessing plant capable of extracting new plutonium from about 100 tons of spent fuel yearly at Tarapur, north of Mumbai. It joined three older plants that produced an estimated 3.8 to 4.6 metric tons of plutonium over the past 40 years. Another plutonium plant is under construction at Kalpakkam, south of Chennai on the Indian Ocean, which the Nuclear Threat Initiative said “will likely surpass” Tarapur “as India’s largest plutonium producer.”
India’s security precautions at such sites have generally been panned by U.S. officials, who privately rank them below those in Russia or Pakistan, and also say they see little evidence the country is doing enough to keep potential terrorists at bay. A paramilitary force responsible for guarding all of India’s nuclear sites is short-staffed, poorly trained, and ill-equipped, our reporting revealed. (Since our series appeared, a debate has ignited there over whether India should create a more specialized nuclear security force).
China, meanwhile, has criticized Japan’s plutonium plans but is considering building a new civilian plutonium plant about the size of Rokkasho at the site of two decommissioned military plutonium plants at the Jiuquan Complex in Gansu Province.
And the United States itself has not exactly set a shining example. A deal with Russia that called on each nation to get rid of 34 tons of plutonium extracted from retired weapons has foundered. Russia has proposed to feed the plutonium into reactors that can produce more of it; the United States has separately made a complete mess of its plan to burn up the plutonium in reactors, with a half-built specialized fuel factory likely to be mothballed in the wake of massive cost overruns and persistent mismanagement.
Washington still talks a good game. But in the course of our research, we discovered a simple but distressing fact: Many countries don’t take the threat of nuclear terrorism as seriously as the United States. Why? First, no government is good at dealing with low-probability, high consequence events, like a terrorist nuclear blast. It’s always easier to hope this is not a current-generation problem.
Second, other governments argue, the United States is a more likely target for resentful extremists than nations with smaller international footprints. Let Washington deal with it, they say.
Washington helped create the problem
Third, other countries also don’t bear as large a burden of history as Washington does. U.S. officials sowed the seeds of a potential terrorist-engineered disaster under a program that operated for decades with the avowed aim of helping smaller, non-nuclear weapons countries build research reactors and embrace a nuclear-powered future. Pursuing a policy that now evokes “what-were-they-possibly-thinking” wonder, the United States helped spread nuclear explosive materials around the globe.
Of the 35 countries that received an estimated 23 tons of highly-enriched uranium under this program — mostly France, Germany and Canada — only fifteen have returned all they received, with about 6.1 tons remaining at 40 locations in 20 countries, according to a May 2014 Nuclear Regulatory Commission Report.
Fourth, some nations also regard the prospect of militants building an improvised nuclear bomb as the stuff of science fiction movie; their officials simply don’t understand how easily such a weapon might be made, even by non-experts. They see themselves as unlikely targets and are reluctant to invest substantial sums to curb what they consider a distant threat. It’s not their problem, they say with considerable boldness.
Fifth, and in the most worrisome category, still others see nuclear explosive materials as a tool to heighten their international standing — a dark reputation-enhancer, if you will — or as a kind of insurance policy, something that could one day be converted into weaponry if international conditions warrant it.
Japan falls into this category, our reporting shows, as does South Africa, which has indignantly rebuffed U.S. suggestions that it give up a stockpile of nuclear explosives sufficient to fuel a half dozen bombs, now locked in a former silver vault at a nuclear research center near the South African capital.
“Inside Japan, and that is not only within the Democratic Party of Japan, there are entities who wish to be able to maintain the ability to produce Japan’s own plutonium,” Naoto Kan, the Japanese prime minister from 2010-2011, told us in an interview. “They do not say it in public, but they wish to have the capability to create nuclear weapons in case of a threat.”
Pretoria has little plausible use for its own bomb-grade (enriched) uranium besides chest-thumping, our investigation showed. It intends not only to keep it but insists on the right to make more. “Our international legally binding obligations… allow for the enrichment of uranium for peaceful purposes only, irrespective of the enrichment level,” South African president Jacob Zuma said at the 2012 nuclear security summit in Seoul.
This is the same demand made by Iran, and approved in last year’s deal with that country by the United States and five other world powers. And it’s hardly theirs alone. Although the Obama administration has tried to discourage uranium enrichment everywhere, leaders in Brazil, Argentina, Egypt, Saudi Arabia, Vietnam, Jordan, and South Korea say they see nuclear power, along with the ability to enrich uranium, as their right.
There’s no question that the Obama administration’s attention to this issue — and in particular its successful efforts to get a dozen countries to relinquish all their nuclear explosives — has helped diminish the threat that existed in 2009. But a hard obstacle remains: Other countries find it easy not to take Washington seriously, and to keep creating or holding onto nuclear explosives, while the United States insists on keeping thousands of nuclear weapons in its stocks that it depicts as a vital component of its national security.
As South Africa’s longtime nuclear ambassador and policymaker Abdul Minty memorably told us from his office in Geneva, “People who smoke can’t tell someone else not to smoke.”
Actually, they can. All the world's nations don't have equal standing, as we know. But Minty’s sentiment reflects the fact that many developing countries deeply resent being told to give up the same activities that major powers have long undertaken – even if doing the same thing winds up jeopardizing everyone. And after facing stout resistance in many foreign capitals, Washington’s eagerness to undertake diplomatic battles over nuclear security issues has now flagged.
The fourth U.S.-led nuclear security summit, scheduled for March 31 to April 1 in Washington, may bring some new, minor progress: Experts say a few more countries are likely to offer to give back their nuclear materials; new tasks will be given to the International Atomic Energy Agency; and new discussions will be held about the dangers posed by a diversion of nuclear materials into so-called “dirty bombs” that might spread radioactive contamination.
But there will be no shortage of urgent tasks for Obama’s successor, if he or she looks closely at the nuclear security danger and decides it warrants their attention.
Two circumstances could make a major difference, and speed up the world’s response. One is the detonation of a terrorist bomb with nuclear fuel or radiological materials in it; a classic low-probability, high-consequence event that everyone will say they didn’t see coming and they deeply regret allowing to happen. The other is probably concerted pressure from the United States, — more concerted and even more sustained pressure than the Obama administration provided.
Citing the Center for Public Integrity’s recent “Science for Sale” series, a group of U.S. senators has asked the National Institutes of Health to make it easier to tell who funds research published in scientific journals.
Sen. Richard Blumenthal, D-Connecticut, on Wednesday released a letter sent to NIH Director Francis Collins asking that the National Library of Medicine make changes to its public database of 25 million journal articles, called PubMed, to reveal conflicts of interest in research.
“With industry now employing more scientists than nonprofits, universities and the government combined, and industry funding the research of many independent researchers, there are growing concerns about objectivity in numerous scientific disciplines — including nutrition science and research on health risk from chemicals,” the letter said.
The letter also cited a New York Times story about Coca-Cola Co. quietly funding academic researchers who blamed lack of exercise, rather than soft drinks and fast food, for the epidemic of obesity and diabetics.
The Center’s series revealed how scientific consultants working for the chemical industry publish journal articles that almost always claim their clients’ products are safe. Examples included two consulting firms, Gradient Corp. and Exponent, which published articles to help clients win asbestos lawsuits.
The NIH maintains a public database of medical and life sciences articles in more than 5,600 peer-reviewed journals. While the database often includes an abstract detailing the purpose of a study and its findings, the search results don’t reveal who paid for the research.
The NIH requires researchers with government grants to disclose conflicts of interest in journal articles. Many journals have their own disclosure policies.
“While scientists regularly use PubMed to conduct and inform research, millions of nonscientists — consumers, journalists, policymakers and others — also make use of this public resource,” the senators’ letter said.
The Center analyzed the funding of 149 articles published by principal scientists at Gradient and found that 98 percent of the time the articles found that chemicals did not pose risks that would require stricter regulations. In order to obtain the funding information, a reporter had to go to National Library of Medicine in Bethesda, Maryland, to get the complete copy of each article.
Senators who signed the NIH letter Wednesday in addition to Blumenthal were Democrats Elizabeth Warren of Massachusetts, Edward Markey of Massachusetts, Brian Schatz of Hawaii and Richard Durbin of Illinois.
Democratic presidential front-runner Hillary Clinton has collected more than any other candidate in the 2016 race from employees tied to the 50 largest contractors with the U.S. Department of Defense — at least $454,994 in campaign funds over a 14-month period ending in February.
That amount was roughly a third higher than the sum collected by Clinton’s opponent for the Democratic nomination, Sen. Bernie Sanders of Vermont, who, unlike Clinton, has called for steep cuts in defense spending.
After Sanders — who got $310,055 from defense-related workers — the presidential race’s third-leading recipient of defense contractor employee contributions was Republican Sen. Ted Cruz of Texas. He received a total of at least $307,995 from the beginning of 2015 through February 2016, according to the Center for Public Integrity’s review of Federal Election Commission data. Cruz has called for large increases in defense spending.
But over this period, employees of the top 50 contractors contributed only about half as much to the Republican presidential candidates still in the race — Cruz, Donald Trump and Ohio Gov. John Kasich— as they did to Clinton and Sanders — a total of at least $357,775 versus at least $765,049 for the two Democrats combined.
The disparity may seem unusual, since Republicans often depict themselves as more supportive of defense spending than their opponents, and historically, more defense-related contributions have gone to Republicans. But Trump, the Republican front-runner, is largely self-funding his campaign, a factor that probably influenced this outcome.
It’s also possible that donors at defense-related companies are betting that a Democrat — either Clinton or Sanders — is more likely to win the White House in the fall than any of the Republicans, which makes them a more useful investment target. The Democrat-targeted donations may also reflect the fact that the party’s highest elected official, President Barack Obama, has called for a $2.4 billion increase in defense spending for fiscal year 2017, and many Democratic lawmakers have said they support that request — even though polls show the public does not agree.
G.E. loves Clinton
In total, the Center for Public Integrity examined contribution data filed with the FEC for 22 current and former candidates for president, and compiled a list of the top 50 defense contractors using data released by the General Services Administration for fiscal year 2013.
The data showed that Clinton’s largest batch of defense-related contributors, from the beginning of 2015 through February 2016, were associated with General Electric, which received contracts from the Defense Department totaling $2.2 billion in fiscal 2014 and $2.3 billion in fiscal 2013. G.E., based in Fairfield, Connecticut, manufactures engines for many of the military's fighter aircraft. Clinton got at least $56,478 from G.E. employees.
Another large group of Clinton contributors was associated with Chicago-based aerospace giant Boeing, whose employees collectively gave Clinton’s campaign at least $34,545; Boeing builds fighter jets, helicopters, radar systems and works on the military's nuclear missiles.
Contributors who work for Bethesda, Maryland-based Lockheed Martin, the Pentagon's largest contractor, gave her at least $28,623. Lockheed Martin is a contractor for numerous defense programs, including the troubled F-35 fighter jet, the most expensive weapons system ever built.
Clinton served on the Senate Armed Services Committee during her final six years in the Senate where she also received defense-industry contributions. Adjusted for inflation, she collected $258,024 from the top contractors for her Senate campaign and leadership political action committee (PAC) during that period — 2003 through 2008 — including $125,351 from contractor PACs. G.E. was also her top contributor among the contractors during that period, giving her $29,235 in adjusted dollars, according to the Center for Public Integrity’s analysis of data from the Center for Responsive Politics.
Corporations, including defense contractors, are banned from giving money directly to candidates. But they can direct spending towards particular candidates by company-run political action committees that receive donations from their employees, and they are also free to donate funds to so-called super PACs, outside spending groups made possible by a 2010 U.S. Supreme Court decision.
Although defense contractors rarely give money to super PACs, $2,100 was given to two pro-Cruz super PACs. Also, a super PAC that supported Sen. Lindsey Graham of South Carolina — who has withdrawn from the presidential race — got $75,000 from Boeing's PAC and from a GE manager.
Several of the current and former presidential candidates were also supported by organizations that have filed registrations with the Internal Revenue Service as nonprofits, but those groups aren't required to disclose their funders, so there is no way to know if they received defense-related contributions.
Clinton hasn't laid out a clear position on defense spending, and her campaign did not respond to several requests for comment. On her campaign website she has argued for "permanently ending the damaging sequester" — meaning she supports rolling back budget caps that tried to curtail the federal deficit by limiting how much government agencies, including the Department of Defense, can spend.
Clinton, during a speech on the Iran nuclear agreement at the Brookings Institution, said she supports selling Israel the trillion-dollar F-35 aircraft. She has said little about nuclear modernization plans, though she said the possible $1 trillion price tag "doesn't make sense" during an Iowa campaign event last January. Asked, after the event, if she would oppose spending that amount on new nuclear weapons, she said she was "going to look into that."
Sanders has taken a different approach. While he has supported the F-35 program, which is slated to station some planes in his home state, he is a co-sponsor of the Smarter Approach to Nuclear Expenditures Act, which calls for cutting $100 billion from planned U.S. spending on nuclear weapons.
"We need a strong military, it is a dangerous world. But I think we can make judicious cuts," Sanders told a U.S. Student Association town meeting at the University of Iowa in February 2015. He added: "There is massive fraud going on in the defense industry. Virtually every major defense contractor has either been convicted of fraud or reached a settlement with the government." He also told the fourth Democratic debate, on Jan. 17, that the Defense Department’s priorities need “fundamental change.”
Nevertheless, Sanders collected at least $310,055 from defense contractor employees, including at least $45,652 from employees of Boeing and at least $36,624 from employees of Lockheed Martin — more than Clinton received from either group. Two-thirds of Sanders’ total and 95 percent of his individual contributions from employees of defense contractors came in amounts of $250 or less, while Clinton was more reliant on contributions of at least $1,000, including many from company managers. Neither Sanders’ campaign nor Boeing responded to requests for comment.
Cruz stands out among Republicans
During the CNN Republican Presidential Town Hall in Greenville, South Carolina, on Feb. 18, Cruz said that Obama has "weakened and degraded the military," and that he wants to raise defense spending to 4 percent of the country's gross domestic product — which would amount to a roughly $135 billion increase beyond what Obama has proposed. Cruz's plan calls for increasing the number of active-duty troops, adding more fighter aircraft and building more ships for the Navy.
Cruz’s top defense-related donor was Lockheed Martin, whose employees gave him at least $44,958, more than they've given to any other presidential candidate. Lockheed Martin is a contractor for the Aegis Combat System, which is equipped with ballistic missile defense capabilities, and it was the Missile Defense Agency's top contractor in fiscal 2014, receiving about $1.8 billion, almost a third of the agency's awarded spending that year, according to the most recent information available from the federal General Services Administration.
The Cruz campaign did not respond to a request for comment.
Coming in second among the remaining Republicans was Kasich, the Ohio governor, who has received at least $39,194 from donors associated with the top contractors. At the outset of his campaign, he highlighted his efforts as a congressman 20 years earlier to cut Pentagon spending, saying "we made things right. We saved money. We improved the system."
In October, as part of his "Action Plan" for balancing the federal budget, he called for freezing funds that can be spent for non-defense programs, while adding $102 billion to the Pentagon's spending.
Of the remaining Republican candidates, Trump has received the least in identified contributions from contractor employees: just $10,586. His position on defense spending isn’t clear, and he hasn’t given clear answers when asked about specific weapons issues. But he has called for countries where U.S. troops are deployed, such as South Korea and Japan, to pay more of the costs. "When you look at the kind of money that our country is losing, we can’t afford to do this," Trump said in an interview with the Washington Post on March 21, referring to the cost of protecting Saudi Arabia in particular.
The amounts given by G.E., Lockheed and Boeing employees to presidential candidates between early 2015 and February 2016 are smaller than what they gave over a comparable period before the 2008 presidential election, the previous one without an incumbent, perhaps because the outcome of the primaries has been too hard to predict.
"It's so confusing this year, they [the contractors] don't know who to give to, especially on the Republican side," said Barry Blechman, a fellow at the nonpartisan Stimson Center. This leaves open the possibility that defense-related campaign giving could ramp up quickly once the party’s choices become clearer.
"G.E. is not backing a presidential candidate. Our employees make their campaign donation decisions individually," said a G.E. spokesperson in an email. A spokesperson from Lockheed Martin declined to comment and Boeing did not respond to requests for comment.
For now, however, the defense contractors are spending more of their employees’ campaign donations on candidates for Congress who sit on key defense-related committees, who arguably have a larger impact on the fate of specific weapons programs through spending and authorizing bills.
From the beginning of 2015 through February 2016, political action committees overseen by the top 50 defense contractors have donated about $7.5 million to the campaigns and leadership PACs of lawmakers who have served on the Armed Services committees and the Appropriations subcommittees for Defense and for Energy and Water in the current Congress, the Center for Public Integrity calculated, using data downloaded from the FEC on March 28.
Reporter Michael Beckel and news developer Chris Zubak-Skees contributed to this story.
A ruling issued Thursday by the Virginia State Corporation Commission will allow Virginia officials to keep annual business reports filed by auto-title loan companies under wraps, marking a major victory for the oft-criticized lenders.
The commission, which oversees financial institutions in the commonwealth, said it’s not clear under state law if corporations enjoy the same rights as people when it comes to the protection of financial information.
Three giant title lenders — TitleMax of Virginia Inc.; Anderson Financial Services LLC, doing business as Loan Max; and Fast Auto Loans Inc. — had asked Virginia officials to prevent the annual reports from being disclosed to the Center for Public Integrity.
The reports include detailed sales figures, volume of loans, interest rates, the number of cars repossessed when borrowers default, and how often the lenders get into trouble with state and federal regulators.
TitleMax, Loan Max and Fast Auto Loans submitted heavily redacted versions of reports earlier this year at the request of the commission. In its brief at the time, TitleMax argued the reports contain “trade secrets,” whose release could cause it “irreparable damage.”
The case turned on whether state laws protecting the privacy of “personal financial information” should apply to national corporations, just as they would for any person. The commission’s staff recommended that the records be released last year. But the three-member commission ruled on Thursday that that state law is not clear on the question.
“After full consideration of the arguments on this matter, the Commission concludes that the term ‘personal financial information’ is ambiguous since it can be understood in more than one way for the purpose of this statute,” according to the ruling.
The commission order directs its staff to seek “clarification” of the law from the General Assembly next year. In the meantime, the staff will release aggregate summaries of the annual reports as it has done in the past. Doing that “strikes a fair balance,” the commission order said.
In Missouri, where all three of the Virginia title lenders also operate, financial reports are public records and anyone can request copies.
The Center for Public Integrity requested the annual reports from Virginia officials in November as part of an investigation into the costs of title loans nationwide. In Virginia, where nearly 500 title loan shops are operating, average interest rates were 222 percent in 2014, according to aggregate figures that Virginia releases.
The Islamic State’s brazen terrorist attacks in Paris last November and its follow-up attacks in Brussels last month cast a shadow over a summit of world leaders in Washington, D.C., about tightening global controls on nuclear materials usable in a terrorist bomb.
President Obama, speaking on April 1 at the capital’s convention center to 37 heads of state or prime ministers and delegations from 52 countries, said significant progress has been made over the past eight years, during which he led four summits on the subject.
Agreements were reached at the meeting to keep the discussion alive within the United Nations, the International Atomic Energy Agency, and INTERPOL, the international crime-fighting agency. But Obama also warned – as he has at previous summits -- that “there’s still a great deal of nuclear and radioactive material around the world that needs to be secured.”
U.S. officials said the task was made more urgent by the discovery last year that Islamic State sympathizers in Belgium were monitoring the movements of a nuclear official there, as part of an apparent plot to steal radioactive materials that could be attached to a so-called “dirty bomb” that would sow wide contamination. Obama screened a video for the leaders depicting the chaotic consequences of such a blast in an urban center.
“The Belgium example, I think it reinforces what we’ve seen for many years, which is that we have seen indications both through their public statements and through their actions that terrorist organizations like al Qaeda and ISIL [the Islamic State] have an interest in getting their hands on these types of materials,” Ben Rhodes, Obama’s deputy national security advisor, told reporters during a briefing on the summit’s first day, March 31. “They want to do as much damage as possible.”
The discussion about “dirty bombs” forged from radioactive materials in an estimated 70,000 industrial and health devices around the globe was a notable shift in emphasis, because Washington had previously worried more about the risk that a terrorist might get ahold of plutonium or highly-enriched uranium, the sparkplugs of a potential nuclear blast like those that devastated Hiroshima and Nagasaki in World War II.
Leaders at the summit made no concrete commitment of funds or manpower to diminish the “dirty bomb” threat, but 23 of the countries agreed to ensure they were better prepared for such a detonation through exercises, training and communications planning.
More generally, the U.S. joined 21 countries in pledging to use alternatives to highly-enriched uranium for civilian nuclear purposes, like research reactors, power plants and medical isotopes, or to shut the reactors down. For 20 of the countries, the agreement represents a departure from current policies.
Thirty nations also signed on to agreements to strengthen cybersecurity at nuclear sites. Twenty-seven pledged to improve protections against insider threats and 37 agreed to expand surveillance for radioactive materials in international ports.
Obama reflected on the accomplishments of the past six years when he took the stage for more than a half hour at the summit’s conclusion. He touted the 3.8 tons of nuclear material – enough to make 150 nuclear bombs – that’s been corralled from 50 facilities in 30 countries. Obama pointed to the 14 nations and Taiwan, including Argentina, Chile, Libya, Turkey and Vietnam, which have given up their plutonium and highly-enriched uranium.
“As of today, South America, an entire continent is completely free of these dangerous materials,” Obama said. “As terrorists and criminal gangs and arms merchants look around for deadly ingredients for a nuclear device, vast regions of the world are off limits,”
And the U.S. took a step of its own at the final summit. Responding to growing controversy over the Navy’s longstanding use of highly-enriched uranium to power nuclear reactors at sea, the Obama administration agreed to explore the feasibility of powering its vessels with low-enriched uranium, which cannot be diverted into a nuclear weapons. The proposal had the support of 35 Nobel laureates.
In his remarks at the end of the summit, Obama singled out only North Korea for specific criticism, but said progress is needed between Pakistan and India. He referred disparagingly to the fact that “global stocks of plutonium are growing” – a circumstance that experts say is occurring in Japan, India, Pakistan, and the United Kingdom. He also expressed worry that “nuclear arsenals are expanding in some countries with small tactical weapons that could be at greater risk of theft” – an issue that relates primarily to Pakistan.
The chilly relationship between Obama and Russian president Vladimir Putin was a frequent topic of discussion in the halls of the summit, since Putin had decided not to attend this meeting after participating in the first three. When senior administration officials were asked about it, they all said Russia had “only isolated itself.”
But independent experts – and less senior U.S. officials – have expressed deep frustration about the absence of any serious nuclear security dialogue between the two countries, emphasizing that Washington cannot verify that Russia is adhering to tight nuclear security standards without being able to visit sites that have benefitted from past U.S. economic aid.
“Because Mr. Putin came into power, or returned to his office as president, and because of the vision that he’s been pursuing of emphasizing military might over development inside of Russia and diversifying the economy, we have not seen the progress that I would hope for,” Obama said during his address at the end of the summit.
Obama has authorized an unprecedented modernization of the U.S. nuclear arsenal that will cost $1 trillion over the next three decades, according to several estimates. A new fleet of submarines, a new ground-based nuclear-tipped missile system, and a precision cruise missile are among the weapons systems that Obama has endorsed.
“It is very difficult to see huge reductions in our nuclear arsenal unless the U.S. and Russia as the two largest possessors of nuclear weapons lead the way,” Obama said during his speech. He told a questioner that the modernization work was required because “we have a nuclear stockpile that we have to make sure is safe and make sure is reliable,” Obama said.
For all its accomplishments, the summit process failed to address security of military weapon stocks – those that are involved in weapons programs and are beyond the reach of standard regulatory framework. It is estimated that 83 percent of all nuclear materials worldwide are in military stockpiles, and therefore out of sight for independent checks to ensure they’re well protected and accounted for.
The Obama administration, in an attempt to persuade other countries to be more transparent about their military holdings, released a detailed accounting of its military nuclear material holdings on the final day of the summit.
“While there has been a lot of progress on the civilian side, the issue of military materials has to be addressed and has not been sufficiently addressed at this summit,” Andrew Bieniawski, a former senior official at the Department of Energy who’s now the vice president for material security and minimization at the Nuclear Threat Initiative, an independent group that advocates for tighter nuclear security, said.
“The path that this administration cut was to highlight the issue and bring people together,” Kenneth Luongo, president of the Partnership for Global Security, another nonprofit focused on international security issues. “That is new. That is valuable.” But Luongo and others said they’re disappointed that more wasn’t accomplished, mentioning in particular that the summits did not set distinct goals for tightening security and timelines to complete them.
While the end of the summits worries Luongo and other independent experts that momentum will fade, its legacy will live on in a less formal way and below the heads-of-state level that was agreed to at the summit. The International Atomic Energy Agency is slated to host continued meetings involving high level experts. INTERPOL will help foster a new era of communication across borders about terrorist threats. The United Nations is to oversee future progress reports on nuclear security. A Global Partnership Against the Spread of Weapons and Materials of Mass Destruction will guide summit nations in continued improvement of security measures.
“President Obama deserves a lot of credit,” Miles Pomper, a senior fellow at the James Martin Center for Nonproliferation, said. At the same time, “I think he could have done a lot more….As in a lot of issues, his legacy will depend in part on what happens next. Does the next president intend to make this a top issue, or do they forget about it?”
An investigation published today by the International Consortium of Investigative Journalists and its media partners reveals the hidden workings of a secretive industry that banks and lawyers use to hide the financial holdings and dealings of powerful clients, including prime ministers, parliamentarians, plutocrats and criminals, according to a trove of leaked documents.
The files, known as the Panama Papers, expose the offshore holdings of 12 current and former world leaders and reveals how associates of Russian President Vladimir Putin secretly shuffled as much as $2 billion through banks and shadow companies, according to the joint investigative project conducted by ICIJ, the German newspaper Süddeutsche Zeitung and more than 100 other news organizations around the globe. ICIJ is the international arm of the Center for Public Integrity.
The files — which total more than 11.5 million documents — contain new details about major scandals ranging from England’s most infamous gold heist in 1983, an unfolding political money laundering affair in Brazil and bribery allegations currently convulsing FIFA, the body that rules international soccer and is under investigation by the U.S. Justice Department.
Most of the services the offshore industry provides can be used for legal purposes and by law-abiding customers. But the documents reveal that banks, law firms and other offshore players often fail to follow legal requirements to assure that clients are not involved in criminal enterprises, tax dodging or political corruption. The files show that these fixers and middlemen protect themselves and their clients by concealing suspect transactions. In some instances, they work to head off official investigations by backdating and destroying documents.
The documents include nearly 40 years of data from inside Mossack Fonseca, a little known but powerful law firm based in Panama with branches in Hong Kong, Miami, Zurich and 35 other cities worldwide. In the first of six articles posted today, ICIJ and its partners detail the the inner workings of the Mossack Fonseca firm, which is one of the world’s top creators of shell companies — corporate structures that can be used to hide ownership of assets.
Another article reveals a clandestine money network with ties to Putin that has shuffled at least $2 billion through banks and offshore companies linked to some of Putin’s closest allies. A third article details how the law firm of a FIFA ethics watchdog had created offshore accounts for three men indicted in the world soccer association’s corruption scandal. One of the men, a former FIFA vice president, has been charged by U.S. authorities with wire fraud and money laundering for his role in the alleged bribery conspiracy.
The documents provide details of Mossack Fonseca’s role in the hidden financial dealings of 140 politicians and public officials worldwide and expose offshore companies controlled by the prime ministers of Iceland and Pakistan, the king of Saudi Arabia and the children of the president of Azerbaijan. They also include the names of at least 33 people and companies blacklisted by the U.S. government because of evidence that they’d been involved in wrongdoing, such as doing business with Mexican drug lords, terrorist organizations like Hezbollah or rogue nations like North Korea and Iran.
The project — which included a team of more than 370 journalists from more than 70 countries — is believed to be the largest cross-border media collaboration ever undertaken. Journalists working in more than 25 languages dug into Mossack Fonseca’s inner affairs and traced the secret dealings of the law firm’s customers around the world. They shared information and hunted down leads generated by the leaked files using corporate filings, property records, financial disclosures, court documents and interviews with money laudering experts and law-enforcement officials.
The disclosures from the law firm’s leaked files dramatically expand on previous leaks of offshore records that ICIJ and its reporting partners have revealed in the past four years.
Mossack Fonseca & Co. had a problem in Vegas.
Legal papers filed in U.S. District Court in Las Vegas claimed that the Panama-based law firm had created 123 companies in Nevada that had been used by a crony of Argentina’s former president to steal millions of dollars from government contracts. A subpoena demanded that Mossack Fonseca turn over details about any money that had flowed through the Nevada companies.
Mossack Fonesca didn’t want to provide this information. For a firm that specializes in setting up hard-to-trace offshore companies for clients around the world, confidentiality is a must.
The law firm tried to block the subpoena by denying that its Las Vegas operations, run by a company called M.F. Corporate Services (Nevada) Limited, were part of the Mossack Fonseca group.
The firm’s Panama-based co-founder, Jürgen Mossack, testified under oath that “MF Nevada and Mossack Fonseca do not have a parent-subsidiary relationship nor does Mossack Fonseca control the internal affairs or daily operations of MF Nevada's business.”
But secret records obtained by the International Consortium of Investigative Journalists (ICIJ), the German newspaper Süddeutsche Zeitung and more than 100 other media partners raise new doubts over that sworn testimony.
Not only do they show that the Nevada subsidiary was wholly owned by Mossack Fonseca but that, behind the scenes, the firm took steps to wipe potentially damaging records from phones and computers to keep details of their clients from the United States justice system.
Read more at the Internation Consortium of Investigative Journalists.
One morning in mid-2014, before the summer sun had reached its peak, two elderly men in Aleppo, Syria, sat on plastic chairs, chatting quietly and drinking black coffee. From his perch outside his food stall, Sabri Wahid Asfur and his friend Abu Yassin watched their neighbors go about their day.
Suddenly, bombs hit the ground, scattering bricks and debris. Seconds later, they exploded, sending thousands of pieces of shrapnel — nails, rebar — in all directions. The crudely made barrel bombs had been designed for maximum human damage.
As the smoke lifted, Asfur reached for Abu Yassin.
“I looked at my friend when I recovered my vision and saw his body in shreds,” Asfur remembers. “He was exhaling his last breath.”
The attack was one of hundreds of aerial bombings that Syrian President Bashar al-Assad’s regime has carried out during the country’s six-year civil war, killing thousands of its own people. The deadly air campaign would not have been possible, U.S. authorities have charged, without a network of companies that dodged international embargoes by supplying the oil and gas that kept the military aircraft in sky.
Three of the companies that the U.S. alleges helped supply the fuel were customers of a global law firm, Mossack Fonseca & Co., which helped the companies incorporate and maintain offshore branches in Seychelles, a tax haven in the Indian Ocean.
The law firm continued doing work for at least one of these closely-linked companies after the three of them were blacklisted by the American government for supporting Syria’s war machine – joining dozens of other Mossack Fonseca customers sanctioned by the U.S. Treasury Department’s Office of Foreign Assets Control.
Mossack Fonseca, which is based in Panama but has offices around the world, has worked with at least 33 individuals or companies that have landed on the Treasury Department’s OFAC list, according to an analysis of the firm’s internal files by the International Consortium of Investigative Journalists, the German newspaper Süddeutsche Zeitung and other media partners.
In some cases, individuals and companies had ceased to work with Mossack Fonseca before being sanctioned. In other cases, the entities were active customers when the sanctions were put in place.
The reporting partners reviewed more than 11 million documents — emails, client accounts and financial records — that show the inner workings of Mossack Fonseca from 1977 to December 2015.
For years, the records show, Mossack Fonseca has earned money creating shell companies that have been used by suspected financiers of terrorists and war criminals in the Middle East; drug kings and queens from Mexico, Guatemala and Eastern Europe; nuclear weapons proliferators in Iran and North Korea, and arms dealers in southern Africa.
“It sounds almost like a corporate death wish taking on that many horrible people,” said Jason Sharman, a political scientist at Australia’s Griffith University and co-author of a groundbreaking study of anonymous companies. “You’d think that, even if they were cynical, they’d be reluctant dealing with U.S. sanctioned entities and taking on the United States.”
Mossack Fonseca denies wrongdoing.
A spokesman told ICIJ that the firm relies on intermediaries such as banks and other law firms to review the backgrounds of the customers that they refer to Mossack Fonseca. These middlemen are supposed to notify the firm “as soon as they have knowledge of a client of theirs having been either convicted or listed by a sanctioning body,” the spokesman said. “Likewise, we have our own procedures in place to identify such individuals, to the extent it is reasonably possible.”
The time it takes to resign varies by jurisdiction, the spokesman said, and some authorities require the agent to remain in place to prevent interference with an investigation.
The spokesman added that Mossack Fonseca has “never knowingly allowed the use of our companies by individuals having any relationship with North Korea, Zimbabwe, Syria and other countries” that have been listed as sanctioned. If it did discover it had unknowingly represented a company that was being used for unlawful purposes, he said, the law firm would take “any measures that are reasonably available to us” to deal with the issue.
In 2010, the firm did resign from the Iranian oil company Petropars after it was sanctioned by OFAC. (The sanction has recently been lifted as a result of the United States-Iranian nuclear deal.) , Petropars was incorporated by Mossack Fonseca incorporated in 1998 and had been publicly linked to the Iranian government as early as 2001.”It is a decision that may be 12 years too late,” an employee who recommended dropping representation of Petropars emailed at the time, “but one that must be taken in light of the circumstances.”
And there were others.
Read more at the International Consortium of Investigative Journalists.
WASHINGTON, DC, April 3, 2016 – After a yearlong investigation into a massive leaked cache of 11.5 million financial records, the International Consortium of Investigative Journalists today is exposing the offshore holdings of 12 current and former world leaders and revealing how associates of Russian President Vladimir Putin secretly shuffled $2 billion through banks and shadow companies. The investigation also reveals details of offshore financial dealings of 128 more politicians and public officials around the world.
The far-reaching investigation was carried out by the ICIJ, German newspaper Süddeutsche Zeitung and about 370 journalists from more than 70 countries.
ICIJ, a global network of investigative reporters who collaborate on in-depth investigative stories, is a project of the Center for Public Integrity. To read ICIJ’s reporting on its latest investigation, please visit its new dedicated website, PanamaPapers.icij.org
The records show how a global industry of law firms and banks sells financial secrecy to politicians, fraudsters and drug traffickers as well as billionaires, celebrities and sports stars. The files expose offshore companies controlled by the prime ministers of Iceland and Pakistan, the king of Saudi Arabia, the president of Ukraine and the children of the president of Azerbaijan. They also include at least 33 people and companies blacklisted by the U.S. government because of evidence that they’d been involved in wrongdoing, such as doing business with Mexican drug lords, terrorist organizations like Hezbollah or rogue nations like North Korea and Iran.
“This is the biggest cross-border investigation in journalism history, using a data set that is the largest of its kind,” said Gerard Ryle, director of the International Consortium of Investigative Journalists. “Collaboration with media partners around the world allows us to expose a bunch of secrets – in depth. There is no way any individual reporter or media organization could have done this.”
"ICIJ has a powerful record in pulling back the veil on offshore financial networks that hide criminality and enable epic tax avoidance,” added Peter Bale, chief executive officer of the Center for Public Integrity. "CPI and ICIJ are non-partisan and non-profit journalism teams funded solely by philanthropy and individuals committed to unbiased investigative journalism."
The records reveal a pattern of covert maneuvers by banks, companies and people tied to Russian leader Vladimir Putin, with offshore companies linked to this network moving money in transactions as large as $200 million at a time. Putin associates disguised payments, backdated documents and gained hidden influence within the country’s media and automotive industries, the leaked files show.
Even before the investigation went public, Russian officials denounced it. This past week, the Kremlin accused ICIJ of mounting an “information attack” on President Putin. “With various unseemly tricks they are trying to discredit the leadership of our country,” Putin spokesperson Dimitry Peskov said.
Some other highlights of the investigation include:
It is not illegal to own an offshore company. And the media partnership’s investigation found no evidence that many of the people named in the “Panama Papers” used their offshore entities for wrongdoing. But the use of offshore entities by top political leaders as well as criminals raises questions about the impact of financial secrecy havens on national treasuries and the rule of law.
The leaked records come from a little-known but powerful law firm based in Panama called Mossack Fonseca. The firm, with branches in London, Miami, Zurich and many more cities, is one of the world’s top creators of shell companies, or corporate structures that can be used to hide ownership of assets. The law firm’s leaked internal files contain information on more than 214,000 offshore companies connected to people in more than 200 countries and territories. In a written response, the firm said it “does not foster or promote illegal acts. Your allegations that we provide shareholders with structures supposedly designed to hide the identity of the real owners are completely unsupported and false.”
These latest disclosures dramatically expand on previous leaks of offshore records that ICIJ and its reporting partners have revealed in the past four years. ICIJ’s stories have triggered official inquiries, high-profile resignations and policy changes around the world.
About the International Consortium of Investigative Journalists (ICIJ)
ICIJ is an active global network of more than 190 reporters in more than 65 countries who collaborate on in-depth investigative stories. Founded in 1997, ICIJ was launched as a project of the Center for Public Integrity to extend the Center’s style of watchdog journalism, focusing on issues that do not stop at national frontiers: cross-border crime, corruption, and the accountability of power. ICIJ reporters and editors provide real-time resources and state-of-the-art tools and techniques to journalists around the world. www.icij.org
About the Center for Public Integrity
The Center for Public Integrity (the “Center”) has an unrivaled record of award-winning and impactful investigative journalism. Founded in 1989, it is one of the country’s oldest and largest nonpartisan, nonprofit investigative news organizations. The Center has earned a global reputation as a watchdog by producing exceptional investigative journalism. Recipient of the Pulitzer Prize for Investigative Reporting in 2014, the Center is funded solely by philanthropy and individuals committed to unbiased investigative journalism. Our mission: to enhance democracy by revealing abuses of power, corruption and betrayal of trust by powerful public and private institutions, using the tools of investigative journalism. www.publicintegrity.org
Network effects (where services become more valuable the more people use them) are some of the most powerful factors in technology and no more so in the case of the Panama Papers, the huge investigation unleashed by the International Consortium of Investigative Journalists (ICIJ) and its partners.
It is undoubtedly the biggest story worldwide today — dominating radio bulletins, television and front pages from Munich to Montreal and Sydney to Sarajevo. The #panamapapers Twitter hashtag has been tweeted more than 1.58m times since Sunday afternoon.
Governments and corporations have been forced to react, some quizzically, some with denials and some lamely. Australian authorities said they were investigating 800 people already. The UK authorities asked if they could take a look at the documents. The Kremlin, which tried to pre-empt the story last week as part of a conspiracy against Vladimir Putin and Russia itself, reacted predictably by attacking the work saying journalistic standards had "sunk into oblivion.”
As far as standards go I don’t think any journalism organization could be prouder today of the work by ICIJ Director Gerard Ryle and his team and the extraordinary network of members and partners of the ICIJ. The genius of Gerard’s work in the past four years in managing the ICIJ collaborative network and in bringing major media companies on as partners played out in Panama Papers. But this is years in the preparation as last year’s Swiss Leaks, the previous Lux Leaks investigation and the original Offshore Leaks showed. [A huge vote of thanks to Gerard’s team, not least: Marina Guevara Walker, Mike Hudson, Mar Cabra, Hamish Boland-Rudder, Will Fitzgibbon, Cecile Chilis-Gallego, Matthew Caruana, Rigoberto Carvajal, Emilia Diaz-Struck, Sasha Chavkin and quite a few others who have made this work possible.]
The journalistic quality is clear also from the originator of the project, the organization which received the huge leak, the German newspaper Suddeutsche Zeitung. It’s handling of the leak, the engagement with the ICIJ to manage it and run it across the network and the professionalism of the work behind the whole effort is remarkable and beautifully described in this how to by the ICIJ’s partners.
I believe the work on this project in unimpeachable, unlike some of the world leaders whose affairs have been exposed. It is a great advertisement for the non-profit model of the Center for Public Integrity and the ICIJ. We have had several hundred donations to the Panama Papers home page overnight and the reaction from our existing supporters has been overwhelmingly positive. This work simply could not be done without the philanthropic foundations and individual donors which back the ICIJ directly and the CPI as its parent. Thank you.
Pieces I would like to call out for particular attention include:
If I were you and wanting to check out what others have done, I would start with the English-Language version of Suddeutsche Zeitung, perhaps go on to the outstanding work of The Guardian, particularly on the Putin story. The BBC led its radio, television, and online news bulletins overnight and in to today on it and has a Panorama documentary this evening.
A gentleman from Charlotte, North Carolina, Mr J P Pritchard, called my office this afternoon: “Are you the people who did this work on the Secret Shell Game I read about in the Charlotte Observer today? Bless your hearts.” It doesn’t get better than that.
I welcome feedback on this note.
CEO, The Center for Public Integrity
Correction, April 5, 2016: This article has been corrected.
Update, April 5, 2016, 1:45 p.m.: This article has been updated to include a response from the Justice Department.
Update, April 5, 2016, 5:28 p.m.: This article has been updated to include a press release from the Bernie Sanders campaign and a response from Department of the Treasury.
Reports published this week on the secretive industry that banks and lawyers use to hide the financial holdings of some of the world’s top leaders and billionaires brought a strong global response, including the resignation of one prime minister, while the White House and U.S. agencies reacted more cautiously.
President Barack Obama addressed the massive leak of documents, which led to the reporting, on Tuesday during a press conference about business tax reform.
“There is no doubt that the problem of global tax avoidance generally, is a huge problem,” the president said.
The Justice Department, which is investigating alleged corruption in the world’s top soccer body, the Fédération Internationale de Football Association (FIFA), said it may focus more on the financial dealings raised in the reporting based on the documents.
“We are aware of the reports and are reviewing them," said Peter Carr, a Justice Department spokesman. "While we cannot comment on the specifics of these alleged documents, the U.S. Department of Justice takes very seriously all credible allegations of high level, foreign corruption that might have a link to the United States or the U.S. financial system.”
The investigation was published Sunday by the International Consortium of Investigative Journalists, which with the German-based newspaper Suddeutsche Zeitung oversaw the probe, which is being referred to as the Panama Papers. ICIJ is the international arm of the Center for Public Integrity.
At the White House’s daily news briefing on Monday, Press Secretary Josh Earnest was asked four separate times about the reports. He said he wouldn’t comment on the allegations and stressed that “the United States continues to be a leading advocate for increased transparency in the international financial system and in working against illicit financial transactions and in fighting corruption.”
Earnest avoided a question asking if the administration would scrutinize the financial dealings of some world leaders with offshore holdings, including Argentina’s President Mauricio Macri, whom President Obama met with last month, and King Salman of Saudi Arabia, whom Obama plans to visit this month.
“I'm not going to be able to consider the individual claims that are made based on some information included in the documents,” Earnest said. “But, look, this large volume of documents does not change the U.S. position.”
The papers, which totaled more than 11 million documents, were leaked from inside Panama-based Mossack Fonseca, one of the world’s top creators of shell companies, which are corporate structures that can be used to hide ownership of assets. The documents expose the offshore holdings of 12 current and former world leaders, associates of Russian President Vladimir Putin and a former FIFA vice president, who has been charged by U.S. authorities with wire fraud and money laundering.
Presidential candidate Bernie Sanders issued a press release Tuesday on the Panama Papers to draw a contrast with Hillary Clinton. He said he voted against the Panama Free Trade Agreement, passed by Congress in 2011, arguing it would encourage the growth of offshore accounts to shield the wealthy from paying taxes. Clinton, Sanders said, “helped push the Panama Free Trade Agreement through Congress as Secretary of State.”
If elected president, Sanders said he would terminate the agreement.
Clinton has not issued a statement about the Panama Papers.
Still, most U.S. reaction was measured. U.S. Treasury Department spokeswoman Whitney Smith said in an email that “we will not comment specifically on the findings.”
Smith added that “it is important to note that the U.S. government intently focuses on investigating possible illicit activity, including violations of U.S. tax laws or sanctions, using all sources of information, both public and non-public. … If there has been any violation of U.S. tax law or sanctions evasion, we will take appropriate action consistent with the national security and foreign policy of the United States.”
The Panama Papers investigation has had a much stronger impact globally. It led to the resignation of Iceland’s prime minister, official investigations were opened worldwide and an immediate censorship drive was instituted in China.
Thousands of Icelanders took to the streets of Reykjavik on Monday to demand the resignation of Prime Minister Sigmundur David Gunnlaugsson following the disclosure by ICIJ, Reykjavik Media, and Suddeutsche Zeitung that he and two members of his cabinet had owned or controlled secret offshore shell companies.
On Tuesday, Iceland’s president refused a request from Prime Minister Gunnlaugsson to dissolve parliament and call snap elections, according to the Guardian.
Gunnlaugsson’s resignation came hours later.
Gunnlaugsson violated parliamentary ethics rules when he failed to disclose his 50 percent ownership of Wintris Inc. in 2009. The company held millions of dollars worth of bonds in the three major Icelandic banks, which collapsed in 2008. The prime minister said the company was actually his wife’s all along and that his 50 percent ownership was caused by an error by the couple’s bank.
The crowd gathered in the square across from Parliament House, tossing eggs, bananas, and Icelandic yogurt at the building.
Elsewhere, prosecutors and officials across the world have announced investigations into the Panama Papers revelations:
Hoping to squeeze out a win, Sen. Bernie Sanders’ campaign aired more than 5,700 TV ads in the two weeks ahead of Tuesday’s Wisconsin presidential primary — more than a third of the nearly 16,000 TV ads aired by both Republicans and Democrats leading up to the Badger State battle.
One Sanders ad, titled “People Before Polluters,” aired roughly once every 20 minutes since March 22, according to a Center for Public Integrity review of preliminary data compiled by Kantar Media/CMAG, a political advertising data firm.
Sanders’ Wisconsin ad blitz follows a massive $44 million fundraising haul in March, funds that can buoy Sanders campaign for months leading up to July’s Democratic National Convention. Meanwhile, Democratic opponent Hillary Clinton raked in a less stellar $29.5 million in March.
On the airwaves, Sanders outpaced Clinton by more than 2,400 TV ads ahead of Wisconsin’s primary.
“When you’re getting your message out there more than your opponent, that’s helpful,” said Travis Ridout, co-director of the Wesleyan Media Project, which tracks political advertising. “It sends a signal that you’re a viable candidate.”
“If all people saw were Clinton ads, they would question his [Sanders’] viability,” Ridout added.
Sanders is leading the polls by a thin margin in Wisconsin, where 86 delegates are up for grabs. But even if he wins, Wisconsin’s Democratic primary is not “winner take all” meaning that Clinton can still come away with a decent delegate haul.
Sanders’ path to the nomination is narrowing. Clinton is ahead by 263 pledged delegates, not counting super delegates. With the path to nomination clearing, Clinton supporters are pivoting to the general election.
Priorities USA Action, a super PAC backing Clinton, has already started to reserve ad space in states such as Ohio, Nevada and Colorado in the months before July’s convention, according to Federal Communications Commission records. The super PAC plans to reserve $70 million worth of ads, according to the group’s operatives.
The pro-Clinton super PAC — which can raise and spend money in unlimited amounts — has brought in more than $55 million. So far this cycle, billionaire George Soros has donated $7 million to Priorities USA Action. (The Center for Public Integrity receives some funding from the Open Society Foundations, which are funded by Soros.)
Though Sanders and Clinton have consistently traded public jabs — this week over Clinton receiving donations from the fossil fuel industry— all was positive on the airwaves. Neither aired an attack ad, opting to focus on character and proposals.
Meanwhile, it hasn’t been quite as rosy on the Republican side.
Nearly 60 percent of ads shown in Wisconsin at least partially attacked another candidate, according to the Center for Public Integrity's analysis of Kantar Media/CMAG data.
Though slowing down from previous weeks, an anti-Donald Trump coalition of groups aired nearly 1,500 ads that in part attacked Trump.
Another popular target was Gov. John Kasich. A recently formed pro-Sen. Ted Cruz super PAC called Trusted Leadership PAC used all of its ad space to knock down Kasich. In one ad, Kasich is portrayed as President Barack Obama’s “BFF.”