‘You Can Legally Bribe a US Government Official’ — Says Investigative Reporter

Janine Jackson interviewed investigative reporter Lee Fang about Washington’s revolving door. This is a lightly edited transcript.

Lee Fang (image: David Feldman Show)

By Janine Jackson
Janine Jackson: When Eric Holder first joined law firm Covington & Burling in 2001, he was coming from a stint as deputy attorney general under Bill Clinton. So it’s no wonder that when Holder went to the Obama administration as attorney general, the folks at Covington kept his seat warm.

And indeed, for many, Holder’s seamless slide from theoretically prosecuting big banks to defending big banks from prosecution is a common-sense phenomenon only the hopelessly naïve would bother to decry. He’s a lawyer, what do you expect? was the substance of many a comment –of what comment there was, because, again, this latest glimpse of the porous tissue between regulator and regulated went down as no news at all for most of the press.

Our next guest does find that revolving door newsworthy. Investigative journalist Lee Fang has been talking about money and politics for years; he’s a co-founder of RepublicReport.org and writes at The Nation as well as The Intercept. He joins us by phone from the Bay Area.

Welcome back to CounterSpin, Lee Fang.

Lee Fang: Hey, Janine. Thank you so much for having me.

JJ: Well, tell us first, if you would, a little bit about Covington & Burling. Who are they and who are some of their clients?

LF: Covington & Burling is a Washington, DC, law firm that also engages in lobbying; it’s got an extensive practice that hires former members of Congress, their staff, former federal officials—including of course, Eric Holder—and it represents major corporations. So the firm has helped negotiate settlements for corporations that have been accused of wrongdoing, they’ve also helped secure legislation for their corporate clients and they’ve done a number of regulatory and lobbying acts that help provide their clients with special access to politicians.

JJ: And some of those clients have included some of the largest banks.

LF: Yeah, that’s right. You know, a few years ago, Reuters had a great investigation that showed that Covington & Burling has not only represented the big banks—Bank of America, CitiGroup, JP Morgan, Wells Fargo—but they played a really special role in the foreclosure crisis, helping these banks set up a mortgage company that helped create a document trail. When banks have attempted to foreclose on companies and they have to produce these documents showing that they have a chain of title, then this third party company, known as MERS, produced these documents, in many cases falsified these documents, and Covington’s role, actually, in the late ’90s—they provided the legal documentation to create MERS on behalf of Fannie Mae and Freddie Mac.

The New York Times depicts Eric Holder’s departure from the
Justice Department. (photo: Zach Gibson/NYT)

J: Well, in thumbnailing Holder’s tenure as attorney general, folks like the New York Times said, “His Justice Department wrested huge fines from banks, including JP Morgan Chase, Barclays and CitiGroup,” but seen another way, Holder by some lights didn’t so much try and fail to prosecute big banks as succeed in protecting them.

LF: That’s right. As the inspector general of the Justice Department found, under Holder the Justice Department actually deprioritized mortgage fraud in their US attorney offices in New York, California and elsewhere. So there was a systemic attempt to shift the blame for the mortgage and financial crisis in 2008. Instead of the big banks, there were only criminal prosecutions of some small-time lenders and mortgage professionals, but the big banks that really had the responsibility behind the financial crisis, there was no effort to make any criminal referrals that we know of publicly and, of course, there were no prosecutions of any of the large banks responsible for the crisis.

JJ: Well, when you talk about Eric Holder going from Covington & Burling to the White House back to Covington & Burling back to the White House back to Covington & Burling, the response from many could be summed up, I think, as “duh.” I mean, some of us don’t forget 1992 Hillary Clinton saying, “For goodness sakes, you can’t be a lawyer if you don’t represent banks.”

And the idea is kind of: This is just how the game is played, what’s your problem?

For me, it’s not as if we’re asking reporters to feign surprise or feign ingenuousness, but you can’t present just kind of winking at the cynicism of it all as though that meant the same as interrogating it, or explaining who is hurt and who is helped. Obviously, real people are involved here.

LF: That right. I think this is not just a scandal for the Justice Department in that so many of the officials, not just Holder, but his top deputy Lanny Breuer also returned to Covington & Burling after serving for a few years in the Obama administration—this is a scandal for the media.

One of the perhaps most cynical and and most prevalent ways that you can legally bribe a government official or an elected official is to wait to give them a multi-million dollar check, not while they’re in office, but as soon as they retire. So if a politician helps a bank or an oil company, that oil company can’t directly buy them a boat or give them a million-dollar check. But if they wait until that official retires from office, as soon as they step out the door of Congress and find an employment contract with a lobbying firm or a big bank, then they can accept a multi-million-dollar payday; and so it’s simply delayed bribery, in my perspective.

But because this has become so routine, that this happens every day, whether it’s a member of Congress or a high level regulator, or in this case, the head of the Justice Department, this has become such a function of life in Washington, DC, it’s no longer a scandal in the eyes of many reporters. In a sense they condone this behavior, because in some of the exit interviews that Holder gave, reporters who had that special access to Eric Holder, they didn’t ask him about this dynamic, they didn’t ask him how much he’s being paid, they didn’t ask him about the ethics issues of going back to work for a big bank lobbying firm given his role in refusing to criminally prosecute these banks. You know the onus lies on the reporters and the media outlets that fail to ask these questions.

JJ: I almost feel as though it’s a sign of savvy to show that you’re not outraged, that you’re not disturbed at this sort of shenanigan, you know? That’s kinda what makes you a “serious” reporter in some ways. Which is disheartening.

LF: Sure, it’s part of the dynamic of being a beat reporter that if you ask these kind of unflattering questions, you lose access, you get shuffled around. So to be a successful beat reporter, you have to ask only tangential questions, or questions that make the interviewee—cast them in a positive light, I suppose.

A lobbyist for Pepsi is now chief of staff of the Senate
Agricultural Committee, which oversees school lunch
programs and nutritional guidelines.

JJ: And just so folks know that we’re not using Holder as an example because he’s so rare, this kind of porousness happens at all levels. For example, before you were writing about Holder, you were writing about this guy Stephen Sayle from Chevron and his new job.

LF: That’s right. A top lobbyist for Chevron, Stephen Sayle is now a senior staff member for the House Committee on Science, which oversees science policy for the federal government. This is a lobbyist, Mr. Sayle, who has helped Chevron beat back regulatory efforts that rest on federal science, whether it’s on the ozone or on climate change.

And now that he is overseeing the Science Committee, he has a unique opportunity to shift not only policy that governs the way that federal science is used to implement pollution regulations, he also has an opportunity to help with the Science Committee’s kind of investigation of climate scientists: Over the years, the House Science Committee has brought in various scientists to quiz them on climate science and other issues that are very controversial now given the EPA’s pursuit of regulations that affect the fossil fuel industry.

But that isn’t a unique dynamic. In the last two Congresses, we’ve seen an unprecedented wholesale change in the senior staff positions in Congress, and I’m referring to the chief of staff, which reports directly to a member of Congress or senator, or the staff director position, and that’s the position that oversees either a committee or a subcommittee. In almost every single position for staff director, we’ve seen lobbyists for the relevant industry take those spots.

So for the Agricultural Committee, which oversees school lunches and nutrition guidelines, we now have a Pepsi lobbyist who is overseeing that committee. In the Senate Armed Services Committee, which oversees military spending, we have a lobbyist for the trade group that represents Lockheed Martin and Boeing now leading that committee. So from committee to committee, whether it’s on chemical safety, whether it’s on pollution or on school lunches, we have lobbyists for the industries affected now running the show from the inside.

JJ: It certainly sounds like a story to me, but it’s not if you think it’s just business as usual.

LF: Certainly, and this gets back to the culture of Washington, DC. If you work in the public interest, if you kind of sacrifice your career to helping the public good, working at a small think tank or at an academic research position or in a public interest organization, you’re kind of seen as a loser. You’re not invited to the big parties, you’re not featured in the glossy magazines. But if you’re a political player, the big media outlets celebrate you; you’re kind of seen as a winner in the big social circles in Washington, DC. And as a kind of side effect of this entire dynamic, when you take these positions, whether it’s with Chevron or with another company, and then move into positions of power, your friends in the media do not consider this a scandal.

JJ: We’ve been speaking with journalist Lee Fang; his recent article on Eric Holder appeared on The Intercept. You can find them online at FirstLook.org. Lee Fang, thank you very much for joining us this week on CounterSpin

LF: Janine, it was a pleasure. Thank you so much for having me.

Reprinted with permission from Fairness & Accuracy In Reporting.

Egypt’s Deep State Rediscovers Itself

Protesters confront Egyptian police. (Screen capture from YouTube video)

By Amr Osman
It is now evident that the coup has not taken Egypt any step closer to a 'real state' where the supreme authority lies within its elected legislature, issuing laws and holding the government to account. On the contrary, the coup has deepened the roots of the deep state, resulting in an entity that is far from modern.

If there is anything positive in the events in Egypt since the military’s junta against its elected president on 3 July 2013, it would be the exposure of what has conventionally come to be called the 'deep state', which is a result of this deep state rediscovering itself.

Among the various groups that participated in the January 25 revolution – Egypt’s real and only revolution – many seem to have sincerely wished to transform Egypt into a state that respected the dignity of its citizens. In fact, they wanted to restore the state – that is, their state – from a corrupt coalition that had hijacked it for decades and divided it into what looked like a confederation of middle-age principalities. The army has its own principality, a giant economic entity with its own factories, supermarkets, and even recreational facilities. As do the police, who are part of the colossal Ministry of the Interior that, in addition to its internal security functions, provides all vital civilian services such as issuing national IDs, passports, etc.

The judiciary is another principality that the parliament cannot even touch without the permission of its lords. The same applies to Al Azhar University and mosque; as well as to the various, and ironically tremendously rich, Sufi ‘orders’; to the equally rich Coptic Church that pretends it is only accountable to God to evade any supervision over its financial and other affairs; to private media that is run by tycoon businessmen who themselves have their own principality, exploiting Egypt’s workers and monopolizing trade in all the vital industries. Last but not least, the Egyptian presidency is a principality of its own, with a budget no one dares to inquire about, that is of course, if it has a fixed budget at all.

Within each of these principalities, different cantons have different privileges and powers. Military police and intelligence officers, for example, have powers and access to benefits other military counterparts envy. A senior police officer in the traffic department within the Ministry of the Interior is no match for a young officer in State Security. Within the judiciary, judges in the State Council may feel resentful towards their arrogant and privileged counterparts in the Supreme Constitutional Court.

This applies to all other principalities, where you always find the powerful and the less powerful; the privileged and the less privileged. But what is common among all these principalities is that they all reject the interference of any outside institution in what they regard as their own domains. This, as it turned out after the revolution, applies to even an elected parliament, as well as the various state bodies put in charge of monitoring the activities of public and private institutions and supposedly fighting corruption.

These various principalities have taken their present shape only gradually as autonomous principalities since the 1950s (many of them did of course already exist, but they were significantly reconstituted after the army’s 1952 coup). Their relationship was determined in a largely ad-hoc manner. At a certain point after their takeover in 1952, the army, as the head of state, was able to exercise a great deal of authority over various state and non-state institutions. In the 1960s they were able to undermine the authority and independence of Al Azhar, the judiciary, private businesses and mass media. In the early 1980s, their second representative (Sadat) felt he had the power even to remove the Pope of the Coptic Church himself – supposedly divinely chosen and appointed – and arrest almost everyone who dared challenge his authority. His policies also gave rise to a new class of businessmen, and the National Democratic Party (NDP) began to assume the role of a moderator to moderate the interests of the various institutions and forces that made up the ruling regime.

Under the army’s third representative in the presidency (Mubarak), each of these institutions began to reassert itself over a long period of time, engaging in a long and mostly silent (but at times turbulent) negotiation with other institutions. However, they never had the opportunity to 'sit down' together to demarcate their respective domains and agree on how to deal with any possible outside threats.

This was well-known before the January revolution. People talked about the “deep state,” even if that exact term was not used. Such awareness was tacitly evident in simple but strongly indicative sayings that Egyptians commonly deployed before the revolution, and particularly when they felt like outsiders in their own country; helpless when the ‘father’ (Mubarak), for example, was grooming his son (Gamal) to ‘inherit the property’ (Egypt). Why not, Egypt is their principality. “It’s their country,” Egyptians used to say.

With the fall of Mubarak in 2011, therefore, Egyptians – ordinary Egyptians who are not part of any principality – felt for the first time that Egypt was theirs, that they were not helpless anymore, and that they could determine their own future by electing their own leaders and their own representatives. This was the real cause of the euphoria that followed the revolution. It was a strong feeling of empowerment following a long period of fear, helplessness, and indifference.

In the interim period between the revolution in 2011 and the coup two and half years later, the principalities of the old state maintained a low profile. The army, now officially in charge, was in the forefront of events, of course. But the events of those years made it clear that their popularity and influence among the Egyptians (which rests on various myths of different kinds) could deplete in a matter of months. Very soon the military realised that things could get out of control and, in their perspective, they did. For the first time since 1952, a civilian became the Supreme Commander of the Armed Forces, one whose legitimacy came from elsewhere, who expected military obedience from senior military leaders and was brave enough to attempt to sack senior officials to make political gains, and more seriously, could ask questions about an empire that has insightfully been described as a “black box in a black room.”

This ‘non-sense’ had to be stopped, all in the name of national security, and allegedly of saving Egypt from a global conspiracy to sabotage the country in which even world leaders were involved, along with their “internal traitors” and “terrorists”. But the events prior to the election of a civilian president must have made it equally clear to the military that if they wanted to regain control, they would have to rebuild the old coalition of principalities, but now on more conscious grounds, where every principality knows its rights and duties. This is exactly what was going on in Egypt after its revolution; the coup itself was just its culmination.

Admittedly, we do not know exactly when the Egyptian military began to orchestrate the coup or with whom. It is unlikely that the President of the Supreme Court (the judiciary), the Sheikh of Al Azhar and the Orthodox Patriarch (the institutions of the “religious establishment”), the Salafi leader, the journalists (mass media), and the “liberal” politicians (liberal and secular forces) were summoned on the day of the coup to show their full support. These representatives of many of the old principalities had very likely been communicating and negotiating for months. And most likely, they were not just negotiating over whether a coup might succeed or not, but also over how the deep state would be restructured and reconstituted in the post-coup era.

All this would be mere speculation had it not been for the events of the last twelve months. A mere glance over the new Egyptian constitution (and the composition of the committee that produced it) and the presidential decrees – issued by the un-elected, army-appointed interim president (Mansour), who is the President of the Supreme Constitutional Court, and who also held both executive and legislative powers, just as his present successor does – suffices to demonstrate the point. The constitution now recognises the virtual autonomy of the judiciary and the army, with the elected president of the republic stripped from his previous military leadership rights (this, of course, becomes irrelevant when a military leader is the president). Many presidential decrees gave the army ownership or management of various lucrative and vital projects, including real estate, high-ways, as well as entire sea ports.

Other decrees have weakened the ability of the Egyptian judiciary and legislature to protect the Egyptian economy from the abuses of domestic and foreign businesses. And we must not forget the decrees that have nearly outlawed protests or criminalised entire groups of political forces in an attempt to eliminate any potential future threats. These are only examples, but almost every single presidential decree from July 2013 to June 2014 has empowered old institutions and weakened “outsider” institutions, groups, or individuals.

This is all we can see for the time being. What appears to be certain, is that the institutions of the old, deep state have become ‘conscious’, both of themselves as separate entities within the state (to the extent we can talk about a state in this context), and of their inter-dependence. Yet as much as this consciousness seems to have strengthened these institutions (to the extent that they successfully orchestrated a counter-revolution with popular support), it may also trigger their undoing.

Each one of these institutions now has both expectations and what they regard as their entitlements for their role in the coup. It is not unlikely that these institutions – whose relationships are based on purely pragmatic calculation but who are otherwise worlds apart – could fail to continue in balancing their respective interests and the interests of the entire coalition that brought Egypt back to square one. This does not necessarily mean that all of them will collapse, but it means that at least some of them will collapse or simply concede to the power of others in a hierarchy of authority, power, and privileges.

Whatever the circumstance, it is now evident that the coup has not taken Egypt any step closer to being a 'real state' where the supreme authority lies within its elected legislature, issuing laws and holding the government to account. On the contrary, the coup has deepened the roots of the deep state, resulting in an entity that is far from modern.

Reprinted with permission from openDemocracy.