Archive for ‘Corruption’

November 13, 2012

Corruption Watch: Big Pharma

When greed is culturally sanctioned and executives are free to cheat pretty much at will with the only downside being civil fines that are “written off” as a cost of doing business, we can have the remarkable corruption we see in Big Pharma.

From the NY Times back in July:

In the largest settlement involving a pharmaceutical company, the British drugmaker GlaxoSmithKline agreed to plead guilty to criminal charges and pay $3 billion in fines for promoting its best-selling antidepressants for unapproved uses and failing to report safety data about a top diabetes drug, federal prosecutors announced Monday. The agreement also includes civil penalties for improper marketing of a half-dozen other drugs…

No individuals have been charged in any of the cases. Even so, the Justice Department contends the prosecutions are well worth the effort — reaping more than $15 in recoveries for every $1 it spends, by one estimate.

But critics argue that even large fines are not enough to deter drug companies from unlawful behavior. Only when prosecutors single out individual executives for punishment, they say, will practices begin to change.

I do believe the solution is in the paragraph above.

September 23, 2012

Zeit Guy Links – 9/23/12

“The Drugs Don’t Work”: How the Medical-Industrial Complex Systematically Suppresses Negative Studies  (Yves Smith)

We’ve written a lot about the scientism of mainstream economics, both here and in ECONNED, and how these trappings have let the discipline continue to have a special seat at the policy table despite ample evidence of its failure. As bad as this is, it pales in comparison to the overt corruption of science at work in the drug arena. Although this issue comes to light from time to time, often in the context of litigation, the lay public is largely ignorant of how systematic and pervasive the efforts are to undermine good research practice in order to foist more, expensive, and sometimes dangerous drugs onto patients.

Ben Goldacre, a British doctor and science writer, provides a short overview of one of the worst scams practiced by Big Pharma: that of suppressing negative research, in a new piece at the Guardian (hat tip John l). This is the overview:

Drugs are tested by the people who manufacture them, in poorly designed trials, on hopelessly small numbers of weird, unrepresentative patients, and analysed using techniques that are flawed by design, in such a way that they exaggerate the benefits of treatments. Unsurprisingly, these trials tend to produce results that favour the manufacturer. When trials throw up results that companies don’t like, they are perfectly entitled to hide them from doctors and patients, so we only ever see a distorted picture of any drug’s true effects. Regulators see most of the trial data, but only from early on in a drug’s life, and even then they don’t give this data to doctors or patients, or even to other parts of government. This distorted evidence is then communicated and applied in a distorted fashion.


Feast of Fools: How American Democracy Became the Property of a Commercial Oligarchy  (Lewis Lapham)

All power corrupts but some must govern. — John le Carré

The ritual performance of the legend of democracy in the autumn of 2012 promises the conspicuous consumption of $5.8 billion, enough money, thank God, to prove that our flag is still there. Forbidden the use of words apt to depress a Q Score or disturb a Gallup poll, the candidates stand as product placements meant to be seen instead of heard, their quality to be inferred from the cost of their manufacture. The sponsors of the event, generous to a fault but careful to remain anonymous, dress it up with the bursting in air of star-spangled photo ops, abundant assortments of multiflavored sound bites, and the candidates so well-contrived that they can be played for jokes, presented as game-show contestants, or posed as noble knights-at-arms setting forth on vision quests, enduring the trials by klieg light, until on election night they come to judgment before the throne of cameras by whom and for whom they were produced.

Best of all, at least from the point of view of the commercial oligarchy paying for both the politicians and the press coverage, the issue is never about the why of who owes what to whom, only about the how much and when, or if, the check is in the mail. No loose talk about what is meant by the word democracy or in what ways it refers to the cherished hope of liberty embodied in the history of a courageous people


C.E.O.’s and the Pay-’Em-or-Lose-’Em Myth  (NY Times)

CORPORATIONS are forever defending big executive paydays. If we don’t pay up, the argument goes, our sharpest minds will jump to our rivals.

Now, there are good reasons for rewarding top executives. The decisions they make are so crucial to their companies that the priority should be to hire competent people rather than scrimp on pay.

But a study released last week pretty much drives a stake through that old “pay ’em or lose ’em” line — what you might call the brain-drain defense. It also debunks the idea that companies must keep up with the Joneses by constantly comparing their executives’ compensation with that of similar companies.

This peer-group benchmark — how executive pay at one company stacks up against pay at another — is a big driver of ever-rising compensation. Boards say it helps them set pay based on what the market will bear.

Well, maybe not.


Obama That I Used To Know – Gotye Parody

Occupy tents have folded, but the concerns that generated the encampments remain. Below is a video parody of Goyte’s “Somebody That I Used To Know.”  The parody nicely captures the disappointment many young people (and some older folks) feel about the President. So far, about 1,400,000 views.

August 7, 2012

The Libor Scandal: Is There Any Trust is Left in Banks and Banksters?

As of this post the Libor scandal has fallen out of the news while investigations into the long time fixing of interest rates continue. One of the best takes I’ve seen on the larger implications of this “greed, greed, greed makes me do illegal things” affair is by Simon Johnson in The Baseline Scenario blog in a post entitled “Lie-More As A Business Model.” One of the major take-aways:

Martin Wolf, senior economics columnist at the FT [Financial Times] and formerly a member of the UK’s Independent Banking Commission, sees to the core issue:

“banks, as presently constituted and managed, cannot be trusted to perform any publicly important function, against the perceived interests of their staff. Today’s banks represent the incarnation of profit-seeking behaviour taken to its logical limits, in which the only question asked by senior staff is not what is their duty or their responsibility, but what can they get away with.”

This matters because, “Trust is not an optional extra in banking, it is, as the salience of the word “credit” to this industry implies, of the essence.”

Click here for the full post at The Baseline Scenario.


January 19, 2012

The Plutocracy as Kleptocracy: Bankster Mortgage Fraud

To get the full background on the mortgage fraud front, I recommend Naked Capitalism. For now I highlight a post there today on a class action suit against JP Morgan. It begins:

To our knowledge, the suit filed by Ernest Michael Bakenie against JP Morgan is the first to accuse a major bank of widespread, systematic residential mortgage documentation and fraud…

We’ve reported repeatedly of widespread evidence of grotesque procedural abuses as servicers and foreclosure mill lawyers try to cover up for the fact that in many cases, mortgage notes were not transferred properly to securitization trusts, and the rigid way these deals were structured makes it impossible to remedy those failures at this juncture. Absent creating a time machine, the only fix is to fabricate documents that make it appear than things were done correctly. We’ve seen (as in in person) obvious forgeries submitted to the court (signatures obviously Photoshop shrunk to fit) and servicer personnel caught perjuring themselves, yet judges are remarkably unwilling to issue a ruling that hinges on finding that the plaintiff filed phony documents.

If this case moves forward, that reticence may change. Note that this case, which covers only the Central District of California, alleges that Chase engaged in over 7000 filings of motions of relief of stay in bankruptcy court using fabricated documents.

A faint hint of silver glimpsed through the clouds…

January 11, 2012

Annals of Banking Crime: Mafia now “Italy’s No.1 bank”

I tried to think up a comment on this, but, really, it speaks eloquently for itself.

ROME, Jan 10 (Reuters) – Organised crime has tightened its grip on the Italian economy during the economic crisis, making the Mafia the country’s biggest “bank” and squeezing the life out of thousands of small firms, according to a report on Tuesday.

Extortionate lending by criminal groups had become a “national emergency”, said the report by anti-crime group SOS Impresa.

Organised crime now generated annual turnover of about 140 billion euros ($178.89 billion) and profits of more than 100 billion euros, it added.

“With 65 billion euros in liquidity, the Mafia is Italy’s number one bank,” said a statement from the group, which was set up in Palermo a decade ago to oppose extortion rackets against small business.

Old style gangsters handing out cash in bars and pool halls had been replaced by apparently respectable bankers, lawyers or notaries, the report said.

“This is extortion with a clean face,” it added. “Through their professions, they know the mechanisms of the legal credit market and they often know the financial position of their victims perfectly.”

Click here for the full story.

May 13, 2011

Institutional Corruption: The 10 Minute and 40 Minute Intros

What is a corrupted institution? How do institutions get corrupted?  For a perspective to think about these questions I offer the videos below. Both are by Lawrence Lessig. The first he describes as “Ten minutes to explain corruption…” from a talk at the Harvard Thinks Big Forum. It’s dense in the way that haiku can be dense — much illuminated in a few words or, here, in a few minutes. The second video is the latest version of his expanded talk on this, “In Plain Sight Corruption,” given at a class at UC Berkeley. Useful, if not necessary, for understanding how government and other instutions actually operate. Includes recommendations for taking action to remedy this ruinous state of affairs.

The shorter course:

The longer course:

[Can’t see the video in your RSS reader or email? Click here.]

April 3, 2011

Annals of Greed: The $100 Million Pied-à-Terre

A tale of the 1% or, more accurately, the 1% of 1%. Not much to be said here. The story of Russian billionaire Yuri Milner’s Silicon Valley “foot on the ground” is making the media rounds. One wonders how much is enough. I am fond of Epicurus’s take: ‘Nothing is enough for the man to whom enough is too little.’ More photos where this one is from: Business Insider.

March 31, 2011

Annals of Greed: The Ever Fattening of the 1%

One of the problems with greed is that it knows no bounds. In 1985 the top 1% of the Americans received 12% of the income and controlled 33% of the wealth. Now the figures are 25% and 40%. respectively. This is not a good thing…and not only from a notion of fairness. It’s a bad thing, also, because of what happens to nations when the distribution of wealth is so skewed.

Such is the warning that Joseph Stiglitz brings us in his article, “Of the 1%, by the 1%, for the 1%,” in the current issue of Vanity Fair. One of several money quotes in a money article:

The more divided a society becomes in terms of wealth, the more reluctant the wealthy become to spend money on common needs. The rich don’t need to rely on government for parks or education or medical care or personal security—they can buy all these things for themselves. In the process, they become more distant from ordinary people, losing whatever empathy they may once have had. They also worry about strong government—one that could use its powers to adjust the balance, take some of their wealth, and invest it for the common good. The top 1 percent may complain about the kind of government we have in America, but in truth they like it just fine: too gridlocked to re-distribute, too divided to do anything but lower taxes.

And the consequences?

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