Thursday, April 3, 2014

SCOTUS Strikes Down Political Spending Limits for Rich Donors

The US govt is corrupt in every branch, every level. Wealth owns everyone and everything. Democracy--game over....

The New Citizens United
 Wednesday, 02 April 2014
By Mike Ludwig, Truthout

Demonstrations were held across the country Wednesday as the Supreme Court continued chipping away at federal campaign finance reforms with a 5-4 ruling striking down the federal cap on the total amount of money an individual donor can spend supporting candidates and political parties during a two-year election cycle.

The ruling, which split the high court along ideological lines, eliminates the aggregate the cap on the total amount of money an individual can donate to candidates and party fundraising committees during an election season, which was set at $123,200 for 2013 and 2014. That cap was so high that only a several hundred mega-rich donors reached it during the last election cycle.

Campaign finance watchdogs now estimate that a single wealthy donor could spread up to $3.6 million among candidates, party committees and some political action groups affiliated with a single party during a single election cycle. A single donor could theoretically spend twice that amount by supporting candidates and committees from both parties, according to the Sunlight Foundation.

Conservatives are hailing the ruling as a victory for free speech. Liberals and progressives say the ruling will only increase the corrupting influence that ultra-rich donors can have on politicians, dealing yet another fundamental blow to the legitimacy of American democracy. Activists organized about 140 demonstrations and events in 38 states to protest the ruling and call for legislative action.

The ruling is not as sweeping as the Supreme Court's infamous 2010 Citizens United decision, which removed caps on the amount of money that corporations and unions can spend influencing federal elections and unleashed a tidal wave of corporate campaign cash that made the 2012 elections by far the most expensive in history.

But the ruling - one of several rulings under Chief Justice John Roberts that have eroded federal and state campaign finance laws in recent years - surely will increase the ability of rich Americans to impact elections.

The ruling also could inflate the power of joint fundraising committees, which take large donations from donors and funnel the cash to candidates and party committees with full knowledge of who signed the original check.

"Eliminating these limits will now allow a single politician to solicit, and a single donor to give, up to $3.6 million through the use of joint fundraising committees," said Michael Walden, president of the Brennan Center for Justice. "Following the Citizens United decision, this will further inundate a political system already flush with cash, marginalize average voters, and elevate those who can afford to buy political access."

Wednesday's ruling in McCutcheon vs. Federal Election Commission does not touch limits on the amount of money an individual can give to a single federal candidate, which currently is set at $2,600.

Free Speech or Plutocracy?

The majority opinion, delivered by Roberts, claims these limits on individual donations will keep political corruption in check. The Roberts opinion, which was supported by the court's conservative justices, argues that the cap on the total amount and individual can spend during an election cycle can prevent a donor from giving to as many candidates as he or she chooses, which violates free speech rights under the First Amendment.

Like the Citizens United ruling, the majority opinion views political speech and the money spent by wealthy donors to support candidates and influence elections as one and the same.

"Contributing money to a candidate is an exercise of an individual’s right to participate in the electoral process through both political expression and political association," Roberts wrote for the majority. " ... The Government may no more restrict how many candidates or causes a donor may support than it may tell a newspaper how many candidates it may endorse."

Writing for the four dissenting justices on the liberal side of the bench, Justice Stephen Breyer argued that the ruling created a "loophole" allowing rich donors to donate millions to candidates and parties, and, coupled with the Citizens United ruling, "eviscerates our Nation’s campaign finance laws, leaving a remnant incapable of dealing with the grave problems of democratic legitimacy that those laws were intended to resolve."

The case was brought before the court by the national Republican Party and Shaun McCutcheon; a wealthy businessman from Alabama who argued the cap on aggregate donations violated his First Amendment rights by prevented him from donating to Republican candidates he wanted to support in recent elections.

"Today, the court made clear that restraints on the political speech of those whose views you don't like must fail; free speech is the right of all Americans and not a revocable grant from the government of the day," said Dan Backer, the lead political counsel for McCutcheon and the Republican Party.

Campaign finance reformers, however, said the ruling is not a victory for free speech. It's a victory for the plutocracy.

"No matter what five Supreme Court justices say, the First Amendment was never intended to provide a giant megaphone for the wealthiest to use to shout down the rest of us," said Robert Weissman, president of Public Citizen, a progressive watchdog group that supports campaign finance reforms. "Our only hope of overturning this McCutcheon travesty - along with Citizens United - is if millions of Americans band together in saying 'Enough!' to plutocracy."

Growing Grass-Roots Momentum

For several years, a broad grass-roots movement has pushed to overturn Citizens United, either through legislation or amending the Constitution to declare that money spent influencing elections is not the same as free speech. Activists also are pushing for federal legislation that would amplify the impact of small political donations made by average Americans.

Jonah Minkoff-Zern, an activist with Public Citizen who helped organize protests in response to the McCutcheon decision, said the ruling would only spark more grassroots momentum.

"The rallies are a way for us to say, this is not going to be a dark day in history but a day of organizing hope and a call for change," Minkoff-Zern told Truthout.

In recent years, lawmakers in at least 16 states have passed resolutions calling for a constitutional amendment to overturn Citizens United. Minkhoff-Zern said at least 150 members of Congress have signed on in support of similar resolutions.

Monday, March 31, 2014

The Economic Scam of the Century

Government Backing for Toxic Mortgage Securities?
The leaders of the U.S. Senate Banking Committee,  Sen. Tim Johnson (D., S.D.) and Sen. Mike Crapo (R., Idaho),  released a draft bill on Sunday that would provide explicit government guarantees on mortgage-backed securities (MBS) generated by privately-owned banks and financial institutions. The gigantic giveaway to Wall Street would put US taxpayers on the hook for 90 percent of the losses on toxic MBS the likes of which crashed the financial system in 2008 plunging the economy into the deepest slump since the Great Depression. Proponents of the bill say that new rules by the Consumer Financial Protection Bureau (CFPB) –which set standards for a “qualified mortgage” (QM)– assure that borrowers will be able to repay their loans thus reducing the chances of a similar meltdown in the future. However, those QE rules were largely shaped by lobbyists and attorneys from the banking industry who eviscerated strict underwriting requirements– like high FICO scores and 20 percent down payments– in order to lend freely to borrowers who may be less able to repay their loans.  Additionally, a particularly lethal clause has been inserted into the bill that would provide blanket coverage for all MBS  (whether they met the CFPB’s QE standard or not) in the event of another financial crisis. Here’s the paragraph:
Sec.305. Authority to protect taxpayers in unusual and exigent market conditions….
If the Corporation, the Chairman of the Federal Reserve Board of Governors and the Secretary of the Treasury, in consultation with the Secretary of Housing and Urban Development, determine that unusual and exigent circumstances threaten mortgage credit availability within the U.S. housing market, FMIC may provide insurance on covered securities that do not meet the requirements under section 302 including those for first loss position of private market holders.” (“Freddie And Fannie Reform – The Monster Has Arrived”, Zero Hedge)
In other words, if the bill passes,  US taxpayers will be responsible for any and all bailouts deemed necessary by the regulators mentioned above.  And, since all of those regulators are in Wall Street’s hip-pocket, there’s no question what they’ll do when the time comes. They’ll bailout they’re fatcat buddies and dump the losses on John Q. Public.

If you can’t believe what you are reading or if you think that the system is so thoroughly corrupt it can’t be fixed; you’re not alone. This latest outrage just confirms that the Congress, the executive and all the chief regulators are mere marionettes performing whatever task is asked of them by their Wall Street paymasters.

The stated goal of the Johnson-Crapo bill is to “overhaul” mortgage giants Fannie Mae and Freddie Mac so that “private capital can play the central role in home finance.” (That’s how Barack Obama summed it up.) Of course, that’s not really the purpose at all. The real objective is to hand over the profit-generating mechanism to the private banks (Fannie and Freddie have been raking in the dough for the last three years) while the red ink is passed on to the public. That’s what’s really going on.

According to the Wall Street Journal,  the bill will
“construct an elaborate new platform by which a number of private-sector entities, together with a privately held but federally regulated utility, would replace key roles long played by Fannie and Freddie….”
“The legislation replaces the mortgage-finance giants with a new system in which the government would continue to play a potentially significant role insuring U.S. home loans.” (“Plan for Mortgage Giants Takes Shape”, Wall Street Journal) 
“Significant role”? What significant role? (Here’s where it gets interesting.)

The WSJ:
“The Senate bill would repurpose the firms’ existing regulator as a new “Federal Mortgage Insurance Corp.” and charge the agency with approving new firms to pool loans into securities. Those firms could then purchase federal insurance to guarantee payments to investors in those bonds. The FMIC would insure mortgage bonds much the way the Federal Deposit Insurance Corp. provides bank-deposit insurance.”
Unbelievable. So they want to turn F and F into an insurance company that backs up the garbage mortgages created by the same banks that just ripped us all off for trillions of dollars on the same freaking swindle?

You can’t be serious?

More from the WSJ
“Mortgage guarantors would be required to maintain a 10% capital buffer against losses and to have that capital extinguished before the federal insurance would be triggered.”

10 percent? What the hell difference does 10 percent make; that’s a drop in the bucket.  If the banks are going to issue mortgages to people who can’t repay the debt, then they need to cover the damn losses themselves, otherwise they shouldn’t be in the banking biz to begin with, right?

This is such an outrageous, in-your-face ripoff, it shouldn’t even require a response. These jokers should be laughed out of the senate. All the same,  the bill is moving forward, and President Twoface has thrown his weight behind it. Is there sort of illicit, under-the-table, villainous activity this man won’t support?

Not when it comes to his big bank buddies, there isn’t. Now check out this clip from an article by economist Dean Baker. Baker refers to the Corker-Warner bill, but the Crapo-Johnson fiasco is roughly the same deal. Here’s Baker:
“The Corker-Warner bill does much more than just eliminate Fannie and Freddie. In their place, it would establish a system whereby private financial institutions could issue mortgage-backed securities (MBS) that carry a government guarantee. In the event that a large number of mortgages in the MBS went bad, the investors would be on the hook for losses up to 10 percent of its value, after that point the government gets the tab.
If you think that sounds like a reasonable system, then you must not have been around during the housing crash and ensuing financial crisis. At the peak of the crisis in 2008-2009 the worst subprime MBS were selling at 30-40 cents on the dollar. This means the government would have been picking up a large tab under the Corker-Warner system, even if investors had been forced to eat a loss equal to 10 percent of the MBS price.
The pre-crisis financial structure gave banks an enormous incentive to package low quality and even fraudulent mortgages into MBS. The system laid out in the Corker-Warner bill would make these incentives even larger. The biggest difference is that now the banks can tell investors that their MBS come with a government guarantee, so that they most they stand to lose is 10 percent of the purchase price.” (“The disastrous idea for privatizing Fannie and Freddie”, Dean Baker, Al Jazeera)
Just ponder that last part for a minute: “The bill would make these incentives even larger.”

Do you really think we should create bigger incentives for these dirtbags to rip us off? Does that make sense to you? Here’s more from Baker:
“The changes in financial regulation are also unlikely to provide much protection. In the immediate wake of the crisis there were demands securitizers keep a substantial stake in the mortgages they put into their pools, to ensure that they had an incentive to only securitize good mortgages. Some reformers were demanding as much as a 20 percent stake in every mortgage.
Over the course of the debate on the Dodd-Frank bill and subsequent rules writing this stake got ever smaller. Instead of being 20 percent, it was decided that securitizers only had to keep a 5 percent stake. And for mortgages meeting certain standards they wouldn’t have to keep any stake at all.
Originally only mortgages in which the homeowner had a down payment of 20 percent or more passed this good mortgage standard. That cutoff got lowered to 10 percent and then was lowered further to 5 percent. Even though mortgages with just 5 percent down are four times as likely to default as mortgages with 20 percent or more down, securitizers will not be required to keep any stake in them when they put them into a MBS.”
Hold on there, Dean. You mean Dodd Frank didn’t ”put things right”?  What the heck? I thought that “tough new regulations” assured us that the banks wouldn’t blow up the system again in five years or so. Was that all baloney?

Yep, sure was. 100% baloney. Once the banks unleashed their army of attorneys and lobbyists on Capital Hill,  new regulations didn’t stand a chance. They turned Dodd Frank into mincemeat and now we’re back to square one.

And don’t expect the ratings agencies to help out either because they’re in the same shape they were before the crash. No changes at all.  They still get paid by the guys who issue the mortgage-backed securities (MBS) which is about the same as if you paid the salary of the guy who grades your midterm exam. Do you think that might cloud his judgment a bit? You’re damn right, it would; just like paying the ratings agencies guarantees you’ll get the rating you want. The whole system sucks.

And as far as the new Consumer Financial Protection Bureau, well, you guessed it. The banks played a role in drafting the new “Qualified Mortgage” standard too, which is really no standard at all, since no self-respecting lender would ever use the same criteria for issuing a loan or mortgage. For example, no banker is going to say, “Heck, Josh, we don’t need your credit scores. We don’t need a down-payment. We’re all friends here, right? So, how much do you need for that mortgage old buddy, $300,000, $400,000, $500,000.  You name it. The sky’s the limit.”

No down payment? No credit scores? And they have the audacity to call this a qualified mortgage?
Qualified for what? Qualified for sticking it to the taxpayers?  The real purpose of the qualified mortgage is to protect the banks from their own shifty deals. That’s what it’s all about. It provides them with “safe harbor” in the event that the borrower defaults. What does that mean?

It means that the government can’t get its money back if the loan blows up.   The qualified mortgage actually protects the banks, not the consumer. That’s why it’s such a farce,  just like Dodd Frank is a farce. Nothing has changed. Nothing. In fact, it’s gotten worse. Now we’re on the hook for whatever losses the banks run up peddling mortgage credit to anyone who can fog a mirror.

We’ll leave the last word for Dean Baker, since he seems like the only guy in America who has figured out what the hell is going on:
“In short, the Corker-Warner plan to privatize Fannie and Freddie is essentially a proposal to reinstitute the structure of incentives that gave us the housing bubble and the financial crisis, but this time with the added fuel of an explicit government guarantee on the subprime MBS. If that doesn’t sound like a great idea to you then you haven’t spent enough time around powerful people in Washington.”
The Johnson-Crapo bill doesn’t have anything to do with “winding down” Fannie and Freddie or “overhauling” the mortgage finance industry. It’s a bald-face ripoff engineered by two chiseling senators who are putting the country at risk to beef up Wall Street’s bottom line.

It’s the scam of the century.

How Much War Does Washington Want?


I doubt that the Ukraine crisis precipitated by Washington’s overthrow of the democratic government is over. Washington has won the propaganda war everywhere outside of Russia and Ukraine itself. Within Ukraine people are aware that the coup has made them worse off. The Crimea has already separated from the US puppet government in Kiev and rejoined Russia. Other parts of Russian Ukraine could follow.

In Kiev itself where the unelected, imposed-by-Washington dictatorial government resides, extreme right-wing Ukrainian nationalists, whose roots go back to fighting for National Socialist Germany, are at work intimidating public prosecutors, media editors, and the US imposed “government” itself. There is an abundance of videos available on the Internet, some made by the extreme nationalists themselves, that clearly reveal the intimidation of the imposed and unelected government installed by Washington.

In Kiev US bribes contend with naked neo-nazi force. Which will prevail?

The murder of ultra-nationalist Right Sector militant leader Myzychko by police of the acting Interior Minister of the American stooge government in Ukraine on March 25 has resulted in another Right Sector leader, Dmitry Yarosh, demanding the resignation of Arsen Avakov, the acting Interior Minister and the arrest of the police who killed Muzychko. Yarosh declared: “We cannot watch silently as the Interior Ministry works to undermine the revolution.” Right Sector organizer Roman Koval in Rovno, Ukraine, warned: “We will take revenge on Avakov for the death of our brother.”

How this will play out is uncertain at this time. The violence provided by the Right Sector and other ultra-nationalist groups was essential to the success of the Washington-backed coup in overthrowing the elected democratic government. But the Right Sector has emerged as both an embarrassment and a threat to the unelected coup government and to its Washington sponsors who are selling the Washington-installed puppet government as a progressive exercise in democracy. This sell is difficult when ultra-nationalist thugs are beating up the imposed government.

Could civil war break out in Kiev between the Right Sector and the government installed by Washington? We know that the Right Sector was sufficiently organized and disciplined to take over the protests. We don’t know how well organized is the Washington puppet government or what force this group has at its disposal. We don’t know whether Washington has provided mercenaries to protect the government Washington has installed. It is not clear at this time where the power balance lies between the Right Sector and the US stooge government.

The American, UK, Canadian, Australian, New Zealand, EU propaganda machine has blamed Putin for all the trouble. But so far the Russian government has not had to do anything except comply with the self-determination of the people in the Russian areas of Ukraine. Much of Ukraine, as it exists or existed today, consists of Russian territories added to Ukraine by Soviet rulers.

When Ukraine became independent with Russia’s agreement when the Soviet Union collapsed, had the Russian territories first been put back into Russia from whence they came, Washington’s coup would not have resulted in the same level of crisis.

Instead, under Washington’s pressure, the Russian territory was retained by Ukraine, and in compensation Russia was given a 50-year lease on Sevastopol, Russia’s Black Sea naval base.

The purpose of the Washington financed and orchestrated coup in Kiev was to put Ukraine, with its artificial boundaries, into the EU and NATO and to evict Russia from its warm water port and ring Russia with US missile bases. Washington and its European puppets described this as “bringing democracy to Ukraine.”

Ukraine already had democracy, a young one trying to put down roots, and Washington destroyed it. As Russian President Putin observed, overthrowing a brand new democracy destroys democracy. Washington’s coup established for Ukraine the precedent that force and propaganda rule, not democracy.

But Washington cares not for democracy, only for its agenda. And Russia, China, and Iran are in the way.

The neoconservatives, who have controlled US foreign policy since the Clinton regime, concluded that the Soviet collapse meant that History has chosen America as the socio-economic system for the world. They declared the US to be “exceptional” and “indispensable” and above international law. Washington had a free pass to invade, murder, destroy, and dominate. The neoconservative claims of “American exceptionalism” sound like Hitler’s claims for the German nation. When the White House sock puppet expressed in a speech the claim of American exceptionalism, Putin replied: “God made us all equal.”

Washington’s opinion is that the exceptional and indispensable nation–the US–is above not only all other nations but also above law. What Washington does is legal. What anyone else does in opposition is illegal.

Washington’s intervention in Ukraine has unleashed dark forces. Yulia Tymoshenko, the criminal Ukrainian oligarch, who braids her hair or hair piece over her head like a crown, was released from prison by Washington’s stooges and has not stopped putting her foot, or both feet, in her mouth. Her latest in her intercepted and leaked telephone conversation is her declaration that “it’s about time we grab our guns and go kill those damn Russians together with their leader.” She declared that not even scorched earth should be left where Russia stands.

Tymoshenko was sentenced to prison by Ukrainians, not by Russians. Contrast her extreme language and Russophobia with the calm measured tones of Putin, who reaffirms Russia’s interest to continue good relations with Ukraine.

On March 23 Tymoshenko was interviewed by the German newspaper, Bild, a mouthpiece for Washington. The crazed Tymoshenko declared that Putin was even more dangerous than Hitler.

This year 2014 is the 100th anniversary of World War 1. As my Oxford professor, Michael Polanyi, said, this was the war that destroyed Europe. He meant culturally and morally as well as physically. As John Maynard Keynes made clear in his prediction, the propagandistic way in which World War 1 was blamed on Germany and the “peace” that was imposed on Germany set up World War 2.

We are witnesses today to the same kind of propagandistic lies with regard to Russia that caused World War 1. In The Genesis Of The World War, Harry Elmer Barnes quotes the French chief editor of a French account of the organization of propaganda in France during World War 1. The French built a massive building called La Maison de la Presse. In this building images of people were created with hands cut off, tongues torn out, eyes gouged out, and skulls crushed with brains laid bare. These images were then photographed and “sent as unassailable evidence of German atrocities to all parts of the globe, where they did not fail to produce the desired effect.” Also provided were “fictitious photographs of bombarded French and Belgian churches, violated graves and monuments and scenes of ruins and desolation. The staging and painting of these scenes were done by the best scene-painters of the Paris Grand Opera.”

This vicious propaganda against Germany meant that Germany could be blamed for the war and that all of President Woodrow Wilson’s guarantees to Germany of no reparations and no territorial loss if Germany agreed to an armistice could be violated.

The propaganda success guaranteed that the peace settlement would be so one-sided as to set up the Second World War.

Russia has observed Washington’s strategic moves against Russian national interests and Russian sovereignty for two decades. What does Putin think when he hears the vicious anti-Russian propaganda based 100% in lies?

This is what Putin thinks: The Americans promised Gorbachev that they would not take NATO into Eastern Europe, but the Americans did. The Americans withdrew from the ABM Treaty, which prohibited escalating the arms race with anti-ballistic missile systems. The Americans arranged with Poland to deploy anti-ballistic missile bases on Poland’s border with Russia. The Americans tell us the fantastic lie that the purpose of American missile bases in Poland is to protect Europe from non-existent Iranian ICBMs. The Americans change their war doctrine to elevate nuclear weapons from a retaliatory deterrent to a pre-emptive first strike force. The Americans pretend that this change in war doctrine is directed at terrorists, but we know it is directed at Russia. The Americans have financed “color revolutions” in Georgia and Ukraine and hope to do so in the Russian Federation itself. The Americans support the terrorists in Chechnya. The Americans trained and equipped the Georgian military and gave it the green light to attack our peacekeepers in South Ossetia. The Americans have financed the overthrow of the elected government in Ukraine and blame me for the anxiety this caused among Crimeans who on their own volition fled Ukraine and returned to Russia from whence they came. Even Gorbachev said that Khrushchev should never have put Crimea into Ukraine. Solzhenitsyn said that Lenin should not have put Russian provinces into eastern and southern Ukraine. Now I have these Russian provinces agitating to return to Russia, and the Americans are blaming me for the consequences of their own reckless and irresponsible actions.

The Americans say I want to rebuild the Soviet Empire. Yet, the Americans witnessed me depart from Georgia when I had this former Russian province in my hands, thanks to the short-lived war instigated by the Americans.

There is no end to the American lies. I have done everything possible to respond to provocations in a low-key reasonable manner, offering to work things out diplomatically, as has my Foreign Minister Lavrov. But the Americans continue to provoke and to hide their provocations behind lies. The Americans brazenly bring to me a strategic threat in Ukraine. They intend to put Ukraine in NATO, the purpose of which expired with the Soviet collapse. They intend to put more missile bases on Russia’s borders, and they intended to evict Russia from its Black Sea naval base, its warm water port.

Americans have no intention of working anything out. They intend to subjugate Russia. Washington wants Russia powerless, surrounded with ABM bases that degrade our strategic deterrent to uselessness. These Americans will not work with me. They will not listen to me or to Russia’s Foreign Minister. They only hear their own call for American hegemony over the world. My only alternative is to prepare for war.

The government of China, having read Washington’s war plans for war against China and being fully away of Washington’s “pivot to Asia,” in which the “indispensable nation” announced its “safe-guarding of peace” by surrounding China with naval and air bases, understands that it has the same Washington enemy as does Russia.

What the entire world faces, every country, every individual regardless of their political orientation, is a Washington-engineered confrontation with Russia and China. This confrontation is enabled by Washington’s bought-and-paid-for European and UK puppet states. Without the cover provided by Europe, Washington’s acts of aggression would result in war crimes charges against the government in Washington. The world would not be able to enforce these charges without war, but Washington would be isolated.

The European, Canadian, Australian, New Zealand, and UK governments have betrayed not only their own peoples but also the peoples of the entire world by lending the support of Western Civilization to Washington’s lawlessness.

The propaganda that the West represents the hope of the world is a great lie.

BP, not Exxon, caused the Exxon Valdez disaster

By Greg Palast
March 2014 | Read the full story at TruthDig

Two decades ago I was the investigator for the legal team that sold you the bullshit that a drunken captain was the principal cause of the Exxon Valdez disaster, the oil tanker crackup that poisoned over a thousand miles of Alaska’s coastline 25 years ago today, on March 24, 1989.

The truth is far uglier, and the real culprit—British Petroleum, now BP—got away without a scratch to its reputation or to its pocketbook.

Just this month, the Obama administration authorized BP to return to drilling in the Gulf.

It would be worth the time of our ever-trusting regulators to take a look at my Exxon Valdez files on BP.  They would see a decades-long pattern of BP’s lies, bribes and cover-ups that led, inexorably, to the Deepwater Horizon blowout—and that continue today within BP’s worldwide oil operations.

Here’s a sample:

Palast’s investigation of BP opens his latest film, Vultures and Vote Rustlers. Pre-release editions are available on DVD and download for a donation to Palast’s foundation for investigative reporting at
And read the complete untold story of the Exxon Valdez and Deepwater Horizon disasters in Palast’s Vultures’ Picnic, BBC Newsnight’s Culture Program’s Book of the Year.

Fraud No. 1: The Emergency Sucker Boat fraud
As the principal owner of the Alaska Pipeline and Terminal, BP, not Exxon, was designated by law to prevent oil spilled by the Exxon Valdez from hitting the beach. It was BP’s disastrous failures, more than Exxon’s, that allowed the oil to devastate Alaska’s coast.

Containing an oil spill—preventing spilled crude from spreading to the shore—is not rocket science.  All you need are rubbers and suckers. It works like this:

If a tanker, oil rig or pipe bursts open, you surround it with a giant rubber skirt known as “boom.” Then you suck the oil out through vacuum hoses on board special “containment” or “skimmer” ships.

The containment ship is the firetruck of oil spills. You simply don’t let tankers out of port unless a containment ship is ready to roll. It’s against the law.

But the law has never meant much to BP.

In May 1977, as the first tankers left Valdez, BP executives promised the state of Alaska that no tanker would leave port unless there were two containment barges at the ready and loaded with boom, with one placed near Bligh Island.

In fact, on March 24, 1989, when the Exxon Valdez ran aground, right at Bligh Island, the containment barge was far away in Valdez, locked in a dry dock, its boom and hoses under Alaskan ice. As a result, by the time the emergency oil spill vessel got to the stricken ship, the oil slick was a hundred miles in circumference and beyond control.

Two decades later, I watched fireboats uselessly spraying the burning oil on the Deepwater Horizon. Once again there were no BP skimmer barges, no boom surrounding the rig. Just as in Alaska, the promised spill containment operation was a con.

Fraud No. 2: Ghost Crews
There’s no sense having a fire truck without firemen. And so, years before the Exxon Valdez grounding, Alyeska, the oil company consortium headed by BP, promised the U.S. Department of the Interior and the U.S. Congress, under oath, that the oil shipper would employ a trained and equipped crew around the clock to jump from helicopters, if needed, to contain an oil spill. My clients, the Chugach Natives of Alaska, agreed to give up ownership of the land under the Port of Valdez to the oil companies in return for those jobs.

The night the Exxon Valdez grounded, Chugach Natives watched from the beach at nearby Tatitlek Village as the tanker headed into the reef. They could have prevented the disaster—but they were helpless: BP had fired them.

To save money, BP’s Alyeska simply drew up lists of nonexistent emergency spill response workers: an imaginary crew to man phantom emergency ships.

Fraud No. 3: Phantom Equipment
And the rubber boom? That was a phantom as well. BP’s Alyeska had promised that too, in writing. The equipment was supposed to be placed along the tanker route including Bligh Island—exactly the spot where the Exxon Valdez grounded.

And so, it was no surprise to me that 21 years later in the Gulf there were neither skimmers nor boom at the site of the Deepwater Horizon.

Cover-Up and Threats
Did BP’s top executives and partners know of the ghost response teams and phantom equipment ruse? Yes, we have the documents and insiders’ testimony. Just two examples from my bulging file cabinet:

In a confidential letter dated April 19, 1984, Capt. James Woodle, BP’s commander of the port at Valdez, warned that “due to a reduction in manning, age of equipment, limited training and lack of personnel, serious doubt exists that [we] would be able to contain and clean up effectively a medium or large size oil spill.”

In response, BP threatened the captain with a file on his marital infidelities (fabricated), fired him, then forced him to destroy his files. (I’ve got the letter—can’t tell you how.  Click here.)

In September 1984, before the Exxon Valdez disaster, BP’s shipping broker, Charles Hamel, was so concerned at what he saw as an immediate danger in Alaska that he flew by Concorde to London to warn BP’s chiefs of the looming emergency. In response, BP hired ex-CIA operatives to tap Hamel’s phone and intercept his mail. BP’s black ops team even ran a toy truck with a microphone into the air vents of a building where he was speaking with a congressman. (Ultimately, BP’s spooks were captured by a team of Navy SEALs.)

BP Gets Off Cheap
The team of attorneys representing the Natives and fishermen whose lives were destroyed by the tanker spill chose to hold back the true and ugly story of systematic fraud and penny-pinching negligence by BP and its partners. We focused instead on the simpler story of human frailty and error—“drunken skipper hits reef.”

We didn’t have a choice: Oil company chiefs had told our clients—Natives who were out of cash, isolated and desperate—that they wouldn’t get a dime unless we agreed not to use the “f-word”: fraud.

And BP? Who said crime doesn’t pay? BP walked away with a nominal payment to Alaska’s Natives, fishermen and towns of $125 million—100 percent of it covered by insurance.

The Oil is Still There
In 2010 for the U.K.’s Channel 4 Television, I returned to Alaska with filmmaker Richard Rowley. In the quiet rivulets of the islands within Prince William Sound, we kicked over some stones—and the place, two decades after the spill, smelled like a filthy gas station.

Maybe it’s time for the Obama Administration, eager to welcome BP back to plunder the Gulf, to wake up and smell the crude.

Insane in the Membrane