Dan is Mother Jones' deputy DC bureau chief. He is the New York Times best-selling author of Sons of Wichita(Grand Central Publishing), a biography of the Koch brothers that is now out in paperback. Email him at dschulman (at) motherjones.com.
Scott O'Malia’s work for a controversial energy firm never surfaced in his first confirmation hearing. This time he may not be so lucky.
Daniel SchulmanSep. 21, 2009 9:17 AM
During his first confirmation hearing, Scott O'Malia got off easy. The nominee to the nation's commodities watchdog agency was never asked about his role, years earlier, as a top lobbyist for a firm accused of Enron-style abuses, including manipulating California's energy market and contributing to a statewide electricity crisis. That is, the very same type of market misconduct that the Commodity Futures Trading Commission (CFTC) is charged with policing, if not preventing.
O'Malia, a Senate staffer who spent nearly a decade working for Mitch McConnell, was originally selected to serve as a CFTC commissioner by George W. Bush. But, after clearing the Senate agriculture committee, his nomination stalled. President Obama recently nominated him again, and O'Malia will soon face another confirmation hearing. This time around, though, he may face some tough questions about his two-year stint as the director of federal legislative affairs for Atlanta-based Mirant. Following a story by Mother Jones on his lobbying past, a spokeswoman for new agriculture committee chair Sen. Blanche Lincoln (D-Ark.) says O'Malia will be questioned about his history working for a company that pushed for deregulation and was the subject of a litany of lawsuits alleging unscrupulous business practices. "The confirmation process exists to fully vet nominees," Katie Laning Niebaum, Lincoln's communications director, told me. "Chairman Lincoln will address this matter in the hearing and looks forward to complete, transparent answers from Mr. O'Malia and all nominees." (The hearing, which will include testimony from two other CFTC nominees, has yet to be scheduled.)
Why is an ex-lobbyist for an Enron-like firm that manipulated energy prices in line to be a top regulator?
David Corn and Daniel SchulmanSep. 17, 2009 6:00 AM
During his confirmation hearing last year, Scott O'Malia, a Republican Senate aide nominated to be a commissioner on the Commodity Futures Trading Commission, testified that while working for an energy firm years earlier, the "Enron debacle" had opened his eyes "to the very serious consequences of...inadequate oversight." O'Malia, who'd been nominated by President George W. Bush, added, "I learned firsthand the devastating impacts a flawed market design can have on consumers and markets." What he didn't tell senators was that he'd learned all this as a lobbyist for a company engaged in Enron-like misconduct that had pushed for deregulation of energy trading. His appointment to the CFTC, an important watchdog agency that oversees the trading of agricultural and energy futures, was subsequently blocked for reasons unrelated to his nomination. But now O'Malia is back. The former lobbyist has been nominated to the CFTC once again, this time by President Barack Obama, who's following a traditional practice and allowing the top Senate Republican—in this case, minority leader Mitch McConnell (R-Ky.)—to select candidates for certain seats on independent agencies.
Less than two weeks before they were scheduled to stand trial, Del and Barbara Spier pleaded guilty to charges of defrauding the US government in connection with their company's security operation in Afghanistan. In July, I detailed how the Texas grandparents, bankrupt as of 2002, cashed in on the contracting bonanza with a little help from their friends at the Louis Berger Group. The construction firm, selected by USAID to rebuild crucial parts of Afghanistan's bombed-out infrastructure, handed the Spiers' company, US Protection and Investigations (USPI), a noncompete contract to protect its employees and subcontractors in the field. In the years that followed, the Justice Department charged, the Spiers proceeded to systematically bilk the government, billing for nonexistent expenses from fictitious companies and inflating the number of Afghan guards on their payroll.
USPI's shady business practices extended beyond fraud. The company cut deals with local militia commanders (one of them accused of a range of wrongdoing, including the attempted kidnapping of Afghanistan's then-attorney general), paying their men a per diem in exchange for performing guard duties. Many of these ragtag soldiers were ill-trained, their loyalties shaky. Some apparently used their authority to engage in criminal activity, including drug trafficking and petty shakedowns. Ex-USPI supervisors I spoke with had no illusion that these guards would hold their ground if the going got tough. "If it came down to a firefight, they would have bailed on us," one told me.
Members of the Commission on Wartime Contracting say ArmorGroup's <i>Animal House</i> antics may fuel the Afghan insurgency.
Daniel SchulmanSep. 14, 2009 4:02 PM
Will ArmorGroup's embassy scandal inflame the Muslim world in the same way Abu Ghraib did? Members of the Commission on Wartime Contracting, the independent panel established to probe contracting issues in Iraq and Afghanistan, certainly see parallels between the infamous photographs of detainee abuse and those depicting Kabul Embassy guards engaging in a range of lewd conduct. Graphic shots of ArmorGroup personnel cavorting half-naked and participating in humiliating hazing rituals, which have circulated widely online, "provide free recruiting material to the Taliban," Chris Shays, the commission's cochair and a former Republican congressman from Connecticut, said on Monday during a hearing on the State Department's oversight of contractors that focused on the recent allegations against ArmorGroup.
Dov Zakheim, a member of the commission who served as the Pentagon's comptroller during the Bush administration's first term, had a similar take on the fallout of the embassy scandal. "This is the equivalent of Abu Ghraib," he said, adding later, "that Internet is killing us."
Early one morning in late April, as the Today Show broadcast live from Rockefeller Center, a group of onlookers gave Matt Lauer a T-shirt emblazoned with the Web address Econ4U.org. "Scored a T-shirt here from these folks promoting economic literacy, which is really nice," the good-natured anchor said, displaying the shirt to nearly 6 million viewers. Little did Lauer know, but he'd been duped into providing that free advertising for a group that promotes payday lending—an industry long accused of preying on low-income Americans with short-term loans carrying huge interest rates.
Who pulled off this publicity stunt? Credit Richard Berman, one of Washington's most notorious PR operatives, whose exploits Mother Jones and others have been chronicling for years. Nicknamed Dr. Evil—a moniker he embraces—he's the force behind several industry-backed nonprofits that share staff and office space with his very for-profit communications and advertising firm, Berman and Company. The firm promises clients it will not "just change the debate" but "start" one, and a range of companies, from Anheuser-Busch to Philip Morris to the casino chain Harrah's, have signed up for Berman's "aggressive" and "hard-hitting" advocacy. Some clients pay Berman and Co. directly, while others donate to his nonprofits—but much of the cash winds up in the same place, via hefty management fees the front groups pay to Berman's company.