Wednesday, June 15, 2011

"Austerity World" Now? (Not For "Them") GHWB's Influences Explained (Again) And The Facts (Let Alone Conclusions) Are Unbelievable!

Yes. "Austerity World" is for us (US citizens at the bottom of the income pyramid). Not for them. As Buffett and many others have noted "They are sitting on trillions." And he's only talking about business interests. The Rethugs and Blue Dog Dims have some austerity in mind that no one will believe. And it will occur without the safety nets of Medicare and Social Security. Bet on it. (When I first heard about the offshort tax-evasioned money in the Caymans and the "Sir" Stanford culprit being exposed, I thought to myself that this could only be the tip of another (financial catastrophe) iceberg. Because, after all, how many people must have been involved with this royal scam?) So where's the rest of all that "disappeared" money? At least Wachovia's not here any longer to take all the blame (as there is plenty to go around).

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And Paul Krugman's last column just addressed what happens when you allow a "rentier" nation to take hold. Pay attention (if you have the time) - as an in-depth discussion is included in the following essay.

If you look at the economic policy demands coming from the right in the face of our current slump, they seem remarkably insensitive to the fact that we are indeed in a slump. Early on, some conservatives called for the use of monetary rather than fiscal policy to stimulate the economy — and you had the likes of Greg Mankiw and Ken Rogoff calling for a period of above-normal inflation. But they were shouted down, and these days the right demands not just fiscal austerity (albeit without any rise in taxes), but hard money too. Modern monetarists like Scott Sumner find themselves without a political home.

What explains this opposition to any and all attempts to mitigate the economic disaster? I can think of a number of causes, but Kuttner makes a very good point: everything we’re seeing makes sense if you think of the right as representing the interests of rentiers, of creditors who have claims from the past — bonds, loans, cash — as opposed to people actually trying to make a living through producing stuff. Deflation is hell for workers and business owners, but it’s heaven for creditors.

The essay below has page numbers attached so you can follow the facts for yourself. (Emphasis marks added - Ed.)

Treasure Islands: Tax Havens and the Men Who Stole the World Nicholas Shaxon, 2011, Bodley Head 27 February 2011 This one gets to the very heart of the matter. As they used to say in The Wire, ‘follow the money’, and that is exactly what Shaxon has done, painstakingly and relentlessly. Even, I might add, to the possible detriment to his own and his family’s safety. The fact that large corporations and criminally wealthy individuals have been moving their wealth off shore to avoid the tax man, and in some cases, the serious fraud squad, is nothing new. They’ve been at it for years. What is new in Shaxton’s book is the exposure of the sheer magnitude of, not only the sums involved, but the Byzantine methods employed to cover their criminal tracks.

What is also new in Shaxton’s book is the extent to which the City of London is shown to be at the very heart of a global network of secret tax havens and just how complicit successive British governments have been in this global scam. To put the matter bluntly, all the current talk of austerity budgets and structural deficits pale into total insignificance when compared to the mind-boggling enormity of the financial crime that is being committed right in front of our noses. So all-consuming is the practise of tax avoidance by the global conglomerates, and so well protected are their offshore financial movements, that even if national governments had a will to confront the practice, it is doubtful if they could summon the muscle to win the battle.

As for the tenure of Gordon Brown – willing accomplice or hapless bystander, it is difficult to know, but either way, history will be sure to damn him.

Capitalism commits many atrocities in the pursuit of profit, including the legal and not so legal arms trade, the legal pharmaceutical and supposedly illegal drug trade, and the ever expanding people trafficking and associated sex trade, but nothing quite compares to the scale of fraud being committed daily by household corporate names. Vodaphone, Boots, Tescoes and Barclays have all recently been in the tax avoidance spotlight but rest assured, they’re all up to their necks in it, and they each employ an army of accountants and lawyers to keep them one step ahead of the law.

In a cleverly titled opening chapter, ‘Welcome to Nowhere’, Shaxton lays out the ground for what is to follow;

‘The offshore world is all around us. More than half of world trade passes, at least on paper, through tax havens. Over half of all banking assets and a third of foreign direct investment by multinational corporations, are routed offshore. Some 85 per cent of international banking and bond issuance takes place in the so called Euromarket, a stateless offshore zone… The IMF estimated in 2010 that the balance sheets of small island financial centres alone added up to $18 trillion- a sum equivalent to about a third of the world’s GDP. And that, it said, was probably an underestimate. The US Government Accountability Office reported in 2008 that 83 of the USA’s biggest 100 corporations had subsidiaries in tax havens. The following year research by the Tax Justice Network, using a broader definition of offshore, discovered that ninety-nine of Europe’s hundred largest companies used offshore subsidiaries. In each country, the largest user by far was a bank.’ P8

If the scale of financial transactions passing through tax havens is jaw dropping, then the central role played by the USA and Britain in this global web of deceit is equally astonishing.

As Shaxton explains, ‘The world’s most important tax havens are not exotic palm-fringed islands, as many people suppose, but some of the world’s most powerful countries.’

Shaxton cites the words of a Marshell Langer, a prominent supporter of tax havens, who puts the matter bluntly enough; “It does not surprise anyone when I tell them that the most important tax haven in the world is an island. They are surprised, however, when I tell them that the name of the island is Manhattan. Moreover, the second most important tax haven in the world is located on an island. It is a city called London in the United Kingdom” P21

Shaxton then goes on to outline how the London tax haven works. It is worth quoting Shaxton in some detail on this point so there can be no doubt as to the complicity of British political leaders in this culture of global criminality.

‘The world contains about sixty secrecy jurisdiction, divided roughly into four groups…. The second offshore group, accounting for about half the world’s secrecy jurisdictions, is the most important. It is a layered hub-and-spoke array of tax havens centred on the City of London. As we shall see, it is no coincidence that London, once the capital of the greatest empire the world has known, is the centre of the most important part of the global offshore system.’

This revelation is likely to come as something of a surprise to many readers, given the popular perception that the British Empire is very much a thing of the past and that Britain at best is a middle ranking and declining nation, regularly punching above its weight by clinging to the imperial coat tails of Uncle Sam. It would seem this is something of a false perception. Shaxton proceeds to elaborate on Britain’s cleverly reconstructed imperial role;

‘The City’s offshore network has three main layers. Two inner rings – Britain’s Crown Dependencies of Jersey, Guernsey and the Isle of Man; and its Overseas Territories, such as the Cayman Islands – are substantially controlled by Britain, and combine futuristic offshore finance with medieval politics. The outer ring is a more diverse array of havens, like Hong Kong, which are outside Britain’s direct control but nevertheless have strong historical and current links to the country and the City of London. One authoritative account estimates that this British grouping overall accounts for well over a third of all international bank assets; add the City of London and the total is almost a half. P15

So far nothing startlingly new, but it’s when Shaxton connects it together one gets a true sense of the reach of the beast. It’s as the old adage goes, ‘the whole is greater than the sum of the individual parts’. Shaxton paints the picture well;

‘This network of offshore satellites does several things. First, it gives the City a truly global reach. The British havens scattered all around the world’s time zones attract and catch mobile international capital flowing to and from nearby jurisdictions, just as a spider’s web catches passing insects. Much of the money attracted to these places, and the business of handling that money, is then funnelled through to London. Second, this British spider’s web lets the City get involved in business that might be forbidden in Britain, providing sufficient distance to allow financiers in London plausible deniability of wrongdoing. The outer rings of the spider’s web are often less hygienic than the inner ones…. So this spider’s web is, in part, a laundering network. By the time the money gets to London, often via intermediary jurisdictions, it has been washed clean.’ P15

Shaxton goes on to provide a detailed examination of how the spider web works and concludes with these sobering Orwellian lines;

‘Even if you can see parts of the structure, the laddering stops you seeing it all – and if you can’t see the whole, you cannot understand it. The activity doesn’t happen in any jurisdiction – it happens between jurisdictions. ‘Elsewhere’ becomes ‘nowhere’: a world without rules.’ P26

These are not mere academic observations. The financial implications for both the developed world and more importantly the developing world are breathtaking in their magnitude. Shaxton offers the following statistics in an attempt to convey the scale of things.

‘In 2005, the Tax Justice Network estimated that wealthy individuals hold perhaps $11 trillion worth of wealth offshore. That is about a quarter of all global wealth, and equivalent to the entire gross national product of the United States. The estimated , $250 billion in taxes lost on just the income that money earns each year is two or three times the size of the entire global aid budget to tackle poverty in developing countries. Add to that all the corporate trade mispricing, and you start to get a handle on the size of illicit financial flows across borders.’ P27

The bigger the figures, the harder it is for us mere mortals to grasp what is happening across the planet, but grasp it we must. It’s pointless complaining that this hospital ward, this library or this sports centre is being closed unless we can see the bigger picture. If this global tax black hole was sealed up, nations, rich and poor would have sufficient tax revenues to maintain and expand their social provision. Shaxton puts it this way;

‘The most comprehensive study of illicit cross-border financial flows comes from Raymond Baker’s Global Financial Integrity programme at the Centre for International Policy in Washington. Developing countries, GFI estimated in 2009, lost $850-1000 billion in illicit financial flows in 2006 – losses that have been growing at 18 per cent per year. Compare this to the $100 billion in total annual foreign aid, and it is easy to see why Baker concluded that “for every dollar that we have been generously handing out across the top of the table, we in the West have been taking back some $10 of illicit money under the table”. Remember that, the next time some bright economist wonders why aid to Africa is not working.’ P27

Having laid out the basic framework of the global tax avoidance network, chapter is riveting, almost like a compelling work of fiction, until one reminds oneself that what we are dealing with here is the precise mechanisms of how our monstrously unequal world perpetuates itself Shaxton then proceeds to deconstruct it piece by piece. Every. Any intelligent life looking down on our little planet would be both highly impressed at the sheer audacity of our economic and political elites, and horrified at the daily ramifications of their actions.

Chapter 12 is particularly absorbing as it throws a harsh spotlight on the City of London. In this chapter there are dozens of passages worthy of extensive airing, but I will limit myself to just one particularly poignant quote from a Jim Cousins, a member of the UK Treasury Select Committee, who has this to say about our much lauded British democracy;

‘For thirty years this city has been engaged in a second empire project. We have run huge trade deficits for over thirty years… they dealt with that trade deficit by sucking in money from wholesale markets on the basis of better returns than could be got elsewhere. This was invented by Margaret Thatcher: the idea was that we would become financial dealers for oligarchs and oil people from around the world.’ P278

It all starts to make sense. Run down British industry and replace it with global financial services. Thatcher invented the scam and Blair and Brown willingly took it to ever absurd levels. It all went swimmingly well until the financial bubble burst. Now Britain has virtually no industrial base worth talking about and no real idea of how to tame the deficit other than squeeze the guts out of the welfare state. Get everybody off benefits and back to work, says the Tories. There are only two slight flaws with this policy. Firstly, there are no jobs. All the work is being done in low cost Asia. Secondly the City of London has been allowed to become so powerful that national governments are too weak, too impotent to reign it in. The beast can no longer be tamed. So it’s bye-bye to a booming British Plc and welcome back to political and economic turmoil. But didn’t that nice Mr Gordon Brown tell us there would be no return to boom and bust?

We owe Shaxton a debt of gratitude for the job of research he has carried out – exposure is the first step to nailing the criminals. But what of Shaxson’s conclusions? He, like Will Hutton, Ed Milliband, Ha- Joon Chang, Seamus Milne and all the other serious critics of unregulated capitalism, all believe that the beast can be tamed. This has yet to be confirmed by history. In fact, all the time that I was absorbed in Shaxson’s work, I had this strange sensation that what Shaxson was exposing had, in its own way, been exposed long before. And sure enough, after perusing the book case for a while, there it was, staring me in the face; Lenin’s little pamphlet,’ Imperialism, the Highest Stage of Capitalism’, written in 1916, nearly one hundred years earlier than Shaxson’s own excellent work.

Dusting off the text that I had once regarded as the economic bible for the 20th century, I quickly discovered, after a careful but critical rereading, that much of what Lenin had to say all that time ago accorded closely with what we are witnessing at the early stages of the 21st century. In fact, in some chapters, one could argue that Lenin was spookily prophetic in his analysis. Just consider some of these excerpts and their relevance for today.

From the first section dealing with the ‘concentration of production and monopolies’ Lenin writes, ‘Here we no longer have competition between small and large, between technically developed and backward enterprises. We see here the monopolists throttling those who do not submit to them, to their yoke, to their dictation…..Translated into ordinary human language this means that the development of capitalism has arrived at a stage when, although commodity production still “reigns” and continues to be regarded as the basis of economic life, it has in reality been undermined and the bulk of profits go to the “geniuses” of financial manipulation. At the basis of these manipulations and swindles lies socialised production; but the immense progress of mankind, which achieved this socialisation, goes to benefit the speculators.’

Every time I read and then re-read this passage I had to remind myself that Lenin was referring to Britain, Germany and the USA at the turn of the 20th century and not the world at turn of the 21st.

From the second section dealing with, ‘Banks and Their New Role’, Lenin appears equally prophetic. These few lines could have easily been penned for today’s bleak reality.

As banking develops and becomes concentrated in a small number of establishments, the banks grow from modest middlemen into powerful monopolies having at their command almost the whole of the money capital of all the capitalists and small businessmen and also the larger part of the means of production and sources of raw materials in any one country and in a number of countries. This transformation into a handful of monopolists is one of the fundamental processes in the growth of capitalism into capitalist imperialism; for this reason we must first of all examine the concentration of banking.’

Lenin then proceeds to detail the respective monopolisation of the banking sector in Germany, France, Britain and the USA. Having carefully detailed this process of concentration Lenin then concludes,

‘When this operation grows to enormous dimensions we find that a handful of monopolists subordinate to their will all the operations, both commercial and industrial, of the whole capitalist society; for they are enabled – by means of their banking connections, their current accounts and other financial operations – first, to ascertain exactly the financial position of the various capitalists, then to control them, to influence them by restricting or enlarging, facilitating or hindering credits, and finally to entirely determine their fate, determine their income, deprive them of capital, or permit them to increase their capital rapidly and to enormous dimensions.

If this was true at the turn of the 20th century it is triply true at the turn of the 21st!

Lenin’s thesis continues to have pressing relevance in all its aspects. Under the section, ‘Finance Capital and the Financial Oligarchy’, Lenin has this to say;

‘It is characteristic of capitalism in general that the ownership of capital is separated from the application of capital to production, that money capital, and that the rentier who lives entirely on income obtained from money capital, is separated from the entrepreneur and from all who are directly concerned in the management of capital. Imperialism, or the domination of finance capital, is the highest stage of capitalism in which this separation reaches vast proportions. The supremacy of finance capital over all other forms of capital means the predominance of the rentier and of the financial oligarchy; it means that a small number of financially powerful states stand out among all the rest.’

Could there be any more accurate a description of our modern world than that offered by Lenin all those decades ago? In the final section of Lenin’s pamphlet under the heading, ‘The Place of Imperialism in History’, Lenin makes a summation every bit as telling today as it was in 1916. I’m sure he will forgive me if I quote him at length.

‘Monopolies, oligarchy, the striving for domination and not for freedom, the exploitation of an increasing number of small or weak nations by a handful of the richest or most powerful nations – all these have given birth to those distinctive characteristics of imperialism which compel us to define it as parasitic or decaying capitalism.’

Lenin, now in full flow, continues his polemic;

‘More and more prominently there emerges, as one of the tendencies of imperialism, the creation of the ‘rentier state’, the usurer state, in which the bourgeoisie to an ever increasing degree lives on the proceeds of capital exports and by ‘clipping coupons’. It would be a mistake to believe that this tendency to decay precludes the rapid growth of capitalism. It does not. In the epoch of imperialism, certain branches of industry, certain strata of the bourgeoisie and certain countries betray, to a greater or lesser degree, now one and now another of these tendencies. On the whole, capitalism is growing far more rapidly than before; but this growth is not only becoming more and more uneven in general, its unevenness also manifests itself, in particular, in the decay of the countries which are richest in capital.

Lenin had Britain in mind in this closing sentence. Today we are witnessing the steady decline of the USA in the face of a rampant Asian capitalism.

For those that have not read Lenin’s defining work I urge an immediate reading. For those who, like me, grew up with this text, I urge a refresher course. It puts the current economic and political debates into a sharp historical context. But I must hasten to warn that Lenin takes an almost teleological stance, like so many Marxists that have followed him, in that a proletarian revolution will sweep aside the capitalist class in all its forms, and reconcile once and for all the contradiction between socialised labour and private ownership. While I am certain that this contradiction must be reconciled before humanity can move much further ahead, I regard a proletarian revolutionary as only one of a number of possibilities. Humans may yet find the will and means to socialise the ‘revolutionary’ force of capital by a combination of revolts, popular revolutions and state regulations and reforms. The industrial proletariat may well have a significant contribution to make in this matter but not necessarily the defining one.

Such a sentiment would no doubt receive Lenin’s fierce displeasure, accusing me of every manner of opportunism. But as the one hundred year anniversary of the Russian revolution approaches, I believe history has yet to definitively decree on these matters. A teleological approach can become dangerously close to a religious one. The dialectic between reform and revolution is never ending. Keep an open mind.

In any event, thanks to Shaxson and Lenin, we are in no doubt as to where all the money has gone. By what ever means necessary we need to re-appropriate that money, and quickly. See the UK Uncut website for a useful place to start.

And how did this financial (almost existential) crisis come to us? Did you think it was careless investors or bankers who were ignorant of what they were doing in the subprime scandal (one of the many huge scams enriching them by impoverishing those to whom they felt superior (in insider knowledge anyway))? I always felt that if the scams were unintended, someone should show me some of the perpetrators who lost money. Actually they tested it pretty well on the rest of the world first. Not only Central and South America but also Russia and eastern Europe's newly-liberated countries after the fall of the Soviet Union. And it ties in very well with the energy scams we've been a viable part of for decades. And if you don't believe me (heck, I lived through it and can't believe it most of the time myself), just read on. (Emphasis marks added - Ed.) Who was George Herbert Walker Bush? It's not a secret from "them." Neither are the details on his part in the Iran/Contra operation, etc. And his very bad memory. (And a nice explanation for why Obama had to keep Robert Gates on (against the example of every new regime in history) and has promoted him - please, feel free to read on.) Kind of sinks pretty deeply the good feeling you had left about Obama, doesn't it?

George Herbert Walker Bush, the son of Prescott Bush, a senator from Connecticut, was born in Milton, Massachusetts, on 12th June 1924. On his 18th birthday he enlisted in the armed forces, becoming the country's youngest commissioned pilot. During the Second World War he served on 58 missions from 1942 to 1945 and was awarded the Distinguished Flying Cross.

After the war he studied economics at Yale University. In 1951 he established Bush-Overby Oil Development, an oil-drilling business in Texas. Later he joined forces with Thomas J. Devine, a former CIA officer, to create Zapata Oil. Other major investors included Prescott Bush and Bill Liedtke.

In 1954, Zapata Off-Shore Company was formed as a subsidiary of Zapata Oil, with George H. W. Bush as president of the new company. According to Bush's autobiography, Eugene Meyer, the publisher of the Washington Post, and his son-in-law, Philip Graham, were major investors in the new company.

Zapata Corporation split in 1959 into independent companies Zapata Petroleum and Zapata Off-Shore, headed by Bush, who moved his offices from Midland to Houston. In 1960, Bush created a new company, Perforaciones Marinas del Golfo (Permargo) with Edwin Pauley of Pan American Petroleum. Pauley is alleged to have had close ties to Allen Dulles. During the Second World War Pauley aided the Dulles brothers former clients in shifting Nazi assets out of Europe.

In 1963, Zapata Petroleum merged with South Penn Oil and other companies to become Pennzoil. In his book Family of Secrets: The Bush Dynasty (2009) Russ Baker argues: "For Devine, who would have been about twenty-seven years old at the time, to resign at such a young age, so soon after the CIA had spent a great deal of time and money training him, was, at minimum, highly unusual. It would turn out, however, that Devine had a special relationship allowing him to come and go from the agency, enabling him to do other things without really leaving its employ."

Thomas J. Devine later rejoined the CIA under non-official cover (NOC) status on 12th June 1963, as a covert commercial asset for Project WUBRINY/LPDICTUM. Joan Mellen points out that: "This CIA document reveals that Thomas Devine had informed George Bush of a CIA project with the cryptonym WUBRINY/LPDICTUM. It involved CIA proprietary commercial operations in foreign countries."

Mellen goes on to argue that this links George Bush to George de Mohrenschildt and Lee Harvey Oswald. "WUBRINY involved Haitian operations, in which, the documents reveal, a participant was George de Mohrenschildt, the Dallas CIA handler of – Lee Oswald." Russ Baker interviewed Devine in 2008 and he refused to say whether he was involved with WUBRINY. However, another CIA officer, Gale Allen, confirmed in another interview that Devine did take part in the project.

There is strong evidence that Bush was working for the CIA during this period. Bush also provided information to the Federal Bureau of Investigation on a proposed assassination attempt by James Parrott of John F. Kennedy. On 29th November, 1963, Bush informed J. Edgar Hoover about a conspiracy involving a group of pro-Castro Cubans in Miami.

Bush became involved in politics and was active in the Republican Party. He was elected to the Ninetieth Congress Congress. He was appointed to a series of high-level positions: Ambassador to the United Nations (1971-73), Chairman of the Republican National Committee (1973-74), Chief of the U. S. Liaison Office in the People's Republic of China (1974-76), and Director of the Central Intelligence Agency (1976-77).

Bush was unsuccessful in his attempts to obtain Republican nomination for President of the United States in 1980, but was elected Vice President of the United States on the Republican ticket with President Ronald Reagan.

On 17th March, 1983, Bush had a secret meeting with Donald P. Gregg and Felix Rodriguez in the White House. As a result the National Security Council established a secret scheme to provide aid to the Contras in Nicaragua. Rodriguez agreed to run the Contra supply depot in El Salvador. In a memo written to Robert McFarlane, Gregg argued that the plan grew out of the experience of running "anti-Vietcong operations in Vietnam from 1970-1972". Gregg added that "Felix Rodriguez, who wrote the attached plan, both worked for me in Vietnam and carried out the actual operations outlined above."

On 21st December, 1984, Bush had another meeting with Donald P. Gregg and Felix Rodriguez. This led to Gregg introducing Rodriguez to Oliver North. Later, Bush wrote a note to North where he thanked him for "your dedication and tireless work with the hostage thing and with Central America."

In October, 1985, Congress agreed to vote 27 million dollars in non-lethal aid for the Contras in Nicaragua. However, members of the Ronald Reagan administration, including Bush, decided to use this money to provide weapons to the Contras and the Mujahideen in Afghanistan.

Gene Wheaton was recruited to use National Air to transport these weapons. He agreed but began to have second thoughts when he discovered that Richard Secord was involved in the operation and in May 1986 Wheaton told William Casey, director of the CIA, about what he knew about this illegal operation. Casey refused to take any action, claiming that the agency or the government were not involved in what later became known as Irangate.

Wheaton now took his story to Daniel Sheehan, a left-wing lawyer. Wheaton told him that Thomas G. Clines and Ted Shackley had been running a top-secret assassination unit since the early 1960s. According to Wheaton, it had begun with an assassination training program for Cuban exiles and the original target had been Fidel Castro.

Wheaton also contacted Newt Royce and Mike Acoca, two journalists based in Washington. The first article on this scandal appeared in the San Francisco Examiner on 27th July, 1986. As a result of this story, Congressman Dante Facell wrote a letter to the Secretary of Defense, Casper Weinberger, asking him if it's "true that foreign money, kickback money on programs, was being used to fund foreign covert operations." Two months later, Weinberger denied that the government knew about this illegal operation.

On 5th October, 1986, a Sandinista patrol in Nicaragua shot down a C-123K cargo plane that was supplying the Contras. That night Felix Rodriguez made a telephone call to the office of George H. W. Bush. He told Bush aide, Samuel Watson, that the C-123k aircraft had gone missing.

Eugene Hasenfus, an Air America veteran, survived the crash and told his captors that he thought the CIA was behind the operation. He also provided information that several Cuban-Americans (were) running the operation in El Salvador. This resulted in journalists being able to identify Rafael Quintero, Luis Posada and Felix Rodriguez as the Cuban-Americans mentioned by Hasenfus. It gradually emerged that Thomas Clines, Oliver North, Edwin Wilson and Richard Secord were also involved in this conspiracy to provide arms to the Contras.

This story brought George Bush into what became known as the Irangate. Ramon Milian Rodriguez, a convicted financier for the Medellin drug cartel, talked about Rodriguez’s role in the CIA involvement in the drug trade: “If Felix had come to me and said I’m reporting to… Oliver North, I might have been more sceptical. I didn’t know who Oliver North was and I didn’t know his background. But if you have a CIA, or what you consider to be a CIA-man, coming to you saying, ‘I want to fight the war, we’re out of funds, can you help us out? I’m reporting directly to Bush on it,’ I mean it’s very real, very believable, have you have a CIA guy reporting to his old boss.”

George H. W. Bush

Family of Secrets

Donald P. Gregg, Bush’s National Security Adviser, was another person who became involved in the scandal. In 1985, Gregg sent Felix Rodriguez to El Salvador to aid the Contra re-supply effort. General Paul Gorman, the head of U.S. military forces in Central America, wrote a memo to the U.S. ambassador in El Salvador. In it he said: “”Rodriquez is operating as a private citizen but his acquaintanceship to the VP (Bush) is real enough, going back to the latter days of DCI (Director of the CIA)”

Bush was eventually forced to admit that along with Donald P. Gregg he had met with Felix Rodriguez three times. However, he argued that he had not discussed Nicaragua with him. He also defended Gregg’s decision to deny these meetings with Rodriguez had taken place. According to Bush, Gregg had not lied, he merely “forgot” about these meetings. Bush’s story eventually became that Gregg was working on his own initiative and that he was unaware of his role in the Iran-Contra affair.

A handwritten note from George Bush to Oliver North that thanked him for his “dedication and tireless work with the hostage thing with Central America” also became public. When asked about this note, Bush said “he didn’t recall why he sent it”.

In an article in the Washington Post (11th October, 1986), the newspaper reported that George Bush and Donald P. Gregg were linked to Felix Rodriguez. It gradually emerged that Richard L. Armitage, William Casey, Thomas G. Clines, Oliver North, Edwin Wilson and Richard Secord were also involved in this conspiracy to provide arms to the Contras.

On 12th December, 1986, Daniel Sheehan submitted to the court an affidavit detailing the Irangate scandal. He also claimed that Thomas G. Clines and Ted Shackley were running a private assassination program that had evolved from projects they ran while working for the CIA. Others named as being part of this assassination team included Rafael Quintero, Richard Secord, Felix Rodriguez and Albert Hakim. It later emerged that Gene Wheaton and Carl E. Jenkins were the two main sources for this affidavit.

Six days after the publication of Sheehan's affidavit, William Casey underwent an operation for a "brain tumor". As a result of the operation, Casey lost the power of speech and died, literally without ever talking. On 9th February, Robert McFarlane, another person involved in the Iran-Contra Scandal, took an overdose of drugs.

In November, 1986, Ronald Reagan set-up a three man commission (President's Special Review Board). The three men were John Tower, Brent Scowcroft and Edmund Muskie. Richard L. Armitage was interviewed by the committee. He admitted that he had arranged a series of meetings between Menachem Meron, the director general of Israel's Ministry of Defence, with Oliver North and Richard Secord. However, he denied that he discussed the replenishment of Israeli TOW missiles with Meron.

Armitage also claimed that he first learned that Israel had shipped missiles to Iran in 1985 when he heard William Casey testify on 21st November, 1986 that the United States had replenished Israel's TOW missile stocks. According to Lawrence E. Walsh, who carried out the official investigation into the scandal (Iran-Contra: The Final Report), claims that Armitage did not tell the truth to the President's Special Review Board.

"Significant evidence from a variety of sources shows that Armitage's knowledge predated Casey's testimony. For instance, a North notebook entry on November 18, 1986, documents a discussion with Armitage about Israel's 1985 arms shipments to Iran - three days before Armitage supposedly learned for the first time that such shipments has occurred."

Walsh also adds that "classified evidence obtained from the Government of Israel... and evidence from North and Secord show that during the period Meron met with Armitage, Meron was discussing arms shipments to Iran and Israel's need for replenishment. Secord and North, on separate occasions, directed Meron to discuss these issues with Armitage."

The report implicated Oliver North, John Poindexter, Casper Weinberger and several others but did not mention the role played by Bush. It also claimed that Ronald Reagan had no knowledge of what had been going on.

The House Select Committee to Investigate Covert Arms Transactions with Iran was also established by Congress. The most important figure on the committee was the senior Republican member, Richard Cheney. As a result George Bush was totally exonerated when the report was published on 18th November, 1987. The report did state that Reagan's administration exhibited "secrecy, deception and disdain for the law."

Oliver North and John Poindexter were indicted on multiple charges on 16th March, 1988. North, indicted on twelve counts, was found guilty by a jury of three minor counts. The convictions were vacated on appeal on the grounds that North's Fifth Amendment rights may have been violated by the indirect use of his testimony to Congress which had been given under a grant of immunity. Poindexter was also convicted of lying to Congress, obstruction of justice, conspiracy, and altering and destroying documents pertinent to the investigation. His convictions were also overturned on appeal.

In 1988 Bush was elected as the 41st President of the United States after defeating the representative of the Democratic Party, the Governor of Massachusetts, Michael Dukakis. A beneficiary of the reforms made by Mikhail Gorbachev that led to the end of the Cold War, Bush could concentrate on other regions of the world. This included the sending of American troops into Panama to overthrow the government of General Manuel Noriega.

When George Bush became president he set about rewarding those who had helped him in the cover-up of the Iran-Contra Scandal. Bush nominated Robert Gates as Director of Central Intelligence on 14th May, 1991. Three of his colleagues in the CIA testified against Gates. Melvin Goodman, recently explained his reasons for taking this action: "Bob Gates, over the period of the 1980s, as a deputy for Intelligence and then as a deputy to CIA director Bill Casey, was politicizing intelligence. He was spinning intelligence on all of the major issues of the day, on the Soviet Union, on Central America, on the Middle East, on Southwest Asia. And I thought this record, this charge, should be presented before the Senate Intelligence Committee."

Secrecy & Privilege

Lost History

In an article published in July, 1991, Walter Pincus called for the Senate to approve Bush's nomination of Gates as director of the CIA. This time he was confirmed but he attracted 31 negative votes, more than all of the votes against all of the CIA directors in history. He served until 1993.

In 1992, Walter Pincus falsely claimed that "special prosecutors have told former Defense Secretary Caspar W. Weinberger that he might face indictment on felony charges in the Iran-Contra scandal, unless he provided them with evidence they believe he has against former President Reagan... The dramatic attempt to get a former cabinet officer to turn on his commander-in-chief occurred a few days ago as Independent Counsel Lawrence E. Walsh tried to conclude his five and one-half year investigation of the affair."

A few days later Pincus wrote that Lawrence E. Walsh was considering indicting Ronald Reagan. This was again untrue and Walsh argues in his book, Firewall, that Bush was using Pincus to spread disinformation on the investigation. As Walsh pointed out: "Of all the sideswipes that we suffered during this period, the false report that we were considering indicting the nation's still-admired former president hurt us the most."

Walsh was attacked by the right-wing media of carrying out the "biggest witch hunt in America since Salem". The leader of the Republican Party in the Senate, Bob Dole, made a speech where he called on Walsh to close down the investigation. He criticized Walsh's "inability to understand the simple fact that it is time to leave Iran-Contra to the history books".

Others involved in the cover-up of the Iran-Contra Scandal who was rewarded included: Richard L. Armitage as a negotiator and mediator in the Middle East. Donald P. Gregg was appointed as his ambassador to South Korea. Brent Scowcroft became his chief national security adviser and John Tower became Secretary of Defense. When the Senate refused to confirm Tower, Bush gave the job to Richard Cheney. Later, Casper Weinberger, Robert McFarlane, Duane R. Clarridge, Clair E. George, Elliott Abrams and Alan D. Fiers, Jr., who had all been charged with offences related to the Iran-Contra scandal, were pardoned by Bush.

George H. W. Bush

Power and Prudence

On 2nd August 1990 Saddam Hussein ordered an invasion of Kuwait. The United Nations immediately impose economic sanctions on Iraq and demanded an immediate withdrawal from Kuwait. In January 1991 a United States led coalition of 32 countries launch an attack on Iraq. Operation Desert Storm is a great success and after Iraq left Kuwait Bush was able to declare a cease-fire on 28th February.

In April 1991 Hussein agreed to accept the UN resolution calling on him to destroy weapons of mass destruction. He was also forced to allow UN inspectors into his country to monitor the disarmament. A no-fly zone was established in Northern Iraq to protect the Kurds from Saddam Hussein. The following year a no-fly zone was also created to protect the Shiite population living near Kuwait and Iran.

At their fourth summit conference, Bush reached agreement with Mikhail Gorbachev on nuclear weapons and in July, 1991, they signed the Strategic Arms Reduction Treaty (START).

Despite these foreign successes Bush was unable to deal with the country's faltering economy. His campaign pledge, “no new taxes” made it impossible to balance the budget and in 1992 was defeated by his Democratic Party challenger, Bill Clinton.

The Crimes of George H. W. Bush

Namebase: George H. W. Bush

George H. W. Bush: Wikipedia

George H. W. Bush: White House Biography

George H. W. Bush Presidential Library and Museum

Famous Texans: George H. W. Bush

Forum Debates

The Kennedy Assassination

George Bush and the Assassination of JFK

Ted Shackley and the Secret Team

George Bush and the CIA

The Nugan Hand Bank

Donald P. Gregg

Jack Alston Crichton

Richard Helms

Operation 40

Operation Condor

Raphael Quintero

Gene Wheaton and the CIA

Assassination, Terrorism and the Arms Trade

A Unified Theory of CIA Covert Activities: 1960-1990


Robert "Bud" McFarlane (trained by Kissinger, working for both Bushes and campaigning for McCain) is working today for the government in Sudan (and disgracing himself once again - purposively probably) and Darfur doing "humanitarian" relief work. Other highlights just for this "Bud:"

McFarlane has been criticized for involving the United States armed forces in the Lebanon Civil War, with gunship bombardment of Lebanese opposition forces, which may have led to the 1983 Beirut barracks bombing where 241 American servicemen were killed.[4]

Following that assignment, he returned to the White House and was appointed President Reagan's National Security Advisor.[5] In that post, he was responsible for the development of U.S. foreign and defense policy. He was a supporter of the Strategic Defense Initiative (SDI or "Star Wars").

In 1988, he pleaded guilty to four misdemeanor counts of withholding information from Congress as part of the Iran-Contra cover-up.[11] He was sentenced to two years’ probation and a $20,000 fine but was pardoned by President George H.W. Bush on Christmas Eve 1992 along with the other key players in the scandal, during the lame duck period of Bush's presidency.

McFarlane co-founded and served as CEO of McFarlane Associates Inc., an international consulting company.

McFarlane is a member of the Washington Institute for Near East Policy (WINEP) Board of Advisors, the Institute for the Analysis of Global Security Board of advisors, and is a founding member of the Set America Free Coalition. He is also an Advisory Board member for the Partnership for a Secure America, a not-for-profit organization dedicated to recreating the bipartisan center in American national security and foreign policy.

McFarlane currently serves on a number of boards including:

Since 2009, McFarlane has been working in the southern region of Sudan and Darfur on intertribal relations and development projects. On September 30, 2009, the Washington Post published a story suggesting that McFarlane's contract for this work, which is supported by the government of Qatar, was the result of a request by Sudanese officials. McFarlane denied any improper contact with Sudanese officials or efforts to avoid disclosure of his work. The Washington Post article reported that some persons involved in peacemaking efforts in the southern Sudan region questioned the source and helpfulness of McFarlane's activities.[12]

I'm sure all those involved in helping those refugees to a better life thank McFarlane and his buddies. (George Clooney probably not included.) I apologize that this essay is so long, but it's important to get all the facts in one place (not that that's even a little bit possible today). Please click here for rest of references. __________________


TONY said...

I think you might have squeezed all the information in the world into this post, Suzan. Brilliant.

Suzan said...



I love you.

(Trying harder than Avis . . . .)