Being Right or Making Money

From TPM Muckraker, posted before our national celebration of Freedom:

A Luxembourg-based subsidiary of Koch Industries has admitted to making illegal campaign contributions to political candidates and committees.



INVISTA is a limited liability company involved in the textile manufacturing business that is organized in Luxembourg but headquartered in Kansas. They admitted in a filing with the Federal Election Commission that was disclosed this week that they made 12 contributions totally $26,800 to various political committees between Nov. 2005 and Oct. 2009.



INVESTA voluntarily disclosed the violations to the FEC in Aug. 2010 after an investigation by Koch Companies Public Sector (KCPA), which represents Koch Industries and their affiliates, and outside counsel. Their investigation revealed that the employees involved with making the donation decisions did not know INVESTA was a foreign entity and did not know that foreign corporations could not contribute to state elections like corporations could.

For me, the news (and puzzle) is not that they did it, but that they self-reported it. Note that the action is: (a) pre-Citizens United; (b) inadvertent (because the employees of the foreign company "did not know" they were working for a foreign company); and (c) some Koch internal watchdog entity fessed up.



The fine is "$4,700 for violating the law" under an "conciliation agreement" plus an agreement get the money returned. The effect is to appear to confirm the foreign donations ban, but I'm wondering why KCPA came forward.



But something's going on that's not being reported. Why did they fess up? Businesses don't usually fess up about anything. They always make the feds prove it, even for minor stuff like perfectly clean sawdust in milk.



Yet on this story, there's nothing but silence on that aspect. For instance, here's the same tale from HuffPost (my emphasis):

INVISTA's contributions were disclosed to the FEC after lawyers for Koch Industries discovered the illegal contributions and relayed the information to the FEC for review.

All very voluntary, and no digging for causes.



If I'm managing this strategically from atop the Olympian clouds at Koch Brothers Central, I'd work the response more cleverly into my geo-political grand schemata. After all, I want all election contribution restrictions overturned, don't I. So is this minor event a bit of hyper-clever mis-direction by the Koch Olympians, or a mistake by a corporate underling working in a sub-office of a subsidiary (in this case, the Koch internal watchdog group)?



Could be either, but I suspect that this was handled too quickly and at too low a level for Olympian eyeballs, by relatively honest people who were hired to do non-geo-political wrangling — i.e., keeping the numerous acquired toilet-paper and textile companies in that giant Kochish octopus on the right side of basic and mundane law.



Pushing the Citizens United envelope is not mundane, however. So if I'm right, you may not see that kind of compliant response again. But in any case, expect a challenge to the foreign corp limitation from somewhere. After all, the Chinese would love a piece of the purchase-a-politico game, assuming they don't already have their own set of retainers under contract. It's going to happen.



But for now, kudos to Koch lower-downs for (inadvertently?) doing the right thing. Hope you have a backup plan in case the bosses aren't pleased.



GP

1: Capitalism’s now a lethal soul sickness, needs a reawakening

What’s the real problem? Not the economy, not markets, nor even politics. Yes, our economic pains are real. But they’re just symptoms. Something’s structural wrong. Since 2000 endless bad news: Greed, deceit, stupidity, corruption, unethical behavior, lack of moral conscience.

The real problem’s deep in our character, the “mutant capitalism” Jack Bogle warned of in “The Battle for the Soul of Capitalism.” Sadly, that battle was lost. With it we lost our soul, our moral compass. America’s character is measured by our net worth.

2. We’re already in the early stages of a Great Depression

Comparing today with the Great Depression is common sport. In a Newsweek special “Seeing Shades of the 1930s,” Dan Gross wrote: “Wall Street, after two terms of a business-friendly Republican president, self-immolated on a pyre of greed, incompetence and excessive optimism.” Today’s “new normal” economy means high unemployment for years, inflation driving prices, rising interest rates, more debt, chaos.

We are destroying ourselves from within. Former U.S. Comptroller General David Walker warns that “there are striking similarities between America’s current situation and that of another great power from the past: Rome.” Three reasons “worth remembering: declining moral values and political civility at home, an overconfident and overextended military in foreign lands, and fiscal irresponsibility by the central government.” We are becoming more vulnerable to external enemies.

3. Good Depression exposes our self-destruct bubble-thinking

Before the 2008 crash, “Irrational Exuberance” author Robert Shiller warned in the Atlantic magazine that “bubbles are primarily social phenomena. Until we understand and address the psychology that fuels them, they’re going to keep forming.” Housing inflated 85% in the decade: “Historically unprecedented … no rational basis for it.”

Bubble thinking is an toxic virus that infected everyone. Shiller warns of another coming: “We recently lived through two epidemics of excessive financial optimism … we are close to a third episode.”

4. Good Depression will stir outrage, force real reforms

Writing in the Wall Street Journal, Jim Grant, editor of the Interest Rate Observer, wrote: “Why No Outrage? Through history, outrageous financial behavior has been met with outrage. But today Wall Street’s damaging recklessness has been met with near-silence, from a too tolerant populace.” Grant worries that Wall Street will run “itself and the rest of the American financial system right over a cliff.”

But we only went to the edge in 2008. Today, a rebellious “throw the bums out” hostility is blowing a new kind of bubble: Three years ago we did not have Tea Party, union fights, the Arab Spring and Greek austerity riots, all signs of an dark angry future sweeping across America.

5. Good Depression forces Wall Street to think outside the box

In a powerful Bloomberg Markets feature, “No Easy Fix,” we’re told Wall Street’s “profit formula has hit a wall.” Their “money-making machine is broken and efforts to repair it after the biggest losses in history are likely to undermine profits.”

Even Mad Money’s Jim Cramer openly admits hedge fund managers are pocketing megaprofits at capital gains rates while laughing at the stupidity of a broken political system that gives hundreds of billions in tax breaks to the richest, then takes taxes off the table as our middle class is dying under massive unsustainable deficits. Soon angry mobs will “fix” Wall Street.

6. Good Depression will deflate America’s warring soul

The American economy is a “war economy” driven by a egomaniac. I saw it firsthand as a U.S. Marine. Americans love being king of the hill, world’s cop, the global superpower. Why else spend 54% of our tax dollars on a war machine, 47% of the world’s total military budgets.

Why? Our war machine generates such “spectacular profits that many people around the world” are convinced America’s “rich and powerful must be deliberately causing catastrophes so that they can exploit them,” warns Klein in “Shock Doctrine.” No wonder the GOP takes military spending, like tax cuts for the rich, off-the-table: The war industry is a major political donor.

7. Good Depression now … avoids a far bigger depression later

In “The Price of Liberty: Paying for America’s Wars,” Robert Hormats, undersecretary of state and a former Goldman Sachs vice chairman, traces America’s wartime financing from the Revolutionary War to present wars. He warns that today we’re “relying on faith over experience, hoping that sustained growth will erase deficits and that the ballooning costs of Social Security, Medicare and Medicaid will be manageable in the coming decades without difficult reforms.”

Absent a brutal reset, we are on a historically predictable course says Kevin Phillips, Nixon strategist and author of “Wealth & Democracy:” “Most great nations, at the peak of their economic power, become arrogant and wage great world wars at great cost, wasting vast resources, taking on huge debt, and ultimately burning themselves out.” Yes, burned out, unprepared.

So pray for a Good Depression earlier rather than later. Choose now and we can be prepared for whatever comes. Or a Great Depression will hit later, when we’re least prepared, the problems bigger, our faith weaker … don’t raise the debt ceiling.

And the take home message:

reputation management process

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