The Endless Chain
A single example will illustrate the vicious circle of control–the endless chain–through which our financial oligarchy now operates:
J.P. Morgan (or a partner), a director of the New York, New Haven, & Hartford Railroad, causes that company to sell to J.P. Morgan & Co. an issue of bonds. J.P. Morgan & Co. borrow the money with which to pay for the bonds from the Guaranty Trust Company, of which Mr. Morgan (or a partner) is a director. J.P. Morgan & Co. sell the bonds to the Penn Mutual Life Insurance Company, of which Mr. Morgan (or a partner) is a director. The New Haven spends the proceeds of the bonds in purchasing steel rails from the United States Steel Corporation, of which Mr. Morgan (or a partner) is a director. The United States Steel Corporation spends the proceeds of the rails in purchasing electrical supplies from the General Electric Company, of which Mr. Morgan (or a partner) is a director. The General Electric sells supplies to the Western Union Telegraph Company, a subsidiary of the American Telephone and Telegraph Company; and in both Mr. Morgan (or a partner) is a director…
– from Other People’s Money and How the Bankers Use It, published by Louis Brandeis in 1914
The “endless chain” of power elite relationships that we track on LittleSis can be challenging to represent in the space of a paragraph. Reading through a list of relationships is often a confusing and mind-numbing exercise; writing such a list can have a similar effect on the author. It is, however, extremely important that we find effective methods of representing these relationships and informing the public about them. Stories of power, corruption, and undue influence revolve around relationships and networks, and exposing this information can have significant policy impact.
Last week, the Salt Lake Tribune ran an op-ed entitled “‘Bean-counting bureaucrats’ at BLM are locking up Utah’s future,” advocating the opening of federally owned lands to oil and gas drilling. The column, essentially the same as an op-ed that ran a week earlier in the Las Vegas Review-Journal, relies on a report by Timothy Considine, a University of Wyoming economics professor whose work we have profiled in depth in our reporting on the “frackademia” phenomenon. That report was funded by the Interstate Policy Alliance, a project of the corporate PR firm Berman and Company which has created myriad front groups to advocate the interests of the tobacco, food, and alcohol industries and to attack unions, animal rights, and environmental regulations. The Salt Lake Tribune and Las Vegas Review-Journal columns were penned by Anastasia Swearingen, who is identified as a research analyst at the Environmental Policy Alliance, a project of another Berman front group, the Center for Organizational Research and Education.
In their foray into the fracking debate, Berman and Company seems to have deployed a vertically integrated astroturf campaign wherein the firm funded research from a notorious pro-fracking academic through one of its fronts and then deployed another front to cite the research in various newspapers in the Rocky Mountain region.
A little more than a week ago the Orange County Register ran a column by Timothy Considine, the director of the Center for Energy Economics and Public Policy at the University of Wyoming arguing against a ban on hydraulic fracturing in California. Considine claims that fracking in the Monterey Shale could add 557,000 jobs per year and increase the state domestic product by $63 billion. While Considine’s numbers look compelling, they are based on a wild overestimate of the recoverable oil from the Monterey formation. Five days after Considine’s column ran, the Energy Information Administration reduced its estimate of recoverable oil from the Monterey Shale by 96%.
On Tuesday, the Los Angeles Times published an interview with Stanford professor of geophysics Mark Zoback in which he argued against a moratorium on fracking in California and lauded the oil and gas regulatory regimes in Pennsylvania and Texas. At the beginning of the article, Zoback is identified as “Stanford geophysicist since 1984, member of the National Academy of Engineering’s Deepwater Horizon investigation committee, personal ‘decarbonizer,’ [and] fracking expert.”
What the LA Times left off of Zoback’s CV is his role as an oil and gas industry insider. In addition to his position at Stanford and role on President Obama’s industry-stacked Natural Gas Subcommittee of the Energy Advisory Board, Zoback is a senior executive advisor to the oilfield services company Baker Hughes, the former chair the oil and gas consulting firm GeoMechanics International (purchased by Baker Hughes in 2008), and a director of the Research Partnership to Secure Energy for America, a federally funded think tank dedicated to “exploring, producing and transporting-to-market energy or other derivative products from ultra-deepwater and unconventional natural gas and other petroleum resources.”
Two weeks ago we reported on former New Mexico governor Bill Richardson’s failure to disclose his Advisor and Chairman positions at consulting firm APCO Worldwide, in his TIME op-ed promoting exporting liquified natural gas (LNG). From December 2012 to January 2014, APCO was contracted by the Ukrainian State Agency for Investment and National Projects for $330,000 to consult on improving the image of an LNG infrastructure project in the country. In November 2013 Richardson was busted for not disclosing this conflict of interest in an article he authored for the Financial Times on exporting LNG to Europe. The Financial Times was forced to issue a correction.
It seems that Richardson has yet to learn his lesson, and is in fact poised to benefit from his high-profile stance supporting LNG exports. On “Platts Energy Week TV” Sunday, Richardson supported speeding up the Department of Energy’s review process for LNG export terminal applications and stressed the role of LNG in providing security to countries in Europe:
“I think it’s important that the United States, as a nation, either pass legislation or executive orders that make it easier to construct these LNG terminals, export natural gas and oil, and increase our energy friendship with these countries that are really fearful of what’s going to happen to them, like what happened to Ukraine.”
You can view the full interview below:
As the west scrambles for a geopolitical response to Russia’s play for the Crimean peninsula, advocates for the oil and gas industry have used the situation to redouble the push to export liquefied natural gas (LNG). Framing the issue as a matter of protecting a fledgling democracy and ensuring security for United States allies, oil- and gas-affiliated pundits, lobbyists, and politicians have begun banging the drum to increase gas exports as a way for the United States to win this standoff with its Cold War rival. However, approving more LNG export facilities is unlikely to have any effect on the current crisis as construction of terminals will take years and billions of dollars and there is no way to ensure that gas will go to Ukraine or any European country when it fetches a higher price in Asia.
Though increased gas exports would not likely score the US a geopolitical win in Crimea, it would help the oil and gas industry to increase their bottom line by selling natural gas, which is currently barely profitable to drill for, to high-priced Asian markets.
As Republic Report’s Lee Fang showed, many in the commentariat calling for exports as a solution have ties to oil and gas lobbying groups and Koch-funded think tanks. We wrote last week on former New Mexico Governor Bill Richardson, who penned an op-ed arguing to use LNG to “[secure] regional independence from Russia,” without disclosing that his employer had been employed as recently as December as a consultant to Ukraine on an LNG project.
Members of Congress have also been speaking out on the issue and have introduced several bills in the House and Senate to expedite Department of Energy approval of LNG export permits. We found that some of the legislators most vocal about LNG and Ukraine have been the recipients of large amounts of campaign cash from the oil and gas industry – the five profiled below have brought in more than $1.5 million since 2009.
On Tuesday TIME published an opinion piece by former New Mexico governor Bill Richardson. In “Our Best Response to Russia is Energy Security,” Richardson argued in favor of using LNG exports to respond to the situation in Ukraine and send “a strong signal” to Moscow:
Strongly supporting projects, such as the Trans-Adriatic and Anatolian Pipelines to extend the East-West energy corridor (connecting the Caucasus and Central Asia to world markets), is not just important for securing regional independence from Russia. These projects are in the West’s long-term interests as well.
In the article TIME noted that Bill Richardson is “a former Secretary of Energy and Ambassador to the U.N.” but failed to disclose that he is an Advisor to consulting firm APCO Worldwide and Chairman of APCO’s Global Political Strategies (GPS) group. In December 2012 APCO was contracted by the Ukrainian State Agency for Investment and National Projects for $330,000 to consult on improving the image of an LNG infrastructure project in the country. From Kyiv Post:
When justifying the choice of a one-bidder tender, the agency said that APCO Worldwide has got experience in communication support and PR in large-scale projects around the globe and can provide professional communication and PR support to the national LNG Terminal project.
In November 2013, while APCO was still under contract with the Ukrainian state agency, The Financial Times (FT) published an article by Bill Richardson (Aptly named “American should not try to keep its shale gas to itself”) promoting US exports of LNG to Ukraine and Europe, without disclosing his APCO tie. After this egregious conflict of interest was exposed it was acknowledged and corrected by FT.
Straight forward connection.
After 13 months, APCO’s contract with the Ukrainian State Agency for Investment was cancelled in January for unknown reasons. But Bill is still on message promoting LNG exports, leading us to wonder about his current client list. Will TIME take a cue from The Financial Times and issue a correction?
As we suspected, the same conflicted experts who called for US military strikes in Syria last year have taken to the airwaves to comment on Ukraine.
Last week, I looked at Stephen Hadley, whose ties to Raytheon and RiceHadleyGates have not been disclosed in multiple media appearances.
Another military-industrial pundit who is back for another go-round: Jack Keane, a retired Army General and Fox News military analyst with significant defense industry connections. Keane is known around PAI for his blithe descriptions of bombing Syria. From our report last fall:
Identified as: Retired Army General; vice chief of staff of the Army from 1999 to 2003; Board Chairman for the Institute for the Study of War; Fox News military analyst. He has also been described as “an influential advocate for the surge of troops in Iraq” and “serving in an advisory role in the U.S. occupation of Iraq.”
Undisclosed industry ties: Keane has been a director with major defense contractor General Dynamics since 2004. General Dynamics was the fourth largest military services company in the world in 201172 and received $15 billion in federal contracts in 2012, making it the fourth largest federal contractor. Keane is a venture partner with SCP Partners, a private equity firm targeting defense and security investments.
Keane was on Lou Dobbs Tonight last week. He had plenty to say about ensuring Putin “pay a price” for the situation in Ukraine, but he did not mention his personal financial stake in the defense industry: Read more…
Stephen Hadley is making the media rounds again. The former National Security Advisor to George W Bush served in the White House when Russia moved into parts of Georgia in 2008 and oversaw the administration’s response. In the past two days Hadley appeared on the Charlie Rose Show, and CNN’s Situation Room and Anderson Cooper 360, to provide commentary on the situation in Ukraine and proffer strategic advice based on his experiences in 2008. In each of those appearances Hadley was simply introduced as the former National Security Advisor.
The hosts failed to mention that Stephen Hadley stepped out of the White House in 2009 and went right to work for the defense industry as a director for Raytheon the same year. This fact, along with Hadley’s penchant for nondisclosure, made him the star of our report, “Conflicts of Interest in the Syria debate.”
Hadley’s audience was not informed that he serves as a director of Raytheon, the weapons manufacturer that makes the Tomahawk cruise missiles that were widely cited as a weapon of choice in a potential strike against Syria. Hadley earns $128,500 in annual cash compensation from the company and chairs its public affairs committee. He also owns 11,477 shares of Raytheon stock, which traded at all-time highs during the Syria debate ($77.65 on August 23, making Hadley’s share’s worth $891,189). Despite this financial stake, Hadley was presented to his audience as an experienced, independent national security expert.
Last fall we issued a report on conflicts on interest in the Syria debate, wherein we tracked the defense industry ties of 22 expert commentators and 7 think tanks who commented on military intervention in Syria. With the uptick in expert analysis on how/if/when the US should respond to the situation in Ukraine we will inevitably see many of the same experts weigh in. In fact we already are.
Today Nicholas Burns was quoted in a New York Times article, “Pressure Rising as Obama Works to Rein in Russia,” and described as “a career diplomat” and “under secretary of state in the George W. Bush administration”:
“It’s the most important, most difficult foreign-policy test of his presidency,” said R. Nicholas Burns, a career diplomat who became under secretary of state in the George W. Bush administration. ”The stakes are very high for the president because he is the NATO leader. There’s no one in Europe who can approach him in power. He’s going to have to lead.”
Nick Burns was an avid commentator during the debates on US intervention in Syria and seems to have carried his disclosure issues into this debate. Burns is a Senior Counselor at the Cohen Group, which boasts a robust defense and homeland security practice and has counted Lockheed Martin, General Dynamics, and United Technologies among its lobbying clients. He is also a director of Entegris, a manufacturing company that provides materials for Aerospace applications, and a board member of the Atlantic Council, which receives financial donations from defense industry heavy-hitters including SAIC, Lockheed Martin, Raytheon, Boeing, and General Dynamics.
As the situation in Ukraine advances we expect we’ll be busy reporting more defense industry ties of experts who feel more comfortable pontificating on sensitive national security issues than on disclosing their own interests.
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