Thursday, April 30, 2015

A Good Time for Cronies

“We must urgently begin to rebuild the bonds of trust and respect among Americans. Between police and citizens, yes, but also across society, restoring trust in our politics, our press, our markets, between and among neighbors, and even people with whom we disagree politically.”
—Hillary Clinton, at Columbia University on Wednesday
In Ireland there is always a scandal du jour—something that keeps the chattering classes, especially the political press, occupied. Currently, that function is filled by a government probe into the sale of a company called Siteserv, “a leading Infrastructure Support Services Group,” as it describes itself on its web page.

Like a lot of companies, it ran into difficulty during the financial meltdown and found itself owing a lot of money to a bank. The bank also became insolvent and was subsequently taken over by the Irish government. The taxpayer-owned bank then sold off Siteserv at a loss for 100 million euro—plus five million extra euro to be paid to the Siteserv shareholders to give them an incentive to approve the offer.

This is the sort of deal that gives capitalism a bad name. A dark, but necessary, element of capitalism is that there is risk in investing in the marketplace. When the government bails out shareholders, it distorts the market with all kinds of indirect bad results. This is not capitalism. It is what people call crony capitalism: manipulation by people in government and the well-connected to evade the laws of the market for the profit of a few.

One of the main beneficiaries of the Siteserv deal was billionaire Denis O’Brien. Interestingly, one of his other companies has recently gotten some mention in the American press. In the aftermath of the devastating 2010 earthquake in Haiti, Bill Clinton (husband of then-Secretary of State Hillary Clinton) was named co-chair of the Interim Haiti Recovery Commission. Haiti legitimately needed all the aid money that poured into the country, but it was also a bonanza for companies that stood to get contracts to do all kinds of infrastructure work and, in some cases, exploit the country’s resources. It turned out that you had a much better chance of getting some of that money if you had a relationship with the Clintons.

One of the main beneficiaries was Denis O’Brien, whose mobile phone company Digicel was hired to build a system of transferring money by cell phones. O’Brien had a history of paying lucrative fees to Bill Clinton for giving speeches and also for generous donations to the Clinton family foundation. (Bill Clinton’s speaking fees skyrocketed while his wife was Secretary of State.) Other companies were invited in to start exploiting Haiti’s mineral resources. Secretary Clinton’s brother was subsequently appointed to the board of a company that got a permit for gold mining.

All of this is currently getting an airing due to the upcoming release of the book Clinton Cash by Peter Schweizer. Interestingly, it’s not just the conservative press giving the book exposure. The New York Times and The Washington Post have joined Fox News in making exclusive agreements with Schweizer.

There is nothing illegal about what the Clintons are known to have done, and everyone is quick to point out that the Clinton foundation does many good things. But the coverage certainly undermines her claim to be a champion for “everyday Americans.” As Hillary Clinton famously told an interviewer, when they left the White House in 2001 they were “dead broke.” A dozen years later they were worth 55 million dollars. Bill Clinton is the only living ex-president to make 24/7 Wall St.’s list of the wealthiest U.S. presidents.

In the last presidential election Democrats did a masterful job of turning Mitt Romney’s wealth into a political disadvantage—with no small amount of help, of course, from Romney himself. But at least no one accused him of making his fortune by trading on influence made possible by past, present and future high public office.

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