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TBR News August 3, 2016

Aug 03 2016

The Voice of the White House

Washington, D.C. August 2, 2016:”: ship owned by a Chinese government-run company that currently operates two giant terminals at the Port of Long Beach, California was found 10 years ago to have been used to smuggle a huge cache of illegal weapons – with the smugglers saying they planned to import missiles that could “take out a 747.”

On the night of March 18, 1996, undercover Customs and BATF agents discovered 2000 AK-47’s in a container smuggled aboard the Empress Phoenix, a ship owned by the China Ocean Shipping Company [COSCO] docked at the Port of Oakland.

The guns were manufactured by another state-run company, Poly Technologies, the international outlet for Chinese weapons sales.

According to Vanity Fair magazine, which covered the episode in detail, the Empress Phoenix’s gun cargo was earmarked for sale to deadly Los Angeles street gangs.

It was the largest seizure of fully operational automatic weapons in the history of U.S. law enforcement.

Operatives nabbed after the seizure told investigators that they were ready to smuggle in everything from grenade launchers to shoulder-fired Red Parakeet surface to air missiles, which they boasted could “take out a 747.”

The Empress Phoenix episode has largely been forgotten as the debate rages over whether Dubai Ports World should be allowed to operate several dozen terminals at 21 U.S. ports.

But it begs the question, if Dubai Ports World – a company with no history of terrorism or smuggling operations into the United States – is unfit to play a role in U.S. ports management, what about Chinese companies?

In fact, the 1996 weapons smuggling operation was far from the only instance where questionable cargo has been discovered aboard COSCO vessels. Ships owned by the Chinese line have been repeatedly caught smuggling illegal immigrants in the United States.

In 2001, COSCO ships delivered weapons to Cuba, a move that triggered calls in the United States for sanctions against China, according to the Washington Times.

Still, Americans might come to regret giving COSCO the boot from U.S. port operations – a move currently favored by Sen. Hillary Clinton, who wants to ban all foreign ownership of U.S. ports.

In 2001, for instance, COSCO ships carried 434,000 containers to the United States, representing 12.1 percent of all the goods shipped between China and the United States.

Undoubtedly those numbers have increased in the last five years.

In 1998, when COSCO first tried to lease terminal space at the Port of Long Beach formerly used by the U.S. Navy, Congress blocked the deal over national security concerns.

Three years later, however, other tenants at the port vacated space and COSCO was able to build its own terminal.

Art Wong, public information officer for the Port of Long Beach, told the San Francisco Chronicle last week that COSCO now operates terminals in a joint venture with a U.S. company, Stevedoring Services of America, with the Chinese company acting as the majority lease holder with 51 percent control.

By the end of the decade, COSCO plans to expand its Long Beach facility into a giant five terminal operation covering 300 acres, according to the Long Beach Press Telegram.”

Far-right violence against refugee camps boom in Germany despite migrant influx slowdown

August 2, 2016


German Criminal Police report 665 criminal offences against refugee centers since the start of 2016, with the majority committed by far-right activists. A German rights group says the numbers are worsening, despite the influx of refugees abating.

Asylum centers in Germany have been the target of 665 criminal offences of various types since the start of this year, the Criminal Police Office (BKA) said. In its official Twitter post the body stated that of that number “613 are clearly far-right inspired.”

That number included dozens of arson cases, Der Spiegel reports, citing BKA. It adds that four attempted “bomb attacks” were also investigated.

Police also looked into dozens of “politically-motivated” attacks among the criminal offences against refugees, Tagesspiegel reports.

“Regarding 52 offences we cannot exclude a political motivation,” the outlet quotes the law enforcers.

In late June, BKA chief Holger Munch said that Germany is witnessing “an alarming level of far-right violence” against refugees, adding that over a third of attackers were “not registered by police.”

That number included dozens of arson cases, Der Spiegel reports, citing BKA. It adds that four attempted “bomb attacks” were also investigated.

Police also looked into dozens of “politically-motivated” attacks among the criminal offences against refugees, Tagesspiegel reports.

“Regarding 52 offences we cannot exclude a political motivation,” the outlet quotes the law enforcers.

In late June, BKA chief Holger Munch said that Germany is witnessing “an alarming level of far-right violence” against refugees, adding that over a third of attackers were “not registered by police.”

This as the number of migrants reported by the Germany’s migration office is in decline. While in January this year the body reported over 90,000 newcomers, that number fell significantly to 16,335 in June.

German anti-fascist rights group Die Antonio-Amadeu-Stiftung paints an even grimmer picture of violence towards migrants and their whereabouts. It says the country had witnessed 756 “attacks on asylum seekers and their camps” since January 1. The groups also counted 153 cases where refugees were injured after being subjected to “physical assaults.”

One of the attacks on a planned refugee compound that caught attention in Germany occurred in the small of town of Bautzen in February this year. A huge fire ripped through the planned migrant facility, as some of the locals cheered and tried to prevent firefighters from extinguishing the flames.

Numerous fires also devastated planned or functioning asylum camps in Norway and Sweden in 2015, with arson almost every time cited as the cause by the respective investigators.

The tense mood towards migrants in Germany has increased after three fatal attacks just last month. In two of the cases the assailants pledged allegiance to Islamic State (IS, formerly known as ISIS/ISIL). German investigators however did not specify whether the assaults were directed by the group or whether the perpetrators were lone wolves.

Democratic National Committee CEO resigns in wake of email hack

Amy Dacey already hired by Democratic consulting firm after resigning about a week after chair Debbie Wasserman Schultz, party strategists said

August 2, 2016


The chief executive of the Democratic National Committee has resigned in the wake of an email hack that embarrassed the party on the eve of its presidential nominating convention.

That’s according to three Democratic strategists familiar with Amy Dacey’s decision to leave her job. The people spoke on condition of anonymity, because they were not authorized to discuss it publicly.

The Democrats say other personnel moves at the party are also expected on Tuesday.

Dacey already has a new job. She has been hired by Squared Communications, a Democratic consulting firm based in Washington.

“As one of the top campaign strategists in our party, and with our experiences together on presidential, Senate and congressional campaigns, Amy will help our firm’s clients navigate this and future election cycles,” Michael Meehan, founder and CEO Squared Communications, said in a statement.

Before joining the DNC, Dacey was executive director of Emily’s List, which works to elect female Democrats.

Dacey’s resignation is just the latest fallout from the hacked emails, which exposed an apparent lack of neutrality in the primary race between Hillary Clinton and Bernie Sanders, with party officials disparaging Sanders.

Earlier, party chairwoman Debbie Wasserman Schultz resigned her position. After being booed at a pre-convention appearance last week in Philadelphia, Wasserman Schultz chose not to speak from the convention stage. Longtime Democratic operative Donna Brazile is serving as the party’s interim chair.

The cache of more than 19,000 messages was made public by the group WikiLeaks.

Democratic party officials learned in late April that their systems had been attacked after they discovered malicious software on their computers. A cybersecurity firm they employed found traces of at least two sophisticated hacking groups on the Democrats’ network – both of which have ties to the Russian government.


From the FAS Project on Government Secrecy

Volume 2016, Issue No. 63

August 3, 2016


Issues affecting the safety and security of athletes and spectators at the 2016 Olympic Games, which begins August 5 in Rio de Janeiro, Brazil, were reviewed in a new report from the Congressional Research Service.

Concerns addressed in the CRS report include the Zika virus outbreak, domestic crime, the threat of terrorism, environmental hazards, and more. See The 2016 Olympic Games: Health, Security, Environmental, and Doping Issues, July 28, 2016.

Other new and updated reports from the Congressional Research Service include the following.

Supplemental Appropriations for Zika Response: The FY2016 Conference Agreement in Brief, July 14, 2016

The Department of Defense Acquisition Workforce: Background, Analysis, and Questions for Congress, July 29, 2016

FY2017 National Defense Authorization Act: Selected Military Personnel Issues, July 29, 2016

The Trans-Pacific Partnership (TPP): Analysis of Economic Studies, June 30, 2016

State Challenges to Federal Enforcement of Immigration Law: From the Mid-1990s to the Present, updated August 1, 2016

Numerical Limits on Permanent Employment-Based Immigration: Analysis of the Per-country Ceilings, updated July 28, 2016

Federal Benefits and Services for People with Low Income: Overview of Spending Trends, FY2008-FY2015, July 29, 2016

Federal Student Loan Forgiveness and Loan Repayment Programs, updated July 28, 2016

The Food and Drug Administration (FDA) Budget: Fact Sheet, July 28, 2016

Police Shootings and Federal Support for Law Enforcement Safety, CRS Insight, July 19, 2016

Pakistan’s Nuclear Weapons, updated August 1, 2016

Turkey: Failed Coup and Implications for U.S. Policy, CRS Insight, July 19, 2016

U.S. Nuclear Weapons in Turkey, CRS Insight, August 2, 2016


U.S. Nuclear Weapons in Turkey

August 2, 2016 (IN10542)

by Amy F. Woolf

According to unofficial reports, the United States stores approximately 50 B61 nuclear bombs at Incirlik Air Force Base in southern Turkey. After the failed coup in Turkey in mid-July 2016, the government arrested several high-ranking officers from the base and cut power for nearly a week. In late July, Turkish citizens  protested outside the base, calling for its closure, though Turkish officials have assured U.S. officials that the United States will retain access to Incirlik and other bases in Turkey. These events have sparked debate about the weapons’ security and plans to continue storing them at Incirlik.

U.S. Nuclear Weapons and NATO

Throughout the Cold War, the United States deployed thousands of shorter-range nuclear weapons with U.S. forces in Europe, Japan, and South Korea, and on ships around the world. These weapons were intended to extend deterrence and defend allies in Europe and Asia. While most were withdrawn in the 1990s, the United States retains around 200 B61 bombs in Europe. These serve not only to deter potential aggressors, but also as an important element in NATO’s cohesion. While all NATO nations (except France) participate in NATO’s nuclear planning, some also store U.S.weapons on their soil and provide aircraft that could deliver them in a conflict. Incirlik is unique, however, in that

Turkey neither maintains nuclear-capable aircraft nor permits the United States to deploy its own at the base. As a result, the United States or other NATO partners would fly aircraft into Incirlik to retrieve the weapons and employthem during a crisis.

In several recent documents, including the 2010 Strategic Concept and the 2012 Deterrence and Defense Posture Review, NATO reaffirmed that it would maintain an “appropriate mix of nuclear, conventional, and missile defense capabilities” to support deterrence and defense. The alliance rejected suggestions to remove U.S. nuclear weapons from Europe while pledging to seek “the conditions for further reductions” in cooperation with Russia. The 2016

Warsaw Summit Communique noted that “the circumstances in which NATO might have to use nuclear weapons are extremely remote” but stated that it would maintain the “capabilities and resolve” needed to respond with nuclear weapons if “the                         fundamental security of any of its members were to be threatened.”

Nuclear Weapons at Incirlik

According to unclassified reports U.S. B61 bombs are stored on racks in secure underground vaults, inside protective aircraft shelters. The shelters are within a heavily guarded security perimeter, with U.S. forces responsible for their security. Reports indicate that the security perimeter at Incirlik was upgraded in 2015, and includes double fencing, lighting, cameras, and intrusion detection devices. The bombs are reported to be 12 feet long and heavy. Even if someone gained access to the shelters and vaults, it would be difficult to move the bombs without proper equipment.

The bombs are reportedly also equipped with Permissive Action Links (PALs), which prevent the arming and use of theweapons in the absence of an authorization code. Most experts agree the bombs are generally secure from unauthorized use and that U.S. forces would likely thwart most attempts to access or damage the weapons. But experts note the base is not impenetrable, and the safety, storage, and use control features are designed to delay unauthorized intrusion, access, and use while security forces defeat the threat and restore control. Some have speculated that a determined actor, particularly one with inside assistance, might be able to access to the vaults and eventually disable the PALs and, possibly, employ a weapon. At the same time, others note that, even if this scenario were possible, the perpetrators would have to achieve this goal while U.S. and NATO forces employed all means necessary, including deadly force, to recover the weapon. In other words, while one can imagine a scenario in which the weapons might be at risk, the probability of such a scenario succeeding is extremely low.

Options and Alternatives

Most experts agree that the weapons at Incirlik are not, at this time, vulnerable to theft or loss of control. But many have questioned the wisdom of the continued deployment of U.S. nuclear weapons in Europe, in general, and in Turkey, in particular.

Between 2010, when NATO adopted its most recent Strategic Concept, and 2012, when it completed the Deterrence and Defense Posture Review, many  analysts and experts suggested that NATO consider changes to its nuclear posture,allowing for the possible withdrawal of U.S. nuclear weapons from Europe. They argued that this change would not only address concerns about the safety and security of the weapons, but might also spur Russian cooperation, leading to improved transparency and possible reductions in Russian nonstrategic nuclear weapons.

Others, however, disputed this conclusion, arguing that the withdrawal of U.S. weapons from Europe could weaken NATO’s security, upset the nuclear sharing arrangements, and undermine confidence in the U.S. commitment to the alliance. These concerns were particularly pronounced for some of the new NATO nations in Eastern Europe, due to their proximity to Russia.

While the failed coup in Turkey has reopened that discussion, it has also stimulated a more narrow debate about whether the United States should move the weapons out of Incirlik, given both the ongoing political uncertainties in Turkey,including the evolving state of U.S.-Turkish relations, and the base’s proximity to territory controlled by ISIS. For example, the United States could consider moving the weapons to other NATO nations with bases equipped with the vaults needed to store B61 bombs and aircraft that could deliver the weapons in a crisis. However, this move might notonly raise concerns about the U.S. commitment to Turkey’s defense, but would also require the approval of the new host government. This discussion may continue in the coming months, particularly if the Turkish government restricts access or operations at Incirlik. The issue has implications for overall U.S./NATO-Turkey cooperation, as referenced in CRS

Student-Loan Defaulters in Standoff with Government

August 2, 2016

by Josh Mitchell

The Wall Street Journal

The letters keep coming, as do the emails. They head, unopened, straight into Jason Osborne’s trash and deleted folder.

The U.S. government desperately wants Mr. Osborne and his wife to start repaying their combined $46,500 in federal student debt. But they are among the more than seven million Americans in default on their loans, many of them effectively in a standoff with the government. These borrowers have gone at least a year without making a payment—ignoring hundreds of phone calls, emails, text messages and letters from federally hired debt collectors.

Borrowers in long-term default represent about 16% of the roughly 43 million Americans with student debt, now totaling $1.3 trillion across the U.S., and their numbers have continued to climb despite the expanding labor market.

Their failure to repay—in many cases due to low wages or unemployment, in other cases due to outright protest at what borrowers see as an unfair system—threatens to leave taxpayers on the hook for $125 billion, the total amount they owe.

The Osbornes say they are the victims of a for-profit school that made false promises and a predatory lender—the government.

“Do you think I’m going to give them one penny I’m making to pay back the loan for a job I’m never going to hold?” said Mr. Osborne, 45 years old, who studied to be a health-care worker but can’t find a job as one.

The rising number of borrowers in default weakens the economy as underwater homeowners did after the housing crash: by damaged credit, an inability to spend and save for the future, and a lack of resources to move to better jobs.

In the case of homeowners, though, foreclosures offered a chance to start fresh and slowly rebuild their lives. There is generally no such option for student debtors—federal law prohibits them from expunging their debts in bankruptcy, except in extremely rare circumstances.

The Obama administration says it can help borrowers like the Osbornes get back on track with programs that slash their monthly payments and forgive a portion of their balances, if only they would respond. The administration is also working to expand a program that forgives debt for borrowers who can prove their schools defrauded them with deceptive advertising claims.

And in a controversial move, the government has stepped up garnishments of borrowers’ wages. It garnished $515 million in the nine months through March, federal figures show.

After years of uneven progress in reducing defaults, the Education Department is turning to a team of behavioral scientists who are trying to figure out how to get borrowers to respond, testing things such as what language to use in emails and what time of day to send text messages.

Deputy Treasury Secretary Sarah Bloom Raskin has also met with borrowers to gauge what policies would help them avoid default. Ms. Raskin has the same concerns about defaulted borrowers as the administration did with homeowners who faced foreclosure.

“As we intervened to help homeowners, I think we also have a responsibility to help students who might feel the aftershocks of economic developments they had no part in creating,” Ms. Raskin said.

Most borrowers in default owe relatively small balances—a median of $8,900, according to the Education Department. But student advocates say that can be a lot of money for someone unemployed or in a low-paying job, and with other expenses to juggle.

And many feel they shouldn’t have to pay anything.

The Osbornes’ example underscores the challenge. Each enrolled at Abdill Career College Inc., a small for-profit school in Medford, Ore., shortly after the recession. They earned certificates as medical assistants and in 2011 graduated from a second program to become phlebotomists, or health-care workers that draw blood.

But they couldn’t find steady jobs in the field, Mr. Osborne said. Now, Mr. Osborne makes $13 an hour in sales for a solar-power company, and she works as a maid, he said.

Mr. Osborne said Abdill provided a low-quality education and exaggerated the likelihood that they would find career success. And he said the government should have never extended them so much debt for jobs that are in low demand. The typical phlebotomist makes just under $32,000 a year, according to the Labor Department.

About 1 in 5 student borrowers who left Abdill in 2012 defaulted on their loans within three years, the latest federal figures show. Its default rate of nearly 21% is far higher than the national average of 12% among all colleges.

Abdill’s owner, a woman named Ki who said she doesn’t have a legal last name, confirmed the couple attended the school. But she said privacy law prevents her from discussing details of the couple’s time there. She said the school has recently lowered its tuition, and that it prioritizes helping students find jobs.

It isn’t clear how many borrowers in default are simply unable to repay, or are able to pay but refuse to do so in protest.

Illinois resident Jim Lopko, 36, said he would repay his debt if his balance hadn’t skyrocketed because of interest. He owes $122,000 in student debt—a combination of federal and private loans—after graduating with an associate degree from one for-profit school and dropping out of a bachelor’s program at a second in 2009. He said he dropped out because he had borrowed the maximum amount in federal loans and he couldn’t gain access to any more private ones.

He is in default on his private loans and in forbearance on his federal loans. Debt collectors call him almost daily but he ignores their calls.

Mr. Lopko, who lives in a Chicago suburb, now earns $32,000 a year as a customer-service agent for an Illinois manufacturer.

“The only way out of this situation honestly is to win the lotto or to find a job that pays me $300,000 a year,” Mr. Lopko said.

He says he tries to be frugal but admits he occasionally splurges. He recently upgraded to a one-bedroom apartment from a studio and took out a loan for a new Subaru WRX that carries a $445 monthly payment.

“Are you supposed to stay in inside all the time, never go out, and pay these loans?” he said.

Hillary Redux

by Harry von Johnston, PhD


Hillary Clinton’s current email scandal is a reprise of her identical problems in the 1990 time frame. At that time, there was the criminal issue of Casa Grande and the Rose law firm.

In the present instance, the documents involved are personal email records, that document her tenure as Secretary of State.

In the 1980s, Hillary Clinton was a partner at the Arkansas-based Rose law firm. Because she was also the wife of the governor, she served on various state commissions, but did minimal work on any of them. Like most big law firms, Rose law firm had no problem with her state obligations as long as she brought in business for other firm members. But Hillary Clinton wasn’t bringing profitable clients to the law firm commensurate with her status as the governor’s wife.

Under pressure to bring in more business, Hillary persuaded her husband. Bill to stir up more business for her and her firm.

Governor Clinton then approached one Jim McDougal, the major stock holder of Madison Guaranty Savings & Loan Association and a partner in the Whitewater Development Company. The governor then persuaded McDougal to send some profitable business to his wife and the Rose law firm.

As a result of the meeting, McDougal retained the Rose law firm act as his attorneys and to work on the Castle Grande project.

The firm worked on this project in 1985 and 1986.

In addition to Madison Guaranty, Rose also represented one Seth Ward, an employee of Madison and the father-in-law of Webster Hubbell. Hubbell was Hillary’s law partner and friend, and after her husband was elevated to the Presidency, the associate attorney general of the United States..  Mr. Hubbell worked with Hillary Clinton on the Castle Grande project.

The Castle Grande project was a scheme to commit a fraud through real estate loans. It was, in essence, a Ponzi-like pyramid scheme that used a series of manipulated loans to enrich Madison insiders. Madison was, in effect, McDougal’s personal cash cow.

The land in question for the Castle Grande scheme was a scrub pine forest that had failed as an industrial development project. The sale price of the property in question was $1.75 million.

State regulations prohibited McDougal from investing more than 6 percent of Madison’s S&L assets in any project. McDougal was able then to put up $600,000 of Madison’s funds and Seth Ward put up the remaining $1.15 million.

Ward borrowed the money from Madison on a no-recourse, no personal obligation to repay basis. If federal regulators ever found out about this circumvention, Madison could be shut down.

The land appraiser for the property inflated his appraisals to support loans to purchasers, including future Arkansas governor Jim Guy Tucker who bought a water and sewer system for the Castle Grande project. The appraiser later pleaded guilty to federal conspiracy charges.

David Hale, head of a firm licensed to provide lendings to minorities and the economically disadvantaged, conspired with McDougal and Tucker to use his operation as a cover to generate additional loans from Madison.

A friend and business associate of Hale’s borrowed $825,000 from Madison to buy three properties from Hale, but never used the money himself. Instead, it went to Hale, who used it to recapitalize his company with matching funds from the Small Business Administration.

Hale loaned a $150,000 down payment to Tucker who bought out a portion of Ward’s Castle Grande holdings for $1.2 million.

Tucker borrowed the additional $1.05 million from Madison.

McDougal loaned former Senator William Fulbright, a long-time friend, $700,000 to buy out the remainder of Ward’s holdings. The net effect was to remove Ward’s non-recourse loan from the Madison books and generate substantial sales profits and commissions for Madison.

Through various “cross-loans,” McDougal hoped to prevent regulators from discovering Ward’s true role, and thus Madison’s full investment, in Castle Grande. But federal regulators weren’t deceived. In 1986, they removed McDougal from Madison Guaranty.

Eventually, the FBI became involved and Federal prosecutors ultimately convicted fourteen  individuals, including McDougal and Tucker (by then the sitting governor of Arkansas).

By 1991, Bill Clinton was running for president. Like his other Democratic rivals, he campaigned against the “decade of greed” that had brought us the S&L scandals.

Fortunately for his campaign, Hillary’s involvement in the Madison scandal had remained unnoticed. In fact, when the Resolution Trust Corporation, a temporary federal agency created to resolve the S&L crisis, wanted to sue the accounting firm that had handled Castle Grande, it hired Rose (in the person of Hubbell) to bring the lawsuit. Hubbell never disclosed the obvious conflict that stemmed from his firm’s work on Castle Grande; nor did he reveal the fact that Rose performed work on this matter in 1985 and 1986.

Castle Grande seemed far removed from both Hillary and Hubbell when a New York Times reporter named Jeff Gerth arrived in Little Rock and started asking questions. Some of his questions pertained to Hillary’s involvement with McDougal.

By this time, the Clinton campaign already believed it had two strikes against it: The extra marital Gennifer Flowers affair and Bill’s revealed draft dodging. Hillary Clinton’s significant involvement in the S&L scandal appeared to be strike three.

Hillary contacted Mr. Vince Foster who had not been involved in the Castle Grandeaffair, but he was Hillary’ mentor and trusted adviser — so trusted that he would eventually come with the Clintons to Washington and served as second in command in the Office of White Counsel.

Foster and Hubbell at once worked on the potentially devastating issue.To mask the condemning facts they removed all billing records pertaining to Castle Grande from the Rose law firm files. Foster and Hubbell also collected any and all other iles pertaining to the law firm’s activities in this business and Hillary Clinton’s time sheets pertaining to this also disappeared.

And any and all of the electronic versions of the billing records were erased from the law firm’s computer system.For these reasons the FBI’s forensic investigative team was unable to reconstruct them.

Hillary told Gerth that a Rose associate, Rick Massey, had done all of the work on the McDougal project. With the billing records and time sheets gone, she could feel comfortable telling this lie, which she would repeat to others in the media.

This appeared to close the explosive issue.

Castle Grande/Whitewater then became a non-issue in the 1992 presidential campaign.

Federal prosecutors remained on the trail, however, and eventually, and  over Hillary’s objections, the administration agreed to the appointment of a special counsel to investigate what was then called “Whitewater.”

In 1994, the Castle Grande billing records were subpoenaed but they were not produced at that time.

A year and a half later, Carolyn Huber, a White House employee, found the billing records in the private quarters of the first family, in a container located outside of Mrs. Clinton’s private office. Huber later stated, that not knowing what they were, she packed them up and took them to her own office. Only later, in early 1996, did she realize that these were the famous billing records that prosecutors were after.

The billing records were then produced, two years late. And Hillary’s fingerprints were discovered on all of them.

The records show that Hillary Clinton billed time for work on Castle Grande, and was the billing partner for this representation. More than that, they show that she and Hubbell performed legal services — described, for example, as “conference with Seth Ward” or just “Seth Ward” — on every day in which federal prosecutors had found that McDougal and his crime partners had committed  acts in furtherance of their unlawful conspiracy e.g., backdating documents and making false loans.

In effect, the billing records very clearly placed Hillary Clinton and Hubbell at the scene of the crime, and in fact, co-conspirators in a criminal venture.

The special counsel subsequently indicted Hubbell for fraud against federal regulators.. The fraud consisted of concealing from federal agents and investigators the true role of Hubbell, the Rose law firm, and Hillary Clinton in Castle Grande.

Out of concern for the White House, the indictment referred to Hillary only as “Rose’s 1985-86 billing partner.” As such, Hillary appears throughout the indictment. She is referred to approximately three dozen times.

Hillary Clinton was slated to be called as a witness at Hubbell’s trial.

Her attorney met with lawyers from the special counsel’s office to try to persuade them that the charges had nothing to do with Hillary. This absurd claim was rejected. The very next morning, Hubbell’s lawyer informed the special counsel that he would plead guilty.

Throughout the Whitewater/Castle Grande scandal, Hillary Clinton’s actions were to stonewall and deceive. She lied about her role in the swindle, personally removed and destroyed pertinent documents, and vigorously opposed the appointment of a special investigative counsel.

The current email scandal isn’t just a reprise of the Castle Grande document theft and destruction but is a logical outgrowth of it.

She did it once and she did it again.

What illegal behavior will Hillary Clinton’s instincts produce is if she is elected president?

Breaking the Camouflage Wall of Silence

When AFRICOM Evaluates Itself, the News Is Grim

by Nick Turse



It’s rare to hear one top military commander publicly badmouth another, call attention to his faults, or simply point out his shortcomings. Despite a seemingly endless supply of debacles from strategic setbacks to quagmire conflicts since 9/11, the top brass rarely criticize each other or, even in retirement, utter a word about the failings of their predecessors or successors.  Think of it as the camouflage wall of silence.  You may loathe him.  You may badmouth him behind closed doors.  You may have secretly hoped for his career to implode.  But publicly point out failures?  That’s left to those further down the chain of command.

And yet that’s effectively exactly what newly installed U.S. Africa Command (AFRICOM) chief, General Thomas Waldhauser, did earlier this year in a statement to the Senate Arms Services Committee (SASC).  It’s just that no one, almost certainly including Waldhauser himself, seemed to notice or recognize it for the criticism it was, including the people tasked with oversight of military operations and those in the media.

Over these last years, the number of personnel, missions, dollars spent, and special ops training efforts as well as drone bases and other outposts on the continent have all multiplied.  At the same time, incoming AFRICOM commanders have been publicly warning about the escalating perils and challenges from terror groups that menace the command’s area of operations.  Almost no one, however — neither those senators nor the media — has raised pointed questions, no less demanded frank answers, about why such crises on the continent have so perfectly mirrored American military expansion.

Asked earlier this year about the difficulties he’d face if confirmed, Waldhauser was blunt: “A major challenge is effectively countering violent extremist organizations, especially the growth of al-Qaeda in the Islamic Maghreb, Boko Haram in Nigeria, al-Shabaab in Somalia, and ISIL in Libya.”

That should have been a déjà vu moment for some of those senators.  Three years earlier, the man previously nominated to lead AFRICOM, General David Rodriguez, was asked the same question.  His reply was suspiciously similar: “A major challenge is effectively countering violent extremist organizations, especially the growth of Mali as an al-Qaeda in the Islamic Maghreb safe haven, Boko Haram in Nigeria, and al-Shabaab in Somalia.”

All that had changed between 2013 and 2016, it seemed, was the addition of one more significant threat.

In the midst of Rodriguez’s 2016 victory lap (as he was concluding 40 years of military service), Waldhauser publicly drew attention to just how ineffective his run as AFRICOM chief had been.  Some might call it unkind — a slap in the face for a decorated old soldier — but perhaps turnabout is fair play.  After all, in 2013, Rodriguez did much the same to his predecessor, General Carter Ham, when he offered his warning about the challenges on the continent.

Three years before that, in 2010, Ham appeared before the same committee and said, “I believe that the extremist threat that’s emerging from East Africa is probably the greatest concern that Africa Command will face in the near future.”  Ham expressed no worry about threats posed by al-Qaeda in the Islamic Maghreb or Boko Haram.  ISIL in Libya didn’t even exist.  And even that “greatest concern,” al-Shabaab, was, Ham noted, “primarily focused on internal matters in Somalia.”

In other words, over these last years, each incoming AFRICOM commander has offered a more dismal and dire assessment of the situation facing the U.S. military than his predecessor.  Ham drew attention to only one major terror threat, Rodriguez to three, and Waldhauser to four.

His Own Worst Critic

That said, Waldhauser isn’t the only AFRICOM chief to point a finger at Rodriguez’s checkered record.  Another American general cast an even darker shadow on the outgoing commander’s three-year run overseeing Washington’s shadow war in Africa:

“AFRICOM’s priorities on the continent for the next several years will be… in East Africa to improve stability there.  Most of that is built around the threat of al-Shabaab.  And then, in the North and West Africa is really built around the challenges from Libya down to northern Mali and that region and that instability there creates many challenges… And then after that is the West Africa, really about the Boko Haram and the problem in Nigeria that is, unfortunately, crossing the boundary into Cameroon, Chad, and Niger.  So those are the big challenges and then just the normal ones that continue to be a challenge are the Gulf of Guinea… as well as countering the Lord’s Resistance Army…”

That critic was, in fact, General David Rodriguez himself in an AFRICOM promotional video released on multiple social media platforms last month.  It was posted on the very day that his command also touted its “more than 30 major exercises and more than 1,000 military to military engagements” between 2013 and 2015.  It was hardly a surprise, however, that these two posts and the obvious conclusion to be drawn from them — just how little AFRICOM’S growing set of ambitious continent-wide activities mattered when it came to the spread of terror movements — went unattended and uncommented upon.

Waldhauser and Rodriguez have not, however, been alone in pointing out increased insecurity on the continent.  “Terrorism and violent extremism are major sources of instability in Africa,” Assistant Secretary Linda Thomas-Greenfield of the State Department’s Bureau of African Affairs told the Senate Foreign Relations Committee in May.  “Terrorist organizations such as al-Shabaab, Boko Haram (which now calls itself the Islamic State in West Africa), al-Qaeda in the Islamic Maghreb (AQIM), and al-Murabitoun are conducting asymmetric campaigns that cause significant loss of innocent life and create potentially long-term humanitarian crises.”

National intelligence director James Clapper, who called the continent “a hothouse for the emergence of extremist and rebel groups” in 2014, spoke of the dangers posed by the Lord’s Resistance Army and al-Shabaab, as well as terror threats in Egypt, Libya, Mali, Nigeria, and Tunisia, and instability in the Democratic Republic of the Congo, the Republic of Congo, Burundi, the Central African Republic, and South Sudan before the Senate Armed Services Committee earlier this year.

And then there’s Brigadier General Donald Bolduc who heads Special Operations Command Africa (SOCAFRICA), the most elite U.S. troops on the continent.  He painted a picture that was grimmer still.  Last November, during a closed door presentation at the annual Special Operations Command Africa Commander’s Conference in Garmisch, Germany, the SOCAFRICA chief drew attention not just to the threats of al-Shabaab, al-Qaeda in the Islamic Maghreb, Boko Haram, ISIL, and the Lord’s Resistance Army, but also another “43 malign groups” operating in Africa, according to another set of documents obtained via the Freedom of Information Act.

The growth of terror groups from the one named by Ham in 2010 to the 48 mentioned by Bolduc in 2015 is as remarkable as it has been unremarked upon, a record so bleak that it demands a congressional investigation that will, of course, never take place.

  Questions Unasked, Questions Unanswered

U.S. Africa Command boasts that it “neutralizes transnational threats” and “prevents and mitigates conflict,” while training local allies and proxies “in order to promote regional security, stability, and prosperity.”  Rodriguez’s tenure was, however, marked by the very opposite: increasing numbers of lethal terror attacks across the continent including those in Burkina Faso, Burundi, Cameroon, Central African Republic, Chad, Côte d’Ivoire, Democratic Republic of the Congo, Ethiopia, Kenya, Mali, Niger, Nigeria, Somalia, South Sudan, and Tunisia.  In fact, data from the National Consortium for the Study of Terrorism and Responses to Terrorism at the University of Maryland shows that attacks have spiked over the last decade, roughly coinciding with AFRICOM’s establishment.  In 2007, just before it became an independent command, there were fewer than 400 such incidents annually in sub-Saharan Africa.  Last year, the number reached nearly 2,000.

While these statistics may be damning, they are no more so than the words of AFRICOM’s own chiefs.  Yet the senators who are supposed to provide oversight haven’t seemed to bat an eye, let alone ask the obvious questions about why terror groups and terror attacks are proliferating as U.S. operations, bases, manpower, and engagement across the continent grow.  (Note that this is, of course, the same Senate committee that Rodriguez misled, whether purposefully or inadvertently, earlier this year when it came to the number of U.S. military missions in Africa without — again — either apparent notice or any repercussions.)

In an era of too-big-to fail generals, an age in which top commanders from winless wars retire to take prominent posts at influential institutions and cash in with cushy jobs on corporate boards, AFRICOM chiefs have faced neither hard questions nor repercussions for the deteriorating situation.  (Similar records — heavy on setbacks, short on victories — have been produced by Washington’s war chiefs in Afghanistan and Iraq for the past 15 years and they, too, have never led to official calls for any sort of accountability.)

Rodriguez is now planning on resting at his northern Virginia home for a few months and, as he told Stars and Stripes, seeing “what comes next.”

U.S. Africa Command failed to respond to multiple requests for an interview with Rodriguez, but if he follows in the footsteps of the marquee names among fellow retired four-stars of his generation, like David Petraeus and Stanley McChrystal, he’ll supplement his six-figure pension with one or more lucrative private sector posts.

What comes next for AFRICOM will play out on the continent and in briefings before the Senate Armed Services Committee for years to come.  If history is any guide, the number of terror groups on the continent will not decrease, the senators will fail to ask why this is so, and the media will follow their lead.

During his final days in command, AFRICOM released several more short videos of Rodriguez holding forth on varioius issues.  In one of the last of these, the old soldier praised “the whole team” for accomplishing “a tremendous amount over the last several years.”  What exactly that was went unsaid, though it certainly wasn’t achieving AFRICOM’s mandate to “neutraliz[e] transnational threats.”  But what Rodriguez said next made a lot of sense.  He noted that AFRICOM wasn’t alone in it — whatever it was.  Washington, D.C., he said, had played a key role, too.  In that, he couldn’t have been more on target.  The increasingly bleak outlook in Africa can’t simply be laid at the feet of AFRICOM’s commanders.  Again and again, they’ve been upfront about the deteriorating situation.  Washington has just preferred to look the other way.

 How a Top GOP Lawyer Guided a Chinese-Owned Company Into U.S. Presidential Politics

August 3, 2016

by Jon Schwarz and Lee Fang

The Intercept

Six days after the Supreme Court lifted restrictions on corporate money in U.S. elections with its January 21, 2010, ruling in Citizens United, President Obama warned in his State of the Union address that it would “open the floodgates for special interests, including foreign corporations, to spend without limit in our elections.”

But as unlimited contributions have coursed through the election system, no one has been able to point to a specific example of foreign money flowing into U.S. presidential politics as a result of the Supreme Court’s decision.

Until now.

The Intercept has determined that a corporation owned by a Chinese couple made a major donation to Jeb Bush’s Super PAC Right to Rise USA — and it did so after receiving detailed advice from Charlie Spies, arguably the most important Republican campaign finance lawyer in American politics.

As Robert Weissman, president of the nonprofit advocacy organization Public Citizen, said, “We know that Citizens United opened the door for foreign money to influence U.S. elections. This case appears to be the first instance in federal elections where the money trail is clear and documentable from publicly available records.”

Spies presented his advice in a memo, obtained by The Intercept, which he prepared for Right to Rise USA, where he served as treasurer and general counsel. “We conclude,” he wrote, “that a domestic subsidiary corporation may now directly contribute to a Super PAC in connection with a federal election.”

The Spies memo was dated February 19, 2015. One month later, American Pacific International Capital Inc., a California corporation owned by Gordon Tang and Huaidan Chen, a married couple who are citizens of China and permanent residents of Singapore, made a $1 million donation to Right to Rise USA. APIC subsequently gave the group an additional $300,000, its total donation of $1.3 million making APIC one of the Bush Super PAC’s largest contributors.

APIC had, quite literally, gotten the memo.

The company, which invests in real estate and industries in Asia and the U.S., is well-connected across the American political scene. Neil Bush, the brother of both Jeb and George W. Bush, is a member of APIC’s board. Gary Locke, U.S. ambassador to China from 2011 to 2014 and previously secretary of commerce, serves as senior adviser to APIC. In October 2013, while Locke was still ambassador, APIC co-owner Huaidan Chen purchased Locke’s Washington, D.C.-area home from him for $1.68 million.

In an interview, Wilson Chen, Huaidan Chen’s brother and president of APIC in 2015, compared APIC’s political donations to the Chinese tradition of gong cha, or paying tribute to the emperor. Chen repeatedly emphasized that APIC “did not want to do anything illegal” and made the donations with the guidance of the Spies memo and the company’s own in-house lawyer.

It’s not clear, incidentally, that APIC followed Spies’s memo to the letter. Spies warned that foreign owners could not be involved in the decision-making process for political contributions by their U.S.-based companies. But based on statements Gordon Tang and Wilson Chen both made to The Intercept, Tang may have crossed this line by authorizing the Right to Rise USA donation from APIC.

In any case, for campaign finance experts, Spies’s roadmap provides compelling evidence of a phenomenon many already suspected was well-entrenched. “Spies’s memo is an explicit how-to guide for foreign nationals to get money into U.S. elections through U.S.-based corporations that they own,” said Paul S. Ryan, deputy director of the campaign finance watchdog organization Campaign Legal Center. “It shows that although Obama was attacked in public for misleading Americans about Citizens United, in private people like Spies and others like him seemingly realized that Obama was right and set to work making his prediction a reality.”

Reached for comment by phone, Spies stated that the memo had been prepared “to ensure compliance with the law,” but he declined to say anything further about the circumstances leading to its writing or about APIC itself.

When asked whether Obama’s remarks in 2010 were vindicated by his memo, Spies grew agitated. After a short discussion, he said, “I don’t think there’s any point in our continuing this conversation,” and then abruptly hung up the phone.

The story of APIC captures the bizarre reality of the U.S. political system: George H.W. Bush and George W. Bush between them appointed three of the five members of the Supreme Court’s Citizens United majority; this majority opened up a loophole allowing foreign money to flow into U.S. elections; and this loophole was used to grab foreign money in an attempt to make a third Bush president.

Whether this loophole will continue to exist may largely depend on the outcome of the 2016 presidential race. The Democratic Party has lambasted the Supreme Court’s decision in its campaign rhetoric, and Hillary Clinton has promised to call for a constitutional amendment to overturn Citizens United in her first 30 days as president.

Gordon Tang and Huaidan Chen, now in their late 40s, have over the past several decades built a business empire largely based in Asia but with some branches in the United States.

The couple are the majority shareholders of SingHaiyi, a publicly traded Singapore-based corporation with a market value of about $250 million. SingHaiyi describes itself as “a diversified real estate company” owning condominiums and commercial property in Singapore, Malaysia, and the U.S.

Tang began his career in the 1990s, developing a large distribution network for duty-free goods. According to a SingHaiyi corporate disclosure, in the early 2000s, “leading trade importers and their staff” in the southeastern Chinese city of Shantou, including Tang’s trading businesses and Tang himself, were investigated by the Chinese authorities over “custom matters.” While “many in Shantou [were] convicted,” the disclosure states, including individuals “who were staff in Mr. Tang’s import and export business,” in the end Tang himself faced “no penalties or convictions imposed by the Chinese courts.”

When contacted by Elaine Yu, a Hong Kong-based journalist and contributor to this series, Tang offered to give her 200,000 dollars in an unspecified currency (Hong Kong and Singapore both denominate their money in dollars) if The Intercept did not reference unverified claims on Chinese-language websites that he had been accused of criminal activity.

Though Tang was most concerned about the resurfacing of these old rumors, which arose out of the government investigation into his trading businesses in China, they are actually far less pertinent to this story than his ownership of the U.S.-based APIC. According to a 2016 corporate filing by APIC, it is wholly owned by another corporation, “Jag Pacific Ltd.,” which appears to be incorporated in the Bahamas. But whatever Jag Pacific’s provenance, a 2012 SingHaiyi corporate circular states that APIC was ultimately “100 percent owned” by Tang and Chen. SingHaiyi’s 2014 annual report also says that APIC was owned by the couple, and its 2016 report states APIC is “controlled” by them. (APIC’s general counsel declined to discuss the company’s ownership structure on the record.)

Now headquartered in San Francisco, APIC calls itself a “diversified international investment holding company.” It currently owns, among other properties, five hotels and several residential developments in San Francisco, and three luxury hotels in China.

SingHaiyi has described APIC as its “sister firm” in news releases, a term that means they have the same ultimate owners.

Neil Bush is a member of the board of APIC and in 2013 joined SingHaiyi’s board as a nonexecutive chairman. Bush owns a small percentage of the Singapore company.

(Bush, like his business partner Tang, has been the subject of government investigations. Bush was famously sued by the federal government for his role on the board of Silverado Savings & Loan in Colorado from 1985 until 1988, when it collapsed with over $1 billion in debts. Silverado made $141 million in never-repaid loans to two investors in Bush’s oil exploration business; one of them used his free Silverado money to buy the entire company from Bush. Bush never faced criminal charges but did have to pay $50,000 to help settle the federal lawsuit and was reprimanded by government regulators.)

“We are very lucky to know them,” Wilson Chen said of the Bush family. “We talk to them as friends.” He noted that the Bushes have always been kind to China and said that “because of our generosity,” he was invited to attend a Right to Rise USA fundraising event hosted by Jeb Bush in April 2015 at the Mandarin Oriental, a luxury hotel in San Francisco.

APIC, which was initially incorporated in Oregon, made contributions between 2010 and 2014 to state and local Oregon politicians, mostly Democrats, totaling about $25,000. The earlier donations include $9,500 given to John Kitzhaber, a Democrat who was elected governor of Oregon in 2010 and 2014 and resigned last year in an unrelated ethics scandal.

“You know the politicians,” said Wilson Chen about the company’s history of donations. “They always ask for help.”

Wilson Chen, who unlike his sister and brother-in-law is a U.S. citizen, stated that APIC has never asked for anything specific in return for its money. However, he said, the connections between the company and prominent U.S. politicians gave those involved with APIC stature in Asia.

When asked whether Gordon Tang was unhappy with the donation to Rise to Rise USA given Jeb Bush’s quick defeat, Chen said no: It was simply about helping a friend. (Right to Rise USA did not spend all of the money it received, and when Bush withdrew from the race, it sent refunds to contributors on a pro rata basis; APIC got back $152,230.)

In Politico’s 2015 list of the 50 most influential people in U.S. politics, Charlie Spies is tied for second place with David Bossie, president of the organization Citizens United, and behind only Supreme Court Justice Anthony Kennedy, author of the Citizens United majority opinion.

Before Spies was general counsel for Right to Rise USA, he co-founded Restore Our Future, the main Super PAC supporting Mitt Romney’s 2012 presidential campaign. Spies was also chief financial officer and counsel for Romney’s first presidential run in 2008.

As Politico put it, Spies “has mastered the art of helping candidates benefit from Super PACs. … His work created a playbook that allows candidates to maximize the new flood of money into politics.”

For instance, Spies advised Jeb Bush to launch Right to Rise USA months before the official start of his presidential campaign in June 2015. This allowed Bush to spend that time directly raising unlimited contributions for his Super PAC, something that would become illegal once Bush was a declared candidate. APIC’s initial donation to Right to Rise USA was made during this period.

Spies’s stature in Republican circles is further enhanced by his wife, Lisa, a prominent GOP fundraiser in her own right. Lisa Spies is known to use a famous quote from Gilded Age powerbroker Mark Hanna as her email signature: “There are two important things in politics. The first is money, and I can’t remember what the second one is.”

Charlie Spies’s Super PAC memo is in some ways a peculiar legal document. It is from Spies, to his client Right to Rise USA, with the subject “Contributions by Domestic Subsidiaries of Foreign Corporations to Federal Super PACs.” But it is not marked as being a confidential communication covered by attorney-client privilege. Moreover, says Ryan at the Campaign Legal Center, the legal questions it addresses generally do not arise “in the abstract. … Instead, such memos are typically sought when a client has a particular course of action in mind.” Taken together, this suggests the memo was created to be given to potential donors, like APIC.

The memo begins by noting that U.S. law strictly forbids any “foreign national” from “contributing, donating, or spending funds in connection with any elections in the United States.” The term “foreign national” includes foreign individuals, corporations, and governments.

However, as Spies helpfully explains in the memo, a company incorporated in the U.S. is not considered foreign. The law prohibiting donations by “foreign nationals” defines the term as equivalent to that of “foreign principals” found in 22 U.S.C. § 611(b). That, in turn, clearly states that a corporation is not a foreign principal if it is “organized under or created by the laws of the United States or of any State.”

By that standard, it doesn’t matter that APIC is owned by Chinese citizens. It’s incorporated in California and therefore counts as an American company that can spend money in U.S. elections just like any other.

And that means it can spend a lot. By striking down prohibitions on corporations and unions engaging in “independent expenditures” on elections, the Supreme Court declared in Citizens United that they can spend as much of their money on engaging in political speech as they want — as long as it is not explicitly coordinated with federal candidates. But as it has turned out, despite the court’s stated intentions, Super PACs like Right to Rise USA are, in all but name, arms of presidential or congressional campaigns.

Supreme Court Justice John Paul Stevens warned about the potential dangers of this in his dissent in Citizens United. “Unlike voters in U.S. elections, corporations may be foreign controlled,” he wrote, and the decision “would appear to afford the same protection to multinational corporations controlled by foreigners as to individual Americans.”

There are, however, a few hoops foreign-owned corporations in particular need to jump through. Spies’s memo explains how to do the jumping.

For example, Federal Election Commission advisory opinions have held that any donation from a company must be, as Spies put it in the memo, “wholly derived from the net earnings generated within the United States [and] spent from segregated accounts not subsidized by the foreign parent corporation.”

In theory, this guarantees the corporation must be a functioning, profitable U.S. business and not simply a shell corporation passing money through into the American political process.

APIC was presumably able to pass that test — its U.S. holdings are large enough that they likely generate considerably more in U.S. profits than the $1.3 million it gave the Super PAC.

But as the enormous amount of corporate tax avoidance demonstrates, multinational corporations can transfer money to subsidiaries in ways that appear legitimate but are not. “It’s often hard to prove those type of things,” said Larry Noble, general counsel of the Campaign Legal Center and previously longtime general counsel of the FEC.

Moreover, money is fungible. The donations to Right to Rise USA made Tang and Chen $1.3 million poorer, whether the money officially came out of their APIC pocket in the U.S. or their pockets in Singapore.

Another hoop: FEC regulations state that foreign nationals may not “directly or indirectly participate in the decision-making process” on political donations. As Spies writes, FEC advisory opinions have held that foreign nationals may decide to create a special segregated account for contributions and set a maximum budget, but that’s it. After that point, all decisions must be “made by a Special Committee comprised solely of U.S. citizens” — including the composition of the committee itself.

But that’s hardly enforceable. As Noble points out, it’s “a fiction” that U.S. citizens in that position could ever make truly independent decisions. “Of course the person is going to be aware of what the board wants, what the company wants, and its interests,” he said.

In any case, in interviews with The Intercept, both Wilson Chen and Gordon Tang made statements that suggest Tang may have violated the relevant FEC regulations.

According to Chen, “I proposed to make a donation to the Republican Party and then let the board of directors approve it before sending the donation.” APIC’s board includes Chen himself and Neil Bush, both U.S. citizens, but also Chinese citizens Tang and Huaidan Chen.

For Tang’s part, when asked why APIC made the donation to Right to Rise USA, he responded: “Wilson said to donate, so I did, I don’t really mind.”

As Paul Ryan points out, this indicates that Tang “was the ultimate decision-maker” even if he made his decision at Wilson Chen’s suggestion. Tang’s statement also has significance beyond the narrow legal question, said Ryan, because it “makes clear that the legal fiction that a U.S.-based corporation that is wholly owned by foreign nationals is a U.S. donor, not a foreign national donor, is ridiculous.”

So APIC — to its potential detriment — may not have followed Spies’s playbook in every respect. But there’s no question that Spies’s analysis was correct: The Intercept asked numerous lawyers from both parties who specialize in campaign finance law to examine Spies’s reasoning, and all agreed with it. As long as a foreign-owned U.S. corporation follows the rules, it can legally go ahead and give an unlimited amount of money to a Super PAC.

While this would likely seem like an alarming conclusion to most Americans, it is the law of the land.

When Obama predicted during his State of the Union address that Citizens United would open the door to foreign money in elections, the television cameras cut to Justice Samuel Alito, part of the majority in that decision. Sitting in the second row, Alito could clearly be seen shaking his head and mouthing the words “not true.”

Bradley Smith, a former chairman of the FEC and key intellectual architect of the deregulation of campaign finance, wrote that “the president’s statement is false.” PolitiFact found Obama’s claim to be “mostly false.”

As for Spies, he told The Intercept that if any Americans are truly concerned about foreign influence on U.S. politicians, they should look to donations by foreign governments to the Clinton Foundation. “That’s a real problem,” he said, “not the three or five steps removed like you’re trying to pigeonhole the situation into here.”

Of course, however troubling contributions to the Clinton Foundation by foreign governments may be, such donations do not violate any laws. So there, at least, Spies and Obama find common ground on money in politics: Both believe something can be completely legal yet deeply wrong.

In response to detailed questions about APIC’s political activities, a representative for Tang and Huaidan Chen responded, “APIC is a legal American company. Our donations are all legal and approved by lawyers. We won’t break the law for our donations.”

The Campaign Legal Center told us it plans to file a complaint with the FEC asking it to open an inquiry into APIC’s contributions, but the reality is that the FEC has largely stopped enforcing even what few campaign finance limits still exist. The FEC has six commissioners, no more than three of whom may come from any one political party. The three current Republican commissioners philosophically object to most restrictions on political spending, which has led to frequent 3-3 deadlocks on important votes, including ones on whether to investigate possible foreign influence on U.S. elections.

“These days, the FEC doesn’t investigate anything,” said Noble. “The way things stand today, you’d probably have to hand them an email that says, ‘I’m directing you to make this contribution out of our foreign money.’”

There is just one known inquiry in the six years since Citizens United into a situation similar to that of APIC, but it was conducted by the Justice Department, not the FEC: A Mexican businessman was charged in 2014 with funneling $100,000 to a Super PAC he created via a U.S. shell corporation in an attempt to elect Republican Bonnie Dumanis as mayor of San Diego.

If Congress wanted to do something about foreign money in elections, it could have passed the DISCLOSE Act of 2010, which would have prohibited corporations with greater than 20 percent foreign ownership from putting money into the U.S. political process. But the act failed when first introduced, even with Democrats controlling the House and Senate. And this foreign ownership provision was stripped out of the most recent version of the bill.

And passage of such a law might make little difference given the partisan gridlock at the FEC; the law hardly matters if it isn’t enforced. Moreover, foreign ownership of a corporation can easily be disguised. As Donald Tobin, dean of the University of Maryland Law School, noted at a June 23 FEC event on the subject of foreign money in elections, “A foreign individual could create a Wyoming corporation. The Wyoming corporation could be the sole owner of a Delaware corporation that could own a Nevada corporation. The Nevada corporation could then engage in independent expenditures on behalf of a candidate. … It’d be incredibly difficult for any government entity, including the FEC, to have any idea that the funds in question” ultimately came from a foreign national.

So are there many more APICs, quietly putting their thumbs on the scale of elections for president, Congress, and state houses across the country? The reality is that America’s system of big-money politics exists in such darkness that it’s impossible to know for certain. And this door to foreign influence will likely remain open unless Citizens United is overturned by a new Supreme Court or invalidated by a constitutional amendment.

“When the president condemned Citizens United and warned that it would open the floodgates to corporate money, including foreign money, he was contemplating this,” said Norman Eisen, who was special counsel to the president when Obama delivered his 2010 State of the Union address. “I think he was prescient. I’m sure there are many more secret examples out there. It’s a sad state of affairs, but the worst scandal in the United States is what’s legal.”













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