2009 update of Kanter Case

Kanter v. CIR, Case No. 08-1036/1037/1038/1039/1040/1041/1042 

(C.A. 7, Dec. 1, 2009)

This case began in 1986, when Burton W. Kanter, a well-known tax attorney and businessman, filed a petition seeking review of the Commissioner of Internal Revenue’s determination that he had not paid all his taxes. Since then, the case has taken a yo-yo path through our judicial system, from the Tax Court to the Supreme Court and back again. In this iteration, Kanter’s Estate and related parties appeal from an unfavorable Tax Court decision that rejected many of the factual findings of the Special Trial Judge (“STJ”) that presided over the trial. (We refer to the petitioners collectively as “Kanter.”)

The theme of Kanter’s arguments on appeal is that the Tax Court did not defer, as it should have, to the STJ’s original findings of fact. In evaluating the issues Kanter raises, we review the STJ’s original findings of fact for clear error.

Kanter raises five issues on appeal.

1. The first includes within it a number of challenges to the Tax Court’s finding that Kanter and his associates orchestrated a kickback scheme and then fraudulently concealed the resulting income. Kanter argues that the Commissioner is precluded from litigating this point, as the Fifth and Eleventh Circuits have already ruled against him in cases dealing with the liability of Kanter’s associates for the same underlying business arrangements. 
2. He also argues that the Commissioner is barred by the statute of limitations from seeking tax fraud penalties for 1983. Kanter’s second issue concerns entities called the Bea Ritch Trusts. The Tax Court found that he was the true owner of these Trusts and thus should have paid certain taxes on their economic gains. Kanter argues that he was not the owner of these Trusts. 
3. Third, Kanter urges that he should not be taxed for half of the earnings of Century Industries, as the Tax Court lacked jurisdiction over many of the years at issue and he owed taxes proportional only to his stated ownership interest because all of the partners were true partners. 
4. Fourth, he argues that the Tax Court should not have counted as taxable income over $1,000,000 that Kanter deposited in his bank accounts in 1982, as those monies were nontaxable loans or returns on investment. 
5. Finally, Kanter asserts that the Tax Court violated his due process rights by overturning various credibility determinations made by the STJ in his original report.

On the first issue, we reject Kanter’s preclusion argument, because non-mutual collateral estoppel does not apply against the United States. On the merits, we conclude that the STJ’s factual findings are not clearly erroneous with respect to Kanter’s tax liability and tax fraud. As a result, we do not reach Kanter’s argument based on the statute of limitations.

Next, we find no reversible error in the STJ’s conclusion that Kanter was not the owner of the Bea Ritch Trusts; this means that Kanter is not liable for the tax deficiencies that the Commissioner assessed.

Third, with respect to Century Industries, we hold that the Tax Court lacked jurisdiction over the 1983, 1984, and 1986 tax years; we further find that the STJ’s conclusion that only the 1% interest that Kanter held in Century Industries for the 1981 and 1982 tax years was taxable is not clearly erroneous. We note that the government has conceded the issue relating to the $1,000,000, but for the sake of completeness we confirm that the STJ did not clearly err in finding that this deposit was nontaxable income.

Finally, in light of our other findings, we have no reason to reach Kanter’s due process argument.

In summary, we conclude that the Tax Court did not show the proper level of deference to the STJ’s factual findings. We therefore reverse and remand with instructions to vacate the Tax Court’s judgment, to enter an order adopting the STJ’s report as its opinion, and to enter judgment consistent with that opinion.

Moneybags Behind Barack Obama Revealed

Dead lawyer, tax evasion and a 14-year-old case

Tax court ruling opens makes appeal likely

February 04, 2007 By New York Times News Service

The federal tax court has ruled in favor of the Internal Revenue Service in a 14-year-old evasion case involving a now-dead lawyer who was one of the nation's leading tax advisers, millions of dollars in reported real estate kickbacks and a Supreme Court ruling that ended a long-standing practice of secrecy in tax court. And if that is not enough, it is probably not over.

In the decision last week, Judge Harry A. Haines of the U.S. Tax Court ruled that the lawyer, Burton W. Kanter, and two associates had accepted kickbacks from the Pritzker family of Chicago, which owns the Hyatt hotels, and then evaded taxes on the payments. [For additional information on Kanter, see Pete Brewton, The Mafia, CIA and George Bush.]

~~~~~~~~~~~~~

 Gus Russo’s Supermob: How Sidney Korshak and His Criminal Associates Became America’s Hidden Power Brokers (623 pages, hardbound, $34.95). Russo, who last focused on the Chicago Mob in The Outfit, is a top investigative reporter whose new book contains almost 100 pages of references, indexing and bibliography alone.
 
This generation may not know who Korshak was, but Russo soon reminds us, calling him the Mob’s “fair-haired boy,” also known as

“The Fixer, who from the 1940s until his death in 1996 was not only the most powerful lawyer in the world, according to the FBI, but also the most enigmatic, almost vaporous player behind some of the shadiest deals of the twentieth century.”

[For more on Korshak, see Dan Moldea's book, Dark Victory.]

Russo’s book covers immense territory including Las Vegas with material on Moe Dalitz (who Russo says considered Korshak his legal adviser), Allen Dorfman (manager of the Teamsters pension fund), Conrad Hilton (patriarch of the Hilton Hotel dynasty), Jimmy Hoffa, Howard Hughes; Murray “The Camel” Humpreys; Kirk Kerkorian, former Nevada Governor Laxalt and Abner “Longy” Zwillman. The book details the growth of Las Vegas and the Mob influence at the Desert Inn, Stardust and Riviera; it covers Korshak’s show business and Hollywood connections; and it reveals who investigated whom (Kefauver, the McClellan committees) and who influenced whom, legally and illegally.

An amazingly well-researched book, illustrated (although I wish the black and white photos were larger), you’ll love this if you liked The Money and The Power: The Making of Las Vegas and Its Hold on America, by Sally Denton and Roger Morris, published in 2001.

~~~~~~~~~~

FBI File on Sidney Korshak

... In l96l, Information was received by the Los Angeles Office that J. A. Pritzker was an officer and owner of  the Hyatt House chain of  motels, and that this company was arranging a pension fund loan from the Teamsters Union. Listed among the associates of PRITZKER was one SIDNEY KORSHAK, a Chicago attorney. In 1962, an informant of the Chicago Office advised that SIDNEY KORSHAK, a close associate of MURRAY HUMPHREYS, had become very wary of dining at St. Huberts Old English Grille at 181 East Lake Shore Drive, Chicago, due to the fact that KORSHAK was aware that some of the top members of organized crime in Chicago

 In a previous interview with KORSHAK by Agents of the Chicago Office, KORSHAK had spoken of his close relationship with former Vice President ALVIN BARKLEY, Secretary of Labor ARTHUR GOLDBERG and Illinois Democratic Committeeman JACOB ARVEY....

~~~~~~~~~

Time To Revisit 2012 Presidential Candidate Obama's Penny Pritzker Family Connection?

Bloomberg News observed in an April 15, 2011 article:

"President Barack Obama began his re-election fundraising drive yesterday in Chicago among some of his earliest political investors and near his 2012 campaign headquarters...Among longtime donors at the events were Penny Pritzker, who led the fundraising effort for his 2008 campaign and John Rogers, chairman of Chicago-based Ariel Investments LLC..."

Gus Russo's 2006 book, Supermob: How Sidney Korshak and His Criminal Associates Became America's Hidden Power Brokers, included the following interesting historical references to how the ultra-rich Pritzker family of Obama's 2008 campaign finance chairperson allegedly obtained some of its wealth, that apparently don't seem to get examined much on the Big Media television screen these days:

1. "What is most relevant to the Pritzker role in the Supermob is the large number of Pritzker transactions that involved known crime figures..." (page 68)

2. 'From LAPD Hamilton's Feb. 2, 1954 internal memo: `Abe Pritzker, a Chicago attorney with offices at 134 N. LaSalle Street, which is the same address as that of Sidney Korshak's office, has been closely connected with members of the Capone syndicate...and other underworld characters. It is believed by the undersigned that Pritzker may be active locally, as a front for eastern hoodlum money to be invested in the Los Angeles area...'" (page 136) [See also William J. Helmer's book about Al Capone.

3."...The Pritzkers also became one of the country's largest hospital operators, acquiring 6 of their own and operating 15 more under lease and contract management..." (page 138)

4. "Profits...were not the only constants in the Pritzker saga. Rumors flew that, as with their questionable real estate partnerships in the forties, the Pritzkers'...Hyatt endeavor was similarly tainted. One IRS informant who was quoted as saying that `the Pritzkers family of Chicago through their Hyatt Corp. initially received their backing from organized crime' was later identified as F. Eugene Poe, the late president of a bank in Perrine, Florida, and vice president of the offshore tax haven where the Pritzkers hid their wealth known as Castle Bank..." (page 138)

5."...By the mid-seventies, the Pritzker empire was awash in profit, the most recent success coming from Nevada casino investments. Between 1959 and 1975, the Pritzkers had obtained $54.4 million in Teamster loans for their hotels...Thus, in 1972, under their Elsinore banner, the Pritzkers joined the Vegas party when they bought the Four Queens in `Glitter Gulch' and King's Castle with Teamsters Pension Fund loans (obtained at 4 percent discount, saving Hyatt $8 million). In return, the Teamsters bought $30 million in Hyatt stock..." (page 438)

6. "It was around this time, the early seventies, that IRS agents like Andy Furfaro noticed that the Prizkers' billion-dollar Hyatt chain was paying no taxes. It turned out the Pritzkers were the largest depositors in one of the most notorious offshore tax havens ever devised, The Castle Bank of the Bahamas, which was nothing less than an intersection of the Supermob, known gangsters, pop stars, a U.S. president, and the covert branch of the CIA--all of whom had good reason to hide their money from Uncle Sam... [The ultimate book on the Castle Bank and similar institutions was written by Jonathan Kwitny.]

 "Castle...was the brainchild of longtime CIA `front organization' mastermind Paul Helliwell...

"In 1964, Helliwell joined forces with...Pritzker Chicago tax attorney (and Hyatt board member] Burton Kanter and Pritzker law firm partner [and Teamsters Pension Fund trustee] Stanford Clinton to establish the Castle Bank, where foreigners could set up trust accounts that were the key to both personal and commercial tax avoidance: since the trusts were, for U.S. tax purposes, foreign citizens, they owed no taxes to the U.S. government. The added beauty of the Castle setup was that the actual deposits never had to be delivered to the bank, which was a fake depository for money that the client could use anywhere in the world." (page 439)

7. "In the mid-seventies...the IRS mounted Operation Tradewinds (later Project Haven), an all-out investigation of Castle, referring to the probe as potentially the largest single-biggest tax-evasion case in U.S. history...IRS agent Richard Jaffee and detective Sybil Kennedy obtained a list of the bank's depositors, which included the Pritzkers...

"Given all the Pritzker associates involved in the management of Castle, it came as no surprise when Pulitzer Prize-winning journalist Knut Royce determined in 1982 that the Pritzkers were in fact the bank's largest depositors. A September 1972 IRS statement noted, `An informant [F. Eugene Poe, a former VP and director of Castle Bank] with access to the records of Castle Trust has stated that the Pritzker family of Chicago, through their Hyatt Corporation, received their initial backing from organized crime.'..." (page 440)

8. "...The CIA's general counsel John J. Greaney intervened and demanded that the Department of Justice and IRS end the probe--it seemed that the CIA had also used Castle Bank to launder money in furtherance of its clandestine operations, and it feared that an investigation would jeopardize national security, not to mention its own congressional free ride..." (page 443)

9. "Using seed money from Chicago investors including the Pritzkers.., Kanter next became the legal advisor to...Cablevision Systems, which went on to become the largest privately held cable television company in the United States..." (page 443)

10. "Castle Bank was not the only shady partnership entered into by Kanter and the Pritzkers. In the 1970s, Kanter and Pritzker were also involved in a massive kickback scheme with two executives from the real estate wing of Prudential Insurance Company...In a complex setup that took prosecutors over 20 years to unravel, Kanter and the Pritzkers devised a scheme wherein contractors paid them and the Prudential executives under the table in exchange for lucrative Prudential business..." (page 440)

11. "...Burt Kanter, the man who had devised so many tax dodges for the Pritzkers and other cadre associates, died of cancer on October 31, 2001, while awaiting sentencing on a finding that he had defrauded the IRS.

"In 1994, after spending years unraveling the Kanter-Pritzker-Prudential insurance kickback scheme, the IRS had finally brought the case to trial...Judge Couvillion concluded that Kanter and associate had devised a scheme of kickbacks to avoid paying taxes to the federal government..." (page 571)

12. "As for the Pritzkers, over the last quarter century the family business had partnered with the infamous Bank of Credit and Commerce International [BCCI] in developing Hyatt hotels in Saudi Arabia..." (page 521)

13. "Like so many of the Supermob who increased their wealth with offshore tax dodges, the Pritzkers attempted to balance their reputation with philanthropy, the clique's way of saying that they'd rather choose where their money goes than allowing the IRS to do it..." (page 68)

From Kim to Erik--plus ça change...

Who is Erik Prince working for? All the information we have about where the founder of the former Blackwater mercenary corporation now lives, when considered with information about that country's leaders and plans, tells us he is part of the future of that same Anglo-American oil elite that gave us the infamous coup d'etats of banana republics in the 1950's led by Allen Dulles and Kermit (Kim) Roosevelt. Up to their same old schemes, but making huge bucks in the process through the selling of massive armaments and security contracts--all designed to protect the wealthy land barons and engineers. Has Kim Roosevelt been reincarnated as Erik Prince?

Kim Roosevelt

Erik Prince

Bigger Than Blackwater: Arming The UAE – Analysis

 June 8, 2011

By Hannah Gurman

The International Defense Exhibition, otherwise known as IDEX, has been held bi-annually in the United Arab Emirates (UAE) since 1993. It is the largest defense expo in the Middle East and North Africa and one of the biggest in the world. But far from being a one-off, it highlights the UAE’s growing stature as a global arms buyer.

This year’s IDEX took place in the glistening Abu Dhabi National Exhibition Centre. Its high ceilings and massive rooms displayed a diverse array of high-tech weaponry against the backdrop of heavily illuminated signboards like the ones you see in the showrooms of luxury car dealerships. All the big Western defense corporations were there — Lockheed Martin, Boeing, Dyncorp, Northrup Grumman, European Aeronautic Defense and Space Co. — as well as Chinese companies, including China North. There were also a host of local companies including Arabian Aerospace, Abu Dhabi Ship Building Company, and the state-owned Mubadala. Like all of these events, it was a heavily male enterprise. The exhibitors wore suits. The visitors wore either the military uniform of the UAE or traditional Arab dress.

Outside, the expo began with a parade and air show, and representatives from BAE Systems gave passersby a tour of the latest features of their all-terrain tank. Just inside the entry hall, visitors could check out a parked yellow Hummer on their way to the exhibits. At the U.S. pavilion, a representative from Boeing demonstrated the features of its integrated defense simulator, and General Dynamics showed off its latest MK- 47 machine gun. At the Lockheed Martin exhibit, you could get within inches of anti-aircraft missiles propped on plastic risers like pieces of modernist art — so shiny you could see your reflection in them.

This lavish exhibition occurred a full three months before The New York Times broke the story that former Blackwater/Xe founder Erik Prince had struck a secret deal worth $529 million with [Gates Foundation partner/sponsor] Sheikh Mohammed bin Zayed al-Nahyan, Crown Prince of Abu Dhabi, to form a mercenary army for the UAE. According to reports cited in the story, the force will be used to protect oil pipelines and skyscrapers against terrorist attacks and suppress internal uprisings of the large population of migrant workers living in the country — as well as potentially engaging Iran, long the UAE’s biggest regional foe. [Tony Blair spoke in Dubai against Iran's President Mahmoud Ahmadinejad in an attempt to protect Britain's oil interests in what was once the Persian oil fields.]

Coverage so far has centered on Prince and his notorious company. But the full story of the UAE’s employment of foreign companies to build up its military and defense goes well beyond Blackwater/Xe and includes a virtual who’s who of Western defense companies.

A Brief History of the UAE military
The UAE we know today is a relatively new entity. For most of the last two centuries Britain provided security in the region in exchange for lucrative trading deals and control of the sheikhs’ relations with other foreign powers. Security was handed over to the UAE in 1971, when the sheikhs of Abu Dhabi, Dubai, and four other emirates agreed to form a federal union.

United Arab Emirates

Although the UAE’s military, known as the Union Defense Force (UDF), is technologically advanced, it is relatively small in numbers. In many armies, the vast underclass typically fills the rank and file. But in the UAE, this social group is made up almost entirely of non-citizens — migrant workers who build the roads, skyscrapers, and golf courses where the oil titans and Branjelinas of the world like to play. There are currently about 65,000 members serving in the UDF. Though most of the officers are UAE nationals, most of the foot soldiers are mercenaries from other Arab states and Pakistan.

In recent years the UAE has made massive military and defense investments in an effort to rebuff Iran, become a dominant military player in the region, and diversify its oil-dependent economy. Recruiting ever more foreign soldiers — like the Colombian paramilitaries [reputedly funded by Chiquita, formerly United Fruit Company] who will be part of Prince’s mercenary outfit — is a key part of this endeavor. Purchasing ever larger amounts of the best high-tech weaponry is perhaps an even more important part. In 2009, the UAE was the biggest foreign purchaser of U.S. arms. In October 2010, it invited 50 U.S.-based defense companies to visit and see the opportunities for growth first-hand.

Who’s Profiting from the UAE Arms Proliferation?
The UAE’s long-term plan is to build its own defense industry into a major international player. In accordance with this plan, 75 percent of the contracts at IDEX went to local firms, including Emirate Systems [UAE's Emiraje Systems], which got a $550 million deal to coordinate military intelligence and communicate military operations down the chain of command. Another major deal involved the Abu Dhabi-based Bayanat Company [located in the heart of Abu Dhabi], which obtained a contract to provide aerial surveillance within the UAE.

As with most aspects of the UAE economy, Western businesses have an integral and profitable role to play in this endeavor. They work as “partners” with the local companies. Typically, this means they provide the expertise, training, and equipment, while the UAE government provides the money. The state-owned Mubadala Development Company [a participant in the Abu Dhabi Economic Vision 2030 Team], which has seen growing profits in recent years, does business with all the biggest Western contractors....

Hannah Gurman, columnist at Foreign Policy in Focus, is an assistant professor at New York University’s Gallatin School of Individualized Study. She writes on the politics, economics, and culture of U.S. diplomacy and military conflict. Her forthcoming book, The Dissent Papers: The Voice of Diplomats in the Cold War and Beyond, will be published by the University of Columbia Press in fall 2011.

Continue reading this article at  FPIF.

Who Made a Deal with Guinea's President?

Or, Too Many Coincidences

The New York Times, citing two law enforcement sources close to the sensational case, said on Thursday that, "although there was clear evidence a sexual encounter took place, prosecutors did not believe much of the version of events told by the Guinean-born maid and suspect she has repeatedly lied to them."

Ex-IMF chief due in court as sex case ‘unravels’

By Agence France-Presse

Friday, July 1, 2011

Officials said that within a day of the alleged rape attempt, the maid was recorded speaking on the phone with a man jailed for possessing 400 pounds (180 kilograms) of marijuana and discussing the benefits of pursuing charges. The Times said he is one of several individuals who made multiple cash deposits, totaling around $100,000, into the woman's bank account over the last two years.

It said Friday's unscheduled hearing would likely alter the strict bail conditions imposed on Strauss-Kahn, allowing him to travel freely within the United States, and that lawyers were discussing dismissing the felony charges.

"It is a mess, a mess on both sides," one official told the respected daily, indicating that prosecutors, who met with defense lawyers on Thursday, would tell the judge they "have problems with the case." The district attorney's office may ask Strauss-Kahn to plead guilty to a misdemeanor, but his lawyers would contest such a move, it added.

Among the discoveries, one official told the newspaper, are issues involving the asylum application of the 32-year-old housekeeper and her possible links to criminal activities, including drug dealing and money laundering. Officials declined to reveal the reason for Friday's hearing.

"No details about this appearance will be available until the defendant appears in court tomorrow," the Manhattan District Attorney's office said.

The former French finance minister had not been expected back in court until July 18. Strauss-Kahn had posted $1 million bail and a $5 million bond when he was released in May and agreed to remain under house arrest with an ankle monitor.

Earlier Thursday, French newspaper Liberation, citing Strauss-Kahn's defense lawyers, said he was likely to challenge the legality of the lineup that took place a day after his arrest, when the alleged victim picked him out. Strauss-Kahn had spent days in New York's tough Rikers Island jail pending the bail agreement, but is now awaiting trial in his luxury rental apartment in Manhattan's TriBeCa neighborhood. He has denied all charges against him.

Strauss-Kahn resigned from the IMF shortly after his arrest, setting off a battle for the leadership of the US-based multilateral lender from which French finance minister Christine Lagarde ultimately emerged victorious.

The Strauss-Kahn affair has sent shock waves through France, where many initially believed he was the victim of a political conspiracy and slammed New York police for forcing him to endure a "perp walk" before the world media. Word that the case might crumble, however, raised hopes among France's opposition Socialists that a vindicated Strauss-Kahn might return to help them drive President Nicolas Sarkozy from office in next year's elections.

"It's a thunderbolt -- but in the opposite direction this time," said Socialist former prime minister Lionel Jospin. In a separate article published Wednesday, the Times reported that Lisa Friel, head of the Manhattan district attorney's sex crimes unit for nearly a decade, was leaving the post. It was not immediately clear if the move was related to the Strauss-Kahn case. Friel had made an early court appearance as part of the case, but did not remain on the investigating team, the Times said.

Another online news source, NDJ World, has stated:

The Sofitel maid keeps insisting however that DSK did rape her at the luxury hotel despite allegedly a telephone recording exists of a conversation between the maid and an inmate, one day after she met with DSK, that reportedly talks about “possible profit” from her claim against Strauss-Kahn. The prisoner identified on the recording is member of a group that reportedly deposited $100,000 into the chambermaid’s bank account over the past two year.  The maid allegedly paid hundreds of dollars in phone bills every month for five separate enterprises.  She insists however, that she only has one telephone and the money was deposited by her fiance and his friends. The maid also alleges she has been raped before and that that fact is documented in her asylum papers.  The prosecutor could however not find any evidence of this in her dossier.

What we don't know is how the woman from Guinea, a country in West Africa, came to be in the United States and how long she has been in New York. Guinea is normally thought of as a haven for refugees from other West African countries, such as Liberia, the Ivory Coast (Côte d'Ivoire), or Sierra Leone.

This unknown factor raises yet more questions about who might have used the New Guinea maid in a scheme to frame or entrap the socialist head of the International Monetary Fund into an activitiy that would lead to his resignation and replacement at the important banking position.

Who would have a motive and the power to inject the maid, whose name is still being withheld,  into this particular place at this particular time? At this point we can only speculate, although it helps to have some knowledge about the history of this country from which the maid seeks asylum in the United States. The Republic of Guinea, a former French colony, gained independence on October 2, 1958. The people of Guinea are predominantly Muslim.

According to an article appearing at the website of the UN Refugee Agency, the UN estimates that "1.1 million of the 15 million inhabitants of Guinea, Liberia, and Sierra Leone are either internally displaced persons or refugees." (AFP, 8 March 2002)

Guinea is colored in beige.

 

 

With Guinea's historical roots as a colonial empire of France, is it possible that the man against whom Dominique Strauss-Kahn planned to run--Nicolas Sarkozy, with ties to Guinea President Alpha Conde--manipulated the maid into the situation of making a rape claim against Strauss-Kahn? According to the Daily Mail:

Nicolas Sarkozy warned Dominique Strauss-Kahn of his behaviour with women when he was sent to the U.S. as head of the International  Monetary Fund, it has emerged. The concerned French president told the under-fire IMF chief in 2007 before he went to Washington D.C. that his life ‘will be passed under a magnifying glass’ in America. And when he heard Strauss-Kahn was arrested last weekend after allegedly sexually assaulting a New York hotel maid, he rolled his eyes and said: ‘We did warn him’.

Guinea's President Alpha Condé meets Nicolas Sarkozy in March this year

Reuters/Benoit Tessier

Rights Group Says Guinea Needs Rule of Law

Anne Look | Dakar

May 24, 2011

Voice of America

 

 Guinea President Alpha Conde reviews an honor guard at his arrival at the Elysee Palace, in Paris for a meeting with French President Nicolas Sarkozy (File Photo - March 23, 2011)

Human Rights Watch says Guinea's new government should address what it says are profound rights and governance problems that have underscored decades of abuse.  Guinean President Alpha Conde took office in December of last year amid high hopes that his presidency would mark an end to 50 years of authoritarian rule and mismanagement in the West African country.

In a new report, Human Rights Watch calls for Conde to bring an end to those decades of impunity and to hold perpetrators of crimes and human-rights abuses accountable, particularly members of security forces responsible for gunning down 100 demonstrators in 2007 and for killing more than 100 individuals and raping dozens of women in the now infamous 2009 stadium massacre.

Conde's task is not without its challenges. Human Rights Watch Senior West Africa researcher, Corinne Dufka, said the new leader has inherited a swelled and unruly security sector, as well as a broken-down justice system.

"The three successive regimes have used militias and security forces not to protect the population but rather to ensure a continuation of the regime," said Dufka. "Members of the security forces have acted more as perpetrators than protectors of the population over the years. President Conde has inherited a military that is steeped in a culture of indiscipline and impunity and there must be measures taken, including downsizing the military, which has grown from 10,000 to 45,000 in the last decade." [Watch the DVD, Liberia, an Uncivil War.]

Human Rights Watch says soldiers and policemen implicated in extortion, banditry, theft, kidnapping, racketeering, and excessive use of lethal force have enjoyed near-complete impunity for years. It says thousands of Guineans who dared to oppose previous regimes have been tortured, starved, beaten to death by state security forces or executed in police custody and military barracks. The group is calling for President Conde to investigate and bring these perpetrators to justice, something his three predecessors failed to do.

"We found that particularly among ordinary Guineans, disturbingly, there is a sense that the security forces are simply above the law," said Dufka. "It is really a blind spot, the fact that they should be held accountable, that they should be subject to the rule of law in Guinea."

Dufka says the rule of law in Guinea has been undermined by a chronically neglected and underfunded judiciary, which gets just one half of one percent of the national budget, compared to the more than 40 percent going to the Defense Ministry. [Watch

"Some of the Ministry of Justice officials and legal professionals we spoke to characterize it as no accident that it has been that way," he said. "Lawyers and judicial personnel do not have pens and paper and desks. They do not have cars to transport detainees to court, and in fact very few cases really take place. "In the criminal court in Conakry for example, there were over 200 cases on the docket and only one was dealt with last year," continued Dufka. "It has effectively ground to a halt because of negligence, marginalization and lack of independence."

Human Rights Watch is also calling for Conde to establish an anti-corruption commission to address embezzlement and mismanagement that have made Guinea one of the world's poorest countries, despite abundant mineral resources.

Posted by America News on Apr 7 2011

 President Conde, who will be accompanied by a high-powered government delegation, will discuss with his host bilateral cooperation issues, including the suspension of several grants by development partners since the December 2008 coup, following the death of President Lansana Conte. Development partners, including the European Union (EU), have subjected the disbursement of grants to the holding of legislative elections, scheduled for the last quarter of 2011.

The two leaders will also discuss the issue of the Guinean debt. ‘President Conde will urge his French counterpart [Sarkozy?] to plead the cause of his country with its creditors in order to reduce the debt, if it can not be cancelled,’ the source added.

Both leaders will also discuss several African political issues, especially those affecting Côte d’Ivoire and Libya.

President Conde, who was the President of the Federation of Black African Students in France (FEANF) in the 60s and a former law professor at the Sorbonne in Paris, is expected to also meet with investors to convince them to invest in Guinea.

 New Bids on World’s Largest Unmined Bauxite Mining Deposit Concession in Guinea

By John Helmer, Moscow

Now it’s official – the French, British, Americans, Chinese and Indians are all behind Guinean President Alpa Conde’s decision to revoke the Russian concession for the world’s largest unmined bauxite mining deposit, Dian-Dian, and hit the current concession holder, United Company Rusal, with back-tax and fraud claims, plus interest and penalties, for about $1 billion.

A small item in a Paris-based newsletter, African Mining Intelligence (AFI) , out this week, reports the problems Rusal is facing in Conakry. These aren’t news – Conde ordered Oleg Deripaska, Rusal’s chief executive, out of his office in April. Since then Conde has held discussions with his advisors in Conakry and abroad, along with George Soros’s legal aid team in Guinea. The Guinean president has decided that after concluding his sensitive negotiations with Rio Tinto over iron-ore mining rights at Simandou, he will start new negotiations with the Russians. “Conde feels he has finished with Rio [Tinto],” said one of the presidential advisors. But there is still no cash [from Rio Tinto’s promised $700 million down payment] in the treasury. The government is strapped for cash, and will go after all the [mine concession] violations it can. His next target is Rusal. After Rusal, the target will be Crew Gold [owned by Alexei Mordashov’s Nord Gold company].”

AMI is owned by a Frenchman of Moroccan origin, Maurice Botbol, who publishes other newsletters on Africa and the intelligence community. Botbol will sell you this story for €4, although though the information is dated, not altogether original, and not quite accurate:

The Russian concern UC RusAl is in a tizzy in Guinea following the announcement that a Chinese group plans to build an aluminum complex at Fria near RusAl’s refinery. A former natural resources minister, Fassine Fofane, now the boss of a consultancy named Kakande, accompanied a delegation of Chinese investors from the firm Jiuquan Iron Steel (Group) Co. Ltd (JISCO) in Guinea in early June. Fofana’s delegation proposed building an alumina refinery and an aluminum smelter in the Fria region, close to the Friguia aluminum refinery managed by UC RusAl.

The Chinese program was presented to prime minister Mohamed Said Fofana and to mines minister Mohamed Lamine Fofana. The delegation visited the mine operated by Compagnie des Bauxites de Guinee (CBG) at Sangaredi before travelling to Fria to examine the Friguia facilities. Rusal was sufficiently alarmed by the visit that it asked its representative in the country to examine how much influence Fassine Fofana had over the present government. RusAl is especially worried that the Chinese shepherded by the former minister might persuade the government to allow JISCO to use the railway to the port of Friguia to ship out its production or even, if it builds an aluminum smelter, that the government could order the Russian group to sell its alumina production at Kindia to the smelter in question.

On April 6, president Alpha Conde gave a report by Alex Stewart International to the Russian envoy to Guinea, Alexander Bregadze. The report calls on RusAl to pay USD 1 billion in compensation for loss of earnings linked to the privatisation of Friguia in 2006. The same day a meeting between Conde and a Russian delegation led by natural resources minister Yury Trutnev turned rather frigid because the president declined to receive Oleg Deripaska, boss of RusAl.

The Alex Stewart International (ASI) report was first ordered and compiled by former Guinean mining minister, Mahmoud Thiam, at the start of January 2010. Thiam discussed it in detail with the Rusal executive in charge of Guinea, Victor Boyarkin, at several meetings during last year. Boyarkin, a former intelligence officer, reports directly to Deripaska. The head of Rusal’s international relations department, Sergei Chestnoy, a former member of the Russian Ministry of Foreign Affairs, has been sidelined as he is under investigation by the US Government.

The Paris publication this week is a signal that there are now French and other international interests engaged in the lobbying for Conde to revoke Rusal’s operating and mining rights in Guinea, and put them up for new awards.

A source close to Conde reports, following a conversation with him a few days ago, that “Minister Fofana is a promoter of a refinery project at Friguia. And at least three other refineries at various stages of planning. They pose no threat to Rusal.”

“On the other hand,” he added, “the President has made it clear that Rusal is next on his list of issues to fix.”
Another Guinean source claims the business issues have become personal for Conde and Deripaska after the April door-closing incident, and after Deripaska sought support from Conde’s wife, Djene Kaba Condé.
Before the ASI report was issued, Thiam and the Guinean government had gone to court in Conakry to annul Rusal’s Friguia purchase agreement. Rusal issued statements in response that it had “purchased Friguia in full compliance with Guinean legislation and we consider the plant to be our legitimate property.” Rusal also said it would apply to an international arbitration tribunal in Paris to overturn the Guinean court’s ruling against Rusal. According to Thiam, Rusal bought the Friguia refinery for a privatization transfer price of less than $20 million.

The second of Conde’s targets is Rusal’s concession to mine Dian-Dian. According to Rusal’s website, this deposit “is located 350 km north of Conakry in the Boke province [see Boke on map], and is a unique deposit containing around 1 billion tonnes of bauxite ore with a high aluminium content and insignificant amounts of hazardous impurities.” According to Rusal’s share sale prospectus in Hong Kong of January 2010, Dian-Dian represents roughly one tonne in five of Rusal’s entire global bauxite reserves.

According to Thiam, President Conde intends to repeat to Rusal the ultimatum it received from Thiam before he left his ministerial office — either start investing and building the mine, as required by the concession agreements, or lose one or all of the Dian-Dian mining permits. “Dian-Dian has three large permits with reserves to accommodate a. large player each,” Thiam said this week. “Once they realise [Dian-Dian] is in play, all the big players will show up.” Asked what bauxite mining internationals he knows to be interested, Thiam referred to Chinese companies, Alcoa of the US, Rio Tinto of the UK, and Middle Eastern companies. He added: “no deadline has been set yet [for retrocession of permits]. The process is just starting. But Dian-Dian is at great risk.”

Rusal refuses to respond to this correspondent’s questions. The latest reference Rusal has made to its negotiations on the Guinean financial claims was this announcement of May 26: “UC RUSAL (SEHK: 486, EuroNext: RUSAL/RUAL, MICEX: RUALR, RTS: RUAL), the world’s largest aluminium producer, is pleased to announce the launch of a unique education programme the “RUSAL Scholarship-2011”. The RUSAL Scholarship will provide 100 talented young Guineans aged between 18 and 25 the opportunity to be educated in Russia’s best universities. All accommodation, transportation costs and tuition fees will be covered by UC RUSAL.”

The company said it anticipates spending $5.5 million over five years on this project. The cost of developing the Dian-Dian mine and associated infrastructure has been estimated at more than $600 million.

The alliance of Alcoa and Rio Tinto already holds a bauxite mining concession at Guinea’s biggest-capacity mine at Boke. According to Alcoa’s website presentation, “Alcoa is present in Guinea as a 45% shareholder of Halco Mining, a partnership which owns 51% of Compagnie des Bauxites de Guinee (CBG). CBG, a partnership with the Government of Guinea, has exclusive rights to mine bauxite in Guinea’s Sangaredi Plateau. In addition to mining in Sangaredi, CBG operates a port in Kamsar [see map] for drying and shipping bauxite to refineries worldwide. Alcoa also supports the local Guinea community through healthcare and library programs funded by the Alcoa Foundation.”

Omitted from this version is that Alcoa’s equal 45% shareholding partner in Halco was Alcan of Canada, and since the latter’s acquisition in 2007, Rio Tinto. The CBG operations are larger than Rusal’s in Guinea, and the largest in the bauxite world.

For many years, Rusal blamed Alcoa, and its former chief executive Paul O’Neill, US Secretary of the Treasury in 2001-2002, for being behind all of Rusal’s troubles in the US, including court fights and the banning of Oleg Deripaska from entry to the US. Then in 2004-2005 Alcoa, headed by an O’Neill successor, bought two of Rusal’s aluminium rolling-mills in samara and Rostov regions. That deal was facilitated by the purported advisor to the Russian government, Dmitry Afanasyev, who has since served as a Rusal board director and lawyer to Deripaska. Alcoa sources concede that they have been careful not to appear to be challenging Rusal’s interests abroad in case Deripaska makes trouble for Alcoa’s interests in Russia.

The involvement of US financier George Soros as an informal advisor to President Conde, and the despatch of Soros-funded US lawyers to Conakry to review mining permits and resource privatization records, has reawakened Rusal suspicion that the Americans, including Alcoa and the White House, are again aiming at Deripaska. 

Read Soros on Soros.

An American aluminium industry source says that President Conde’s negative attitude towards Rusal goes back many years, during the rule of Lansana Conte, the 25-year Guinean dictator who died in December of 2008. “Rusal was so arrogant and insulting to the Ministers and to the President’s assistants that it was clear that something was going to happen with Rusal’s virtual monopoly. Now it is coming home to roost.”

But Rusal wasn’t the first of the Russian groups to try to hold on to Dian-Dian without digging a hole. In the last years of the Soviet period and early 1990s, the controlling shareholders of the Bratsk Aluminium Plant (BrAZ) — Boris Gromov, Yury Schlaifstein, plus David and Simon Reuben of London – also claimed the Dian-Dian concession, and planned to mine it to feed their smelter. “Funny how life repeats itself,” the US source says.

Obama's new jobs creation plan--Mercenaries?

Pratap Chatterjee joined the Center for American Progress in September 2010 as a Visiting Fellow specializing in federal procurement reform. He wrote on Jun 29, 2011 an article which predicts that, once Obama's troop withdrawal plan goes into effect, the number of "private contractors" aka mercenaries, engaged in Afghanistan will surge. His analysis reveals that " the one group that has seen demand explode since Obama became president is the number of private security contractors (men or women with guns), which spiked from a flat line of about 4,000 to almost 19,000 today."

CHART: Number Of Contractors In Afghanistan Will Surge As U.S. Troops Withdraw

The number of contractors in Afghanistan is likely to increase significantly in the next year as the Obama administration pulls back some of the extra 68,000 troops that it has dispatched there since January 2009.
Typically, the U.S. pays one contractor to support every soldier that has deployed to Afghanistan and Iraq. The ratio of contractors to troops increases dramatically during a military surge as well as during a drawdown, and often stays higher than troop levels when military numbers are low, i.e. down to 30,000-50,000.

The reason is simple — the military needs extra workers to build new bases as well as to shut them down. Just like a hotel or restaurant, a military base also needs a minimum number of people to do the basics like janitorial or food service work. And as troops withdraw, U.S. diplomats are likely to hire extra security contractors as they are doing now in Iraq.


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