Issue 299
July
16, 2004
ARTICLES
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Nuclear Terror: Has Bush Made Matters Worse?
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Video Tools Fight Crime, but Privacy Is at Issue
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White Collar Prison Terms Under Debate
v Jackson
Prosecutor to Take Stand
This
article was published in the National Journal on June 29, 2004
Nuclear
Terror: Has Bush Made Matters Worse? By
Stuart Taylor Jr.
“The
United States of America will not permit the world's most dangerous regimes to
threaten us with the world's most destructive weapons,” President Bush vowed in
his January 29, 2002, State of the Union address. Two and a half years later,
one member of the "axis of evil" that Bush denounced in the same
speech, North Korea, may have as many as eight nuclear bombs and be on its way
to making about a dozen a year, with every intention of selling them to
terrorists and other willing bidders.
A second member of the axis of evil, Iran's terrorist-sponsoring Islamic
regime, is racing toward a bomb-making capability while thumbing its nose at
Europe and the United States. The third member, Iraq, turns out to have had no
substantial nuclear weapons program when Bush invaded, contrary to the prewar
Bush-Cheney hype and the more measured, but also mistaken, suspicions of the
world's major intelligence agencies.
Our unstable, nuclear-armed ally Pakistan, caught last year running a black
market in weapons designs and equipment, is crawling with Qaeda sympathizers.
And the 178-nation Nuclear Nonproliferation Treaty regime is at risk of
collapsing into a chain reaction of regimes going nuclear.
"On the current course, if everybody just keeps doing what we're doing, a
nuclear terrorist attack is inevitable," Graham Allison, perhaps the
nation's leading expert on nuclear terrorism, told several hundred people in
his June 22 closing address at a two-day conference on nuclear nonproliferation
sponsored by the Carnegie Endowment for International Peace. "If the U.S.
government and others just keep doing what we're doing, a nuclear 9/11 is more
likely than not in the decade ahead."
More likely than not.
Are we better off than we were four years ago, when it comes to this, the
greatest danger that we face—the risk that Americans will be massacred by the
hundreds of thousands or millions, with survivors fleeing our cities and an
unimaginable impact on our economy and way of life? Listening to the speeches
and reading the reams of stuff distributed at the conference made the task of
preventing such a catastrophe seem like trying to plug thousands of leaks in a
dike.
I supported Bush's invasion of Iraq—wrongly, I now think—as our best hope of
stopping the nuclear proliferation that, if current trends continue, virtually
guarantees nuclear terrorism. I believed (and still suspect) that invading was
the only way to prevent Saddam from getting a nuclear bomb within a few years.
But the invasion, which has fanned the flames of anti-Americanism and terrorism
in Iraq and elsewhere, may not be worth the cost without the other benefit for
which I had hoped: a victory so quick, clean, and low-cost as to deter Iran,
Libya, Syria, and others from developing nuclear weapons lest they suffer the
fate of Saddam.
Instead, the occupation of Iraq has been bloody, costly, divisive, and
unpopular, both there and here; has overstretched our armed forces; and has
discredited the abilities of our leaders and intelligence agencies to determine
whether a hostile regime has weapons of mass destruction. All this makes it
hard to imagine any president launching—or voters supporting—another
regime-change invasion in the foreseeable future. So Bush appears to have
exhausted his "pre-emption" doctrine on a regime with no weapons to
pre-empt.
Was it the Iraq invasion that scared Libya's Muammar el-Qaddafi straight, as
administration officials claim? Perhaps. But many experts doubt it, citing
Qaddafi's long-documented desire to end Libya's economic isolation. In any
case, while the U.S. is bogged down in Iraq, Iran and North Korea are racing to
acquire weapons that would make them invasion-proof. And Bush appears to have
no idea of how to stop them from becoming far more threatening than Saddam ever
was.
Our only remaining hope of halting, or at least slowing, the spread of nuclear
weapons appears to be the sort of painstaking diplomacy, international teamwork
with coalitions of the not-entirely-willing, and payment of extortion to
"evil" regimes that Bush and Cheney disdain.
The administration may already have squandered its best chance of bribing North
Korea—with some combination of nonaggression guarantees, recognition, trade
concessions, and cash—to verifiably freeze or abandon its nuclear program, as
President Clinton and, to some extent, Colin Powell had sought to do. Bush's
reluctance to deal with a tyrant who starves his own people and the
administration's suspicions that North Korea would cheat (again) on any
agreement are understandable. But it's hard to suppress the suspicion that the
Bush approach of denouncing North Korea and pursuing an unwieldy six-state
process, while refusing to engage in bilateral bargaining, has so far been an
abject failure. With no visible progress, "Time favors North Korea,"
in the words of Donald Rumsfeld.
Allison, director of a program on science and international affairs at Harvard
University and author of a forthcoming book, Nuclear Terrorism: The Ultimate
Preventable Catastrophe, said that Bush's North Korea policy may prove to
be "the gravest strategic failure in American history, God forbid."
Allison served in the Clinton Defense Department and strongly supports John Kerry.
He gave a harsh overall appraisal of Bush's efforts to prevent nuclear
terrorism. So did many of the other experts at the conference, where the
administration was represented by fairly low-level officials, and where Sen.
Edward Kennedy, D-Mass., gave a Bush-bashing luncheon speech.
Not all of the critics were Democrats. "We are spending less than a
billion dollars a year on securing the huge stockpile of nuclear weapons and
materials in Russia, which represents potentially a dagger pointed at our heart,
while at the same time spending $10 billion a year on missile defense directed
at a so-far-nonexistent problem and utilizing unproven technology," said
Thomas Graham Jr., a career arms control lawyer, in an interview. He was
President Clinton's special ambassador for nonproliferation and disarmament and
served in the Ford, Carter, Reagan, and Bush I administrations as a politically
appointed arms control and nonproliferation expert. He calls himself an
"Eisenhower Republican." Lamenting Bush's reliance on
"ideologically driven neoconservatives" who disdain diplomacy, Graham
urged a return to the bipartisan approach to foreign policy still embraced by
Republicans including Sen. Chuck Hagel of Nebraska and Senate Foreign Relations
Committee Chairman Richard Lugar of Indiana.
Graham's critique of Bush's
preoccupation with missile defense is echoed in a 94-page draft Carnegie
Endowment report, "Universal Compliance: A Strategy for Nuclear
Security," which notes, "U.S. intelligence assessments and military
officials have said for years that the United States is most likely to be
attacked with a nuclear weapon covertly delivered on a ship, plane, or
truck."
Bush critics agreed with the Carnegie report in denouncing the administration's
push to develop new, more "usable" nuclear weapons, including
so-called mini-nukes and bunker-busters, and its refusal to support the
Comprehensive Test Ban Treaty that the Clinton administration negotiated. New
weapons would add very limited military capability at the cost of igniting a
new arms race and mocking the U.S. promise in the nonproliferation treaty to
work toward nuclear disarmament.
"It's hard to persuade other countries to move in one direction when we
are moving in the other," former Sen. Sam Nunn of Georgia told the
conference on June 21.
Nunn also stressed that by leaving thousands of nuclear missiles on
hair-trigger alert, the Bush administration and Russia are "running the
irrational risk of an Armageddon of our own making"—an accidental or
unauthorized launch. Bush pledged during the 2000 campaign to "remove as
many weapons as possible" from hair-trigger alert, but he has done little
to follow up.
Would John Kerry do better? Allison thinks so. "Bush has had his turn at
bat, and you can see the results," he said, "and John Kerry is eager
to show that he can hit this ball." Allison expressed confidence that
Kerry would make nonproliferation a "real presidential priority" and
"do everything physically and technically possible on the fastest possible
timetable to prevent" proliferation and nuclear terrorism.
I'm not sure I share Allison's optimism about Kerry, whose foremost priority
now seems to be to say anything that might help get him into the Oval Office.
And it is far from clear that Kerry would be more successful than Bush has been
in dealing with the push by North Korea and Iran to acquire doomsday weapons.
Which of these men is a better bet to stop the terrifying drift toward nuclear
catastrophe? Which of them better understands the logic of President Kennedy's
assertion that "the weapons of war must be abolished before they abolish
us"? Our lives may depend on the answer.
* * * * *
This article was published in the Chicago Tribune on
July 11, 2004
Video Tools Fight Crime, but Privacy Is at Issue by Jon Van
A
police officer responding to a bank robbery looks at a video feed on his car's
laptop from cameras inside the bank.
Through the laptop, he can count the robbers and potential hostages. He can see
that guns have been drawn.
At the scene, a camera mounted on the officer's dashboard scans the bank's
entrance, sending video to the dispatcher and other squad cars speeding toward
the bank.
Using video tools on the fly is just a glimpse of the future of crime fighting
in Cook County, and it may not be far off.
Financed with $34 million in federal Homeland Security money, the county is
installing a system to give public safety officers across 128 municipalities
and Chicago unprecedented video surveillance and communication capabilities.
They'll have access to video from government cameras mounted on poles or
traffic lights, cameras placed in police cars and fire trucks and, they hope,
access to privately owned cameras in banks and even parking lots.
Privacy advocates say the plan is another step toward an all-seeing
governmental Big Brother. But a bigger threat to privacy, they say, is Little
Brother--or the individuals, companies and marketers that can use surveillance
technology for commerce.
"We're at a historic watershed in the notion of individual privacy,"
said Larry Smarr, director of the California Institute for Telecommunications
and Information Technology. "Video cameras in banks are useful in
identifying criminals.
"But there's not enough public discussion of the minus side of this technology.
The potential for abuse is sneaking up on us."
Dramatic images of prisoner abuse in Iraq this spring provided a stunning
example of how quickly and widely electronic networks can distribute
information. Many of the images were taken by the soldiers themselves, vividly
illustrating the technological influence of Little Brother.
And while many fear the encroaching threats to privacy, "business is a
greater danger" than the government, said Paul Saffo, director of the
Institute for the Future in Menlo Park, Calif. "They will do things for
security and for marketing that really violate privacy.
"I can envision the day when you drive to a shopping mall and the cameras
will identify your car's license plate and follow everything you do as you go
through the mall. They'll use that to improve their understanding of consumer
behavior.
"In a decade or so, we'll all feel like tagged bears being studied by
biologists."
Cook County's broad communication plans are an example of technology's upside.
Using off-the-shelf technology, it wants to become a national model for
disaster communications by creating a county-wide wireless "hot spot"
for public safety agencies.
Through the Internet, the county will enable police, fire and paramedics from
Chicago and the suburbs to communicate regardless of what radio equipment they
use.
"The biggest complaint you'll hear from any department is the lack of
interoperable communications," said Cathy Maras O'Leary, Cook County's
chief information officer and the architect of the high-tech information
system. "When we had a simulated disaster drill, that's the biggest lesson
we learned."
Last year O'Leary demonstrated the workability of her concept for Cook County
by deploying the technology to blanket the U.S. Open golf tournament at Olympia
Fields Country Club with video surveillance and digital communication. While
using Internet technology, the information was encrypted and traveled on
secured connections open only to authorized personnel.
The system transmitted video to police stations in Olympia Fields and Maywood
as well as to the sheriff's command van. Officers in patrol cars with laptop
computers had access to video images as did others on foot and bicycles using
hand-held units.
"They could zoom down on the golf course from a camera on the bell tower
or check out the railroad station," said Dudley Donelson, O'Leary's
deputy. "It was high-resolution video. In one instance, an officer
watching the video saw a spectator drop something before any officer on the
scene noticed. He alerted them by radio."
Response to the terrorist attacks of Sept. 11 has opened spigots of government
funding to install wireless video surveillance technology that has been under
development for years.
Digital video images are a potent component of surveillance technology that
also includes satellite location tracking cell phones, environmental sensors
and radio frequency ID chips.
Key to the surveillance boom is turning analog information into zeros and ones
that can be sent over computer networks.
Mavix, a Lincolnwood firm, uses technology developed for the Israeli military
to digitize analog signals from video cameras.
Digitizing the signals enables their transmission on regular wired and wireless
computer networks, making them accessible to laptops, desktops and handhelds,
said Ames Adjai, a Mavix vice president.
"Everything is searchable by time and date," said Adjai.
The falling cost of surveillance technology is also putting cameras into
unlikely spots.
A San Diego firm, DriveCam, provides cameras for commercial vehicles. While
they may cost about $1,000 per vehicle, that's a bargain, said Greg Perdue,
fleet loss director for Metropolitan Limousine Service in Chicago.
When the camera records a collision, "there's no more `he said, she said'
to it," said Perdue. "We just e-mail a video clip to the insurance
company and they send a check."
Perdue also uses video records to monitor his employees' driving skills and
provides pointers when he sees them doing anything to abuse the vehicle.
"Before long, these will be available to the general public," he
said. "It's what every parent of a 16-year-old will want to have in his
car."
Ed Andrew, DriveCam's president, said his firm eventually will market a
consumer product. "The insurance industry backs it," he said.
It is a short step from putting a camera and a satellite positioning system in
a car to using wireless technology to put that information on a network.
Parents could watch on the Internet where their teenager takes the family car
and what he's doing.
"In our country it's not unusual for parents to put a camera and
microphone in a baby's room so they can monitor things," said Smarr.
"In Japan, it's already common for parents to put microphones in their
child's backpack to keep track of what he's doing.
"There needs to be a strong public discussion about the implications of
this technology. We cannot stop the technology, but we may control how this
information is used and who controls it."
The benefits of surveillance technology are too real for anyone to expect that
it won't be adopted, said Jack Gold, a technology analyst for the META Group in
Boston.
"If a system identifies me when I go to an airport and that means I don't
have to stand in so many security lines, I think that's just great," said
Gold. "Video isn't that much different from anything else. Your grocery
store knows what you buy, your Internet service knows what Web sites you visit.
"Anonymity is an illusion most of the time."
- - -
Wireless network will put video in the field
Using a dedicated wireless Internet network, Cook County officials plan to
enable sharing of real-time video among emergency personnel.
An example of how the technology might work during a hypothetical bank robbery:
1. Bank cameras
A robbery is captured on video cameras that monitor the interior and exterior
of the bank. In this case, there are two cameras--one in the parking lot and
one in the lobby.
2. Dispatcher
Signals are sent to a dispatcher who monitors the video feeds.
3. Wireless towers
The signal is then sent through towers that comprise the county's wireless
network. The video signal is encrypted so that no outside users can see the
images. The county plans to install 18 towers by 2005.
4. Broadcast to field
The video is sent across the county and accessed by police on the scene with
hand-held video monitors or cell phones. Video can also be accessed by response
vehicles on laptop computers.
* * * * *
This article was published
in the Los Angeles Times on July 11, 2004
White Collar Prison Terms
Under Debate by Jonathan Peterson
In
late May, a 38-year-old Houston accountant and lawyer named Jamie Olis said
goodbye to his wife and baby daughter and moved into a 79-square-foot cell at
the Federal Correctional Institution in Bastrop, Texas.
It might be his home until 2028.
"I take no pleasure in sentencing you to 292 months," U.S. District
Judge Simeon Lake told the Dynegy Inc. executive as he handed down
the sternest penalty yet in the post-Enron crackdown on corporate crime.
"But my job is to follow the law."
Yet what it means for judges to follow the law in punishing white-collar
defendants has suddenly been tossed into limbo. A recent Supreme
Court decision has cast doubt on the legality of the guidelines that determine
federal sentences. That development could affect individuals convicted in the
Justice Department's campaign against corporate fraud — a crackdown punctuated
by last week's indictment of former Enron Corp. Chairman Kenneth
L. Lay.
Under the guidelines, a judge's calculation of investors' financial losses has
largely determined the length of punishment. Late last month, the Supreme Court
appeared to torpedo that approach, ruling that the facts used in sentencing
must be considered by juries — and not judges alone — and proved beyond a
reasonable doubt.
"That is a difficult standard, and unlikely to be met," said Kirby
Behre, a former U.S. prosecutor and coauthor of a book on federal sentencing
for business crimes.
The Supreme Court case involved a crime far different from the kind Olis was
convicted of.
The justices overturned an extra three years in prison given to a Washington
state man who had kidnapped his estranged wife and their son. The trial judge
had determined that the kidnapper displayed "deliberate cruelty" and
therefore deserved prison time beyond the maximum 53 months set by the state's
sentencing guidelines.
But the Supreme Court said it was up to a jury to decide all aspects of a
person's guilt — a finding that many lawyers and court watchers believe extends
to federal white-collar cases as well.
The Olis case, some say, is Exhibit A in that regard.
"I'm not saying that this guy is blame-free," said Avanidhar
Subrahmanyam, a UCLA finance professor who has reviewed Olis' sentence.
"But the way it was computed is very questionable."
In November, a Houston jury found Olis guilty of helping cook the books at
Dynegy, the big Texas energy company. Olis was convicted of a battery of
charges — conspiracy, securities fraud, mail fraud and wire fraud — related to
an accounting scheme called Project Alpha, which cloaked $300 million of debt
as revenue.
After the jury was dismissed, Lake — a respected jurist who is chairman of the
U.S. Judicial Conference's criminal law panel — began considering Olis'
sentence.
Under the sentencing guidelines, several factors — including the skills
required to perpetrate an accounting sleight-of-hand, the number of victims and
a defendant's criminal history — contribute to the length of a prison term for
a white-collar criminal. The most significant factor in determining a sentence
in a corporate fraud case, however, is the monetary loss.
Yet pinning down that loss is far from an exact science, and there are strong
indications that Lake may have missed the mark.
At Olis' sentencing, Lake put the loss at a minimum of $105 million. He based
that finding on his view of losses suffered by the University of California, a
major Dynegy shareholder and lead plaintiff in a class-action lawsuit against
the company.
During the trial, Jeffrey Heil, a former university investment official,
testified that the UC system had lost a little more than $100 million on its
Dynegy investment.
But in a recent interview, Heil made clear that he was not sure the punishment
meted out to Olis was fair, considering the much lighter sentences given to
senior corporate officers who have cut plea agreements in other cases.
"This doesn't make a lot of sense," said Heil, who served as UC's
co-head of investments until January 2003.
Notably, Heil never testified that Project Alpha cost the university system
more than $100 million. Rather, he told the court that UC lost that amount
during its overall period of owning Dynegy stock in 2001 and 2002, a time when
the shares dropped for any number of reasons: the market-rocking Sept. 11,
2001, terrorist attacks; Enron's spectacular collapse, which dragged down the
whole energy sector; Dynegy's ill-fated attempt to acquire Enron; and the
California energy crisis, which raised fears of a broad regulatory clampdown.
Stock Sell-Off
To be sure, that time frame also included Dynegy's negative disclosure that
it was reclassifying $300 million from Project Alpha as debt and that the
Securities and Exchange Commission was looking into the scheme. Those
revelations sparked a major sell-off of the stock.
On April 25, 2002, the day Dynegy revealed those woes, its stock plunged 30%,
falling to $19.21 from $27.30 a day earlier, an overall loss of $3.4 billion.
For all that, some experts say it is difficult to assign a clear-cut loss to
the Project Alpha disclosures because the bad news reinforced other,
long-standing concerns hovering around the company and industry.
"Everything else in that universe was going down, just like one of these
big water slides you see in the playground," said John Olson, a respected
energy analyst with investment firm Sanders Morris Harris in Houston. Project
Alpha "was just one more nail in the coffin."
Said Steven R. Grenadier, a professor of financial economics at Stanford
University: "Clearly, just looking at the stock price highs and lows,
without factoring in the timing of information events or considering the impact
of the industry and overall market, is not an accurate manner of judging the
effect of a manager's actions."
More Questions
There also are new questions about trial testimony that may emerge during
Olis' appeal.
At the trial, Assistant U.S. Atty. Belinda Beek referred Heil to a chart
showing the steep drop in Dynegy's stock on April 25 and asked Heil whether the
decline was triggered by the negative news over Project Alpha.
"Yes," he said, adding, "and this is when we also decided to
sell the stock."
But, in fact, UC continued to buy Dynegy stock — 900,000 shares on May 6 and
May 7, according to a summary of trades the university system provided to The
Times.
In the interview, Heil said that he couldn't recall those specific purchases.
He speculated that they might have been made "because you think the stock
has declined more than the bad news warrants." However, Dynegy's stock continued
to fall, and UC sold all its shares in the following weeks, dumping them at a
loss that Lake would eventually lump into his sentencing calculation.
If the university's losses were limited to declines in Dynegy after the
negative revelations of April 25, and the May purchases were not considered,
UC's losses might have totaled about $59 million, depending on the method of
calculation, UCLA's Subrahmanyam said. By that count, Olis' sentence could be
five years shorter under the sentencing guidelines.
Maybe Olis did "something bad and he deserves time, but his time should be
rationally based," said Behre, a lawyer with Paul, Hastings, Janofsky
& Walker in Washington. "We are now basing sentences directly upon
numbers which are little more than guesswork."
Lake declined to be interviewed. So did Olis, who is appealing both the verdict
and the sentence.
Meanwhile, in the wake of the Supreme Court's decision, Olis attorney David
Gerger has filed a motion asking for his client to be released pending appeal.
Gerger argued that lacking the jury's endorsement of the $100-million-plus
loss, Olis' sentence should be no longer than six months.
For their part, federal prosecutors have sought to describe Olis as the
mastermind of Project Alpha, more central to the plan than even his boss, who
testified against him and, under a plea agreement, was sentenced to five years
in prison.
"Olis was everywhere, involved in all major meetings, even those from
which his superior was excluded," Assistant U.S. Atty. Jimmy R. Sledge Jr.
wrote the judge before the sentencing.
The government urged Lake to figure investors' losses at more than $500 million
— and perhaps twice that amount — based on the hit taken by all shareholders,
not just the university. Prosecutors submitted a consultant study that
considered the entire decline in Dynegy's market value and attempted to screen
out factors unrelated to Project Alpha.
The defense countered that it was impossible to accurately separate the losses
tied to the fraud, given the array of pressures bearing down on Dynegy.
In the end, Lake sought to simplify the matter by focusing on UC's investment
alone.
Toughest Tier
By holding Olis responsible for more than $100 million in losses for the
university, the judge moved the defendant into the toughest tier of sentences,
under guidelines approved in 2001 by a federal commission. Had Olis been
sentenced in 2000, his jail term might have been less than half of what he
ended up with.
The official view at UC is that Olis' punishment fits the crime.
"The Olis sentence reflects the … significant damage that the Dynegy fraud
has inflicted on the company's shareholders," said Trey Davis, director of
special projects for the UC system.
Yet Heil, who now works for the Doris Duke Charitable Foundation in New York,
acknowledged in the interview that he couldn't place a dollar value on the UC
losses tied specifically to Project Alpha.
It was not a number he was asked to single out at trial.
"To be truthful," he said, "I wouldn't have known the figure."
* * * * *