The Fate of an Honest Intellectual
Excerpted from Understanding Power, The New Press, 2002, pp. 244-248
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| I'll tell you another, last case—and there are many others like this. Here's a story which is really tragic. How many of you know about Joan Peters, the book by Joan Peters? There was this best-seller a few years ago [in 1984], it went through about ten printings, by a woman named Joan Peters—or at least, signed by Joan Peters—called From Time Immemorial. It was a big scholarly-looking book with lots of footnotes, which purported to show that the Palestinians were all recent immigrants [i.e. to the Jewish-settled areas of the former Palestine, during the British mandate years of 1920 to 1948]. And it was very popular—it got literally hundreds of rave reviews, and no negative reviews: the Washington Post, the New York Times, everybody was just raving about it. Here was this book which proved that there were really no Palestinians! Of course, the implicit message was, if Israel kicks them all out there's no moral issue, because they're just recent immigrants who came in because the Jews had built up the country. And there was all kinds of demographic analysis in it, and a big professor of demography at the University of Chicago [Philip M. Hauser] authenticated it. That was the big intellectual hit for that year: Saul Bellow, Barbara Tuchman, everybody was talking about it as the greatest thing since chocolate cake. Well, one graduate student at Princeton, a guy named Norman Finkelstein, started reading through the book. He was interested in the history of Zionism, and as he read the book he was kind of surprised by some of the things it said. He's a very careful student, and he started checking the references—and it turned out that the whole thing was a hoax, it was completely faked: probably it had been put together by some intelligence agency or something like that. Well, Finkelstein wrote up a short paper of just preliminary findings, it was about twenty-five pages or so, and he sent it around to I think thirty people who were interested in the topic, scholars in the field and so on, saying: "Here's what I've found in this book, do you think it's worth pursuing?" Well, he got back one answer, from me. I told him, yeah, I think it's an interesting topic, but I warned him, if you follow this, you're going to get in trouble—because you're going to expose the American intellectual community as a gang of frauds, and they are not going to like it, and they're going to destroy you. So I said: if you want to do it, go ahead, but be aware of what you're getting into. It's an important issue, it makes a big difference whether you eliminate the moral basis for driving out a population—it's preparing the basis for some real horrors—so a lot of people's lives could be at stake. But your life is at stake too, I told him, because if you pursue this, your career is going to be ruined. Well, he didn't believe me. We became very close friends after this, I didn't know him before. He went ahead and wrote up an article, and he started submitting it to journals. Nothing: they didn't even bother responding. I finally managed to place a piece of it in In These Times, a tiny left-wing journal published in Illinois, where some of you may have seen it. Otherwise nothing, no response. Meanwhile his professors—this is Princeton University, supposed to be a serious place—stopped talking to him: they wouldn't make appointments with him, they wouldn't read his papers, he basically had to quit the program. By this time, he was getting kind of desperate, and he asked me what to do. I gave him what I thought was good advice, but what turned out to be bad advice: I suggested that he shift over to a different department, where I knew some people and figured he'd at least be treated decently. That turned out to be wrong. He switched over, and when he got to the point of writing his thesis he literally could not get the faculty to read it, he couldn't get them to come to his thesis defense. Finally, out of embarrassment, they granted him a Ph.D.—he's very smart, incidentally—but they will not even write a letter for him saying that he was a student at Princeton University. I mean, sometimes you have students for whom it's hard to write good letters of recommendation, because you really didn't think they were very good—but you can write something, there are ways of doing these things. This guy was good, but he literally cannot get a letter. He's now living in a little apartment somewhere in New York City, and he's a part-time social worker working with teenage drop-outs. Very promising scholar—if he'd done what he was told, he would have gone on and right now he'd be a professor somewhere at some big university. Instead he's working part-time with disturbed teenaged kids for a couple thousand dollars a year. That's a lot better than a death squad, it's true—it's a whole lot better than a death squad. But those are the techniques of control that are around. But let me just go on with the Joan Peters story. Finkelstein's very persistent: he took a summer off and sat in the New York Public Library, where he went through every single reference in the book—and he found a record of fraud that you cannot believe. Well, the New York intellectual community is a pretty small place, and pretty soon everybody knew about this, everybody knew the book was a fraud and it was going to be exposed sooner or later. The one journal that was smart enough to react intelligently was the New York Review of Books—they knew that the thing was a sham, but the editor didn't want to offend his friends, so he just didn't run a review at all. That was the one journal that didn't run a review. Meanwhile, Finkelstein was being called in by big professors in the field who were telling him, "Look, call off your crusade; you drop this and we'll take care of you, we'll make sure you get a job," all this kind of stuff. But he kept doing it—he kept on and on. Every time there was a favorable review, he'd write a letter to the editor which wouldn't get printed; he was doing whatever he could do. We approached the publishers and asked them if they were going to respond to any of this, and they said no—and they were right. Why should they respond? They had the whole system buttoned up, there was never going to be a critical word about this in the United States. But then they made a technical error: they allowed the book to appear in England, where you can't control the intellectual community quite as easily. Well, as soon as I heard that the book was going to come out in England, I immediately sent copies of Finkelstein's work to a number of British scholars and journalists who are interested in the Middle East—and they were ready. As soon as the book appeared, it was just demolished, it was blown out of the water. Every major journal, the Times Literary Supplement, the London Review, the Observer, everybody had a review saying, this doesn't even reach the level of nonsense, of idiocy. A lot of the criticism used Finkelstein's work without any acknowledgment, I should say—but about the kindest word anybody said about the book was "ludicrous," or "preposterous." Well, people here read British reviews—if you're in the American intellectual community, you read the Times Literary Supplement and the London Review, so it began to get a little embarrassing. You started getting back-tracking: people started saying, "Well, look, I didn't really say the book was good, I just said it's an interesting topic," things like that. At that point, the New York Review swung into action, and they did what they always do in these circumstances. See, there's like a routine that you go through—if a book gets blown out of the water in England in places people here will see, or if a book gets praised in England, you have to react. And if it's a book on Israel, there's a standard way of doing it: you get an Israeli scholar to review it. That's called covering your ass—because whatever an Israeli scholar says, you're pretty safe: no one can accuse the journal of anti-Semitism, none of the usual stuff works. So after the Peters book got blown out of the water in England, the New York Review assigned it to a good person actually, in fact Israel's leading specialist on Palestinian nationalism [Yehoshua Porath], someone who knows a lot about the subject. And he wrote a review, which they then didn't publish—it went on for almost a year without the thing being published; nobody knows exactly what was going on, but you can guess that there must have been a lot of pressure not to publish it. Eventually it was even written up in the New York Times that this review wasn't getting published, so finally some version of it did appear. It was critical, it said the book is nonsense and so on, but it cut corners, the guy didn't say what he knew. Actually, the Israeli reviews in general were extremely critical: the reaction of the Israeli press was that they hoped the book would not be widely read, because ultimately it would be harmful to the Jews—sooner or later it would get exposed, and then it would just look like a fraud and a hoax, and it would reflect badly on Israel. They underestimated the American intellectual community, I should say. Anyhow, by that point the American intellectual community realized that the Peters book was an embarrassment, and it sort of disappeared—nobody talks about it anymore. I mean, you still find it at newsstands in the airport and so on, but the best and the brightest know that they are not supposed to talk about it anymore: because it was exposed and they were exposed. Well, the point is, what happened to Finkelstein is the kind of thing that can happen when you're an honest critic—and we could go on and on with other cases like that. [Editors' Note: Finkelstein has since published several books with independent presses.] Still, in the universities or in any other institution, you can often find some dissidents hanging around in the woodwork—and they can survive in one fashion or another, particularly if they get community support. But if they become too disruptive or too obstreperous—or you know, too effective—they're likely to be kicked out. The standard thing, though, is that they won't make it within the institutions in the first place, particularly if they were that way when they were young—they'll simply be weeded out somewhere along the line. So in most cases, the people who make it through the institutions and are able to remain in them have already internalized the right kinds of beliefs: it's not a problem for them to be obedient, they already are obedient, that's how they got there. And that's pretty much how the ideological control system perpetuates itself in the schools—that's the basic story of how it operates, I think. |
zaterdag 28 december 2013
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SEC Paying $755,000 To Settle With Gary Aguirre, Lawyer Fired While Investigating Hedge Fund
06/29/10 09:07 PM ET
WASHINGTON — The Securities and Exchange Commission is paying $755,000 to settle a lawsuit with a former staff lawyer who accused the agency of blocking his investigation of a prominent hedge fund.
The SEC settlement of Gary Aguirre's wrongful termination claim resolved a long-running controversy that prompted scrutiny in Congress and by the SEC inspector general. The settlement was announced Tuesday by the Government Accountability Project.
Aguirre was fired by the SEC in September 2005. He went public in 2006 with allegations of interference by SEC officials in the probe of Pequot Capital Management and improper deference to a Wall Street executive whom Aguirre wanted to interview. That prompted an investigation by Republican staff of the Senate Judiciary and Finance Committees.
The SEC initially took no enforcement action in the case, which was started in 2004 and closed in 2006. The agency reopened it in January 2009 after documents emerged in a divorce proceeding showing that Pequot began paying $2.1 million to a key witness in the case in mid-2007.
Last month, Pequot and its founder and chairman, Arthur Samberg, agreed to pay a total of $28 million to settle the SEC's charges of insider trading of Microsoft Corp. shares. The SEC alleged that the hedge fund traded Microsoft shares on confidential information provided by a former employee of the technology giant whom it later hired.
Pequot, whose core hedge fund was liquidated last year, and Samberg, a well-known money manager and philanthropist, neither admitted nor denied wrongdoing.
The $755,000 being paid to Aguirre represents his salary for four years and 10 months plus his attorneys' fees, according to the Government Accountability Project, a group that works with whistleblowers. The group said it may be the largest settlement of its kind.
Under terms of the settlement, which was approved by a judge at the federal Merit Systems Protection Board, Aguirre agreed to drop two related cases against the SEC.
SEC spokesman John Nester said the settlement "resolves all outstanding litigation between the parties and reflects the agency's determination to focus on its core mission of protecting investors."
Aguirre, in a statement, said "I think it's fair to the public that the SEC pays for my work over the past four years and 10 months, since it generated $28 million to the U.S. Treasury. But it's a shame the team I worked with at the SEC did not get to complete the Pequot investigation. The filing of the case in 2005 or 2006, before the financial crisis, would have been exactly what the Wall Street elite needed to hear at the perfect moment: the SEC goes after big fish too."
In August 2007, the Republican staff of the two Senate committees published a scathing report criticizing the SEC's decision to fire Aguirre and close the first Pequot investigation. Sens. Charles Grassley, R-Iowa, and Arlen Specter of Pennsylvania, then a Republican, spoke critically on the Senate floor that year about the SEC's handling of the Pequot investigation.
The SEC inspector general, David Kotz, in a report issued in late 2008, found there were "serious questions" about the impartiality and fairness of the agency's probe of Pequot.
"The settlement with Mr. Aguirre shows that the SEC is finally acknowledging its mistake," Specter said in a statement Tuesday.
August 17, 2011 8:00 AM ET
Pete Gardner/Getty
Imagine a world in which a man who is repeatedly investigated for a string of serious crimes, but never prosecuted, has his slate wiped clean every time the cops fail to make a case. No more Lifetime channel specials where the murderer is unveiled after police stumble upon past intrigues in some old file – "Hey, chief, didja know this guy had two wives die falling down the stairs?" No more burglary sprees cracked when some sharp cop sees the same name pop up in one too many witness statements. This is a different world, one far friendlier to lawbreakers, where even the suspicion of wrongdoing gets wiped from the record.
That, it now appears, is exactly how the Securities and Exchange Commission has been treating the Wall Street criminals who cratered the global economy a few years back. For the past two decades, according to a whistle-blower at the SEC who recently came forward to Congress, the agency has been systematically destroying records of its preliminary investigations once they are closed. By whitewashing the files of some of the nation's worst financial criminals, the SEC has kept an entire generation of federal investigators in the dark about past inquiries into insider trading, fraud and market manipulation against companies like Goldman Sachs, Deutsche Bank and AIG. With a few strokes of the keyboard, the evidence gathered during thousands of investigations – "18,000 ... including Madoff," as one high-ranking SEC official put it during a panicked meeting about the destruction – has apparently disappeared forever into the wormhole of history.
Under a deal the SEC worked out with the National Archives and Records Administration, all of the agency's records – "including case files relating to preliminary investigations" – are supposed to be maintained for at least 25 years. But the SEC, using history-altering practices that for once actually deserve the overused and usually hysterical term "Orwellian," devised an elaborate and possibly illegal system under which staffers were directed to dispose of the documents from any preliminary inquiry that did not receive approval from senior staff to become a full-blown, formal investigation. Amazingly, the wholesale destruction of the cases – known as MUIs, or "Matters Under Inquiry" – was not something done on the sly, in secret. The enforcement division of the SEC even spelled out the procedure in writing, on the commission's internal website. "After you have closed a MUI that has not become an investigation," the site advised staffers, "you should dispose of any documents obtained in connection with the MUI."
Many of the destroyed files involved companies and individuals who would later play prominent roles in the economic meltdown of 2008. Two MUIs involving con artist Bernie Madoff vanished. So did a 2002 inquiry into financial fraud at Lehman Brothers, as well as a 2005 case of insider trading at the same soon-to-be-bankrupt bank. A 2009 preliminary investigation of insider trading by Goldman Sachs was deleted, along with records for at least three cases involving the infamous hedge fund SAC Capital.
The widespread destruction of records was brought to the attention of Congress in July, when an SEC attorney named Darcy Flynn decided to blow the whistle. According to Flynn, who was responsible for helping to manage the commission's records, the SEC has been destroying records of preliminary investigations since at least 1993. After he alerted NARA to the problem, Flynn reports, senior staff at the SEC scrambled to hide the commission's improprieties.
As a federally protected whistle-blower, Flynn is not permitted to speak to the press. But in evidence he presented to the SEC's inspector general and three congressional committees earlier this summer, the 13-year veteran of the agency paints a startling picture of a federal police force that has effectively been conquered by the financial criminals it is charged with investigating. In at least one case, according to Flynn, investigators at the SEC found their desire to bring a case against an influential bank thwarted by senior officials in the enforcement division – whose director turned around and accepted a lucrative job from the very same bank they had been prevented from investigating. In another case, the agency farmed out its inquiry to a private law firm – one hired by the company under investigation. The outside firm, unsurprisingly, concluded that no further investigation of its client was necessary. To complete the bureaucratic laundering process, Flynn says, the SEC dropped the case and destroyed the files.
Much has been made in recent months of the government's glaring failure to police Wall Street; to date, federal and state prosecutors have yet to put a single senior Wall Street executive behind bars for any of the many well-documented crimes related to the financial crisis. Indeed, Flynn's accusations dovetail with a recent series of damaging critiques of the SEC made by reporters, watchdog groups and members of Congress, all of which seem to indicate that top federal regulators spend more time lunching, schmoozing and job-interviewing with Wall Street crooks than they do catching them. As one former SEC staffer describes it, the agency is now filled with so many Wall Street hotshots from oft-investigated banks that it has been "infected with the Goldman mindset from within."
The destruction of records by the SEC, as outlined by Flynn, is something far more than an administrative accident or bureaucratic fuck-up. It's a symptom of the agency's terminal brain damage. Somewhere along the line, those at the SEC responsible for policing America's banks fell and hit their head on a big pile of Wall Street's money – a blow from which the agency has never recovered. "From what I've seen, it looks as if the SEC might have sanctioned some level of case-related document destruction," says Sen. Chuck Grassley, the ranking Republican on the Senate Judiciary Committee, whose staff has interviewed Flynn. "It doesn't make sense that an agency responsible for investigations would want to get rid of potential evidence. If these charges are true, the agency needs to explain why it destroyed documents, how many documents it destroyed over what time frame and to what extent its actions were consistent with the law."
How did officials at the SEC wind up with a faithful veteran employee – a conservative, mid-level attorney described as a highly reluctant whistle-blower – spilling the agency's most sordid secrets to Congress? In a way, they asked for it.
On May 18th of this year, SEC enforcement director Robert Khuzami sent out a mass e-mail to the agency's staff with the subject line "Lawyers Behaving Badly." In it, Khuzami asked his subordinates to report any experiences they might have had where "the behavior of counsel representing clients in... investigations has been questionable."
Khuzami was asking staffers to recount any stories of outside counsel behaving unethically. But Flynn apparently thought his boss was looking for examples of lawyers "behaving badly" anywhere, including within the SEC. And he had a story to share he'd kept a lid on for years. "Mr. Khuzami may have gotten something more than he expected," Flynn's lawyer, a former SEC whistle-blower named Gary Aguirre, later explained to Congress.
Flynn responded to Khuzami with a letter laying out one such example of misbehaving lawyers within the SEC. It involved a case from very early in Flynn's career, back in 2000, when he was working with a group of investigators who thought they had a "slam-dunk" case against Deutsche Bank, the German financial giant. A few years earlier, Rolf Breuer, the bank's CEO, had given an interview to Der Spiegel in which he denied that Deutsche was involved in übernahmegespräche – takeover talks – to acquire a rival American firm, Bankers Trust. But the statement was apparently untrue – and it sent the stock of Bankers Trust tumbling, potentially lowering the price for the merger. Flynn and his fellow SEC investigators, suspecting that investors of Bankers Trust had been defrauded, opened a MUI on the case.
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