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Friday, March 16, 2018
Is ‘Truth, Justice and the American Way’ a Dead Concept?
D.C. DISPATCH-When bombshell bribery and corruption allegations surfaced last December against OSI Systems, a 5,000-employee port-and-aviation scanning company based in Hawthorne, they arrived with all the earmarks of modern investigative reporting: anonymous sources identified as former employees with detailed knowledge, links to public documents supporting the allegations, even a well-made 13-minute documentary illustrating why one expert felt the company was "rotten to the core."
Shortly thereafter the company's stock plummeted, losing some 25 percent in a single day. By February the Securities and Exchange Commission (SEC) and Department of Justice had taken notice and the company's quarterly filings included a disclosure to investors. The stock-watching site SeekingAlpha reported that the investigation disclosure was “… that the SEC has launched an investigation into the company’s compliance with the Foreign Corrupt Practices Act. OSI says the U.S. Attorney’s Office for the Central District of California has also said it would request information.”
This is “Real news” especially in SoCal where OSI Systems' security firm Rapiscan is well known and provides security for, among lots of other places, the Port of Los Angeles. It was the kind of reporting that's hard to come by in this era of newsroom cutbacks and Trump-obsessed 24/7 analysis. It is also worth noting that, despite extensive coverage in the stock-watchdog mediascape, the story has still received little attention from "mainstream" business reporters.
There's just one issue. The original reporting did not come from journalists.
Instead, it came from a "short seller" firm, which means the reporters presumably had a very direct financial interest in negative reporting driving the stock value down. Short sellers make money by, in effect, borrowing shares in a company and selling them. They make money if they "repay" the shares at a lower cost than that initial loan, so clearly, they have a direct financial interest in negative news about the targeted company. A New York Times story described the practice, and the Wild West world of activist investing here.
This particular reporting, about the California company, came from Muddy Waters Research (the name comes not from the father of Chicago blues but from the Chinese proverb about muddy water making it easier to catch fish), which is one of the better known American short-sellers. Carson Block, its founder, is a frequent cable news guest who rose to prominence, in large part, with a series of shorts involving shady practices by a few Chinese companies. In fact, one of the other ways that short-sellers resemble journalists is that China has begun censoring their reporting, issuing its first Hong Kong ban last December, according to the South China Morning Post.
Muddy Waters Research is not shy about denouncing Wall Street, saying on its website that it "... peels back the layers, often built up by seemingly respected but sycophantic law firms, auditors, and venal managements."
The SeekingAlpha stock-watcher website was among those taking notice that the OSI/Rapiscan story had another staple of a news story: the non-denial denial. It reported that "... Not surprisingly, when Block’s revelations became public on December 6, 2017, OSI responded by calling the allegations 'misleading' and said the contracts in Albania and Mexico 'were the result of public tenders'... the press release also stated how effective the contracts have performed. However, they did not categorically deny the charges."
The scandal has played out over months, with OSI share prices swaying with the latest report and those pesky federal investigations looming. A good second quarter earnings report helped, revelation of federal investigations hurt, and a disputed Mexican contract renewal helped, but terms are not entirely clear. The story goes on, but the core reporting remains that original Muddy Waters investigation.
The Motley Fool stock website is among those following the saga, reporting that the Muddy Waters investigation "... launched serious accusations against the company, which the U.S. government is now taking seriously. If OSI Systems’ did indeed use bribes to win those contracts, it could have an enormous impact on OSIS's profits... because of that risk, investors should avoid this stock until it's cleared of all wrongdoing, because there could be significantly more downside ahead if it's not."
You have to wonder if, at a time when President Trump is promising fewer regulators and investigative news reporting is on the wane, if this longstanding practice might become even more mainstream in its own right. The Law360 news website, a division of the very credible LexisNexis firm, covered the OSI/Rapiscan federal investigation revelation and referred to the Muddy Waters report as "a tip" to law enforcement.
Maybe what we're seeing, at least in this case, is that activist reporting is evolving beyond the sort of socially focused reporting we've expected and into the Wall Street environment. Reporting with direct financial gain is certainly not the non-biased journalism of lore, but what about reporters and outlets with their own goals, albeit non-financial? Is a clearly disclosed financial interest all that far removed from other conflicts of interest?
That remains to be seen, but I did notice a sign that "activist reporting" is starting to be treated as quasi-journalism. It's one of the more reliable indications: They're banning it in China.
(Sara Corcoran writes for CityWatch and is a correspondent and contributing editor, as well as founding publisher of the National Courts Monitor. She literally grew up in a “legal family.” She is the granddaughter of “Tommy the Cork,” who advised President Franklin D. Roosevelt and is considered an “author of the New Deal.” As a former Real Estate Executive, Sara was a VP at Remington Capital where she was responsible for originating and servicing the mid cap portfolio for a leading hospitality REIT. Concurrently, she did business development for Jack Kemp at Kemp Capital Partners. She received her MBA from the Antai School of Economics and Management in Shanghai, China, and a BA in Political Science from the University of Southern California. Sara also specializes in Forex, Merger Arbitrage, Cryptocurrencies, and Futures and Commodities.) Prepped for CityWatch by Linda Abrams.
CORRUPTION WATCH-The idea of “Truth, Justice and the American Way” is dead, dead, dead.The phrase is from the 1930's when Joe Shuster and Jerry Siegal created Superman.
Truth, Justice and the American Way were in contrast to the Pre-WW War II Nazi propaganda and in contrast to the Communists during the Cold War. For the 1950's Baby Boomers who heard the phrase each week with the Superman TV series, “Truth, Justice and the American Way” were synonymous with “Life, Liberty and the Pursuit of Happiness.” Truth and Justice defined our American self-image.
Today, lies, lies and more lies fill our daily lives. People will complain about the lies from people whom they dislike while readily promoting lies from people they do like. The GOP condemns “Lame Street media,” while Democrats rail against “Alt News,” but neither finds any fault with their own lies and distortions.
The institution where lies have become most entrenched is the judiciary. The oath, “to tell the truth, the whole truth and nothing but the truth,” itself is a lie. If a witness tries to tell the whole truth, he can be thrown in jail for contempt of court. Witnesses may tell only the truth which the judge finds acceptable and no witness may tell any more truth.
Judges themselves habitually lie and encourage prosecutors and civil attorneys to lie. Truth, Justice and the American Way have no home in today’s courts.
Let’s look at how the ascent of lying has become our national modus operandus.
To justify the invasion of Iraq, the Bush Administration lied that Saddam Hussein had or was about to obtain nuclear weapons. In March 2003, 72% of Americans supported the invasion. Years later, a huge percentage of these same people blamed Hillary Clinton for voting for the invasion, while implicitly lying about their own support.
The Crash of 2008 was the culmination of years of criminal frauds committed by Wall Street firms to cheat investors out of billions of dollars. The big lie was that a few Wall Street executives had “gambled,” i.e., they had taken risks and then oops, they lost money. The Obama Administration used its Too Important to Prosecute Doctrine to steadfastly protect the liars who had crashed the economy.
The GOP was happy to go along with this policy since many of the Wall Street executives were GOP bigwigs.Over $16 trillion was lost but almost no one cared that gargantuan losses were covered-up by the grandiose lie that a few guys had become too adventuresome. Regular Joe’s lost their homes, families went bankrupt, people died from the stress, and it precipitated the opioid epidemic -- all of which lay the ground work for Trump to become President.
In 2010, Los Angeles had its criminal Hollywood Sign Bait and Switch Scam. Hollywood Councilmembers Eric Garcetti [CD13] and Tom LaBonge [CD4] published worldwide that $12 million was needed to protect the Hollywood Sign from developers. The City draped huge SAVE the PEAK letters over the Hollywood Sign and raised money from all around the world.
It was a Bait and Switch scam since there was no danger to the Hollywood Sign. The City wanted to pay a real estate firm $12 million for the Cahuenga Peak, which is the ridge northwest of Mt. Lee where the Hollywood Sign is located, but the world would not pay millions to buy Cahuenga Peak. The criminal H Sign Bait and Switch Scam was like advertising a Mercedes and delivering a Chevy with the justification, “I wanted the money.”
When the State abolished the Community Redevelopment Agencies in 2012, it pointed to Garcetti’s project at 1601 N. Vine as the poster child for the corruption. At the heart of that criminal enterprise was Garcetti’s real estate appraisal fraud to justify the City’s paying $5.4 million for the land that was worth only $4 million.
Two years later in January 2014, Judge Allan Goodman ruled that Garcetti’s update to the Hollywood Community Plan had been intentionally based on “fatally flawed data” and “wishful thinking” to the extent that it subverted the law (Lies and Myths). Judge Goodman was soon off the bench. The State Bar is now knowingly relying on perjury and falsified evidence to try to disbar the attorney who brought the City’s fraudulent data to Judge Goodman’s attention.
The concept that a “Lie Told Thousand Times becomes the Truth”has been attributed to Nazi propagandist Joseph Goebbels. Whether Goebbels coined the phrase or not is not as important as the fact that it describes how the City of Los Angeles treats the truth. Lies and Myths are pushed on people until the public comes to believe the lies to be true.
The current Big Lie thatGarcetti and other crooks have been shoving at Angelenos is that there is a shortage of housing due to a lack of construction. Canon Nolan repeats this lie almost every week on Channel 4 NewsConference. The LA Times constantly supports the lie. Adam Fowler from Beacon Economics claims that the solution to homelessness is to construct more apartments for the wealthy. Most famously, we have State Senator Scott Wiener’s hoax that all of California near any transit route should be massively up-zoned to become five- to eight-story apartments. The only reason that such a ludicrously absurd claim has not been laughed out of the public forum is that people believe the developer lie which has been repeated a thousand times.
What becomes of a society that replaces “Truth, Justice and the American Way” with “Lie, Lie, Lies”?
(Disclosure: author involved with Hollywood Community Plan case)
(Richard Lee Abrams is a Los Angeles attorney and a CityWatch contributor. He can be reached at: Rickleeabrams@Gmail.com. Abrams views are his own and do not necessarily reflect the views of CityWatch.) Edited for CityWatch by Linda Abrams.