Daily Archives: November 14, 2008

Italian Mafia cashes in on financial meltdown

Mafia cashes in on Italian downturn

Financial Times | Nov 13, 2008

By Guy Dinmore and Giulia Segreti in Rome

Italy’s Mafia gangs are profiting from the credit crunch by expanding lending to small businesses and using their vast pools of cash to buy up property and companies at knockdown prices.

A report by Confesercenti, an association of shopkeepers which operates a Mafia research group, estimates that 180,000 small enterprises have turned to loan sharks, partly because the credit crunch has affected bank lending.

“The economic crisis makes the Mafia even more dangerous,” said Marco -Venturi, chairman of the association, presenting his “Crime’s Hold on Business” report.

Usury is the fastest-growing business for the Mafia, which has long consolidated its hold over local businesses and politicians, especially in the south, by providing “security” of cash flow and jobs – at a price.

The Mafia – in reality diverse criminal groups with different structures, histories and tendencies – is -estimated to have a turnover of €130bn ($163bn, £109bn), with “commercial” activities accounting for €92bn, or 6 per cent of Italy’s gross domestic product.

Confesercenti estimates usury accounts for €15bn of Mafia income. Narcotics are by far the most profitable activity, traded across Europe and worth €59bn.

The report underscored recent warnings by anti-Mafia prosecutors that criminal gangs were expanding their activities into trade, tourism, the betting industry, restaurants, construction, rubbish disposal and the property and health -sectors.

Prosecutors recently told the Financial Times that Europe was seriously underestimating the geographic reach of the Mafia, which extended to Russian oil trading and banks.

The centre-right government of Silvio Berlusconi has deployed the army in the Naples region to back up police. Critics say its presence is aimed more at winning over public opinion and will end up being directed against illegal immigration.

Roberto Maroni, interior minister, was in Sicily this week to underline the government’s resolve to tackle organised crime by handing over confiscated Mafia assets, including villas and farms, to local authorities and co-operatives.

Confesercenti estimated that about 150,000 shopkeepers pay the pizzo, or protection money, to Mafia gangs, amounting to €6bn a year. A stall in a food market in Naples has to pay €5-€10 a day, while a Palermo construction site must hand over €10,000 a month.

It said “Mafia Inc” paid €1.76bn in salaries, with the head of a clan earning up to €40,000 a month, while an underage drug dealer, at the bottom of the pyramid, is paid about €1,000.

“The Mafia will take advantage of the weaknesses and the uncertainties of the economy to reinforce its positions. It is necessary to react with determination,” Mr Venturi said.

Traditional subjects like history replaced by lifestyle and sex education in British public schools

Traditional subjects such as history and geography are disappearing from state schools, according to new research.

Telegraph | Nov 14, 2008

Traditional subjects ‘disappearing’ from school

By Graeme Paton, Education Editor

Many secondary schools are slashing time devoted to the humanities to make more room for “lifestyle” classes, it was claimed.

It follows an overhaul of the secondary curriculum this year.

From September, new “flexible” timetables have been introduced in all state schools, reducing the number of prescribed lessons.

Teachers are given less detailed instructions on subject matter to free up more time to teach issues such as British identity, citizenship and sex and relationships education.

But the Royal Geographical Society said the move has resulted in a drop in exposure to traditional subjects.

It surveyed 200 schools and found 70 per cent had cut the amount of time spent on geography.

Rita Gardner, society director, said the picture was similar with history.

“We worry about the maintenance of a broad and balanced curriculum as we go forward, and as increasing pressures continue to be placed on it,” she said.

Rebecca Sullivan, chief executive of the Historical Association, told the Times Educational Supplement: “There is some indication that there may be a drop in the time spent teaching history because of the way some schools are adopting the new curriculum and going for a cross curricular approach.”

Mafia is boss in Italy

Foreign Policy |Nov 13, 2008

In an economic crisis, citizens look to the stalwarts of their economy for a little reassurance. But in Italy, the size and resiliency of a famous home-grown business may or may not be so encouraging. That business, as you may have guessed, is organized crime.

A new report from the industry group Conferescenti estimates that the mafia’s combined revenues of 130 billion euros ($163 billion) for 2008 make it the largest business in Italy, comprising a whopping 6 percent of the economy.

Favorite mafia activities such as drug trafficking, loan sharking, and extortion still make up the bulk of the profits (doing construction in Naples? That’ll be 10,000 euros a month to make sure no “accidents” happen), but like any shrewd business, the mafia has branched out. The illegal disposal of waste is second only to the drug business as a money-earner, and even legitimate business such as tourism, restaurants, and food production are now on the books.

The concern is that a worsening economy could drive businesses further into the mafia’s hands. A tighter credit environment means businesses may turn increasingly toward organized crime for loans, which it is all too glad to provide, albeit on very severe terms. It may be a comfort to know someone will support your business during hard times, but the consequences for the community are not as soothing.

Blackwater faces fine for illegally shipping arms to Iraq

erik-prince

Founder and CEO of Blackwater USA, Erik Prince

McClatchy | Nov 13, 2008

By Warren P. Strobel

WASHINGTON — The State Department is preparing to slap a multimillion-dollar fine on private military contractor Blackwater USA for shipping hundreds of automatic weapons to Iraq without the necessary permits.

Some of the weapons are believed to have ended up on the country’s black market, department officials told McClatchy Newspapers, but no criminal charges have been filed in the case.

The expected fine is the result of a long-running federal investigation into whether employees of the firm shipped weapons hidden in shrink-wrapped pallets from its Moyock, N.C., headquarters to Iraq, where Blackwater is the State Department’s largest personal security contractor.

Since the arms shipment allegations first became public 14 months ago, Blackwater, which has received $1.2 billion in federal contracts, according to the Web site fedspending.org, has consistently denied involvement in illicit arms trafficking.

However, the State Department found that Blackwater shipped 900 weapons to Iraq without the paperwork required by arms export control regulations, one department official said. Of that number, 119 were “particularly … erroneous,” he said. He and the other officials spoke on the condition of anonymity because the decision hasn’t been announced.

Federal laws require obtaining a license before exporting military hardware, including automatic weapons, overseas.

Blackwater spokeswoman Anne Tyrrell said Wednesday that the company had “not been informed of an intent to impose a fine, however … we have been cooperating with the government to respond to inquiries into our export processes.”

The State Department’s “resolution of export matters with other significant defense contractors, such as Boeing, L-3, Lockheed-Martin and General Dynamics has typically resulted in some payment” to the government, she said in an e-mail exchange.

Blackwater last month announced what it billed as a major new initiative to ensure that the company complies with rules for exporting military hardware.

Saying that “our company has experienced remarkable growth in the last few years,” Blackwater CEO Erik Prince said: “This growth, our work for the U.S. Government around the world, and the nature of the services we offer have created compliance challenges.”

Blackwater said it created the position of vice president of export compliance and created a three-person independent oversight committee whose members include former U.S. Rep. Asa Hutchinson, R-Ark.

The amount of the planned fine couldn’t be learned, but one State Department official said it was “way in the millions.” The official said the fine could be announced as early as this week. A second official, however, cautioned that it’s not imminent.

Jay Greer, a spokesman for the State Department Bureau of Politico-Military Affairs, which implements defense export controls, declined comment.

The weapons case became public in September 2007 as part of a House Oversight and Government Reform Committee inquiry into then-State Department inspector general Howard Krongard.

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UK “secure” child database accessible by one million “officials”

children_hexed

UK’s ‘secure’ child protection database will be open to one million

The Register | Nov 12, 2008

By Chris Williams and John Ozimek

More than three times as many officials will be able to access sensitive information on every child in England and Wales held in the forthcoming ContactPoint database than estimates circulated by the government suggest, research by The Register has found.

ContactPoint is now scheduled to launch in January. It will store and share data including every child’s name, home address and school, and information about their legal guardians. The government has argued it could help prevent cases similar to the horrific death of Baby P, whose tormentors were convicted at the Old Bailey yesterday.

Publicly available staffing figures from education authorities, the NHS, social services and other organisations show that more than one million government employees will have access to ContactPoint.

The Department for Children, Schools and Families (DCSF) has told parliament that only 330,000 will use the delayed centralised data sharing system.

DCSF ministers Lord Adonis and Kevin Brennan have told both houses of parliament “the number of users is estimated to be around 330,000”.
Use versus access

The lesser figure has been repeatedly highlighted by ContactPoint’s critics as reason to fear it will be open to abuse. News that the true number of users could top a million will provide them with more ammunition to attack the government’s security claims. Although ministers have emphasised the numbers who will “use” ContactPoint rather than be able to access the database, it’s the latter that is seen as most important by campaigners, who are concerned the database will be easily trawled by abusive former partners seeking a reunion, for example.

At time of publications DCSF had not respond to requests for comment on the much wider access to ContactPoint our research reveals.

Both the Conservatives and the Liberal Democrats have pledged to scrap ContactPoint.

Maria Miller, the Tories’ shadow minister for children, schools and families told The Register: “An independent review by Deloitte in February said that urgent changes needed to be made to ContactPoint before the government could implement it. Now more problems are emerging with ContactPoint and still the government thinks it is acceptable to introduce it.

“They have grossly underestimated the number of people who will have access to children’s data and now more children will be put at risk. ContactPoint should be scrapped.”

The Conservatives want to replace ContactPoint with a smaller system that will only hold data on children deemed at risk. Officials wrote to councils in October arguing against the alternative scheme. DCSF later apologised for the breach of civil service political impartiality rules.

The total number of government employees who will have access to ContactPoint among only GPs and the police is more than 323,000, official figures show.

Bush administration moves to dismiss Amish “Mark of the Beast” lawsuit

Bush Administration: Dismiss RFID ‘Mark of the Beast’ Lawsuit

Wired | Nov 13, 2008

By David Kravets

The Bush administration on Thursday urged a federal judge to dismiss a lawsuit brought by a group of Amish farmers in Michigan claiming RFID chips required on cattle “are a mark of the beast.”

The Amish farmers claim (.pdf) Michigan regulations requiring them to use radio frequency identification devices on their cattle “constitutes some form of a ‘mark of the beast’ and/or represents an infringement of their ‘dominion over cattle and all living things’ in violation of their fundamental religious beliefs,” according to the farmers’ lawsuit filed in September in U.S. District Court for the District of Columbia.

In response to the charges, the United States Department of Agriculture wrote (.pdf) Thursday that its RFID tagging program is a voluntary measure to help agricultural officials track bovine and other livestock diseases. The USDA said the lawsuit should be directed at Michigan, which adopted RFID requirements last year.

The case should be dismissed, the administration wrote, “because plaintiffs cannot establish that any rule issued or action taken by the USDA either mandates the use of RFID tags on livestock located within Michigan, or, conversely, prevents the Michigan Department of Agriculture from granting appropriate religious exemptions imposed by that department.”

The farmers, however, contend the program is a USDA mandate because the Michigan law was adapted last year as part of a multi-million dollar, federally backed grant program to help eradicate livestock disease.

As radio frequency identification devices become a daily part of the electronic age, RFID technology is increasingly coming under fire for allegedly being the mark of Satan. The technology is fast becoming a part of passports, payment cards, locking devices and is widely expected to replace bar-code labels on consumer goods.

The Virginia-based Farm-to-Consumer Legal Defense Fund, a 1,400-member group, brought the case. Some of its members so staunchly oppose the program that “they may have to quit farming,” according to the lawsuit.

Bailout execs get bonus billions from taxpayers

TRIBUNE-REVIEW | Nov 13, 2008

By Thomas Olson

Despite the worst financial crisis since the Great Depression, Wall Street firms expect to pay billions in executive bonuses after being shored up with billions in taxpayer dollars.

Related

Treasury Secretary Henry Paulsen threatened martial law if bailout bill was not passed

Merrill Lynch & Co. lost money for five straight quarters and its stock dropped 70 percent this year. Yet, it set aside about $6.7 billion to pay bonuses this year, according to a Bloomberg analysis.

“I think it’s sickening when I hear these stories,” Democratic Rep. Jason Altmire of McCandless said Wednesday. “The Wall Street firms are tone deaf. They don’t understand the American people are outraged at this type of behavior.”

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Many banks paying bonuses are receiving billions in capital from the Treasury department as part of the government’s $700 billion financial rescue plan. The Troubled Asset Relief Program, known as TARP, was announced in September.

Stock brokerage giant Merrill Lynch is receiving $10 billion from the government. The struggling institution is merging into Bank of America.

Bank of America, which is getting $15 billion from TARP, is offering bonuses equaling up to 100 percent of revenue Merrill’s brokers generate, in order to retain them, said Bloomberg.

“The public is angry about this, and they should be,” said Joan Claybrook, president of Public Citizen, a consumer advocacy organization in Washington.

“(Wall Street executives) are the ones who caused this economic crisis, and they are the ones who should be asked to sacrifice,” said Claybrook.

National City Corp. is not receiving government money — but tried to. The struggling Cleveland-based bank applied to the Treasury for money but was told Oct. 19 it would not receive any, according to a recent Securities and Exchange Commission filing.

Five days later, National City agreed to merge into PNC Financial Services Group in a $5.6 billion deal. PNC, in turn, will get $7.7 billion — more than enough to cover the acquisition — from the Treasury in exchange for preferred stock.

National City spokeswoman Kristen Baird Adams declined to discuss the issue yesterday, saying it was “inappropriate for us to comment for your story on bonuses, given our pending merger with PNC.”

PNC spokesman Fred Solomon said: “PNC will comply with the rules governing TARP participants, and the (board’s) compensation committee shortly will start the annual process of carefully considering compensation decisions.”

The Wall Street bailout passed by Congress states the five highest-paid executives cannot receive rich severance packages known as “golden parachutes,” but it doesn’t address bonuses. Altmire said he voted against the bailout for that reason.

“Wall Street firms will say the money isn’t from the bailout,” said Altmire. “But there is no separate pot of money. You have all the money in your budget, and you decide what to do with it.”

Said Claybrook: “The deal was the $700 billion bailout would provide money to banks to increase their liquidity to extend credit to businesses and the public.

“The public’s irritation with this is we’re going into debt as a nation to try to save the economy, and then these banks are using the money to pay bonuses to executives,” she said. “The cost is equal to about $3,000 to $4,000 per citizen, yet many are losing their homes. It’s morally and economically wrong.”

Fifth Third Bancorp, which operates 13 branches in the Pittsburgh region, is another TARP recipient — $3.45 billion. The Cincinnati bank’s stock fell 63 percent this year.

“At this particular point in time, we do not have a decision with respect to executive bonuses. That’s a decision that will be made in January 2009,” said bank spokesman Debra DeCourcy.

Bank of New York Mellon Corp. is receiving $3 billion from the government in exchange for preferred shares in the New York-based institution. It was among the nine major institutions chosen by the Treasury to jump-start TARP.

“We are not using the $3 billion from the capital infusion to pay bonuses or dividends,” said BNY Mellon spokesman Ron Gruendl. The bank hasn’t determined executive bonuses for 2008, he said.

Spokesmen for Citizens Financial Group could not be reached for comment.