Wednesday, December 3, 2008

Federal Prosecutor Is Making Inquiries in the Investigation of the Dismissal of U.S. Attorneys

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By Carrie Johnson

A prosecutor who is investigating the dismissals of nine U.S. attorneys has been meeting with defense lawyers, dispatching subpoenas and seeking information about the events, according to legal sources familiar with the case.

Attorney General Michael B. Mukasey appointed prosecutor Nora R. Dannehy two months ago, after the department's Office of Inspector General and Office of Professional Responsibility reported that they had hit a roadblock in their lengthy probe into whether political interference prompted the dismissals. Internal investigators said they had been stymied by the refusal of key witnesses, including former presidential adviser Karl Rove and former White House counsel Harriet E. Miers, to cooperate.

By naming a federal prosecutor to determine whether crimes have been committed, the attorney general ensured that authorities would have the power to compel testimony and documents. Dannehy, a longtime assistant U.S. attorney in Connecticut, in recent weeks has met with lawyers and government officials involved in the case. A grand jury in the District has issued subpoenas, the sources said.

The requests for documents could provoke another legal skirmish in a fight over the scope of executive power wielded by the Bush administration. In past cases, White House lawyers have asserted executive privilege in refusing to make available witnesses and information to Congress and interest groups. A lawsuit filed by the House, which also is demanding information about the prosecutor firings, is under consideration by an appeals court.

Justice Department spokesman Peter Carr declined to comment yesterday, as did Tom Carson, a spokesman for the U.S. attorney in Connecticut, where Dannehy is based.

The firings of the U.S. attorneys two years ago touched off allegations that lawmakers and White House aides had engineered the dismissals for improper political reasons. Ultimately, more than a dozen senior Justice Department officials, including then-Attorney General Alberto R. Gonzales, resigned.

D. Kyle Sampson, who served as the chief of staff to Gonzales until his March 2007 resignation, recently took a leave from his job as a partner at the law firm Hunton & Williams while the investigation proceeds. A spokeswoman for the law firm said he is on leave "pending admission to the D.C. bar."

The report by Inspector General Glenn A. Fine singled out Sampson for offering testimony that was "not credible" and "unpersuasive." The authorities also concluded that Sampson had committed "misconduct."

An attorney for Sampson previously said that Sampson had gone out of his way to help investigators and that he had offered "his best, most honest and complete recollection of these events."

Meanwhile, the Justice Department has agreed to cover the legal expenses of Gonzales, who is among several former officials fighting a civil lawsuit in the District accusing him of violating privacy rights and other claims in the weeding out of candidates for the department's elite honors program.

George J. Terwilliger III, an attorney for Gonzales, said that his client had engaged in no wrongdoing, "making it patently unfair and unwarranted to prolong an investigation that has no substantive justification. By the department's own standards, this matter should be closed now as to Judge Gonzales."

Military contractor in Iraq holds foreign workers in warehouses

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By Adam Ashton

About 1,000 Asian men who were hired by a Kuwaiti subcontractor to the U.S. military have been confined for as long as three months in windowless warehouses near the Baghdad airport without money or a place to work.

Najlaa International Catering Services, a subcontractor to KBR, an engineering, construction and services company, hired the men, who're from India, Nepal, Sri Lanka and Bangladesh. On Tuesday, they staged a march outside their compound to protest their living conditions.

"It's really dirty," a Sri Lankan man told McClatchy, speaking on the condition of anonymity because he still wants to work for Najlaa. "For all of us, there are about 12 toilets and about 10 bathrooms. The food — it's three half-liter (one pint) bottles of water a day. Bread, cheese and jam for breakfast. Lunch is a small piece of meat, potato and rice. Dinner is rice and dal, but it's not dal," he said, referring to the Indian lentil dish.

After McClatchy began asking questions about the men on Tuesday, the Kuwaiti contractor announced that it would return them to their home countries and pay them back salaries. Najlaa officials contended that they've cared for the men's basic needs while the company has tried to find them jobs in Iraq.

The laborers said they paid middlemen more than $2,000 to get to Iraq for jobs that they were told would earn them $600 to $800 a month. Some of the men took out loans to cover the fees.

"They promised us the moon and stars," said Davidson Peters, 42, a Sri Lankan. "While we are here, wives have left their husbands and children have been shut out of their schools" because money for the families has dried up. The men live in three warehouses with long rows of bunk beds crammed tightly together. Reporters who tried to get a better glimpse inside were ushered away by armed guards.

The conditions in which the men have been held appear to violate guidelines the U.S. military handed down in 2006 that urged contractors to deter human trafficking to the war zone by shunning recruiters that charged excessive fees. The guidelines also defined "minimum acceptable" living spaces — 50 square feet per person — and required companies to fulfill the pledges they made to employees in contracts.

A U.S. military spokesman for the Multi-National Force-Iraq referred questions to KBR, a Texas-based former subsidiary of Halliburton. The spokesman said that the American military wasn't aware of the warehouses until McClatchy and the Times of London began asking questions about it on Monday.

Some of the men who've been living in the warehouses said that KBR representatives visited the site two weeks ago. They said Najlaa held their passports until the KBR inspection, which Najlaa officials denied. Seizing passports is a violation of the U.S. military's 2006 instructions to contractors.

KBR didn't answer direct questions about the warehouses but issued a two-paragraph statement. "When KBR becomes aware of potential violations of international laws regarding trafficking in persons, we work, within our authority, to remediate the problem and report the matter to proper authorities. KBR then works with authorities to rectify the matter," it said.

Reached in Kuwait, Najlaa chief executive Marwan Rizk said the company recruited the laborers for contracts it expected to begin servicing, but the work didn't materialize. He didn't specify which contracts fell through or why they were delayed. The company offers a number of services in Iraq, including catering at U.S. military bases. "We had some obstacles with the services we were contracted to do," Rizk said. "These obstacles were not forecasted."

He said it's the company's practice to begin paying its employees once they start their jobs, though Najlaa credits them from the time they arrive in Iraq.

While the main complaint in the warehouses centered on living in what many considered prison-like conditions, Najlaa officials said it was crucial to keep the men in the compound to prevent kidnappings or other dangers. "We're in Iraq; it's a war zone," said Isha Rufaie, a Najlaa logistics manager who tried to calm the protest Tuesday.

Peters, the Sri Lankan, said the men had notified Najlaa officials in advance, and the firm had agreed to let them protest their status outside their compound. They walked in thick clusters up and down an airport side road that wouldn't be visible even to the sparse traffic that passes on the airport's primary routes.

The protest, nonetheless, caught the attention of Sabre, a British company that holds a contract to maintain security at the airport.

Sabre officers halted the protest by telling Najlaa to get the men back in the compound. Najlaa officials did so by telling the men they'd be paid Tuesday. They returned to the camp voicing skepticism that Najlaa would follow through. Some of them, reached by phone later in the day, said they hadn't been paid.

Sabre representatives said they've closed similar buildings housing laborers near the airport in the past. Peters, the Sri Lankan, had a message for his countrymen who might consider pursuing work in Iraq. "There is little money here. The jobs do not come easily and people are being held against their wishes," he said.

A group of about 50 men living in tents about a mile away were even worse off than the men in the warehouses, and they appeared to be victims of human trafficking. They live in huts they built with tarps and pieces of carpet, and said they had no access to food or water.

The property is under the control of the Iraq Civil Aviation Administration, which couldn't be reached for comment Tuesday.

These men apparently didn't arrive in Iraq with contracts promising them work, but instead had relied on agents who were supposed to place them in jobs. The men in the tent camp, who're from the same countries as those in the warehouses, said they paid close to $5,000 to the agents.

"We came to make a good salary and go home, but we're not lucky," said Ganesh Kumar Bhagat, 22, a Nepalese man who sleeps with four others in a tent along the main airport road.

He hasn't told his family that his plans did not succeed in Iraq, instead assuring them that he lives and works safely on an American base.

Bhagat and others at the camp gave a McClatchy reporter phone numbers for the agents who led them to Iraq. Some numbers had been disconnected. In other cases, people quickly hung up.

Impeach Bush for Christmas

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By Jeremy Olshan

The White House censored her subversive Christmas tree ornament -- only to spread its anti-Bush cheer.

Seattle artist Deborah Lawrence says she is crestfallen that the ornament she was commissioned to design for the White House Christmas tree will not be displayed. But then again, she always suspected the "ornament might not be met with full enthusiasm."

A mixed-media artist whose work is charged by politics, Lawrence, 55, striped a silver bulb with a swirl of tiny text from a resolution to impeach Bush. "America cannot regain its moral leadership in the world if America cannot hold its leaders accountable for their actions at home," the text reads. "Without accountability, a Democracy will fail."

As one of over 350 artists asked to create a Christmas ornament, Lawrence submitted her work to a White House office this October. She never heard a word of criticism. Along with the other artists, she was invited by Laura Bush to attend a White House reception on Tuesday afternoon, Dec. 2.

On Monday, Lawrence gave an interview to Washington Post gossip columnist Roxanne Roberts, revealing her political handiwork. Lawrence was not supposed to talk about the ornament publicly until Laura Bush revealed the "secret theme" of the ornaments -- the colors of the flag -- at the Tuesday afternoon reception. But she didn't explicitly ask that the interview not be published. "I guess I was naïve," Lawrence says. On Tuesday morning, her interview hit the Post newsstands.

After a little morning reading, and a close look at the ornament, Laura Bush apparently found it lacking the Christmas spirit. "It's inappropriate and it's not being hung," Sally McDonough, a spokeswoman for the first lady, told the Post on Tuesday afternoon. "We reviewed the ornament along with all the [other] ornaments, and Mrs. Bush deemed it inappropriate for the holiday tree."

Lawrence nevertheless was welcomed at the reception in the White House's Blue Room. She posed for a photograph by the tree with her fellow artists, listened patiently as Laura Bush gave a talk about compassion, and gladly explained to artists why they couldn't find her ornament on the tree. "It was a lovely afternoon," she says.

Lawrence was actually flummoxed when she first got the commission this summer. "I had an immediate, convulsive reaction to the request," she says. "Why would I want to put a smiley face of tacit approval on an administration famous for lies, greed, warmongering and religious fundamentalism?"

After all, on the cover of her 2008 book, "Dee Dee Does Utopia," Lawrence depicts a scrawny George W. Bush spoon-feeding the word "FEAR" down the throat of a woman shown in silhouette. The president stands atop a pedestal inscribed with a quote from Nazi Reischmarschall Hermann Goering, in which Hitler's deputy notes how easy it is for leaders to fool their people into supporting a war.

In fact, Lawrence was tapped for the honor by Washington state congressman Jim McDermott, a staunch anti-war liberal who advocated Bush's impeachment. Each year, certain members of Congress are invited to pick artists for the tree, and when McDermott asked a local arts organization, 4culture, for ideas, Lawrence's name came up.

To return the favor, Lawrence, whose political work has been shown at galleries across the country, including a recent show at the Lincoln Center, offered a written homage to McDermott on the ornament: "McDermott was attacked for predicting that no WMDs would be found in Iraq, and he was correct."

Along with the impeachment resolution, Lawrence noted moments of civil disobedience and activism in Washington state: the 1919 Seattle General Strike, in which 65,000 workers walked off the job, and the 1999 WTO protests. McDermott's office told the Associated Press that the congressman had "no role whatever" in the ornament's theme and design.

In past years, White House ornaments have tended to be cloying balls of patriotism. For instance, 2007's secret theme was an homage to the national park system. But the White House Christmas tree does have a history of controversy. In 1972, the Nixon administration was lambasted for topping its tree with the atomic symbol of peace instead of the traditional star. And in 1995, the Clinton administration refused to censor an ornament depicting Newt Gingrich's stocking filled with lumps of coal.

The White House may have dumped Lawrence's ornament like a lump of coal. But censoring it only spread its anti-Bush cheer. "My original intention was to make a statement," Lawrence says. "I felt like I needed to register my feelings about this administration. And I got a really great chance to do it."

US private sector shed 250,000 jobs in November: ADP

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The US private sector lost 250,000 jobs in November, the largest decline in six years, in a further indication of a tightening labor market amid recession, according to a private payrolls report Wednesday.

The job loss was again driven by the goods-producing sector, which posted its 24th consecutive monthly decline in November, the ADP National Employment Report said.

It was the "largest decrease in private sector employment since November of 2002," according to the report.

Nonfarm private employment decreased 250,000 from October to November on a seasonally adjusted basis, it said. The decline exceeded analysts' consensus forecast of a 200,000 drop.

ADP revised upward the October jobs loss to 179,000 from a prior estimate of 157,000, following a September decline of 26,000.

The November jobs decline "offers evidence of a labor market that continues to weaken," the report said.

The Labor Department will issue its nonfarm payrolls report on Friday and analysts expect major job losses in November.

This year, the US economy has shed 1.2 million jobs, and president-elect Barack Obama warned millions more could be lost next year without urgent action.

Obama had announced plans to create 2.5 million new jobs as he forged ahead in his bid to shore up the flagging economy before his January 20 inauguration.

The Federal Reserve has warned the jobless rate could climb to 7.6 percent in 2009 as the economy struggles with a recession amid global financial turmoil.

A private panel of US economists charged with the official designation of business cycles, the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER), said it had determined the world's largest economy has been in recession since December 2007.

Although a recession is generally defined as two consecutive quarters of declining activity, the panel has its own criteria for determining a downturn.

US President George W. Bush's administration acknowledged the NBER conclusion and said it has been working to foster recovery.

Hawaii Endorses Plan for Electric Cars

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The State of Hawaii and the Hawaiian Electric Company on Tuesday endorsed an effort to build an alternative transportation system based on electric vehicles with swappable batteries and an “intelligent” battery recharging network.

The plan, the brainchild of the former Silicon Valley software executive Shai Agassi, is an effort to overcome the major hurdles to electric cars — slow battery recharging and limited availability.

By using existing electric car technologies, coupled with an Internet-connected web of tens of thousands of recharging stations, he thinks his company, Better Place L.L.C. of Palo Alto, Calif., will make all-electric vehicles feasible.

Mr. Agassi has succeeded in assembling a growing consortium of national governments, regional planning organizations and one major car company. Tuesday’s announcement follows earlier endorsements from Israel, Denmark, Australia, Renault-Nissan and a coalition of Northern California localities supporting the idea leading to the deployment of an electric vehicle with a range of greater than 100 miles, beginning at the end of 2010 in Israel. The company plans test deployments of vehicles in 2009 and broad commercial sales in 2012.

Mr. Agassi has raised $200 million in private financing for his idea. In October, he obtained a commitment from the Macquarie Capital Group to raise an additional $1 billion for an Australian project.

On Tuesday, he said that he was optimistic about his project despite the dismal investment and credit markets because his network could provide investors with an annuity. Users of his recharging network would subscribe to the service, paying for access and for the miles they drive.

Given the downturn in the mortgage market, he said that investors are looking for new classes of assets that will provide dependable revenue streams over many years. “I believe the new asset class is batteries,” he said. “When you have a driver in a car using a battery, nobody is going to cut their subscription and stop driving.”

Mr. Agassi has argued that even if oil prices continued to decline, his electric recharging network — which ideally would use renewable energy sources like solar and wind — could provide competitively priced energy for a new class of vehicles.

He supposes that his network idea will be appropriate first for “island” economies that typically have significantly higher energy costs, and then will become more cost-competitive as it is scaled up.

“We always knew Hawaii would be the perfect model,” he said in a telephone interview. “The typical driving plan is low and leisurely, and people are smiling.”

Hawaii is a relatively small market with high energy costs. The state has about 1.2 million cars and replaces 70,000 to 120,000 vehicles annually.

Drivers on the islands also rarely make trips of more than 100 miles, meaning there will be less need for his proposed battery recharging stations. Part of Mr. Agassi’s model depends on quick-change service stations to swap batteries for drivers who need to use their cars before they have completely recharged their batteries.

Peter Rosegg, a spokesman for the Hawaiian Electric Company, said that Better Place would become a major customer for electricity and was also planning to invest in renewable energy sources that would be connected to the electric grid.

“It’s going to be a nonexclusive agreement, but so far they’re the only one that has shown up,” Mr. Rosegg said.

In late November, the mayors of San Francisco and other major Bay Area cities endorsed the Better Place network to help create an electric recharging network by 2012. The company estimates that it will cost $1 billion to build a charging network in the Bay Area that may create as many as half a million charging stations.

Despite challenges, the Better Place model is promising, said Daniel M. Kammen, a professor in the Energy and Resources Group at the University of California, Berkeley. It could appeal to owners of fleets of vehicles and to early adopter customers who are willing to work through the difficulties that will inevitably accompany a new transportation system. “It has a lot of promising features,” he said.

US GAO: critical issues not yet addressed in TARP

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By Richard Cowan and Rachelle Younglai

The investigative arm of the U.S. Congress on Tuesday criticized the Treasury Department's handling of a $700 billion bank bailout program and urged the Bush administration to get it into better shape.

Treasury has yet to address a number critical issues, including how it will ensure that the program "is achieving its intended goals," said Congress' Government Accountability Office (GAO) in a study first reported by Reuters.

Under the government's Troubled Asset Relief Program (TARP), $250 billion has been committed for direct injections into U.S. banks in a bid to revive sluggish credit markets and restore confidence in the banking system.

Some lawmakers have accused banks of hoarding the money, instead of lending it out, and have urged Treasury to make it clear that government funds must be used for loans and not to buy healthy banks or pay higher dividends.

The GAO said Treasury has not yet determined if it will impose reporting requirements on participating banks so that the government can monitor how federal funds are being used.

"The standard agreement between Treasury and the participating institutions does not require that these institutions track or report how they plan to use, or do use, their capital investments," the GAO said.

The congressional watchdog recommended Treasury develop ways to ensure participating banks comply with key TARP conditions, such as limits on executive compensation.

It also urged Treasury to report in a timely manner on whether financial institutions are fulfilling the bailout's goals, and to ensure accountability and transparency.

Treasury agreed with the bulk of the GAO's recommendations, but said it had a "different perspective" with what is needed to evaluate how participating banks are spending their government funds.

Many banks, including Bank of America (BAC.N: Quote, Profile, Research, Stock Buzz), have already received government funds and have assured Congress that they intend to lend the money out to credit-worthy borrowers. ID:nN17526849

The GAO also said oversight and enforcement of the program's executive pay provisions are still unclear. The TARP limits executive pay for participating banks, including restrictions on golden parachutes for departing executives.

The GAO said credit market improvement could not be solely attributed to the government's capital injection program because so many different actions are being taken.

"No single indicator will provide a definite determination of the program's impact," the document said. The GAO said its preliminary indicators of success for the program will include trends in interest rate spreads, mortgage rates, mortgage originations and foreclosures.

In related news, Montana Democratic Sen. Max Baucus, chairman of the Finance Committee, in a statement urged the Senate to confirm the Bush administration's nominee for inspector general of the TARP so he can get to work.

Baucus said the GAO report underlined how important it is for nominee Neil Barofsky to start his job and set up his staff of internal TARP watchdogs. His nomination is being blocked by a single, unnamed Republican senator.

"This report proves the immediate need for oversight of the taxpayer dollars being expended right now as part of TARP. Because of one Senator's anonymous block on this nomination, three weeks have been lost, a key element of the TARP oversight program is not in place," Baucus said.

"It makes no sense to block the appointment of the special inspector general. The Senate must act quickly to confirm the special IG next week."