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The Best Democracy Money Can Buy Greg Palast Fonte | Torna a Indice

But there was a ray of hope for the firm. At the end of Wackenhut's sunless summer, between the fourth and fifth murder in New Mexico, the office of Britain's Home Secretary announced he would award new contracts to the company including one to build and operate a prison at Marchington. Wackenhut has become the leading operator of choice in the globalization of privatized punishment based on its stellar experience in the US.

With state after state handing Wackenhut walking papers, what could have motivated Her Majesty's Prison Service to invite the company to operate a UK prison? The Home Office at first denied they offered new work to the company, noting huffily that Britain too cancelled a Wackenhut contract, ending their operations at Coldingley Prison by "mutual agreement". (In fact, it was not so ,'mutual". A confidential audit leaked into hands of a prison expert and passed to me accused Wackenhut of dubious accounting and "total disregard for fundamental tenets of Prison Services financial policy".)

When the Home Office spokesman said they had given no new contract to Wackenhut, I suggested he look under the corporate alias, "Premier". I received a breathless call the next morning: Yes, we have several contracts with Premier, including operation of the Doncaster Prison (aka "Doncatraz") and the planned Marchington prison. Wackenhut, said the flak, "is a part of the Premier consortium". That's one way of putting it. Wackenhut owns 50 per cent of Premier and controls Premier's UK prison operations.

The prison service checks the backgrounds of its prison guards, but what about companies applying to run the entire operation? Did the UK Prison Service contact US authorities? No. Did they even enquire of Wackenhut an explanation of the deaths, riots, criminal indictments and contract terminations in the US? "Uh, we have no reason to contact Wackenhut." This eyes-wide-shut indifference has a purpose: it permits the Blair government's born-again free market faith in prison privatization to remain undisturbed.

The Home Office has also paid Wackenhut to open a new Child Prison in County Durham. The prison opened one month after American prosecutors charged Wackenhut executives and guards of a Texas juvenile center with ,offensive sexual contact. Deviant sexual intercourse and rape were rampant and where residents were physically injured, hospitalized with broken bones."

It wasn't a convict but an employee who told me, "My 15 months in the prison were hell on earth. I'll never go back to Wackenhut." Those sentiments need not worry the company so long as they are not shared by governments mesmerized by the free market in human misery.

Following my initial report on Wackenhut, I was flooded with whistleblowers, insiders and professionals in the incarceration 'industry' who piled papers on me: internal company and government documents from three continents, pleading that I keep their names concealed.

To be honest, I hated it. I felt weighed down, responsible and guilty as hell because I couldn't report it. There was the story of Wackenhut's juvenile center in Louisiana where guards beat a I 7-year-old boy so severely that part of his intestines leaked into his colostomy bag. But that's not exactly attractive television. Editor after editor said, "No sale.'

Nevertheless, I spent nights going through technical documents. One thing is clear to me from reviewing the confidential bid documents leaked to me from Her Majesty's Prison Service: Wackenhut's bid to operate Doncaster Prison was clearly higher in cost to the government than a competing proposal from the civil servants and union employees already operating the prison. But the government jiggered with the bidding analysis to reach the conclusion that somehow higher was lower, less qualified was more qualified. As the Blair government is in love with privatization and love is blind, it chose Wackenhut to do the job,

In the meantime, more Wackenhut guards were indicted in Texas and Louisiana for brutality and illegal use of gas grenades inside a detention center for youth, yet Britain's Home Secretary gave the company approval to open a jail for juveniles near Bristol. I mentioned this to New Mexican State Senator McSorley, who said, 'That's bordering on the bizarre. "

No senator, it's award-winning. It earned the UK Home Secretary, lack Straw, one of my annual Golden Vulture awards, which I promised to send him mounted, manacled and beaten black and blue.

What Price A Store-Gasm?

At Wal-Mart's 1992 general meeting, company founder Sam Walton asked his shareholders to stand and sing 'God Bless America'. The 15,000 Wal-Martians responded emotionally to Sam's call, even though Mr Walton had been dead for two months.

Walton's request to the stockholder-cum-revival meeting in rural Arkansas - channelled through an executive, spot-lit and on bended knee, speaking to the departed Deity of Retail - was not surprising. Wal-Mart is the most patriotic, flag-waving company in America.

Until you look under the flags. Stores are decked out like a war rally, with Stars and Stripes hung from the ceiling and cardboard eagles shrieking, BUY AMERICA! But one independent group sampled 105,000 store items and found only 17 per cent made-in-the-USA items, many on sales carts marked "Made in America!"

Wal-Mart Store's annual sales far exceed the GDP of the old Warsaw Pact. Where does all that stuff come from? Avid WalMart shopper Wu Hongda can tell you.

"Harry" Wu is famous in the US. Although he escaped China after 19 years in a prison camp for "counter-revolutionary" views, Wu conned his way back into the prisons to document laogai, the misery of forced labor. In 1995, Wu was caught and re-jailed.

But Wu told me another part of the tale. just before his last arrest, he set up a fake commercial front and sent a confederate to Guanclong Province posing as a wholesale clothes buyer looking to contract with Shantou Garment Trading Company. The Trading Company uses factories in both Shantou town and within nearby Jia Yang prison. Shantou gave Wu's operatives "references" from another customer: Wal-Mart.

I asked Wal-Mart directly if they used incarcerated gangs in Guandong to stitch T-shirts, breaking US law. The company responded, inscrutably, that its contracts prohibit slaves, prisoners or little children from making its products. How does Wal-Mart know if company contractors with plants in China's gulag use captive labor? They can't know. Wu's associate was told Chinese authorities prohibit monitoring production inside the prison.

Of course, asking Wal-Mart if shirts are made by workers shackled or "free" is merely playing China's game. To the workers, whether inside or outside the barbed wire enclosures, China is a prison economy. What wage can a worker expect when competing prison factories pay an effective wage of zero - and when the price for complaining about the system is made so starkly visible?

Wu, now back in the US, continues to shop at Wal-Mart, just to check labels. He has discovered bicycles, condoms and other necessities manufactured by the Peoples' Liberation Army under the aptly named brand "New Order".

Outside China, who makes the dirt-cheap clothes? The answer depends on how you define "children". When reporters confronted CEO David Glass with photos of 14-year-old children locked in his Bangladesh factories, he said, "Your definition of children may be different from mine." But those were the bad old days, back in 1992, before Wal-Mart published its Code of Conduct, which ended contractor abuses.

Or maybe not. According to the highly reliable National Labor Committee of New York, Wal-Mart contractor Beximco is listed as paying teenage seamstresses in Bangladesh 18 cents an hour and their helpers 14 cents working an 80-hour seven-day week. That's half the legal minimum wage and way beyond the legal work week of 60 hours.

Wal-Mart told me this could not happen. But the company has a bad habit of trying to put one over on reporters. In 1994, former Wall Street Journal reporter Bob Ortega, author of the fearsome exposŽ, In Sam We Trust, was taken on a dog-and-pony show of Wal-Mart's Guatemalan contract factories filled with smiling adult workers. But Ortega had arrived secretly two weeks earlier to speak with the child seamstresses hidden from the official tour. Later, human rights activists flew Guatemalan Wendy Diaz to the US where she testified about the sweatshop where, as a 13-year-old, she earned $0.30 an hour making Wal-Mart label clothes.

Regarding abuse of child workers, Wal-Mart's former lawyer, Senator Hillary Clinton, the "little lady" Sam appointed to his Board of Directors, did not return my calls.

Despite the bothersome gripes of a few skinny kids from Guatemala, Wal-Mart maintains a folksy image based on Sam Walton's aw-shucks Joe Bloke manner. Joyous clerks, say the company, chant pledges of customer service, which end with shouts of "So help me Sam!" The multi-billionaire took time to go into his shops and warehouses, put on a name tag and chat with employees over doughnuts. An employee told me about these folksy chats. In 1982, well on his way to becoming America's richest man, Sam dropped by an Arkansas distribution center and told the loaders, as one regular guy to another, if they voted to join a union in a forthcoming representation ballot, he would fire them all and shut down the entire center.

The words, corroborated by eight witnesses, may have been in violation of US labor law, but they were darned effective, The workers voted down the union, keeping Sam's record perfect. Out of 2,450 stores in America today, exactly none is unionized.

Who needs a union anyway? Arkansas headquarters would not tell the Observer the company's wage rate for clerks. So our volunteers called Wal-Marts nationwide to apply for cashier jobs. Openings averaged $6.10 an hour (a hair above Britain's minimum wage), though in deference to an old American tradition, Wal-Mart offered only $4.50 near Indian reservations.

But these wages are before Wal-Mart deducts for health insurance "copayments". Because the deductions could wipe out their cash pay checks, most workers cannot accept this "benefit".

There is a pension plan and profit sharing. But Sam Walton didn't make his billions by sharing profits. Wal-Mart invented the disposable workforce. About a third of the workers are temporary and hours expand, shift, contract at whim. The workforce turns over like the shoe inventory, so few ever collect full pensions or profit shares.

But Wal-Mart does provide free meals, sort of. Most workers' salaries are near or below the official US poverty line, so those without second jobs qualify for government food stamps. With 780,000 workers, Wal-Mart has the nation's largest payroll, if you call that pay. Taking over the care and feeding of the Wal-Martyred workforce is a huge government welfare program. It could have been worse, but the courts rejected Walton's plea for exemption from the US minimum wage.

Wal-Mart does respond to workers who plead for an extra bowl of porridge. When employee Kathleen Baker handed her store manager a petition from 80 workers hoping for a little raise, she told me, she was fired on the spot for theft of the use of the company typewriter to write up the petition. The charge ruined her ability to get another job.

In 1994, Linda Regalado was threatened with loss of her job if she continued to talk to fellow "associates" about their right to join a union. She persevered and Wal-Mart made good on its illegal threat. Shortly thereafter, her husband Gilbert, working at the same store, was seriously injured and Wal-Mart refused to pay for surgery. The government sued the company, but the United Food and Commercial Workers, which backed Linda's cause, threw in the towel. The Commercial Workers' organizer told me that "the Fear Factor had become so widespread" that the union had no choice but to abandon all hope of signing up any Walton operation. Now Wal-Mart has come to Britain's happy realm. Will Wal-Mart megaliths chew up England's greenbelts and bleed rural high streets? Tony Blair's government denies reports that it has loosened the ban on giant out-of-town stores. Britain's Trade Ministry says its preservation policy remains unchanged (and will announce that policy as soon as industry lobbyists tell them what it is).

A Wal-Marted Britain is not an inevitability. US towns "are wising up," says Al Norman, head of Sprawl-Busters, which helped 88 communities slam the door on the Beast in the Box.

Down the road from my home, 60 miles from New York City, Wal-Mart has built a "Sam's Club". It is one of the company's smallest shops. Still, it could fit three of Britain's Tesco supermarkets plus a football field inside the one building. Entering for the first time, reason cannot withstand 70,000 Standard Commercial Product Units under the fluorescent sun moaning you want me, take me, have me, fulfilling my nastiest human desire for Cheap and Plenty.

But my store-gasm has a cost. I step out of the Big Box and into the Pine Barrens, the last scrap of woodland left on Long Island's suburban moonscape, which Wal-Mart, despite a thousand urban alternatives, insisted on cutting up for its car parking lots.

Thirty miles east in my small farming hamlet, one in four shop windows on Main Street say, For Rent. Maybe we'll end up like Hudson Falls, once called "Home Town USA". Planning theorist James Howard Kunstler told me, "That town's main street is now a pitiful husk of disintegrating nineteenth-century buildings." After Sam Walton's Big Boxes landed outside the town, Hudson Falls was "sprawled into extinction".

No more cheap commercial thrills for me. I'm staying out of the Box, so help me Sam.

How the Filth Trade Turned Green

Long before George W. Bush killed the global warming treaty, it was mortally wounded by industry lobbyists - and the richest environmental group in America.

Up in the hills of Tennessee, they just love air pollution. Can't get enough of it. In fact, they'll spend hard cash for more of it.

In May 1992, the Tennessee Valley Authority paid a Wisconsin power company for the "right" to belch several tons of sulphur dioxide into the atmosphere, allowing the TVA to bust above-contamination limits set by law. Wisconsin cut its own polluting to offset Tennessee's. This was the first ever trade in emissions credits, an experiment in using market mechanisms to cut nationwide pollution overall. Why should you care if Billy Hill is paying good money to suck soot? Because trading rights to pollute (first tried on Tennessee) was the cornerstone for implementing the Kyoto Protocol, the global warming treaty, which proposed rules for industrial production worldwide for the next three decades.

The Kyoto Protocol aimed to slash emissions of "greenhouse gases" which would otherwise fry the planet, melt the polar caps and put Blackpool and Los Angeles under several feet of water. (It will also have negative effects.)

As you can imagine, industry's big lobbying guns lined up against the Protocol. Leading the charge against the treaty is Citizens for a Sound Economy, an ultra-right pressure group chaired by corporate super-lobbyist Boyden Gray.

Squaring off against CSE is the influential Environmental Defense Fund of Washington DC. So committed are EDF's greens to the treaty that they set up a special affiliate to help implement the protocol's trading system. EDF's new Environmental Resource Trust is chaired by Boyden Gray.


How did Gray, top gun of big industry's anti-treaty forces become chief of a respected environmental group? Did he have a deathbed conversion? No, Mr Gray's in fine health, thank you. Someone far more cynical than me might suggest that Mr Gray and his polluting clients, unable to halt the clean air treaty during the Clinton administration, perfected a new way to derail the environmental movement: If you can't beat 'em, buy 'em. By covering themselves in the sheep's clothing of a respected green organization, polluters can influence treaty talks to make darn certain they do not have to change their dirtmaking ways.

That's where the Tennessee model comes in. By insinuating into the protocols a company's right to meet pollution targets by buying unused emissions allotments, US industry can blow up the treaty from the inside. Fronting the filthtrading scheme is the Environmental Defense Fund. The idea of contamination credits originated with the corporate lobby Business Roundtable. We know this because the Roundtable left a memo to that effect in a photocopy machine at a Kyoto follow-up meeting in Buenos Aires.

Other than the plain creepiness of selling rights to pollute, what is wrong with such trades if they painlessly cut emissions overall? Well, keep your eye on that "if". I haven't yet found a single trade that took an ounce of pollution out of the atmosphere. The free market fix for dirty air was rotten from the first deal. In the 1992 Wisconsin "sale" of pollution to Tennessee, the Wisconsin company's right to sell sulphur dioxide was based on their agreement not to build another power plant. But state authorities in Wisconsin would never have permitted building the new plant. Therefore, the seller's supposed reduction in pollution was a sham; however, the additional spume of poison from the Tennessee mountains is real and deadly.

Despite this sorry record, US negotiators have pushed emissions trading as a take-it-or-leave-it condition of America's participation in the global warming treaty. Emissions trading, as a so-called "market mechanism" for saving the biosphere, is the pride and joy of the Third Way, the means by which New Democrats hoped to replace those nasty old ruleby-command laws - "THOU SHALT NOT POLLUTE" - with efficient, retail transactions, possibly at your local TOXINS'R'US. (America already has a "stock exchange" where 15 million tons of sulphur dioxide are traded each year.)

Under US treaty proposals, any US or European manufacturer who wants to crank up their earth-baking discharges will have to buy up rights from a greenminded company which has cut emissions. But where in the world will they find earthfriendly industries willing to sell their rights to pollute? You'll never guess: Russia and Ukraine.

In case you were on vacation when Russia became an eco-paradise, I'll fill you in. The treaty's rights to pollute are allocated based on the level of air trash pumped out in 1990. Up to that year, remember, Russians were under communist rule, forced to work in grimy, choking factories. Now they are free not to work at all. The post-communist Russian industrial depression has cut that nation's emissions by 30 per cent. Thus, the bright side of starvation on the Steppes: a bountiful supply of pollution "credits", enough to eliminate 90 per cent of US industries' assigned reduction in pollution.

Is anyone fooled? Did tree-hugging Al Gore, vice-president when the scheme was proposed, jump up and holler "Fraud!" Not a chance. To corporate applause, the VP has blessed the bogus trading in filth credits. Gore even used the pollution trading scam to enhance his green credentials by posing for photo ops surrounded by members of that most revered environmental organization, the Environmental Defense Fund.

It gets worse. The Clinton-Gore administration, before taking its final bow, announced a scheme to give "early credits" to US companies that cut emissions before any treaty takes effect. So, for example, if a chemical company shuts a plant to bust its trade union, they get credits. A dozen top environmental groups are up in arms about this windfall for phantom reductions in pollution - but not EDF, which takes pride in crafting the proposal's details.

How did EDF come up with this bizarre idea? Apparently, under the tutelage of some of America's most notorious polluters, at least according to internal documents faxed to my newspaper from a source (whom, as you undoubtedly understand, I cannot name) from inside the Environmental Resource Trust, the EDF unit chaired by Boyden Gray.

One memorandum, dated October 21, 1997, states: "At the present time, most of the major utilities have been regularly meeting with EDF staff to discuss this concept." Another memo indicates the group could cash in on the credits, opening the door to an environmental group profiting by selling rights to increase pollution. An EDF staffer admitted the plan was drafted with Southern Company and American Electric Power, notorious polluters, "looking over our shoulders".

Why do some enviros appear to act like Rent-A-Greens for the Boyden Grays and corporations they once blasted? It's not just the loot. Rather, genteel alliance with industry is the ticket that lets them hang out with Gore or Bush and the industry Big Boys in the deal-making loop. They believe that, from the inside, talking the "market" lingo, they can change policy. They certainly are allowed to feel important. Unfortunately, the collaborationists have confused proximity with influence.

The filth trade is the ugly stepchild of the new mania to replace regulation with schemes that pose as "market" solutions. We know the attractions of the filth trade to politicians of any party: it provides a pretence of action to the public while giving winking assurance to industry that the status quo is not disturbed.

The sale of crud credits is chopping the legs off America's anti-pollution laws and it will be used to sabotage any new global warming treaty.

Marketing-not-governing gimmicks spread like Tennessee kudzu. And it's not limited to the trade in pollution. Don't be surprised when General Pinochet claims to have purchased unused bone-cracking rights from Pol Pot.

Neither Bodies to Kick nor Souls to Damn

Here's something to put your mind at ease. In the US, the federal government payroll includes 150 bureaucrats whose job is measuring the space between a mattress and the railings on a bunk bed.

While the rest of America is busy making things people can use, these rulerarmed squadrons launch surprise raids on shopping malls and furniture stores hunting for the latest threat to society: the killer kiddy bed. If a railing is even a half inch off the specifications in their little rule books, the bed is put under arrest and removed. Altogether the bureaucrats have saved us from 513,000 criminal beds, costing manufacturers nearly $100 million. Never mind that the industry issued its own strict safety standards voluntarily without help from the little men with rulers.

That's Version A. Now try Version B.

One evening in May 1994, James Mayernick's wife put their visiting young nephew, Nicholas, into the top cot of a brand new bunk bed. Ten minutes later, hearing her own son's screams,,, she rushed to the children's room to see Nicholas hanging. When the boy struggled to free himself, the railing pushed his head into the mattress. The gap between rail and mattress, an inch more than allowed by regulation, permitted his body to slip through, but not his head. Nicholas suffocated, the fifty-fourth child to die trapped in bed rails before the government sweep.

So which version tickles your fancy? In the Version A world-view, the US has become America the Panicked, where selfserving lawyers and journalists have created a lucrative industry of scaremongering, hunting down dangers rare or nonexistent. The result of all this misguided hysteria, say the Version A advocates, the Deregulators, is the mushrooming of giant bureaucracies whose sole effect is to hog tie business with red tape and maddening, nitpicking regulations.

America, which touts itself as the land of free enterprise cowboys, John Wayne individualism and capitalism unfettered, has the most elaborate, pervasive, rule-spewing system of regulating private industry on the face of the earth. US government agencies such as the Consumer Product Safety Commission - the bed police - have exploded to a scale unimagined in Europe. For example, in 1999 the UK had 265 nuclear plant inspectors. The US, with not many more operating plants than Britain, had 4,000.

And for good reason. America tried it the other way, hoping the marketplace would reward enlightened producers and drive out the rogues. Not a chance. The Mayerniks' bed, which smothered their nephew, was manufactured by El Rancho Furniture of Lutts, Tennessee long after the industry published its "voluntary standards" for bed designs.

How did America become international headquarters for corporate capitalism and, at the very same time, the society with the world's tightest constraints on private industry? It all goes back to the beginning of the nineteenth century when Andrew Jackson ran for president on the platform of outlawing that dangerous new legal concoction called, the "Corporations".

Jackson and his ally, Thomas Jefferson, feared this faceless, heartless creature made of stock certificates. Before the advent of the stockholder corporation, business owners had names and faces. They could be personally held accountable for their evils before courts or mobs or the Lord in His Heaven or at society dinners. But, ran Jackson's manifesto, "Corporations have neither bodies to kick nor souls to damn."

President Jackson could not stop the corporate Dreadnought. Instead, as historian Arthur Schleisinger put it, Jackson established government regulation as the means by which the democracy would impose a sense of morality upon these amoral entities.

The regulatory reform gang argues that in the twenty-first century we no longer need the reams of rules and the phalanx of agency inspectors. Enlightened corporations now understand the long-term advantage of protecting the public interest voluntarily. Oh, please. Catalina Furniture of California resisted the government order to recall 5,000 of its bunk beds despite a report that, as happened to the Mayernicks' nephew, a three-year-old child was caught between mattress and rails on the thin beds. The company protested at the recall on the grounds that the first trapped child survived.

Recently, I was nauseated by a full-page advert run by Mobil Oil (soon to be Exxon-Mobil) topped with the banner: "Two of the Safest Ships Ever Built". It announced the launch of a new, double-hulled oil tanker which, trumpeted Mobil, would "have prevented most of history's collision caused oil spills". Indeed, it would have. However, the Exxon-Mobil PR people, preening and prancing in their double-hulled self-congratulations, failed to mention that in the 1970s the oil giants successfully sued the government of Alaska, blocking a law requiring they use double hull ships when moving oil out of the port of the Valdez. As a direct consequence, the single-hulled Exxon Valdez destroyed 1,200 miles of Alaska's coastline. MobilExxon now sees the light - but only because, after the great spill, Congress, under public pressure, rammed the double-hull rule down Big Oil's corporate throats.

Today, the Jacksonian compact is under assault, and not just from the Republicans - we expect them to be craven toadies to business interests - but from that Democratic coulda-been Al Gore. As vice-president, he pushed a program called "ReInventing Government", which all but dynamited Jefferson's head off Mt Rushmore.

Gore's "Re-Inventing Government" program repackaged in Democratic sheep's clothing all the hate-the-government blather which once spewed from moss-back Republicans. Gore's cute anecdotes about red tape and goofy rules mask a treacherous proposal for industry to "peer review" any new government regulation. This would add new levels of bureaucracy, procedural delay and red tape. But it would accomplish the goal of General Motors and Alliance USA, a business lobby which devised the plan for Gore, to choke off tougher safety and environmental rules.

I spoke with one of the little bureaucrats with a ruler, Consumer Product Safety Commission inspector Robin Ross. Measuring bed rails "is one of the things I like best" about the job, she says. It is a nice break from her main chore, taking evidence from families of children hung, sliced, drowned and burned. Sometimes, when her day is done, "I just sit in my car and cry."

I asked her about the best-selling book called The Death of Common Sense: How Law is Suffocating America. The author, Philip K. Howard, Al Gore's deregulation guru, is especially fond of jokes about government agents "who even measure the number of inches surrounding a railing". Robin acknowledges the need for a second look at rule-making, but she notes that it wasn't the law that suffocated Nicholas Mayernick.


No, there aren't a million lawyers in America. Only 925,671. But that's not nearly enough, according to Elaine Levenson.

Levenson, a Cincinnati housewife, has been waiting for her heart to explode. In 1981, surgeons implanted a mechanical valve in her heart, the Bjork-Shiley, "the Rolls-Royce of valves," her doctor told her. What neither she nor her doctor knew was that several Bjork-Shiley valves had fractured during testing, years before her implant. The company that made the valve, a unit of the New York-based pharmaceutical giant, Pfizer, never told the government.

At Pfizer's factory in the Caribbean, company inspectors found inferior equipment, which made poor welds. Rather than toss out bad valves, Pfizer management ordered defects ground down, weakening the valves further, but making them look smooth and perfect. Then Pfizer sold them worldwide.

When the valve's struts break and the heart contracts, it explodes. Two-thirds of the victims die, usually in minutes. In 1980, Dr Viking Bjork, whose respected name helped sell the products, wrote to Pfizer demanding corrective action. He threatened to publish cases of valve strut failures.

A panicked Pfizer executive telexed, "ATTN PROF BJORK. WE WOULD PREFER THAT YOU DID NOT PUBLISH THE DATA RELATIVE TO STRUT FRACTURE." The company man gave this reason for holding off public exposure of the deadly valve failures: " WE EXPECT A FEW MORE. " His expectations were realized. The count has reached 800 fractures, 500 dead - so far. Dr Bjork called it murder, but kept public silence.

Eight months after the "don't publish" letter, a valve was implanted in Mrs Levenson.

In 1994, the US Justice Department nabbed Pfizer. To avoid criminal charges, the company paid civil penalties - and about $200 million in restitution to victims. Without the damning evidence prised from Pfizer by a squadron of lawyers, the Justice Department would never have brought its case.

Pfizer moans that lawyers still hound the company with more demands. But that is partly because Pfizer recalled only the unused valves. The company refused to pay to replace valves of fearful recipients.

As you've learned from watching episodes of LA Law, in America's courtrooms the rich get away with murder. Yet no matter the odds for the Average Joe, easy access to the courts is a right far more valuable than the quadrennial privilege of voting for the Philanderer-in-Chief. This wee bit of justice, when victim David can demand to face corporate Goliath, makes America feel like a democracy.

Some Britons appreciate the US system. Several British heart valve victims sued Pfizer in US courts.

In Britain itself, Pfizer has little to fear. As a London solicitor for the pharmaceutical industry told me, "US legal excesses are not visited upon defendants here." And the drug companies want to keep it that way. If you happened to be in Blackpool during the 1998 Labour Party Conference, you could have dropped by Pfizer's booth. (For more discreet approaches to Downing Street, Pfizer used GPC Access, Derek Draper's former lobby firm.) Pfizer had two reasons to cuddle up to New Labour. First, Pfizer was pushing the National Health Service to pay a stiff price for its love potion, Viagra. Second, to protect Viagra super-profits, Pfizer needed to prevent a toughening of UK products liability law demanded by the European Union.

Back in the US, the heart valve victims' rights were under attack. Waving the banner of "Tort Reform", corporate America had funded an ad campaign portraying entrepreneurs held hostage by frivolous lawsuits. But proposed remedies stank of special exemptions from justice. A ban on all lawsuits against makers of parts for body implants, even those with deadly defects, was slipped into Patients' Rights legislation by the Republican Senate leader. The clause, killed by exposure, was lobbied by the Health Industries Manufacturers Association supported by - you guessed it - Pfizer.

At their best, tort lawyers are cops who police civil crime. just as a wave of burglaries leads to demand for more policemen, the massive increase in litigation has a single cause: a corporate civil crime wave.

Six years ago, after 18 buildings blew up in Chicago and killed four people, I searched through the records of the local private gas company on behalf of survivors. What I found would make you sick. I saw engineers' reports, from years earlier, with maps marking where explosions would be likely to take place. The company, People's Gas, could have bought the coffins in advance. Management had rejected costly repairs as "not in the strategic plan". It's not planned evil at work here, but the enormity of corporate structures in which human consequences of financial acts are distant and unimaginable.

I admit, of the nearly one million lawyers in the US, you could probably drown 90 per cent and only their mothers would grieve. But as Mrs Levenson told me, without her lawyer who worked for a percentage of her settlement, Pfizer would not have paid her a dime of compensation.

The tort reformers' line is that fee-hungry lawyers are hawking bogus fears, poisoning American's faith in the basic decency of the business community, turning us into a nation of people who no longer trust each other. But whose fault is that? The lawyers? Elaine Levenson put her trust in Pfizer Pharmaceutical. Then they broke her heart.

War on Corruption? Not Quite, Minister

In July 2000, 1 had a very interesting conversation with one of Britain's top corporate banisters, who told me about an enlightening conversion he'd had at a Trade Ministry reception. It was just after Tony Blair took over the government. As the free drinks flowed at the Ministry bash,

... I was introduced to somebody who identified himself as the chairman of the company you just mentioned [Balfour Beatty] and we were talking about corruption.

He announced with enormous pride that he personally had handed over the check to the government minister for the Pergau Dam bribe.

And it just so happened that I had my tape recorder turned on.

There's still one bargain left in Rip-Off Britain: the price of a UK minister remains way below the cost of purchasing officials in the US, even below traditional influence shopping centers in the developing world.

Case in point: last year, it was disclosed that the US Justice Department had sought Swiss help in tracking $60 million from British Virgin Island bank accounts which justice contends was paid to the current president and former prime ministers of Kazakhstan. The account was funded by US giant ExxonMobil, British Petroleum and Phillips Petroleum. (There was no accusation of criminal intent by the oil firms who, we assume, had legitimate reasons to send their millions on holiday to the Caribbean.)

By contrast, in 1989, prior to its merger with Exxon, Mobil paid a mere 10,000 pounds ($15,000) to Neil Hamilton MP, following his attempt to scupper a tax on North Sea oil. During the trial of Hamilton's libel suit against Mohamed Al Fayed and the Guardian, a Mobil executive testified that Hamilton, then sitting on the Finance Committee in Commons, demanded cash for defending the oil company's positions in the committee. The Mobil executive was "horrified"; nevertheless, the company suggested the payment be invoiced as a consulting fee, although "the reality was we were buying off Mr Hamilton for what he had done, in connection with this tax issue".

In what must be the most stunning - and never reported - statement during the trial, Mobil's lawyer informed his executive, "This was the normal course of things for some MPs who did ask for payment."

Really? Which other MPs? And how much? And which other companies received bills from Parliamentarians'R'Us?

Most important, is this "normal course of things" still business as usual? At first blush, it appeared the game was over. Tough-guy Home Secretary Jack Straw published "Upholding Integrity: the Prevention of Corruption". Extortionists and bribers beware. No more Hamiltonian fees for favors.

Well, not exactly, explained a Home Office spokesperson. The Home Office would not call a payment to a Member of Parliament a bribe if the cash is "remuneration" for services performed. Furthermore, the government's proposal states that "offering a bribe" will not constitute an offense unless the pay-off is "primarily" the reason for a public servant's actions. If a future Hamilton simply hates taxes on oil companies deep in his heart and oil company payola merely stiffens his resolve, the cash is his to keep.

Then bribery is legal? Don't be cynical. A 10 pound pay-off, says the Home Office, would be a "gratuity", but a 1,000,000 pound pay-off is corrupt. It depends on the amount the fixer believes would influence the politician's decision. How about 10,000 pounds? The functionary told me, either as a warning or an advertisement, "Ten thousand would influence me, but maybe not some of our wealthier MPs." (The Home Office declines, however, to publish the legal price list for each member of government.)

I was assured that the normal course of things would remain undisturbed. "We are not trying to change the law, just clarify it." New Labour, promised the Home Office, had simply repackaged current common law and three old codes into a single new statute.

So why had Mr Straw bothered at all with this legal shuffling? Because there was a need for one change. For the first time, the anti-corruption rules, such as they are, will now apply to British corporations bribing foreign officials. This was not a courageous advance toward a moral foreign policy. Rather, PM Tony Blair has been dragged kicking and screaming into action by the Organization for Economic Cooperation and Development's declaring Britain out of compliance with the Organization's Anti-Bribery Convention.

Thus, as a result of the government's belated and grudging move to adhere to international regulations, UK companies that oblige requests for gratuities from Col. Mustaffa Hamilton of Fanatistan are now subject to the same diligent lack of prosecution as in dealings with the domestic Mr Hamilton.

The real test of Blair's commitment to shutting down the worldwide kasbah for favors is not whether the Home Office puts English executives into leg irons but an action far less dramatic: cutting off public subsidies to companies found guilty of corruption. The World Bank has adopted this simple rule: if you pay off a potentate (and get caught), you lose your loan guarantees and your government contracts.

The Government of Lesotho has charged a consortium including construction giant Balfour Beatty (along with several European and American operators) with paying at least 22 million rand to government agents to grease approval of lucrative contract amendments in the building of the Highlands Dam. It looks grim for Balfour Beatty. The Swiss government has obliged prosecutors with details of bank accounts traceable to some of the accused.

While Balfour Beatty's consortium is in the dock in Lesotho, the company is drawing down funds backed by the British taxpayer through the Export Credit Guarantee Department (ECGD) for the company's work on the Ilisu Dam project in Turkey - and Tony Blair wants to sell the London Underground to Balfour Beatty.

The ECGD says it is looking into the Lesotho case. I called Lesotho's Chief Prosecutor about any evidence he had passed to Britain's government. He told me no one from the Home Office, the Department of Trade and Industry (DTI) or the British government had contacted him. That does not mean there has been no UK investigation. The DTI told one watchdog organization that officials asked Balfour Beatty if the charges had merit and the company said "No." Well then, case closed.

"Government is so hypocritical," says Jeremy Carver, head of international law with the firm Clifford Chance. Carver, adviser to the anti-corruption campaign Transparency International, cited the government's predilection for strong press releases and weak enforcement. It was Carver to whom the Balfour Beatty executive boasted he "personally had handed over the check to the government minister for the Pergau Dam bribe" in Malaysia. Carver noted that a Tory trade minister, learning of the pay-off, publicly congratulated Balfour Beatty on its patriotic competitiveness.

Carver looks longingly at the US Foreign Corrupt Practices Act, the oldest, toughest such statute, the grounds for the US Justice Department's foray into Kazakstan. But he may not want to look too closely at the US experience.

Where, after all, did the Kazakhs get the idea of paying off a president? In 1995 and 1996, Roger Tamraz, an investor promoting US backing for an oil pipeline in Kazakhstan, secretly provided $300,000 to the Democratic Party, a violation of US election law. This did not surprise Johnny Chung, who pleaded guilty to funnelling money from Red Chinese military industries to Clinton's campaign. Chung, who earned several meetings with the president, explained: "I see the White House is like a subway - you have to put in coins to open the gates. "

These and hoarier tales suggest American politicians' zeal to prevent payments of bribes abroad is motivated primarily by a jealous desire to keep all the baksheesh at home.

Not unexpectedly, the week after I reported this story, the mail brought a note from Balfour Beatty.

A company spokesman, Mr Tim Sharp, wrote that he spoke to my source who, according to the company, "denies absolutely having said what is attributed to him". The company demanded a retraction.

There was something odd about this complaint. The company seemed to challenge only the words of the accusation, not the substance. For clarification, I wrote to the company asking for an answer to a simple, and far more relevant, question: "Did Balfour Beatty pay bribes in Malaysia - yes or no?"

I received no reply.

This was a difficult time for Balfour Beatty. A consortium to which the company belongs faces new charges of bribery, this time over another dam project in Lesotho in Southern Africa. Adding insult to indictment, the FBI raided Balfour Beatty's American offices in response to other allegations. I thought the company deserved an extra chance to clear its name.

So I called Mr Sharp:

Question: Was a payment made to a government official by Balfour Beatty, its chairman or an agent for its chairman regarding the Pergau Dam project, yes or no?


Question: Did you pay a bribe?


Question: I just want to know if you bribed the Malaysians,


[We nearly did. This continued for almost an hour.]

Question: I'm worried about the issue of bribery and corruption.

Balfour B: AREN'T WE ALL? ....

Question: I'm happy to print "Balfour Beatty states unequivocally that no payment was made to a Malaysian official.'

Balfour B: I SUGGESTED TO YOU THAT YOU MIGHT HAVE MISLED PEOPLE. (How had I led my readers astray?]

Balfour B: THE THING YOU WROTE HAS BEEN DENIED FLATLY BY YOUR ALLEGED SOURCE! [Odd this: I had a tape-recording, but Balfour Beatty claimed to have received a letter from the lawyer I had quoted. Twice, I asked Sharp to read it during our interview. Only on the second reading did he include this]:



For their helpful clarification, Balfour Beatty won a Golden Vulture Award, which I offered to deposit in a numbered Swiss account. And the Observer printed the following correction:

We hereby retract the statements made regarding Balfour Beatty's alleged boasting of corrupt practices on the grounds that our article was wholly accurate.

When You're Hot, You're Hot

Here's an idea: Why don't we send 10,000 tons of high-level uranium waste to Russia? You'd rather not? Not until you buy your lead suit?

OK then, how about we send 10,000 tons of radioactive garbage to Russia and throw in $15 billion for Vladimir Putin. For the cash, Putin must solemn promise to store the bomb-making material safely and not let any of it slip into the hands of the Iranians or the IRA.

Just when I thought the Bush administration had adopted every crack brained idea that could threaten Mother Earth, along comes another. This send-uranium-to-Russia scheme is the creation of something called the NonProliferation Trust (NPT Inc.), a Washington group which says it "grew out of extensive dialog with ... the arms control community and the environmental community".

If by "arms control community" you were thinking of Greenpeace, you'd be a bit wide of the mark. The chairman of NPT Inc. is Admiral Daniel Murphy, once Deputy Director of the CIA and Bush Senior's chief of staff. The other seven listed board members and executives include former CIA chief William Webster, two nuclear industry executives, one former Nixon administration insider, the general who commanded the US Marine Corps, one top Masonic official and, indeed, one certified greenie tree-hugger.

It may not be your typical save-the-world line-up, but their idea is worth a hearing. Russia has a huge hot pile of "fissile material" - bomb fixings and old nuclear plant rods - sitting in polluted Siberian towns whose very names, like Chilyabinsk- 14, sound radioactive. NPT Inc.'s idea is that if we send them more radioactive garbage, plus cash, Russia will then have the means and obligation to store theirs, and ours, safely. In July the scheme got a big boost when the Duma, under pressure from Putin, abolished the Russian law which barred the nation's importing most foreign nuclear waste.

NPT Inc.'s assemblage of ex-spooks and militarists (and their lone green compatriot) control the operation through three non-profit trusts. But nonprofit does not mean that no one gains.

So after no small amount of digging and several pointed questions by my associate Oliver Shykles, this self-described charity admitted it will pay a British-American wheeler-dealer, Alex Copson, some unidentified percentage of the deal. NPT has been reluctant to give details of Copson's potential gain from the success of NPT, possibly because the polo and sports car afficionado with the posh accent lacks the diplomatic gloss appropriate to this sensitive enterprise. Copson once described the natives of the Marshall Islands as "fat, lazy, fucks" when they nixed one of his nuke dump schemes. Sources tell me Copson also suggested dumping hot stuff under the North Sea.

Contractors will share a few billion from this scheme, including German power consortium Gellschaft fur NuklearBehaltg mbH (GNB). By the way, Dr Klaus Janberg of GNB is director of "not-for-profit" NPT International.

But the real winner, should NPT succeed, would be the long-dead nuclear industry, which George Bush hopes to bring back from the crypt. There is one huge obstacle to Bush's radioactive dream: disposing of the nuclear waste. If you think about it, the only indispensable appliance for a kitchen is a toilet (presumably in another room); so too, one cannot build a nuclear plant without planning for the end product.

At $15 billion, dumping in Russia is a bargain. Since Russia is already a nuclear toilet, who would notice a little more hot crud?

Russia's own environmentalists have noticed, but objections from their Ecological Union are smothered by the ringing endorsement of the nuclear issues chief of one of America's richest environmental groups, the Natural Resources Defense Council. NRDC's Dr Thomas Cochrane sits on NPT Inc.'s MinAtom Trust board of directors, painting the project with a heavy coat of green.

What on Mother Earth would drive the NRDC man to front for NPT? Bernardo Issel, director of the Washington-based Non-Profit Accountability Project, sent the Observer a copy of NPT Inc.'s draft, "Long-term Fissile Materials Safeguards and Security Project". At page 18, one finds arrangements for the NRDC to administer a $200 million Russian "environmental reclamation fund", for which the green group will receive a fee of up to 10 per cent of expenditures, a cool $20 million.

NRDC's Cochrane insists his group would have never taken that role. An NPT spokesman says the clause has been removed from a new draft contract, though they have refused our request to see the document.

Is this another case of greens selling out for greenbacks? It's not that simple. The NRDC's Dr Cochrane is as straight a shooter as you'll ever meet. The problem here is not payola, but philosophy. The NRDC represents the new wave of environmental organization enchanted with the use of market mechanisms. Like the Environmental Defense Fund with its goofy pollution trading scheme, these groups are mesmerized by can-do entrepreneurs with access to huge mounds of capital and sold on the pleasant if naive idea that the profit motive can be bent to the public good.

The NRDC and other pro-market environmentalists are always on the hunt for what their prophet, Amory Lovins, calls "win-win" cases - deals that aid the environment while making big bucks for the corporate players. To the horror of many consumer advocates, NRDC stood with business lobbyists to push the trade in "pollution credits" and promote deregulation of electricity in California, though the group did a quick flip on deregulation when the scheme flopped.

The NPT scheme is the quintessential public-private partnership that business greens find irresistible. For Dr Cochrane, the uranium-dumping scheme's attraction is NPT Inc.'s promise, which cannot be easily dismissed, to provide billions to clean up Russia's radioactive hell-holes. And NPT also promises to toss in $250 million to a Russian Orphans Fund.

Environmental clean-up, non-proliferation and orphans. Why would Russia's green activists turn away from this obvious win-win? The answer, in a word, is "MinAtom". MinAtom, Russia's ministry of atomic industries, is, of course, the agency that created the nuclear mess in the first place. Can MinAtom be trusted to safely handle both the nuclear fuel and faithfully use the several billion for environmental clean-up, not to mention the orphans?

As soon as I heard "MinAtom", I ran to my notes of my interview with Joseph Stiglitz, former World Bank economist and one-time chief of Bill Clinton's Council of Economic Advisers. The economist told me about an incident involving MinAtom which disturbs him to this day.

In July 1998, the Clinton administration privatized the United States Enrichment Corporation, USEC. According to Stiglitz, the privatized USEC proved inefficient at enriching uranium, but exceptionally efficient at enriching several Clinton associates. Hillary's sidekick Susan Thomases was a USEC lobbyist. The law firm that defended the president in one of Bill's bimbo law suits picked up $15 million for work leading up to USEC's flotation. A federal judge concluded, after reviewing documents USEC tried to conceal, that the privatization decision was influenced by "bias, self-interest and selfdealing".

To sell privatization, Clinton's buddies at USEC promised their corporation would buy up tons of Russia's old warhead uranium from MinAtom. As with NPT, the sales pitch was that, by taking over government enrichment operations, private industry could reduce the amount of bomb ingredients in Russia's hands at no cost to the US Treasury. Another public/private win-win.

But Stiglitz, ever the hard-nosed economist, could not fathom how this new profit-making corporation could pay the Russians above-market price for the uranium. The answer was, USEC couldn't. In 1996, some unnamed birdie dropped a damning document on Stiglitz's White House desk. It was a memo indicating that MinAtom had demanded USEC take about double the amount of uranium originally expected. Rather than take the costly deliveries, USEC quietly arranged a payment to MinAtom of $50 million. Stiglitz called it "hush money". USEC says it was a legitimate pre-payment for the hot stuff. However one describes it, MinAtom was more than happy to play along, for a price.

Yet NPT Inc. tells us MinAtom and US private enterprise can now form a trustworthy partnership to safeguard nuclear material for the next few thousand years. At first, this puzzled me: NPT Inc.'s board is led by the CIA and military men who pushed Star Wars, which they sold on the premise that Russia has probably let slip nuclear material to unnamed "rogue states".

But I think I've solved this puzzling conundrum. What we have here is the ultimate, and very green, recycling program: NPT ships America's uranium to the Russians ... which then falls into the hands of a rogue state ... which then returns it to the US perched atop an intercontinental ballistic missile ... which is shot down by the trillion-dollar Star Wars defense system. Win-win for everyone.

"Two Symbols of American Capitalist Hegemony"

September 11, 2001

There's two people you ought to know: Greg O'Neill and Clinton Davis. They are exceptionally important because, according to the Guardian, they are "two symbols of American hegemony". Technically, the paper refers to the two towers of the World Trade Center. But it was not American hegemony that fell 50 floors into horrid, crushing oblivion. Nor was it just some architectural artefact that was a justly deserved "painful lesson" about US foreign policy, as one French columnist wrote with unapologetic glee.

For four years, I've written tales from inside corporate America - from pig swill price-fixing conspiracies ripping off Asians to Texas power pirates turning off the lights in Rio. And when the profit hunt turned from goofy to cruel, I've printed the names of victims from Argentina to Tanzania. Now the victims are from inside America itself, from what US television hair-do Tom Brokaw, also happy to reduce humans to emblems, called "the symbols of American capitalism".

Davis worked in the basement of the Trade Center; O'Neill in Tower One. (And, not so long ago, I worked in Tower Two, Floor 50.)

Here's what O'Neill did on Floor 52. When the Exxon Valdez grounded, he fought the oil company to get compensation for the Natives of Alaska. When he learned an electric company had faked safety reports on its nuclear plant, O'Neill, a lawyer, sued them and put these creeps out of business.

Davis worked in the cops' division of the state's Port Authority. Neither Davis nor O'Neill would be my first choice as a symbol of US imperial might, to target for retaliation for "terror by Jewish groups", to use one British commentator's bone-head words.

If anything, the Trade Center was a symbol of American socialism. These towers were built by New York State in the 1970s, when "government-owned" became quite unfashionable in Thatcherized Britain. The towers' owner, New York's Port Authority, generates the revenue which keeps the city's infrastructure - subways, tunnels, bridges, and more - out of the hands of the ever-circling privatizers. Convincing capitalists that publicly owned operations are as good an investment bet as General Motors fell to government securities market-makers, Cantor-Fitzgerald (100th floor, 700 workers, no known survivors).

Here's a statistic you might find a bit odd to bring up at this moment. Capitalization of corporations owned by the US federal government exceeds $2.85 trillion. Add to that state and local operations, like water systems, and the total invested in public enterprise eclipses the stock market, making the US one of the most socialized nations left on this sad planet. If you're not American, you wouldn't know that. And if you are, you probably wouldn't know that either. There's a lot you probably don't know about America that would surprise you, that would surprise ourselves.

As I write this, George W. Bush is beating the war drum against Osama Bin Laden, a killer created in our president's very own Cold War Frankenstein factory. During the war in Vietnam, thousands filled jails (including me) to resist it. It would help those of us Americans ready to stop the killing machine if Europeans would stop the smarmy lecturing. In a sickening but not unique commentary, the Guardian's Seamus Milne wagged his finger at Americans still gathering corpses. "They can't see why they are hated." He demands that Americans must "understand" why O'Neill and Davis were the targets of bloodcrazed killers. Hey, if your government backs Israel, well, just get used to it baby. (And what do you mean "they are hated" Seamus? When did the Muslim world fall in love with the British Imperial conquerors of Iraq, Palestine and the Khyber Pass?)

After the IRA bombed London's Canary Wharf, I don't remember Americans suggesting this was a just revenge for the Queen's occupation of Northern Ireland, a time to cuddle up to the berserkers with bombs.

Commentators like Milne have a great advantage over me. While Bin Laden hasn't returned my phone calls, he seems to know exactly the killer's cause. We have to "understand" that the terrorists don't like America's foreign policy. Well, neither do I. But I also understand that the bombers are not too crazy about America's freedom of religion nor equality of women under the law. And they're none too happy about our reluctance, despite televangelists' pleas, to cut off the hands of homosexuals.

On my journalistic beat investigating corporate America, I've heard every excuse for brutality and mayhem: "We met all the government's safety standards"; "We never asked for the military to use force on our behalf." The excuses and bodies pile up. Maybe I just have to accept that killing is in fashion again, for profit, for revolution, to protect American interests or to take vengeance on American interests.

Baroness Thatcher thinks we should understand Pinochet; the Bush family ran their own little jihad against communism I was supposed to understand; now some Europeans want us to understand a new set of little Pinochets with turbans. To prevent an unelected US president from ordering up counteratrocities, grieving Americans don't need nasty admonitions about the causes, just or unjust, of our killers.

That terrible Tuesday evening, I had to call O'Neill's home. He answered the phone. "My god, you're safe!"

O'Neill replied, "Not really." I hope that doesn't disappoint the Guardian.

Davis was safe too, in the towers' basement. But he chose to go up into the building to rescue others. Today, this symbol of American capitalist hegemony is listed as missing.

[Chapter] 6 - The Best Democracy Money Can Buy

Who owns America? How much did it cost? Was the transaction cash, check or credit card? Or a donation to my son who's running for president? Or a consulting contract to my wife's former law partner to comfort him on his way to the federal penitentiary?

And what do you give a billionaire who has everything? That gold mine in Nevada they so covet? Immunity from prosecution?

Then there's the practical difficulty of gift-wrapping the US Congress.

Ah, the Smell of Texas in the Morning

According to LaNell Anderson, real estate agent, what I'm smelling is a combination of hydrogen sulphide and some other unidentifiable toxic gunk. With the crew from BBC's Newsnight, we've pulled up across from a pond on Houston's ship channel, home of the biggest refinery and chemical complex in America, owned by ExxonMobil.

The pond is filled with benzene residues, a churning, burbling goop. Though there's a little park nearby, this is not a bucolic swimming hole. Rather, imagine your toilet backed up, loaded, churning and ripe - assuming your toilet is a halfmile in circumference.

In May 2001, I flew to Houston to prepare for the official release of President George W. Bush's proposal to end the energy crisis in California. The Golden State was suffering rolling black-outs. The state's monthly electricity bill shot up by 1,000 per cent.

But as soon as I got a whiff of the president's proposals, I knew his plan had nothing to do with helping out the Gore voting surfers on the Left Coast. Bush's "energy crisis" plan reeks of pure eau de Texas, that sulphurous combination of pollution, payola and political power unique to the Lone Star State.

Bush put his vice-president, Dick Cheney, in charge of the committee to save California consumers. Recommendation number one: build some nuclear plants. Not much of an offer to earthquake-prone California, but a darn good deal for the biggest builder of nuclear plants based in Texas, the Brown and Root subsidiary of Halliburton Corporation. Recent CEO of Halliburton: Dick the Veep.

Suggestion number two: drill for oil in Alaska's Arctic Wildlife Refuge. California does not burn oil in its power plants, but hey, committee member and commerce secretary Don Evans gave the Arctic escapade a thumbs-up. Evans most recent employment: CEO of Tom Brown Inc., a billion-dollar oil and gas corporation.

And so on. Former Texas Agriculture Commissioner Jim Hightower told me, "They've eliminated the middleman. The corporations don't have to lobby the government any more. They are the government." Hightower used to complain about Monsanto's lobbying the secretary of agriculture. Today, Monsanto executive Ann Venamin is the secretary of agriculture.

Well back to energy. California's electricity watchdog agency claims that speculators and a little club of energy merchants exercised raw monopoly power to overcharge state consumers by a breathtaking $6.2 billion last year. Bill Clinton, before his final bow, issued an order on December 14, halting uncontrolled speculation in the electricity market. You could hear the yowls all the way to Texas where the big winners in the power game - Enron, TXU, Reliant, Dynegy and El Paso corporation - have their headquarters.

These five energy operators, through their executives and employees, ponied up $4.1 million for the Republican presidential campaign cycle, according to the Center for Responsive Politics in Washington. They didn't have long to wait before their investment - excuse me, donation - paid off big time. just three days after his inauguration, Bush swept away Clinton's orders directing controlled power sales to California.

Back in the ship channel, once LaNell picked up the scent of airborne poisons, she hopped from her Lexus, pulled out a big white bucket and opened a valve, sucking in a three-minute sample of air which she'll send off to the US Environmental Protection Agency. She believes the EPA will trace and fine the polluter.

Hunting killer fumes is a heck of hobby. LaNell began after learning she had a rare immune system disease associated with chemical pollution. Her mom and dad died young of lung disease and cancer. She grew up and lives near the ship channel.

I didn't have the heart to tell her that she might as well chuck away her buckets. Quietly tucked into President Bush's new budget is a big fat zero for the key EPA civil enforcement team. This has no connection whatsoever to the petrochemical industry dumping $48 million into the Republican campaign.

LaNell stopped to chat with some Chicano sub-teens playing soccer with an old bowling ball. They live in what ExxonMobil calls its "vulnerability zone". The refinery released 1,680,000 lb of toxic chemicals into the air and water here in 2000 by accident. According to Exxon-Mobil records, if the pentane on site vaporized and ignited, it would burn human skin within 1.8 miles: 7,300 people live in that zone.

Bush is addressing the problem. He's closing down public access to these reports on the killing zones.

A giant flare suddenly lit up the other side of the channel - and LaNell sped off to investigate. She discovered that a chemical plant blew a hydrogen line - and the operators, rather than store the ruined batch of ethylene, chose to ignite it. The toxic fireball, big as the Houses of Parliament, burned from the stack for several hours, exhaling a black cloud over Houston.

LaNell said this sickening "sky dumping" procedure is okey-dokey with Texas state regulators. Now Bush proposes moving air quality enforcement away from the tougher feds to these laid-back state agencies. And the Bush energy plan proposes additional loosening of EPA rules on the chemical industry.

On to Dallas, where I met with Phyllis Glazer, founder of a group of bereaved mothers in Winona, Texas. They lost their children to rare diseases which they believe are related to a local hazardous waste "injection well", a big underground chemical dump. Cynthia wore one of those fancy Western dance shirts with the metal bangles and cowhide fringe, so I brilliantly asked her if she enjoys Texas two-stepping. "Actually, I don't do a lot of dancing these days. My bones are deteriorating."

Phyllis and the moms took a bus to Washington DC. But official doors slammed in their faces. "They said someone who's given 200,000 or a couple million, their call goes straight through."

One Texan who made his way through the doors to power is Ken Lay, the chairman of Enron, the electricity speculating outfit which made out so well in Bush's energy program. Lay is a Pioneer, but not the kind that lives in a little house on the prairie, busting the soil. A "Pioneer" designates the big buckaroos who pledged to raise $100,000 apiece for Mr Bush. Four hundred Pioneers - that's $40 million in campaign booty.

Lay wouldn't talk to me, but his fellow Pioneer, Senator Teel Bevins, Texas Panhandle rancher, was right friendly. His office walls in the Capitol in Austin sport a pair of riding chaps, his Pioneer medallion and the head of a deceased LongHorn. I was assured the back half of the beast ended up on the Senator's barbecue.

Getting the hundred grand for Bush was no problem for the cowboy politician. Easiest money he ever raised ("Eezist monuh ah eva rayzed"). And Bush never forgets his friends. One unheralded milestone of Bush's first 100 days is his allowing beef packers to zap meat with radiation to kill salmonella, a disinfectant cheaper than non-nuclear methods. (Bush's proposal to permit a bit of salmonella in school lunch meats was withdrawn after the public reacted with loud gagging and retching noises.)

I told the senator about Phyllis Glazer, the cancer victim and pollution fighter, and her complaint that Washington access required big bucks donations.

"Well, it's easy for the press to take some victim and make her a poster girl. The reality is individuals in a country with 300 million people have very little opportunity to speak to the President of the United States."

But what about Pioneer Lay of Enron Corp? His company, America's number one power speculator, is also Dubya's number one political career donor. Lay was personal adviser to Bush during the post-election "transition". And his company held secret meetings with the Energy Plan's drafters. Bush's protecting electricity deregulation has meant a big pay-day for Enron, profit up $87 million in the first quarter of Bush's reign thanks to reversing Clinton orders.

The senator is nothing if not candid. "So you wouldn't have access if you had spent two years of your life working hard to get this guy elected president raising hundreds of thousands of dollars?"

In case I didn't understand, he translated it into Texan. " Ya dance with them what brung ya!"

I couldn't argue with that. If President Bush chose to two-step with Lay of Enron instead of Phyllis Glazer, well, let's be honest, Phyllis ain't much on the dance floor these days.

Check out Senator Biven's riding chaps on the BBC broadcast from the Lone Star State which you can still view in RealVideo at

Did Bush spike the investigations of Bin Laden?

During America's days of innocence just before September 11, 2001 our unelected president's favors for his monied buddies appeared as a vaudeville of venality, but not life-threatening. Then, after September and into the new year, darker tales began to seep out of the pus-holes of America's intelligence agencies.

After September 11, the BBC's and Guardian's investigation teams, in coordination with the National Security News Service of Washington, set out to find out why the CIA, FBI and other well-funded spooks could neither prevent nor know about the most deadly attack on America since Pearl Harbor. From inside the agencies we heard that government chiefs stopped key investigations into allegations of the funding of Al Quaida and other terrorist organizations by top Saudi royals and some members of the Bin Laden family, not just Osama. Crucially, one top-placed operative told me that, even under Bill Clinton, investigations that implicated Saudis were subject to "constraints". But after the elections, under Bush's control, the agencies were ordered to "back off" from any inquiries into the Saudi royals or the Bin Laden family, except for the supposed lone black sheep, Osarna.

As a result, one agent told me, "There were particular investigations that were effectively killed." We learned that the Bush administration's ruling killed the secret hunt for the funding, possibly from Saudi Arabia, for Pakistan's successful manufacture of an "Islamic" atom bomb. Without realizing the black humor of his comment, the insider added that the restrictions on the investigations ended on September 11.

And there was a lot to investigate - or in the case of the CIA and FBI under Bush, a lot to deliberately ignore. One international arms dealer (I'm sorry, but in this business, sinners are better sources than saints) described a meeting of Saudi billionaires at the Hotel Monceau in Paris in May 1996 to decide who would pay, and how much, to Osama bin Laden's operations. (Our information is that this was not an act of support for Osama but protection money to keep the mad bomber away from Saudi Arabia.) At a lower level, FBI agents let slip a document showing that, on September 11, 1996, the FBI closed an investigation on Bin Laden family members - not Osama - and their links to "alleged terrorist" organizations. FBI agents were livid that these investigations were shut down for five years - until September 11, when they were, for sad and obvious reasons, reactivated.

Was the FBI's case closed because there were no grounds to watch these groups and the Bin Ladens? At the time the FBI agents were directed to look away, one organization, the World Assembly of Muslim Youth (WAMY) was accused of connections to terror in India and the Philippines. Maybe they are completely innocent (the FBI targets lots of innocents, too many in fact), but the question was, why was the FBI blocked - then unblocked on September I I? When we asked, the answer came back from several sources: "Arbusto" and "Carlyle". A young George W. Bush made his first million as principal of Arbusto Oil, Texas. The nearly worthless venture ended up as a gold mine for the little Bush ("Arbusto" means "shrub" in Spanish), with financing and contracts from Saudi-linked businessmen and Gulf Arabs.

Carlyle is a holding and investment bank which, through its ownership of United Technologies and other arms makers, has become one of America's top defense contractors. It also has the distinction of having had both Bush pere and fi1s as paid retainers. In 1999, the elder Bush traveled to Saudi Arabia as a Carlyle representative.

James Baker, Bush the First's pro-Saudi secretary of state, works for Carlyle; its chairman is Frank Carlucci, Bush Sr's former defense secretary. The Bin Laden family held a stake in the secretive private company until just after the September 11 attack. It would be absurd to say that the Presidents Bush spiked 'investigations of terrorist funding by the Saudis in return for packets of money. The system is not so crude. But it is quite natural to conclude that these smiling billionaires, where associates made your family wealthy, are unlikely to have funded mass murder of Americans, despite the evidence.

Bush Family Finances: The Best Democracy Money Can Buy

Writing in London, I have put up with condescending comments about America's democratic rituals from a nation with an unelected House of Lords occupied by a bunch of cross-dressing genetic fossils. It's easy to knock America, but the world should think of the $3 billion spent in the 2000 US election campaign in positive terms. Think of it as the privatization of democracy - though an outright auction for the presidency would have been more efficient.

George W. Bush may have lost at the ballot box but he won where it counts, at the piggy bank. The Son of a Bush rode right into the White House on a snorting porker stuffed with nearly half a billion dollars ($447 million): my calculation of the suffocating plurality of cash from Corporate America ("soft" money, "parallel" spending, "marketing fund"), a good 25 per cent more than Al Gore's take.

George W. could not have amassed this pile if his surname were Jones or Smith. The key to Dubya's money empire is Daddy Bush's post-White House work which, incidentally, raised the family's net worth by several hundred per cent.

Daddy Bush has many friends who filled up his sonny's campaign kitty while Bush performed certain lucrative favors for them. In 1998, Bush pere created a storm in Argentina when he lobbied his close political ally, President Carlos Menem, to grant a gambling licence to Mirage Casino corporation.

Bush wrote that he had no personal interest in the deal. That's true. But Bush fils did not do badly. After the casino flap, Mirage dropped $449,000 into the Republican Party war chest.

The ex-president and famed Desert Stormtrooper-in-Chief also wrote to the oil minister of Kuwait on behalf of Chevron Oil Corporation. Bush says, honestly, that he "had no stake in the Chevron operation". Following this selfless use of his influence, the oil company put $657,000 into the Republican Party coffers. Most of the loot, reports the Center for Responsive Politics, came in the form of "soft money". That's the squishy stuff corporations use to ooze around US law which, you may be surprised to learn, prohibits any donations to presidential campaigns in the general election.

Not all of the elder Bush's work is voluntary. His single talk to the board of Global Crossing, the telecoms start-up, earned him $13 million in stock. The company also kicked in another million for his kid's run.

And while the Bush family steadfastly believes that ex-felons should not have the right to vote for president, they have no objection to ex-cons putting presidents on their payroll. In 1996, despite pleas by US church leaders, Daddy Bush gave several speeches (he charges $100,000 per talk) sponsored by organizations run by Rev. Sun Myung Moon, cult leader, tax cheat - and formerly, the guest of the US federal prison system. Take two packets of payments to the Republican Party from ...

CENSORED: This part is all about a Canadian gold mining company that Bush Sr worked for after he left the White House. The story's a real page-turner: all about Daddy Bush, the dictator Suharto, Adnan Khashoggi (the arms trafficker pardoned by Bush Sr) and that gold mine in Nevada.

Well, you won't read about it here. That's because there is some chance that someone may read this book while standing on the soil of the United Kingdom. The gold company's lawyers have demanded and received a promise from Guardian Newspapers never again to publish this article. For me to do so here would mean taking a chance that corporate censors might attempt to use libel courts to lock my paper in a financial Tower of London and suck our bank accounts dry. Read Joe Conason's story in Salon, "Exporting Corporate Control" which can be found at

So hand me the scissors; out it goes. No games, no coy rewriting of the material. If Britons want to read a free press, they should go to Moscow or Tanzania or Bolivia where this information has been published - or, alternatively trade in your Queen for a written constitutional guarantee of freedom of the press, In fact, you can borrow America's - we aren't using it.)

The Bush family daisy chain of favors, friendship and campaign funding goes way back to Dubya's "War Years". Junior Bush was a fighter pilot during the war in Vietnam, not in the United States Air Force, where one could get seriously hurt, but in the Texas air force, known as the Air Guard. Texas's toy army, an artefact of Civil War days, is a favorite club for warmongers a bit squeamish about actual combat. Membership excused these weekend warriors from the military draft and the real shoot'm up in 'Nam. Young George W. tested at 25 out of 100, one point above "too-dumb-to-fly" status, yet leaped ahead of hundreds of applicants to get the Guard slot.

In 1968, an aide to the Lone Star State's lieutenant governor Ben Barnes quietly suggested to Brig. Gen. James Rose that he find a safe spot in the Air Guard for Congressman George H. Bush's son. Neither of our Presidents Bush remember asking for this favor. How Barnes knew he should make the fix without a request from the powerful Bush family remains a mystery, one of those combinations of telepathy and coincidence common to Texas politics.

Fast forward to 1997. A company named GTech operated the Texas lottery. That year GTech's operation faced an unprecedented threat. The state's lottery director was sacked following revelations that GTech had put the director's boyfriend on the company payroll while he was under indictment for bribery. A new clean-hands director, Lawrence Littwin, ordered an audit, ended GTech's contract and put it out for re-bid. Littwin also launched an investigation into GTech's political donations,

Then a funny thing happened. The Texas Lottery Commission fired Littwin. Almost immediately thereafter, the Bushappointed commissioners cancelled the bidding for a new operator, though the low bidder had already been announced to replace GTech. The commissioners also halted the financial audit, ended the political payola investigation - and gave the contract back to GTech. Why did the Texas government work so hard at saving GTech's licence? An unsigned letter to the US Justice Department points to one lobbyist to whom GTech paid fees of $23 million - Ben Barnes. The letter accuses Barnes of using his knowledge of Governor Bush's draft-dodging to lock in GTech's exclusive deal with the state. In court papers filed in a civil racketeering suit brought by discharged regulator Littwin, Barnes confessed that he got Bush into the Guard and took millions from GTech. Littwin asserted that other witnesses can prove the cash bought the governor's influence to save GTech's licence.

GTech responds, irrefutably, that it terminated the contract with Barnes before the 1997 dismissals of the lottery directors - but not before the blackmailing alleged in the anonymous letter. And, although the company denies it maintained the financial connection to Barnes, GTech's chairman Guy Snowden was a partner in a big real estate venture with Barnes's wife. (In 1995, Snowden was forced to resign as chairman of GTech when a jury found he tried to bribe British billionaire Richard Branson.)

What did GTech get for their $23 million to Barnes, the man who saved Dubya from the war (to which Bush Sr happily sent other men's sons)? Can't say: in November 1999 GTech paid a reported $300,000 to Littwin. In return, the whistleblower agreed to sea] forever Barnes's five-hour deposition transcript about the Bush family influence on the Lottery and the Air Guard.

I'm not complaining, mind you. After all, the Bush family has given us the best democracy money can buy.

Republicans and Democrats, Hand in Hand, to Save the Billionaire Boys' Club

A thoughtful reader found my Texas tales about President Bush a wee harsh:

'G'day, asshole! Smelled any good ones lately? That's generally where guys like you have their noses. By the way, it's PRESIDENT Bush to you, numbnuts. Now, have a g'day and may Ireland be free!'

So I resolved to be a bit fairer - and take a look at the strange financial history of the Arkansas Hillary-Billies. I thought it proper to check Special Prosecutor Ken Starr's evidence. He had nothing. Starr; whose mind is as small as it is vicious, spent $40 million investigating the Clintons and turned up with little more than a bucket of dirty 'Whitewater' ' a stained dress and some overwritten softporn, "So then I pulled down the President's ... . " How could they find nothing? Part of the problem was that Starr and staff were no Sam Spades, just a bunch of right-wing preppy snots from white-shoe law firms who thought they could replace investigative know-how with unlimited meanness. But if Starr was lost in a nutty cavort with Clinton's slick willy, the Senate Governmental Affairs Committee was looking into the serious stuff. six-flgure payments to Hillary's former law partners by the Riady family of Indonesia and Entergy International of Little Rock, Arkansas, Hillary's former client. (When it came to foreign policy that suited Entergy, the Clinton Administration could not be more accommodating.) Then, in 1998, just as the Republicans on the Senate Committee were closing in on the evidence that could, if borne out, pull down the Clintons ... the Committee closed its investigation.

Why? In 1998, 1 found an answer: 'Triad.'

Clinton was saved from this far more threatening inquiry by two of America's wealthiest industrialists, Charles and David Koch. They had not set out to rescue Clinton. The Koch brothers despise Clinton with a passion.

Koch Industries is the biggest company you've never heard of - and their owners like it that way. Estimates of its annual turnover, at $35 billion a year, make it bigger than Microsoft or Boeing Aircraft. We can only estimate because Koch [pronounced "coke" like the cola] is a private corporation, second largest in the US. David and Charles Koch, who own nearly all of it, are reported to have a combined net worth of $4 billion.

The Koch clan's fortune originated in Russia where daddy Fred Koch built oil refineries for Stalin's regime. In 1946, Koch returned from the Soviet Union to Wichita, Kansas, and founded the ultra-right John Birch Society. David and Charles have rejected their father's politics, preferring to back ultra-ultra rightwing causes. In 1980, as a Libertarian Party candidate, David campaigned against Ronald Reagan.

Secrecy is the Kochs' trademark. From headquarters in Wichita, they operate the nation's only private, secure telephone network outside the CIA to control their core business as America's largest purchaser of oil and gas from small farmers and Indian reservations.

As a private company, the Kochs answer to no one about their expenditures. No little old ladies query them at stockholder meetings. Unconstrained, the Koch brothers can indulge their singular dream. Where other US corporations throw a few million dollars into the political arena in the hope of obtaining a few special favors, the Kochs have spent close to $100 million to change the entire tone of political discourse in America.

And they succeeded. With $21 million spent to establish the Cato Institute in Washington DC, $30 million to start the Council for a Sound Economy and tens of millions more for think tanks, political action committees and the like, they constructed a nonpareil policy apparatus which reinvigorated the antigovernment movement with a new intellectual legitimacy backed by fearsome political clout. From Cato and the Koch machine came Newt Gingrich's "Contract for America" and the funds to put Gingrich in power in the 1994 elections. Not that the Kochs don't call in special favors. In 1989, the US Senate Special Committee on Investigations reported that "Koch Oil, a subsidiary of Koch Industries, is the most dramatic example of an oil company stealing by deliberate mismeasurement and fraudulent reporting." FBI agents had watched Koch Industries trucks taking, but not fully paying for, oil from little gathering tanks on Indian reservations. An expert for Indian tribes calculates that $1.5 billion of Koch Industries' wealth comes from pilfered oil. Koch denies all charges.

Action against Koch stalled until 1995 when an FBI agent on the Senate investigation, Richard Elroy, charged in a letter to the Justice Department that criminal prosecution had been declined "for political reasons" during the first Bush presidency. But Clinton's Justice Department followed up on the FBI's evidence and filed civil lawsuits charging Koch Industries with 3 15 wilful acts of pollution. Clinton also empanelled two grand juries to consider criminal indictments.

The government's case would have collapsed if one clause of the "Contract for America", the Regulatory Reform Act, had become law.

Passage of the legislation depended upon the Republicans holding their majority in Congress. In the 1996 election cycle, Republican control was in jeopardy. Crucial to their ultimate narrow victory in that campaign was a multi-million dollar television advertising blitz in key districts paid for by the Coalition for Our Children's Future, a registered charity. The action was extraordinary for a child protection society - as was their choice of candidates to assist, Only weeks before CCF purchased the adverts, every one of the incumbent congressmen they helped, all Republicans, voted to abolish food stamps for children of the poor.

The politicians supported by the "Children's" fund had something in common besides an antipathy to free meals for youngsters. Their districts contained Koch operations.

US law prohibits corporate payments in aid of political campaigns. Investigators with the Senate Governmental Affairs Committee located bank records linking the Children's charity and other political front groups to Triad Management, an operation funded by the Kochs. Democratic senators threatened to subpoena Koch Industries' chiefs to question whether they funded Triad and manipulated its related groups. Democrats could drag the tycoons before the same public tribunal on campaign finances skewering Clinton.

A key Senate insider, who must remain anonymous, says Republicans then offered a straightforward trade: "A truce - you don't do Triad, we don't do Clinton." Other sources inside the Committee confirm that the Republicans, under the direction of Senators Trent Lott and Don Nickles, rather than risk exposure of the Kochs' web of mega-dollar funding operations, agreed to shut down the money probe and let Clinton off the hook.

The true, unreported reason for the collapse of the inquiry most threatening to Clinton - the one that could have knocked him out of office, the Indonesia money chain - reveals the ultimate measure of Koch influence, that Republicans sacrificed their case against the president to keep their secret benefactors under wraps.

Both parties were content with their mutual protection agreement. With the important fundraising allegations off limits, there has been nothing left for Republican investigators to do - except rummage through Monica Lewinsky's dirty laundry and sniff at the president's zipper.

I ran this story in the Observer. It was, of course, never reported in the US. Why did Democratic insiders give me this information? Because they were spitting mad at the Republicans; the Dems thought they had a cease-fire and the Republicans were playing games with the Monica Lewinsky story. Republicans decided that the deal only barred investigation of campaign finances; and did not include light-weight stuff like the president's playing stinky flnger with an intern.

I discovered the deal not because I was on some kind of hunt for the goods on Clinton or on Newt Gingrich, but because, in my old day-job as an investigator and government adviser, I'd been tracking the Koch brothers, Entergy Corporation and the Riady interests. (See "California Reamin': Hunting the Power Pirates" in Chapter 4.) That both Entergy and Koch, master deal-makers, popped up in the middle of a Senate inquiry which suddenly stopped dead gave off the smell of a bit too much bipartisan cooperation.

The Kochs, by the way, are a real piece of work. FBI agents caught their company skimming oil out of the gathering tanks of poor Indians in Oklahoma in the 1980s. Maybe the top guys at Koch Industries, the billionaire brothers themselves, didn't know about the skimming game; maybe there was a good explanation. But not according to Roger Williams, an executive in the oilgathering operation.

Williams kept records of the filching - a couple of dollars worth of oil here, a couple there - hardly the kind of petty cash that billionaires would seem to bother with. But Williams (on tape I've obtained) was asked how Charles Koch reacted to a paper that "showed how much overage they had and how many dollars". Williams said, of billionaire Koch and another executive with him at the time, "They would just giggle and nudge each other, you know, it's kind of a fun time."

And that's where I heard the phrase that well explains the success of some of America's wealthiest corporate chiefs. Williams was surprised at the billionaire's concern over these small-change scams, but Williams said Charles Koch told him, "I want my fair share and that's all of it."

[Chapter] 7 - Cash-for-Access - "Lobbygate": The Real Story of Blair and the Sale of Britain

On the first Wednesday of July 1998, on the floor of the House of Commons, Britain's prime minister rose to defend himself According to the news reports, for the first time since his election the year before, Tony Blair's hands were shaking. The PM denounced the American reporter whose expose of wholesale corruption in his cabinet 'had not one shred of evidence'. Meanwhile, Blair's spokesman, a former pornographer named Alastair Campbell, grabbed every newsman he could find in the hallway to whisper that they should not trust a "man in a hat' ' while Peter Mandelson, known as Prince of Darkness, and the power behind the power of the prime minister, hissed a warning about 'the man with an agenda'.

Unfortunately, I couldn't enjoy any of this. I could hardly keep my eyes open, half-passed-out after 70 sleepless hours in my "safe house" in Crouch End. I had moved in with sympathetic friends in the middle of the night because of a crank bomb scare at my hotel and to avoid camera crews.

But that's not why I didn't get any sleep. My paper, the Observer, had run a front-page story with detailed evidence that cronies of the prime minister, including his princeling and other cabinet members, had bartered policies for payola, cash for access. Our Observer team described lobbyists' special, secret access to ministers operating a flea market for favors out of 10 Downing Street. Not a shred or evidence? My paper announced that I had tape recordings of lobbyists explaining exactly how and when and to whom they made the fixes - for Tesco's supermarkets, for American power companies, for friends of Clinton, friends of Bush, friends of Blair and for Rupert Murdoch.

Blair's attack-masters demanded, the radio and TV stations demanded, I play the tapes. They said, the tapes are phoney. They don't exist. Palast's a liar. And now the business editor of the Observer, the brilliant journalistic fanatic Ben Laurance, was shouting at my friends trying to block him at the door at my Crouch End hideaway that I had to get out of bed, get to the BBC studios and confront with tape the number one New Labour fixer, Derek Draper, on another live Newsnight broadcast.

But the truth was, I didn't have the tape.

The day before, I called my wife back home in the States with our one-year old twins and told her to express to me the tape marked "Draper". It was right in the middle of my desk. Linda said, "I don't see any tape. There's no tape here." The next day, the entire front page of the Mirror was taken up by a photo of a balding, snearing, devious-looking man me - under a four-inch-high screamer, "THE LIAR". "CASH FOR ACCESS - LOBBYGATE" began innocently enough. Antony Barnett, Britain's best investigative journalist, got a tip that lobbying firms close to Blair's New Labour Party government were getting their hands on inside information to pass on to their clients. Antony who, with the editor, Will Hutton, had just asked if I could write for the Observer, thought I might give a couple of these guys a call, maybe hinting to our targets I needed a little influence.

At first, I said no. My idea had been to bring to journalism the full arsenal of weapons used in my official racketeering probes. No more quick and cheap. What I had in mind would take time and it would cost thousands of pounds.

To do this right, we needed a front, for which I enlisted a top US business executive, Mark Swedlund, formerly with Booz Allen Hamilton, who mixes street smarts with boardroom savvy. We added a former Morgan Stanley executive (no name, sorry) and gave ourselves impressive legitimacy by tying up with one of America's white shoe law firms well known to Her Majesty (no names, sorry again).

The most difficult fake-out was to recreate me. All these lobbyists knew me; it was their job to know. They knew I contributed to the Guardian, but more important, I was, before the election, one of Blair's much displayed American policy advisers, close in with Blair's Trade and Industry and energy ministers, "that influential American", said a big-shot British industrialist. It was bullshit, but now it would be useful bullshit.

I couldn't wear a false moustache and voice-coder - so I changed from Greg Palast, policy weanie and reporter, to Greg Palast, scuzz-ball, sleaze-o-"consultant" on the take ... just like them. I didn't get my beach-front estate and stable of ponies, I told them, by writing good government advice for the Guardian. I had a damn successful consulting firm that made deals.

At no time did we offer money in return for influence or access or favors (though they would be offered to us). I was looking for something else: what had these lobbyists already done for others. My line: "The Texans I'm working with don't want a lot of boasting horseshit, these boys need hard, no-nonsense evidence of exactly what you've done, for whom. Names, dates, deeds, and solid proof if you want our business.'

And they delivered ... right to our suite at the London Tower Hotel.

Lobbygate - Cash for Access

Complete and uncut

"There are 17 people that count. To say that I am intimate with every one of them is the understatement of the century. On the morning of June 8, 1998, I found a surprise in my fax machine, a copy of the Trade and Industry Select Report on Energy Policy. What made it surprising was that the report had not yet been released to the public.

Attached to the fax was a short, hand-written note to me from Karl Milner of GJW Government Relations. Through the 1997 general election, Milner handled internal communications for Gordon Brown, then Shadow Chancellor. Milner wrote, "Thought you may be interested."

I was. In May, the Observer received a tip from reliable sources that certain lobbyists had offered clients advance drafts of confidential government papers. But our investigation nearly crashed on take-off, When I first contacted Milner on behalf of two American clients seeking "an influential presence" in Britain, he immediately recognized me as a writer for the Guardian. Yet surprisingly, he faxed the restricted government document to my offices at Union Associates in New York, a firm well known for its investigations of corporate corruption.

I called Milner. Maybe he had not filched the documents from the government but rather had committed the lesser offense of lifting a pre-release copy from a journalist. Milner assured me otherwise. His special access to policy papers for his clients was standard operating procedure. "We have many friends in government. They like to run things past us some days in advance, to get our view, to let them know if they have anything to be worried about, maybe suggest some changes." The report contained crucial recommendations sought by another potential client to whom he was pitching.(I can now say that was Enron, the energy Goliath from Texas, tight in with the Bush family. See, "Ah, the Smell of Texas in the Morning" in Chapter 6.)

The managing director of Milner's firm is Andrew Gifford, chairman of the Association of Professional Political Consultants. The Nolan Committee on Standards of Conduct, Britain's ethics watchdog, praised the Association's voluntary Code of Conduct. The government concluded the industry could police itself without government regulation.

"I'm very excited"

June 11: the Chancellor of the Exchequer, Gordon Brown, announced new government spending caps. I was trying to end my third phone call with Derek Draper, top lobbyist with GPC Market Access. Draper had been chief aide to Minister without Portfolio Peter Mandelson. "I'm very excited," said Draper, "Very excited."

What had so excited Mr Draper?

"Gordon Brown put the cap on total spending at 2.75 per cent, not 2.5 per cent, like everyone expected! And we said so! We said so last week!"

This one-quarter percentage point difference may seem minuscule, but in the hands of securities traders and arbitrageurs, advance word could be parlayed into quite a windfall. Indeed, the week earlier, Draper had given the correct number to his client Salomon Brothers, the US investment banking giant. I complimented Draper on his firm's extraordinary forecasting work. He responded, "No, I'm afraid it's inside information." In a voice crackling with schoolboy glee, Draper added, "If they [Salomon] acted on it, they'd have made a fortune!"

Indeed they would have. And under US law, they would have risked jail time.

The Observer never asked any lobbyist to produce confidential government documents or information. We did not have to. Milner, Draper and others provided the evidence unrequested, meant to convince us they could deliver the goods from Tony Blair's New Labour government.

Draper too quickly recognized me as a writer with the Guardian and Observer. Yet, from our first New York-to-London call, Draper gossiped, gushed and ultimately could not resist revealing his special access to the Treasury and Downing Street.

If we retained his firm, what could he deliver for our money? Could he secure a seat on one of the government's task forces? Done! "We just got the Chief Executive of British Gas on the government's Welfare to Work Task Force." Draper emphasized that winning this coveted spot at the elbow of the chancellor was an enormous achievement for a company once known in Labour circles as "the Fat Cats headed by Cedric the Pig" (an unkind reference to former British Gas chairman Cedric Brown).

What if my clients had reputations far less savoury than BG? Not a problem. In fact, Draper was about to sign up such a "challenging" client, US lottery operator GTech Corp (another company close to the Bushes). The company was in hot water. A jury had found them guilty of attempting to bribe the British tycoon Richard Branson (they wanted him to drop his competing bid for Britain's lottery). Blair had committed to oust GTech from the lucrative Camelot consortium, which had exclusive rights to operate the UK lottery. Draper described his scheme-in-progress to waltz GTech around the official watchdogs and lure Labour ministers into a sticky web of agreements with his new client.

"The government needed someone to sell tickets for this ridiculous Millennium Dome thing that my old boss is building. But GTech is offering to do that via the national lottery-selling equipment. Now it doesn't take a lot to work out that if the government thinks that GTech can sell government tickets for the Dome then it's got to be a legitimate firm to sell tickets for the lottery. See what I mean? Our forte, like, is to be imaginative."

His "old boss" was Peter Mandelson, minister without portfolio, architect of the New Labour shift to the right. To call Draper and Mandy close would be a grievous understatement. Mandy had dedicated his book, The Blair Revolution, to the young man.

In a recent profile in Business on Sunday Draper said his friendships with Labour's top office-holders were a "hindrance" to his lobbying business because his former workmates are "all so concerned to be ethical". Nevertheless, Draper assured me that, if we needed to change a law to our liking, "I can have tea with Geoffrey Robinson! I can get in to Ed Balls!" When Draper spoke of reaching Paymaster General Robinson and Balls, the chancellor's chief adviser, you could hear the exclamation points in his voice. He added, "Once someone pays us."

A kind of schizophrenia

While fielding calls and faxes from Draper and Milner, we reached Lawson Lucas Mendelsohn, a firm less than one year old yet already the hottest lobby group in town, collecting f 2 million in billings in one year. LLM lists 20 powerful clients including the RSPCA and Rupert Murdoch's News International. Named for its three founders, LLM is the definition of "inside". Neal Lawson advised Tony Blair on campaign strategy, Ben Lucas conducted Blair's political briefings and Jon Mendelsohn handled the future prime minister's contacts with business.

But LLM is no influence-for-hire operation that can be purchased by anyone with a check-book. To obtain their muchsought services, LLM clients are asked to review and embrace an eleven-page introductory statement of principles and methods, a somewhat chilling mix of Peter Mandelson and Nietzsche. A chart on page 3 displays two columns labelled in bold face, "The Passing World and The Emerging World". To the Passing World belong "ideology", "conviction" and "politicians who lead". These will be replaced in the Emerging World by pragmatism, consumption and "politicians who listen". The sales brochure-cum-manifesto announces that the political terms Right and Left are now "obsolete". LLM promises to guide clients to understand "not only new Labour but more importantly the new world".

Partner Ben Lucas knows what government will do because "we know how they think". But what may seem like telepathic prognosticating comes down to harvesting insider leaks. Lucas knew, for example, that on June I I Gordon Brown would announce the creation of a new housing inspectorate. "The reason I knew that in advance is that I was speaking to people who were writing the chancellor's speech." He delivered the information to an LLM client and advised them on ways to capitalize on the early warning.

Also, like his competitor Draper, Lucas had several days' notice of details in the chancellor's public spending announcement. Lucas offered up other examples of "intelligence which in market terms would be worth a lot of money".

The inside track on decisions is one thing, influencing the outcome is another. Influence requires access. What could we obtain for our monthly retainer? LLM's Lawson trumped GPC's tea with Geoffrey Robinson by offering, if needed, to "reach anyone. We can go to Gordon Brown if we have to." His partner Lucas commented, "We use relationships in a subtle way."

And how were these relationships subtly used? On behalf of Tesco, LLM were about to derail the chancellor's plan for a tax on car parks. LLM was holding secret negotiations that very week with Policy Unit advisers to Blair, the ones who told Deputy Prime Minister John Prescott, nominally in charge of the issue, when to jump and how high. The tax, pushed by environmentalists to discourage excessive auto use, would have cost the supermarket giant more than E20 million annually.

Lawson also took credit for taking the regulatory heat off Anglian Water. The utility had failed to live up to its promises to invest in reducing water leakage, and had run into trouble in mishandling sewer sludge. And LLM successfully lobbied against trade union pleas for easier recognition.

When complimented for avoiding less reputable clients such as GTech, Lawson countered that he had in fact lobbied for the scandal-plagued lottery operator. LLM used Labour's trust in them to "assure the government how [GTechl will behave". GTech does not appear on the LLM's published client list.

Lawson and Lucas were quick to point out that lobbying is not all about calls to the Treasury. Sometimes LLM recommends the indirect route, "placing things with columnists we know the chancellor reads". They called this 11creating an environment". continua >>>

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