Killings, cancer, corruption and Azerbaijan:
Eurovision in the Islamic Republic of BP
by Greg Palast for Left Foot Forward
Saturday, 26 May, 2012
Via
Will “Beyond Petroleum” oil giant BP pick the winner of the Eurovision Song Contest today in Baku, Azerbaijan? If so, I wouldn’t be surprised.
When I was arrested by the military police of Azerbaijan during my investigation of BP for Channel 4′s Dispatches in 2010, one of the cops who surrounded our crew in the desert told us, with great pride:
“BP drives this country.”
Indeed it does.
In 1992, the newly independent former Soviet republic of Azerbaijan elected a kindly Muslim Professor, Abulfaz Elchibey, as President.
But the voters had made an error: Elchibey refused to give BP an exclusive contract to drill the nation’s massive Caspian Sea fields as the company wished. In 1993, with assistance and, reportedly, guns provided by MI6, Elchibey was overthrown by the nation’s former Soviet KGB boss, Heydar Aliyev.
Within three months, Aliyev handed BP a sweetheart deal, called “The Contract of the Century”, to take Azerbaijan’s Caspian oil.
The way to the no-bid deal for BP was “greased”, to use the term applied by former BP operative Leslie Abrahams, with several million dollars in illicit payments and weekends with lap dancers in London for Azeri officials. I asked Abrahams, who was ordered by BP to provide military intelligence to MI6, whether he understood that he was paying “bribes on behalf of BP and the British government”. He replied, “absolutely, yes”.
When asked, BP would not directly deny paying bribes.
The company told us, tantalisingly, that:
“While there were some facts in [Abrahams] account that were accurate, we do not recognise most of it and regarded it as fantasy.” (here is Abrahams in the BP office with his Kalashnikov).
Since BP has taken control of Azerbaijan’s oil, the nation has become fabulously wealthy – at least for those close to the Aliyev family and BP.
And they eat well. The daughters of the new President, Ilham Aliyev (son of Heydar), picked up the tab for dinner in London for a half dozen of their friends. It came to £300,000 (excluding tip and VAT).
According to Robert Ebel, the CIA’s former oil intelligence chief, the whereabouts of $140 million in BP and other oil industry payments are “totally unknown”.
This week, Eurovision Song Contest viewers will be treated to the images of the ancient city of Baku where the Silk Road streets are filled with Maseratis and Bentleys. The Bentley dealership, and much of the capital, is owned by Azerbaijan’s First Lady, Mehriban Aliyeva, the “Sexiest Muslim Woman in the World”. That’s official, the vote was taken by Esquire Magazine. (She’s actually the twelfth “Sexiest Woman in the World”, but the other eleven, infidels all, can be ignored here.)
I’m not saying she doesn’t deserve the title: her fashion model face has been created at great expense by “so much plastic surgery”, according to the US State Department Manning/WikiLeaks cables, that Lady Mehriban “appears unable to show a full range of facial expression.”
But when I left the Old City and its Gucci and Dolce & Gabbana stores and headed off to Sangachal, the town where BP’s terminal operates, I found a nation heading full speed into the 14th century…
Baku, once the world’s leading manufacturer of oil drilling equipment, is now one of the world’s leading centers of oil-toxin cancers. Walking along the main street of Sangachal, the aptly nicknamed, “Terminal Town”, was like doing the rounds in a cancer ward.
The local shoemaker, Elmar Mamonov - who hasn’t sold a shoe in two years - told me:
“This one’s daughter has breast cancer; there, Rasul had a brain tumor. Cancers we had never seen. His funeral was last week.”
Azlan, afraid to give his last name, paid to have a cancerous lung cut out, because employer BP wouldn’t pay. He says the oil company fired him after he could not keep up with his work.
And there was Shala Tageva, a schoolteacher, who has ovarian cancer. She needs treatment soon, but how to pay for it, Mamonov can’t imagine. Shala is Mamonov’s wife.
Suddenly, Mamonov stopped himself.
“If I am arrested, you will help me, yes?”
Sorry, sir, not in the Islamic Republic of BP.
Oil, their main industry, has seen employment drop about 90 per cent according to journalist Khadija Ismayilova. Her father, the former oil production minister, was fired by Aliyev when the minister suggested bribery was behind the destruction of the industry, bribes which allegedly allowed BP to avoid “local content” laws that would have saved those jobs.
Throughout the nation, we heard the same refrain: nostalgia for the old days of freedom and prosperity under Soviet rule; under BP rule, the people’s health, income and freedoms have decayed rapidly, as pollution has turned their Caspian fisheries into a dead, chemical toilet.
But Azeris are well entertained. The massive expenditure for the Eurovision Song Contest follows the government’s spending of $1 million for an Elton John concert during a depression.
Today, only one in seven dollars of GDP is paid in salaries (versus four of five dollars in the US and UK). Where have the billions gone? No one dare look for it, nor the source of the First Lady’s wealth. The last journalist who asked about the funds, Elmar Huseynov, was gunned down in his home. A journalist who questioned what happened to Huseynov was jailed. No third journalist is investigating what happened to the first two.
Azerbaijan is, nominally, a democracy. Indeed, the First Lady won a convincing election to Parliament (as did every other candidate supporting her husband’s regime - there was not a single member of the opposition elected). But it doesn’t, in the end, matter who is voted in, as long as “BP drives”.
Within hours of our arrest, my crew and I were released by the Deputy Chief of the Security Ministry: Imprisoning a Channel 4 reporter would have been an embarrassment for BP. But our witnesses to BP’s horrific drilling practices didn’t do so well. One made it out of the country, but others disappeared.
When you watch the Euro-warblers compete this Saturday, just remember that in Azerbaijan, the winners are already chosen: BP and the family of the Sexiest Muslim Woman in the World. And that’s not a pretty sight.
"Those who danced were thought to be quite insane by those who could not hear the music"
Sunday, May 27, 2012
Friday, May 25, 2012
Illuminati symbol cheered and worshipped across Britain...
ILLUMINATI SYMBOL CHEERED AND WORSHIPPED ACROSS BRITAIN...
... HITLER WOULD BE SO PROUD
The David Icke Newsletter
We are drowning in ritual in Britain this summer. As I write, the Olympic flame is being carried through the streets before cheering crowds in most of the population centres of the country on its way to the games in London at the end of July.
Meanwhile, the country (though far from all of it) is also celebrating the Diamond Jubilee of Queen Elizabeth II and her 60 years as bloodline head of state of Britain as well as 16 Commonwealth countries including Canada and Australia.
Both celebrations are actually rituals to worship two major symbols of the very Control System that is enslaving the people doing the cheering, clapping and waving of flags. Depressing? Yes, if you allow it to be, but I don't, because it achieves nothing. It is just another potent example of that which has held humanity in servitude for aeons - ignorance. Put a nicer way, lack of information.
The Olympic torch relay in which the flame is carried from Greece to the Olympic venue every four years (every two including the winter games) has nothing to do with the ancient games at all. It was instigated at the Nazi Olympics in Berlin in 1936 which were overseen by Hitler's propaganda chief and occultist, Joseph Goebbels ...
... In the run up to the Berlin games, the International Olympic Committee agreed to German requests that a flame should be kindled from the rays of the sun in Olympia, Greece, home of the original games, and carried by torch to the host city. The 'Olympic' tradition of the flame relay had begun and it is being continued on the streets of Britain as you read this.
Some 3,330 runners carried the flame to Berlin through Greece, Bulgaria, Yugoslavia, Hungary, Austria, Czechoslovakia, and Germany in 1936, while 7,000 are doing so across Britain in 2012. On its way through Yugoslavia and Czechoslovakia in 1936 protesters were brutally dealt with in keeping with the 'Olympic spirit'.
The Nazis of 1936 also made the Olympic rings popular and brought them into widespread use at Olympic Games to this day. They ordered that a milestone with carved Olympic rings be installed at the ancient site of Delphi before the torchbearers trotted off for Berlin.
Later, two British writers visited Delphi and found the said milestone with its Olympic rings and recorded in their work, History of the Ancient Games, that the ring symbol originated in ancient Greece when it was actually designed by the originator of the modern games and promoted to prominence by the Nazis.
As in Nazi Germany in 1936 …
… so in Britain in 2012 …
... HITLER WOULD BE SO PROUD
The David Icke Newsletter
We are drowning in ritual in Britain this summer. As I write, the Olympic flame is being carried through the streets before cheering crowds in most of the population centres of the country on its way to the games in London at the end of July.
Meanwhile, the country (though far from all of it) is also celebrating the Diamond Jubilee of Queen Elizabeth II and her 60 years as bloodline head of state of Britain as well as 16 Commonwealth countries including Canada and Australia.
Both celebrations are actually rituals to worship two major symbols of the very Control System that is enslaving the people doing the cheering, clapping and waving of flags. Depressing? Yes, if you allow it to be, but I don't, because it achieves nothing. It is just another potent example of that which has held humanity in servitude for aeons - ignorance. Put a nicer way, lack of information.
The Olympic torch relay in which the flame is carried from Greece to the Olympic venue every four years (every two including the winter games) has nothing to do with the ancient games at all. It was instigated at the Nazi Olympics in Berlin in 1936 which were overseen by Hitler's propaganda chief and occultist, Joseph Goebbels ...
... In the run up to the Berlin games, the International Olympic Committee agreed to German requests that a flame should be kindled from the rays of the sun in Olympia, Greece, home of the original games, and carried by torch to the host city. The 'Olympic' tradition of the flame relay had begun and it is being continued on the streets of Britain as you read this.
Some 3,330 runners carried the flame to Berlin through Greece, Bulgaria, Yugoslavia, Hungary, Austria, Czechoslovakia, and Germany in 1936, while 7,000 are doing so across Britain in 2012. On its way through Yugoslavia and Czechoslovakia in 1936 protesters were brutally dealt with in keeping with the 'Olympic spirit'.
The Nazis of 1936 also made the Olympic rings popular and brought them into widespread use at Olympic Games to this day. They ordered that a milestone with carved Olympic rings be installed at the ancient site of Delphi before the torchbearers trotted off for Berlin.
Later, two British writers visited Delphi and found the said milestone with its Olympic rings and recorded in their work, History of the Ancient Games, that the ring symbol originated in ancient Greece when it was actually designed by the originator of the modern games and promoted to prominence by the Nazis.
As in Nazi Germany in 1936 …
… so in Britain in 2012 …
With control of drone strikes, is counterterror chief John Brennan the US "Assassination Czar"?
Via DN
JUAN GONZÁLEZ: As President Obama expands the use of armed drones to assassinate suspects overseas, the White House is reportedly taking up a key role in determining who should be targeted. Since Obama has taken office, deadly drone strikes have been carried out in Pakistan, Afghanistan, Yemen and Somalia. According to the Associated Press, a small team at the White House led by counterterror chief John Brennan has taken the lead for drafting lists of individuals to target. One official said there is a growing concern over, quote, "how easy it has become to kill someone" under the administration’s drone strike policy.
Late last month, Brennan publicly confirmed that the United States has used drones to conduct targeted killings overseas.
JOHN BRENNAN: President Obama believes that, done carefully, deliberately and responsibly, we can be more transparent and still ensure our nation’s security. So let me say it as simply as I can. Yes, in full accordance with the law, and in order to prevent terrorist attacks on the United States and to save American lives, the United States government conducts targeted strikes against specific al-Qaeda terrorists, sometimes using remotely piloted aircraft often referred to publicly as drones. And I’m here today because President Obama has instructed us to be more open with the American people about these efforts.
AMY GOODMAN: That was John Brennan, President Obama’s top counterterrorism adviser.
The newly revealed procedure for drone attacks means Brennan’s staff consults the Pentagon, the State Department and other agencies in deciding who will be targeted. According to the Associated Press, this makes a military-run review process in place since 2009 less relevant. Pentagon spokesperson George Little has defended the program, saying the department was, quote, "entirely comfortable with the process by which American counterterrorism operations are managed."
For more, we turn to Marcy Wheeler, an investigative blogger who runs the website EmptyWheel.net.
Marcy, welcome to Democracy Now! Talk about the significance of John Brennan being at the hub, being in charge of—well, what would you call this? A White House assassination team?
MARCY WHEELER: Yeah, right. I think we’re now calling Brennan the "assassination czar."
There are a couple of factors to this, Amy. I think one is, the suggestion that the recommendation of who to have on the assassination list is going to come from other entities. The AP describes it as coming from other agencies, possibly the State Department. But that means it’s coming from people that aren’t the special forces guys on the ground in Yemen. It may mean—and we’ll get back to this, but it may mean that it’s coming from Saudi Arabia. The other thing is, it’s unclear whether these assassination strikes are going to be overseen by the Senate intelligence community or by the armed services committees. In other words, it doesn’t—it’s unclear whether—what kind of oversight there will be. And since the Congress has a very difficult time subpoenaing or getting testimony from the National Security Council, it may mean that there is much less oversight for what’s going on.
And then, finally, the clip you had with John Brennan, he kept emphasizing that these are targeted strikes. But the decision, as the AP—as the AP reported it, the decision of this happened not yesterday but actually in April, around April 22nd. And that means it coincides with the decision that the White House made to embrace not just personality strikes, but signature strikes, which means we’re shooting drones at people whose identity we don’t actually know. We’re shooting at them because they look like terrorists from the sky, because they seem to have certain levels of security. In other words, Brennan was not telling the full truth when he said that these are targeted killings. What they are, in fact, are not targeted. We don’t know who we’re shooting at. And the fact that that’s all brought into the White House all at the same time, I think, really means we’ve lowered the level at which we’re targeting people in Yemen, and probably means it’s going to be a lot easier for us to target not al-Qaeda members in Yemen, but insurgents who really aren’t trying to target the United States but are instead fighting the government of Yemen.
JUAN GONZÁLEZ: Marcy Wheeler, you mentioned Saudi Arabia as possibly being involved in helping to identify targets. Now, Brennan used to be a station chief for the CIA in Saudi Arabia and is supposedly close to Saudi intelligence—the intelligence machinery of the Saudi state. Could you talk about Saudi Arabia’s role in this, from what we know?
MARCY WHEELER: Right, yeah. Well, we don’t know, I mean, for sure about the drone strikes, but if you recall after the undie bomb plot was revealed a couple weeks ago—and that actually was delivered up to us in the same week where the White House embraced signature strikes, when John Brennan started managing the targeting of these things, so that all happened around April 20th, April 22nd. Around that time—
AMY GOODMAN: And explain—remind us of what the undie bomb plot was.
MARCY WHEELER: Right. It was a Saudi infiltrator into al-Qaeda in the Arabian Peninsula, and he brought out a similar bomb to the one that Umar Farouk Abdulmutallab used in the Christmas Day bombing in Detroit. He was under Saudi—you know, he was being managed by the Saudis the entire time. He was able to bring the bomb out. The FBI has it. They’re doing analysis. But that plot was revealed to John Brennan, at least, to the U.S., at least, back in April, probably around April 20th. So this is all happening around the same time. The Saudis, you know, deliver us this alleged terrorist plot, and then, around the same time, we decide we’re going to change the way we’re targeting people in Yemen.
And at the same time, in the discussions of this undie bomb plot, there were Saudi sources who were saying, "We’re the ones who pinpoint. We’re the ones who provide the HUMINT, the human intelligence on the ground, for what you’re doing in Yemen." And that’s particularly concerning, because the Saudis not only have very different interests in Yemen than we do, they’re—you know, this is their backyard. They’re worried about the instability in the Middle East generally. They have a big push against the Arab Spring. Their installment of the current president, Hadi, in Yemen is part of that. In addition, they’ve struck at Houthi rebels in the north of Yemen as recently as 2010. And when they were doing that, they actually asked us, "Well, you know, if we had drone strikes, our targeting against these Houthi rebels would be more accurate." So they’ve got far different interests in Yemen than we do, and they’re running around saying, "We’re the ones providing human intelligence for the targeting that you guys are doing in Yemen."
JUAN GONZÁLEZ: Marcy, I want to turn to a comment Attorney General Eric Holder made in March, when he outlined what the White House billed as the legal rationale for its claimed right to kill U.S. citizens who belong to al-Qaeda or associated forces.
ATTORNEY GENERAL ERIC HOLDER: It is and unfortunate but undeniable fact that some of the threats that we face come from a small number of United States citizens who have decided to commit violent attacks against their own country from abroad. Based on generations-old legal principles and Supreme Court decisions handed down during World War II, as well as during this current conflict, it’s clear that United States citizenship alone does not make—does not make—such individuals immune from being targeted.
JUAN GONZÁLEZ: Marcy Wheeler, your response?
MARCY WHEELER: Well, what he was talking about, ostensibly, was the killing of Anwar al-Awlaki, Anwar al-Awlaki’s 16-year-old American citizen son, Abdulrahman, and also Samir Khan, also an American citizen. So he was trying to say, "Well, we OK using drone strikes against American citizens if they reach a certain level of being involved with al-Qaeda." Now, Abdulrahman, the 16-year-old, there’s no evidence that he had any active—I mean, he was a 16-year-old kid, playing soccer like everybody else.
But as the government moves drones to the U.S., and they’re rolling out drones in civilian airspace, you’ve got to really wonder what the legal basis for using drones is and whether—after he made those comments, a number of people in Congress asked him or asked Robert Mueller, the FBI director, whether the U.S. could use drone strikes in the United States, and they really didn’t answer that. They kind of said, "Well, you’ve got to ask the—you’ve got to ask DOJ." And we still don’t have any answer to that. Ron Wyden, the senator from Oregon, has said he doesn’t know, and he’s actually on the Intelligence Committee. So, we don’t know even whether the government claims they could use drones against American citizens in the United States.
AMY GOODMAN: Marcy Wheeler, the people you’re all talking about were killed by drone strikes in Yemen, the poorest country in the Arab world despite receiving over $300 million in military and security aid from the United States over the last five years. Much of that money has gone into an aggressive and controversial counterterrorism campaign rather than programs of humanitarian relief. We recently spoke to Democracy Now! correspondent Jeremy Scahill, who had just returned from Yemen. He said U.S. counterterrorism operations have ignited an Islamist uprising in the country.
JEREMY SCAHILL: The Obama administration began an air war in Yemen. Sometimes the strikes hit the people that were the intended targets, but oftentimes civilians were killed. And so, what happened is that the prophecy envisioned by the leaders of al-Qaeda in the Arabian Peninsula, and envisioned by Anwar al-Awlaki, came true. And that was that the United States intended to turn Yemen into its next Afghanistan, its next Iraq, its next Pakistan. So you had the one-two punch—or actually, there were three punches. The first one is the air strikes. The second one is supporting Saleh family military units. And then the third is not funding any humanitarian programs and allowing the vast majority of the U.S. money to go toward units which were then used as agents of domestic repression.
AMY GOODMAN: Independent journalist Jeremy Scahill. Marcy Wheeler, can you continue to respond to that?
MARCY WHEELER: Yeah, I mean, two more things to add to that. One is, the State Department just released a kind of talk sheet of aid that goes to Yemen. And what it actually shows is for things like humanitarian aid, it’s going down, whereas military aid is going up. And so, I really think we need to be asking how much we’re sucking dry what little humanitarian aid we’re giving to Yemen and instead putting it in drone strikes.
But the other thing is—and Jeremy, I think, mentioned this on the program when he was there—is that one of the reasons why al-Qaeda in the Arabian Peninsula is having some success is because they’re kind of taking the same approach that the Taliban or Hezbollah did, which is they’re providing services. They’re trying to turn the electricity on. And if we’re bombing them, and al-Qaeda in the Arabian Peninsula is turning on the electricity, we’re going to have a really hard time winning that battle for hearts and minds, because we’re not providing the really basic things that people need. And instead, since this new drone targeting procedure rolled out on the 15th, I think, we’ve already killed a number of civilians. So, you know, we’re still killing civilians at the same time as al-Qaeda in the Arabian Peninsula is trying to turn the electricity on.
JUAN GONZÁLEZ: Marcy, John Brennan spoke late last month at the Woodrow Wilson Center for—International Center for Scholars, and he was disrupted by Medea Benjamin of CodePink. Let’s go to a clip of that incident.
MEDEA BENJAMIN: How many people are you willing to sacrifice? Why are you lying to the American people and not saying how many innocents have been killed?
MODERATOR: Thank you, ma’am, for expressing your views. There will be time for questions and answers after the presentation.
MEDEA BENJAMIN: I speak out on behalf of Tariq Aziz, a 16-year-old in Pakistan, who was killed because he wanted to document the drone strikes. I speak out on behalf of Abdulrahman al-Awlaki, a 16-year-old born in Denver, killed in Yemen, just because his father was someone we don’t like. I speak out on behalf of the Constitution, on behalf of the rule of law. I love the rule of law. I love my country. You are making us less safe by killing so many innocent people.
JUAN GONZÁLEZ: For our radio listeners, as Medea Benjamin was speaking for those last 30 seconds, she was being actually dragged and lifted up in the air by a security guard and removed from the offices of the Woodrow Wilson Center—from the auditorium. Marcy, your response? And also, could you talk a little bit about Brennan’s role prior to becoming counterterrorism chief? Under the Bush administration, he had been in the CIA, been a supporter of enhanced interrogation techniques?
MARCY WHEELER: Right. Medea Benjamin’s interruption, right after she was pulled away, John Brennan picked up his speech again. And if I recall, it was something like, "Oh, and al-Qaeda keeps killing other people." And it was this wonderful contrast, because she had just listed all these people that we’ve killed, including citizens. And Brennan just kept going, suggesting that it was al-Qaeda who was killing citizens, after she had just made it clear that that’s not all that was going on.
Brennan, yeah, right, and in—he was at the CIA until, I want to say, 2004, 2005, went—he was a contractor after that. In addition to being a supporter of en hanced interrogation, he also was involved in the targeting for Cheney’s illegal wiretapping program. So he’s got a lot of complicity with some of the things that were done in the Bush administration. And as you already pointed out, he was the Riyadh station chief going back into the '90s. So he's got ties to the CIA in the region going back some time and to a lot of the illegal things that were started under the Bush administration.
AMY GOODMAN: And as Glenn Greenwald pointed out, Brennan’s support of enhanced interrogation techniques forced him to withdraw from consideration as President Obama’s CIA director, because of the controversy that swirled around that.
MARCY WHEELER: And so, one of the things we’ve got now is that, had he been CIA director, he would have been running these targeted strikes, or these not-targeted strikes, with oversight from Congress. But now that he’s running the Yemen war from inside the NSC, it’s not entirely clear whether he’ll have any oversight. Same guy running the war as we otherwise would have had, except that it’s buried in the White House, so it’s going to be less accessible to oversight.
AMY GOODMAN: Marcy Wheeler, we want to thank you for being with us, investigative blogger who runs EmptyWheel.net, speaking to us from Chicago. This is Democracy Now! Back in a minute.
JUAN GONZÁLEZ: As President Obama expands the use of armed drones to assassinate suspects overseas, the White House is reportedly taking up a key role in determining who should be targeted. Since Obama has taken office, deadly drone strikes have been carried out in Pakistan, Afghanistan, Yemen and Somalia. According to the Associated Press, a small team at the White House led by counterterror chief John Brennan has taken the lead for drafting lists of individuals to target. One official said there is a growing concern over, quote, "how easy it has become to kill someone" under the administration’s drone strike policy.
Late last month, Brennan publicly confirmed that the United States has used drones to conduct targeted killings overseas.
JOHN BRENNAN: President Obama believes that, done carefully, deliberately and responsibly, we can be more transparent and still ensure our nation’s security. So let me say it as simply as I can. Yes, in full accordance with the law, and in order to prevent terrorist attacks on the United States and to save American lives, the United States government conducts targeted strikes against specific al-Qaeda terrorists, sometimes using remotely piloted aircraft often referred to publicly as drones. And I’m here today because President Obama has instructed us to be more open with the American people about these efforts.
AMY GOODMAN: That was John Brennan, President Obama’s top counterterrorism adviser.
The newly revealed procedure for drone attacks means Brennan’s staff consults the Pentagon, the State Department and other agencies in deciding who will be targeted. According to the Associated Press, this makes a military-run review process in place since 2009 less relevant. Pentagon spokesperson George Little has defended the program, saying the department was, quote, "entirely comfortable with the process by which American counterterrorism operations are managed."
For more, we turn to Marcy Wheeler, an investigative blogger who runs the website EmptyWheel.net.
Marcy, welcome to Democracy Now! Talk about the significance of John Brennan being at the hub, being in charge of—well, what would you call this? A White House assassination team?
MARCY WHEELER: Yeah, right. I think we’re now calling Brennan the "assassination czar."
There are a couple of factors to this, Amy. I think one is, the suggestion that the recommendation of who to have on the assassination list is going to come from other entities. The AP describes it as coming from other agencies, possibly the State Department. But that means it’s coming from people that aren’t the special forces guys on the ground in Yemen. It may mean—and we’ll get back to this, but it may mean that it’s coming from Saudi Arabia. The other thing is, it’s unclear whether these assassination strikes are going to be overseen by the Senate intelligence community or by the armed services committees. In other words, it doesn’t—it’s unclear whether—what kind of oversight there will be. And since the Congress has a very difficult time subpoenaing or getting testimony from the National Security Council, it may mean that there is much less oversight for what’s going on.
And then, finally, the clip you had with John Brennan, he kept emphasizing that these are targeted strikes. But the decision, as the AP—as the AP reported it, the decision of this happened not yesterday but actually in April, around April 22nd. And that means it coincides with the decision that the White House made to embrace not just personality strikes, but signature strikes, which means we’re shooting drones at people whose identity we don’t actually know. We’re shooting at them because they look like terrorists from the sky, because they seem to have certain levels of security. In other words, Brennan was not telling the full truth when he said that these are targeted killings. What they are, in fact, are not targeted. We don’t know who we’re shooting at. And the fact that that’s all brought into the White House all at the same time, I think, really means we’ve lowered the level at which we’re targeting people in Yemen, and probably means it’s going to be a lot easier for us to target not al-Qaeda members in Yemen, but insurgents who really aren’t trying to target the United States but are instead fighting the government of Yemen.
JUAN GONZÁLEZ: Marcy Wheeler, you mentioned Saudi Arabia as possibly being involved in helping to identify targets. Now, Brennan used to be a station chief for the CIA in Saudi Arabia and is supposedly close to Saudi intelligence—the intelligence machinery of the Saudi state. Could you talk about Saudi Arabia’s role in this, from what we know?
MARCY WHEELER: Right, yeah. Well, we don’t know, I mean, for sure about the drone strikes, but if you recall after the undie bomb plot was revealed a couple weeks ago—and that actually was delivered up to us in the same week where the White House embraced signature strikes, when John Brennan started managing the targeting of these things, so that all happened around April 20th, April 22nd. Around that time—
AMY GOODMAN: And explain—remind us of what the undie bomb plot was.
MARCY WHEELER: Right. It was a Saudi infiltrator into al-Qaeda in the Arabian Peninsula, and he brought out a similar bomb to the one that Umar Farouk Abdulmutallab used in the Christmas Day bombing in Detroit. He was under Saudi—you know, he was being managed by the Saudis the entire time. He was able to bring the bomb out. The FBI has it. They’re doing analysis. But that plot was revealed to John Brennan, at least, to the U.S., at least, back in April, probably around April 20th. So this is all happening around the same time. The Saudis, you know, deliver us this alleged terrorist plot, and then, around the same time, we decide we’re going to change the way we’re targeting people in Yemen.
And at the same time, in the discussions of this undie bomb plot, there were Saudi sources who were saying, "We’re the ones who pinpoint. We’re the ones who provide the HUMINT, the human intelligence on the ground, for what you’re doing in Yemen." And that’s particularly concerning, because the Saudis not only have very different interests in Yemen than we do, they’re—you know, this is their backyard. They’re worried about the instability in the Middle East generally. They have a big push against the Arab Spring. Their installment of the current president, Hadi, in Yemen is part of that. In addition, they’ve struck at Houthi rebels in the north of Yemen as recently as 2010. And when they were doing that, they actually asked us, "Well, you know, if we had drone strikes, our targeting against these Houthi rebels would be more accurate." So they’ve got far different interests in Yemen than we do, and they’re running around saying, "We’re the ones providing human intelligence for the targeting that you guys are doing in Yemen."
JUAN GONZÁLEZ: Marcy, I want to turn to a comment Attorney General Eric Holder made in March, when he outlined what the White House billed as the legal rationale for its claimed right to kill U.S. citizens who belong to al-Qaeda or associated forces.
ATTORNEY GENERAL ERIC HOLDER: It is and unfortunate but undeniable fact that some of the threats that we face come from a small number of United States citizens who have decided to commit violent attacks against their own country from abroad. Based on generations-old legal principles and Supreme Court decisions handed down during World War II, as well as during this current conflict, it’s clear that United States citizenship alone does not make—does not make—such individuals immune from being targeted.
JUAN GONZÁLEZ: Marcy Wheeler, your response?
MARCY WHEELER: Well, what he was talking about, ostensibly, was the killing of Anwar al-Awlaki, Anwar al-Awlaki’s 16-year-old American citizen son, Abdulrahman, and also Samir Khan, also an American citizen. So he was trying to say, "Well, we OK using drone strikes against American citizens if they reach a certain level of being involved with al-Qaeda." Now, Abdulrahman, the 16-year-old, there’s no evidence that he had any active—I mean, he was a 16-year-old kid, playing soccer like everybody else.
But as the government moves drones to the U.S., and they’re rolling out drones in civilian airspace, you’ve got to really wonder what the legal basis for using drones is and whether—after he made those comments, a number of people in Congress asked him or asked Robert Mueller, the FBI director, whether the U.S. could use drone strikes in the United States, and they really didn’t answer that. They kind of said, "Well, you’ve got to ask the—you’ve got to ask DOJ." And we still don’t have any answer to that. Ron Wyden, the senator from Oregon, has said he doesn’t know, and he’s actually on the Intelligence Committee. So, we don’t know even whether the government claims they could use drones against American citizens in the United States.
AMY GOODMAN: Marcy Wheeler, the people you’re all talking about were killed by drone strikes in Yemen, the poorest country in the Arab world despite receiving over $300 million in military and security aid from the United States over the last five years. Much of that money has gone into an aggressive and controversial counterterrorism campaign rather than programs of humanitarian relief. We recently spoke to Democracy Now! correspondent Jeremy Scahill, who had just returned from Yemen. He said U.S. counterterrorism operations have ignited an Islamist uprising in the country.
JEREMY SCAHILL: The Obama administration began an air war in Yemen. Sometimes the strikes hit the people that were the intended targets, but oftentimes civilians were killed. And so, what happened is that the prophecy envisioned by the leaders of al-Qaeda in the Arabian Peninsula, and envisioned by Anwar al-Awlaki, came true. And that was that the United States intended to turn Yemen into its next Afghanistan, its next Iraq, its next Pakistan. So you had the one-two punch—or actually, there were three punches. The first one is the air strikes. The second one is supporting Saleh family military units. And then the third is not funding any humanitarian programs and allowing the vast majority of the U.S. money to go toward units which were then used as agents of domestic repression.
AMY GOODMAN: Independent journalist Jeremy Scahill. Marcy Wheeler, can you continue to respond to that?
MARCY WHEELER: Yeah, I mean, two more things to add to that. One is, the State Department just released a kind of talk sheet of aid that goes to Yemen. And what it actually shows is for things like humanitarian aid, it’s going down, whereas military aid is going up. And so, I really think we need to be asking how much we’re sucking dry what little humanitarian aid we’re giving to Yemen and instead putting it in drone strikes.
But the other thing is—and Jeremy, I think, mentioned this on the program when he was there—is that one of the reasons why al-Qaeda in the Arabian Peninsula is having some success is because they’re kind of taking the same approach that the Taliban or Hezbollah did, which is they’re providing services. They’re trying to turn the electricity on. And if we’re bombing them, and al-Qaeda in the Arabian Peninsula is turning on the electricity, we’re going to have a really hard time winning that battle for hearts and minds, because we’re not providing the really basic things that people need. And instead, since this new drone targeting procedure rolled out on the 15th, I think, we’ve already killed a number of civilians. So, you know, we’re still killing civilians at the same time as al-Qaeda in the Arabian Peninsula is trying to turn the electricity on.
JUAN GONZÁLEZ: Marcy, John Brennan spoke late last month at the Woodrow Wilson Center for—International Center for Scholars, and he was disrupted by Medea Benjamin of CodePink. Let’s go to a clip of that incident.
MEDEA BENJAMIN: How many people are you willing to sacrifice? Why are you lying to the American people and not saying how many innocents have been killed?
MODERATOR: Thank you, ma’am, for expressing your views. There will be time for questions and answers after the presentation.
MEDEA BENJAMIN: I speak out on behalf of Tariq Aziz, a 16-year-old in Pakistan, who was killed because he wanted to document the drone strikes. I speak out on behalf of Abdulrahman al-Awlaki, a 16-year-old born in Denver, killed in Yemen, just because his father was someone we don’t like. I speak out on behalf of the Constitution, on behalf of the rule of law. I love the rule of law. I love my country. You are making us less safe by killing so many innocent people.
JUAN GONZÁLEZ: For our radio listeners, as Medea Benjamin was speaking for those last 30 seconds, she was being actually dragged and lifted up in the air by a security guard and removed from the offices of the Woodrow Wilson Center—from the auditorium. Marcy, your response? And also, could you talk a little bit about Brennan’s role prior to becoming counterterrorism chief? Under the Bush administration, he had been in the CIA, been a supporter of enhanced interrogation techniques?
MARCY WHEELER: Right. Medea Benjamin’s interruption, right after she was pulled away, John Brennan picked up his speech again. And if I recall, it was something like, "Oh, and al-Qaeda keeps killing other people." And it was this wonderful contrast, because she had just listed all these people that we’ve killed, including citizens. And Brennan just kept going, suggesting that it was al-Qaeda who was killing citizens, after she had just made it clear that that’s not all that was going on.
Brennan, yeah, right, and in—he was at the CIA until, I want to say, 2004, 2005, went—he was a contractor after that. In addition to being a supporter of en hanced interrogation, he also was involved in the targeting for Cheney’s illegal wiretapping program. So he’s got a lot of complicity with some of the things that were done in the Bush administration. And as you already pointed out, he was the Riyadh station chief going back into the '90s. So he's got ties to the CIA in the region going back some time and to a lot of the illegal things that were started under the Bush administration.
AMY GOODMAN: And as Glenn Greenwald pointed out, Brennan’s support of enhanced interrogation techniques forced him to withdraw from consideration as President Obama’s CIA director, because of the controversy that swirled around that.
MARCY WHEELER: And so, one of the things we’ve got now is that, had he been CIA director, he would have been running these targeted strikes, or these not-targeted strikes, with oversight from Congress. But now that he’s running the Yemen war from inside the NSC, it’s not entirely clear whether he’ll have any oversight. Same guy running the war as we otherwise would have had, except that it’s buried in the White House, so it’s going to be less accessible to oversight.
AMY GOODMAN: Marcy Wheeler, we want to thank you for being with us, investigative blogger who runs EmptyWheel.net, speaking to us from Chicago. This is Democracy Now! Back in a minute.
Thursday, May 24, 2012
A critical analysis of the Facebook IPO...
Andy Sutton
Infowars.com
May 24, 2012
It will likely go down in history as one of the biggest flops the stock market has ever seen – at least initially. The comedy of errors that have resulted in the loss of billions of dollars of market capitalization and shareholder value is noteworthy. The greed of many that led up to the flop really needs to be dissected though. The purpose of this article, however, is not merely to bash Facebook or anyone else, but rather to shine the light of day on what are generally accepted business practices. Since Facebook has become a household word in the past few weeks, it presents an outstanding opportunity to connect the dots in the hopes of educating retail investors and tipping the scales a bit in favor of the little guy; at least in the information department.
Media Hype – Justified or Unjust?
The headlines alone in the days and weeks preceding the IPO would have had market newcomers believing that Facebook was about to save the world, at least in terms of its benefit to the financial markets. It was going to be the offering that would bring retail investors off the sidelines and get them active in the markets again. This was a classic pump and dump. The media got people frothy and I took phone calls from numerous clients and interested parties, many of whom said they felt that the stock would immediately go to $150 or more a share just because everyone was talking about it.
It truly reminded me of the dot com days when offerings would take off just because the company had a fair amount of web traffic and had the letter ‘e’ in its name. Fundamentals were forgotten and money was put on the line. Obviously we know how that ended. The best friend of underwriters and insiders is a public whipped into a frenzy about an IPO. It allows the insiders to cash out at above market equilibrium prices, make a fortune, and as a result lose most of their incentive to ensure the company’s success moving forward. We’ve seen it hundreds of times already, yet this time it was going to be different. The question must be asked then, who exactly does the financial media work for anyway? If you need a roadmap to answer this question, it is probably best to stop reading here because what follows will likely be very upsetting.
The media once again has shown its true colors and its inclination towards sensationalism. At best this is a symptom of the 24-hour news cycle we’ve become immersed in as a society and the competition for ratings. At worst, it is another piece of evidence that builds a very convincing prima facie case that the media is nothing more than extension of the financial establishment, used once again to the betterment of the establishment at a great cost to retail investors.
Imperfect Information – Are Markets Really Efficient?
One of the things often recited much in the way a sacred creed would be is the idea of something called the Efficient Market Theory, aka Efficient Market Hypothesis (EMT). This is the idea that the marketplace is always efficient. This efficiency is based on five major criteria, one of which is the construct of perfect information. The assumption in EMT is that all financial and economic agents have equal information. With the advent of the Internet, one might falsely assume that this is actually true. Sure we know a whole lot more thanks to the Internet than we did before it, but is the playing field equal? Not a chance. This IPO was another shining example of that.
For evidence I submit an article posted on CNBC’s website on Tuesday May 22, 2012. The article asserted that Morgan Stanley, the principal underwriter (bank in charge of offering Facebook shares) released a note to ‘major clients’ regarding the opinion of its consumer Internet analyst on the Facebook offering.
“In the run-up to Facebook’s $16 billion IPO, Morgan Stanley, the lead underwriter on the deal, unexpectedly delivered some negative news to major clients: The bank’s consumer Internet analyst, Scott Devitt, was reducing his revenue forecasts for the company.
The sudden caution very close to the huge initial public offering, and while an investor roadshow was underway, was a big shock to some, said two investors who were advised of the revised forecast.
They say it may have contributed to the weak performance of Facebook shares, which sank on Monday — their second day of trading — to end 10 percent below the IPO price. The $38 per share IPO price valued Facebook at $104 billion.”
We could argue all day and into the next about Morgan Stanley’s obligation towards all of its clients to release this very pertinent information. For however large of a point that is, it pales in comparison to the idea of perfect information in the marketplace. There is no such thing and this is living, breathing proof. People who seek to refute the notion of EMT generally point at insiders and the illegal distribution of information to third parties as being the only thing that makes the playing field unequal. However, the fact of the matter is that critical information is nearly always reserved for ‘preferred’ clients over the masses. And as you’ll find over the coming weeks and months, the bank will likely get away with it from a legal perspective. However, as a retail investor, understanding that you’re most likely not getting the whole story is critical to protecting yourself against these types of situations.
Morgan Stanley may well end up getting itself sued by the balance of its clients – everyday folks who trusted the firm to make wise decisions on their behalf – but that is only half the story. Retail investors with no ties to the underwriter were also negatively affected by this imbalance of information. So much for the idea of market efficiency.
Epitome of Greed
As more and more information comes out about how this deal went down and the decisions that were made, it should become very apparent to even the most casual of observers that greed was the driving force throughout the entire process. While this may not come as a shock to most folks, the rather transparent nature of the greed in this case is definitely noteworthy.
Even more important to understand is how the Facebook executives and underwriters sacrificed their implied and express fiduciary responsibilities to those who would become Facebook shareholders. Morgan Stanley is already being ‘investigated’ by FINRA and the SEC over its alleged warning of certain large clients regarding the findings of its internal analyst just prior to the IPO. The real problem here is that if we assume hypothetically that Morgan Stanley is found to have acted improperly, nothing of substance will be done. Sure, they’ll have to pay a fine and it may be several hundred thousand dollars or more. They’ll sacrifice a middle manager or low-level executive or two and will claim to have learned the lesson well and will promise to reform. The sad thing is that this is tantamount to you and I doing 120 in a 55 to complete a deal worth a few thousand dollars and receiving a three-dollar speeding ticket. Morgan Stanley released the following statement regarding the distribution of its analyst’s pre-IPO change of heart:
“Morgan Stanley followed the same procedures for the Facebook offering that it follows for all IPOs. These procedures are in compliance with all applicable regulations,” the brokerage said in a statement to CNBC.
“After Facebook released a revised S-1 filing on May 9 providing additional guidance with respect to business trends, a copy of the amendment was forwarded to all of MS’s institutional and retail investors and the amendment was widely publicized in the press at the time.
In response to the information about business trends, a significant number of research analysts in the syndicate who were participating in investor education reduced their earnings views to reflect their estimate of the impact of the new information. These revised views were taken into account in the pricing of the IPO.”
There is just too much incentive in today’s financial structure to cheat, lie, and obfuscate. The penalties don’t serve as an effective deterrent and the practice goes on unabated. This is certainly not an isolated incident. The only reason we’re even hearing this much about it is because of the publicity surrounding the offering. And this also plays into the idea of market efficiency’s major assumption – that all actors and economic agents have access to the same information.
The Fallacy of Retail Demand
The real chicken dinner winner of the whole Facebook IPO was the idea of record retail demand. The company marketed its offering feverishly and was certainly successful in ginning up a lot of talk and speculation, but when it came down to it, there were way too many shares offered. Showing a complete lack of understanding of demand, Morgan Stanley went as far as to increase the number of shares floated by 25% just before the offering commenced.
Even in the first hours of trading, the financial press was almost giddy at what was called ‘record retail demand’ as the shares went from $38 to $45. That initial burst of buying was replaced almost immediately by fervent selling and before the first session was over, underwriters had to step in and support the offering by buying up shares. In short, there were too many shares out there and not enough buyers. While there may have been ‘record demand’, there were way too many shares otherwise prices wouldn’t have tanked. There were scads of reports of funds of all stripes receiving double and even triple the allotment of shares they requested. Their obvious first step was to trim their positions.
Exacerbating the problem was the inability of Nasdaq OMX to handle the flow of orders. Traders and investors were relegated to tracking their positions on spreadsheets and legal pads for much of Friday while Nasdaq struggled to fix the problems. The delay in order processing resulted in losses for many investors and at least one lawsuit has already been filed with likely many more to follow.
Lack of ‘Value’
Tying into the fallacy of Morgan Stanley’s claim that the new information was priced into the IPO is the reality that of the two potential ranges of price offerings given pre-IPO, the final price was at the highest possible level of the two ranges – $38/share. That created a Price/Forward Earnings multiple of around 100, which is several orders of magnitude higher than that of established tech stalwart Google (P/E around 23). For most investors, Google was the only parallel example in recent memory as pertained to the scope and hype of the offering.
It doesn’t take a Wall Street analyst to point out that Facebook, despite all of its popularity among users and tentacles throughout the web, still derives nearly all of its revenues from advertising. And that advertising is contracting in 2012 and is expected to continue to do so in 2013. The hubris of those involved in the decision-making process regarding the pricing of the IPO is unequalled in recent memory. The thought process clearly at work here was that people would be willing to pay an exorbitant premium just because it would be cool to own Facebook. At least that is the distinct impression this author got. Ironically, this time I’m not alone by any stretch as many mainstream analysts and money managers shared that opinion as well.
Take Home Lessons
The simple lesson that can be learned from this whole experience (which is nowhere near over yet by the way) is that in the end fundamentals will rule. The past two weeks are very reminiscent of the hype surrounding the boatloads of IPOs by various Internet companies in the late 1990s. This was to be the biggest ever and so far it has gone down as a huge flop. Absent significant propping by either large shareholders, the underwriters themselves or an aggressive stock buyback program, it would seem that Facebook shares are doomed to mediocrity; at least for now. A second lesson to learn is to never underestimate hype and the greater fool principle that there will always be someone willing to pay more than you did. After nearly a week out on the tiles, many singed Facebook investors are learning what value investors have known for a long time – occasionally, IPOs are nothing more than hot air.
"Congress may begin an investigation of the Facebook IPO scam now that outrage is growing over what is essentially business as usual on Wall Street. Both the Senate Banking Committee and the House Financial Services Committee have announced they will “review” the case but have not announced a date...The Facebook scam is fairly straight forward, so even Congress can figure it out. It was a classic flip and hardly an abnormality in the “markets,” more accurately described as the biggest casino in the world. Everybody knows the house always wins. Despite this reality, millions of Americans can be counted on to rush like lemmings into the abyss"
Irrational Exuberance: Congress Promises to “Review” Facebook Bankster Scam
Kurt Nimmo
Infowars.com
May 24, 2012
Congress may begin an investigation of the Facebook IPO scam now that outrage is growing over what is essentially business as usual on Wall Street. Both the Senate Banking Committee and the House Financial Services Committee have announced they will “review” the case but have not announced a date.
An aide to the House Financial Services Committee told the media hearings are not specifically scheduled.
Ohio Democrat Sherrod Brown, a senior member of the Senate banking panel, said securities markets “require transparency and accountability, not one set of rules for insiders and another for the rest of us.”
A call for “transparency” has become popular with Congress and the establishment media since the economy collapsed, thanks in large part to Stanley Morgan, JP Morgan Chase, and especially Goldman Sachs and others from the financial criminal class on Wall Street.
The Federal Reserve has admitted the top banks own more than 50% of the GDP in the United States. In 2009, Illinois Democrat senator Dick Durbin engaged in a rare bit of candor when he said the banksters own the place. “And the banks — hard to believe in a time when we’re facing a banking crisis that many of the banks created — are still the most powerful lobby on Capitol Hill. And they frankly own the place,” he said during an interview on an Illinois radio station.
The Facebook scam is fairly straight forward, so even Congress can figure it out. It was a classic flip and hardly an abnormality in the “markets,” more accurately described as the biggest casino in the world. Everybody knows the house always wins. Despite this reality, millions of Americans can be counted on to rush like lemmings into the abyss.
In the weeks prior to the IPO, insiders grabbed up most of the shares – well over 200 million – at a remarkably cheap price . They later sold them to outsiders (called “retail investors”) who were mesmerized by the establishment media’s hype in the days leading up to the IPO.
The Insiders paid only 1.1% of the $38 offering price – remarkably low for an initial public offering – thanks to an underwriting discount arranged by Morgan Stanley. “Facebook insiders who sold in the offering not only got a high price for their shares, they got to keep an extraordinarily large portion of the proceeds,” writes Allan Sloan.
So angry were the duped, they immediately sued Facebook frontman Mark Zuckerberg, Goldman Sachs, and JPMorgan Chase, accusing them of concealing “a severe and pronounced reduction” in revenue growth forecasts and telling bank underwriters to “materially lower” their forecasts for the company. Lowered forecasts were revealed only to “preferred” investors.
“If Facebook told analysts to materially lower their forecasts, it should have told the entire market,” Antony Page, a professor at the Indiana University Robert H. McKinney School of Law, told Reuters. “We need to know what exactly was said to the analysts, and determine how different Facebook’s public story was from its private story.”
“The main underwriters in the middle of the road show reduced their estimates and didn’t tell everyone,” said Samuel Rudman, a partner at Robbins Geller Rudman & Dowd, which brought the lawsuit.
The class-action lawsuit filed in U.S. District Court in Manhattan seeks compensatory damages from Facebook, JP Morgan, Bank of America and Barclays. Another scammed investor has filed a lawsuit in California.
On Tuesday, Massachusetts Secretary of Commonwealth William Galvin issued a subpoena to Morgan Stanley. The Securities and Exchange Commission and the Financial Industry Regulatory Authority have also called for a review of the Facebook IPO.
It will take months before any action if any is taken in the case. In the meantime, Goldman Sachs and the other scamsters remain free to engage in more fraud and criminal predatory activity.
Kurt Nimmo
Infowars.com
May 24, 2012
Congress may begin an investigation of the Facebook IPO scam now that outrage is growing over what is essentially business as usual on Wall Street. Both the Senate Banking Committee and the House Financial Services Committee have announced they will “review” the case but have not announced a date.
An aide to the House Financial Services Committee told the media hearings are not specifically scheduled.
Ohio Democrat Sherrod Brown, a senior member of the Senate banking panel, said securities markets “require transparency and accountability, not one set of rules for insiders and another for the rest of us.”
A call for “transparency” has become popular with Congress and the establishment media since the economy collapsed, thanks in large part to Stanley Morgan, JP Morgan Chase, and especially Goldman Sachs and others from the financial criminal class on Wall Street.
The Federal Reserve has admitted the top banks own more than 50% of the GDP in the United States. In 2009, Illinois Democrat senator Dick Durbin engaged in a rare bit of candor when he said the banksters own the place. “And the banks — hard to believe in a time when we’re facing a banking crisis that many of the banks created — are still the most powerful lobby on Capitol Hill. And they frankly own the place,” he said during an interview on an Illinois radio station.
The Facebook scam is fairly straight forward, so even Congress can figure it out. It was a classic flip and hardly an abnormality in the “markets,” more accurately described as the biggest casino in the world. Everybody knows the house always wins. Despite this reality, millions of Americans can be counted on to rush like lemmings into the abyss.
In the weeks prior to the IPO, insiders grabbed up most of the shares – well over 200 million – at a remarkably cheap price . They later sold them to outsiders (called “retail investors”) who were mesmerized by the establishment media’s hype in the days leading up to the IPO.
The Insiders paid only 1.1% of the $38 offering price – remarkably low for an initial public offering – thanks to an underwriting discount arranged by Morgan Stanley. “Facebook insiders who sold in the offering not only got a high price for their shares, they got to keep an extraordinarily large portion of the proceeds,” writes Allan Sloan.
So angry were the duped, they immediately sued Facebook frontman Mark Zuckerberg, Goldman Sachs, and JPMorgan Chase, accusing them of concealing “a severe and pronounced reduction” in revenue growth forecasts and telling bank underwriters to “materially lower” their forecasts for the company. Lowered forecasts were revealed only to “preferred” investors.
“If Facebook told analysts to materially lower their forecasts, it should have told the entire market,” Antony Page, a professor at the Indiana University Robert H. McKinney School of Law, told Reuters. “We need to know what exactly was said to the analysts, and determine how different Facebook’s public story was from its private story.”
“The main underwriters in the middle of the road show reduced their estimates and didn’t tell everyone,” said Samuel Rudman, a partner at Robbins Geller Rudman & Dowd, which brought the lawsuit.
The class-action lawsuit filed in U.S. District Court in Manhattan seeks compensatory damages from Facebook, JP Morgan, Bank of America and Barclays. Another scammed investor has filed a lawsuit in California.
On Tuesday, Massachusetts Secretary of Commonwealth William Galvin issued a subpoena to Morgan Stanley. The Securities and Exchange Commission and the Financial Industry Regulatory Authority have also called for a review of the Facebook IPO.
It will take months before any action if any is taken in the case. In the meantime, Goldman Sachs and the other scamsters remain free to engage in more fraud and criminal predatory activity.
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