Saturday, February 21, 2015

Maybe "Smelly Shelly" Silver is answerable to the laws we have after all: Part 2, Laws? What laws?


Just what connection do I see between Smelly Shelly and "Moneybags Mikey" Khodorkovsky?

Man with a microphone (but is anyone listening?): Ex-oligarch, ex-convict Mikhail Khodorkovsky "has grandly declared that he would guarantee Putin's safety if he left power peacefully."

by Ken

Last night, in Part 1 of this two-part "Maybe 'Smelly Shelly' Silver is answerable to the laws we have after all" series, I took note of the multi-count indictment handed down Thursday by a federal grand jury against former NYS Assembly Speaker "Smelly Shelly" Silver. The indictment covers nearly $4 million squirreled away by the Smellyman in a pair of schemes involving sums paid to him by law firms essentially in exchange for -- or so the feds allege -- using his position to either steer state funds in desired directions or to secure passage of desired legislation.

There had been, you'll recall, heavy speculation that Preet Bharara, the U.S. attorney for the Southern District of New York, and his team were reluctant to press the grand jury for an indictment knowing how difficult it is to prove a quid pro quo in the movement of money into the pockets of a politician. We heard from a source, Susan Necheles, "a former prosecutor who has defended political corruption cases," who said that if you can't prove NYS legislators' quid pro quo, "even when the people they're earning money from also want political favors from them," then "that's not criminal, it's just politics."

And in fact, we're hearing blowback from Albany about how mean USA Preet is being to them, and showboating. Just last weekend a bunch of crybabies bent the ear of the New York Daily News's Kenneth Lovett for a moderately amusing piece, "Albany lawmakers cry foul over Manhattan U.S. Attorney Preet Bharara's tactics," which came with a deck so long, there seemed hardly any need to read the actual piece:
While many are praising his willfulness to take on corruption in Albany, more than a dozen lawmakers and other insiders are upset over the means by which Bharara conducts his business, including his way of keeping the spotlight on him and his method of attacking the entire legislature as one.
Now the fact is that USA Preet never said, or in my hearing hinted, any such thing. If that's what these upstanding legislators are hearing, maybe they're hearing some other voices, possibly voices much closer to them. As for horning in on a state legislature, which shouldn't even fall under his jurisdiction, and the charge of showboating, I don't think it's my imagination that until the day Smelly Shelly was arrested, when understandably all hell broke loose, USA Preet kept about as low a profile as someone in his position finally could. And even on arrest day, it wasn't the Preetster who was out front, but his guys and the FBI guys who worked on the investigation.

For that matter, I don't see any reason to believe that USA Preet would have ever gotten involved in the Albany cesspool if the State Legislature had shown the slightest inclination to set and maintain any decent sort of ethical standards. But they haven't, and they don't, and unless they're forced, they won't.


Yes, finally we're getting to the point I've been threatening to make for ages now. When the shocking story of Smelly Shelly's arrest broke, I still had floating around my head pieces of Julia Ioffe's January 12 New Yorker profile of the bloodied-but-unbowed Russian ex-oil oligarch Mikhail Khodorkovksy, "Remote Control: Can an exiled oligarch persuade Russia that Putin must go?." Actually, I've already shared my "money" quote, and I don't think I can do much better than to share it again, with maybe a little boldfacing.

First I need to repeat the context I set when I presented the quote originally: "Before Khodorkovsky was brought down by Russian strongman Vladimir Putin, you'll recall, he had at a remarkably young age amassed a fortune that made even the fortunes amassed by the other rampaging oligarchs look ho-hum. And today, while he remains, as Ioffe puts it, 'unapologetic,' he's a little, um, defensive about what he did."

We might add just this additional bit of context for the breakout of the wealth grab that characterized Russia's economic transformation from SSR to post-Soviet entity:
Boris Yeltsin’s post-Soviet government implemented radical market reforms but instituted almost no legal structure to control them. Khodorkovsky was perfectly positioned to take advantage.
Now here's what Moneybags Mikey told Ioffe (as noted, with emphasis added):
When people say, ‘It was impossible to live back then without violating the law,’ I say, ‘Come on, don’t make me out for a fool,’ ” he said, with a sneer. “When there are so few laws and they’re so imperfect, you have to be a total idiot not to be able to find a way to do what you want without violating the existing laws.”

He had only taken colossal advantage of a nearly lawless landscape.
“Back then, I didn’t grasp the fact that people of a slightly older generation than me simply couldn’t adequately assess the opportunities in front of them,” he said. “In this case, we are—or I was—also victims of the same problem. Because we got property but in a flawed way.”

He went on, “We weren’t the Rockefellers, but we weren’t modern Americans, either.”
Did you get that?

MONEYBAGS MIKEY: "When there are so few laws and they’re so imperfect, you have to be a total idiot not to be able to find a way to do what you want without violating the existing laws."

And JULIA IOFFE: "He had only taken colossal advantage of a nearly lawless landscape."

Now do you see why coverage of Smelly Shelly's day of shame set me thinking again about Moneybags Mikhail?


One refrain you'll note throughout the coverage of Smelly Shelly's legal situation: NYS legislators are in fact allowed, almost without restriction, to rack up outside income," because our Legislature is presumed to be part-time. That's right, every once in a while our legislators entrust the care of the family farmstead over to the rest of the family and the farmheads and set out on the arduous trek to Albany, where they transact some official business and promtply set out on the return trek to the farm. It's citizen democracy at its best.

Yeah, right.

The fact remains that the way the Legislature was set up, it's practically assumed that legislators will do outside work, since they can hardly be expected to support their families on the pittance coughed up by the State of New York. Actually, it's far from what you or I would probably consider a pittance, especially when you add in all the extras, in either perks or outright cash, members earn for doing pretty much anything beyond showing up.

You're probably thinking, well, that's kind of iffy. After all, when your job is doing the state's business, it might seem awfully difficult to avoid conflicts of interest in performing outside work. Still, it's easy enough to see which sources of income might fail the smell test by looking at legislators' disclosure forms for their sources of outside income. Well, ha-ha and ha! Because the legislators don't have to disclose all their sources of outside income.

This is one of those utterly unaccountable oversights that somehow the Legislature has never gotten around to rectifying. Oh, I'm sure they've meant to, and somehow every time they have, well, something came up. Like they had to hurry home to chop some firewood or slop the pigs.

This was in fact one of the things our governor, "Boy Andrew" Cuomo, had in mind when he organized that commission that caused such a ruckus to look into ethical problems in state government. It was so important to him that as soon as the the "money guys" of some state legislators being poked at by commission investigators happened also to be "money guys" of Boy Andrew. Wham, end of investigation, end of commission!

Nevertheless, just this month Boy Andrew was back at it. As the head read on a post by Newsday's Michael Gormley, "Cuomo says he will force State Legislature to accept his ethics measures." As far as I know, the governor has made no mention of forcing himself to ponder gubernatorial ethics.

Still, the law is what the law is, and when you look at the rackets set up by, or at least on behalf of, Smelly Shelly, it's hard -- at least for me -- not to think of Moneybags Mikey declaring, "When there are so few laws and they’re so imperfect, you have to be a total idiot not to be able to find a way to do what you want without violating the existing laws."

Certainly that includes finding out just how far you can stretch those laws. When you dig into the details of the crimes alleged by the federal prosecutors, and see all the devices and strategies devised to hide what is alleged to have been going on, and the gaps even in following such laws as there are, you get a pretty good idea that everyone involved understood perfectly well how bad these things stunk. So it's kind of a relief that on the basis of the evidence the U.S. attorney's office presented to that grand jury, the jurors decided that yes, the charges deserve to be pursued to trial.


I would have liked to touch on a bunch more points that crop up in Julia Ioffe's profile of Khodorkovsky, which is definitely worth a read if you have access. As she notes, Mikey has freely reinvented himself ideologically a number of times, by coincidence all times when his reinvented self happened to suit his current financial self-interest. Forget presenting a "democratic" alternative to Russia's once and apparently for-all-time (at least until he loses control) strongman Vladimir Putin. None of those selves would seem well adapted to a principled "for love of Mother Russia" alternative.

For example, when Khodorkovsky started making his fortune through his sleazily won control of Yukos, the former state oil monopoly, Ioffe -- drawing on a 2002 Foreign Affairs article by Leo Wolosky, "at the time the deputy director of the Economic Task Force on Russia at the Council on Foreign Relations" -- notes:
Very little of this wealth was making it back to the parts of the country that were producing it. Instead of paying taxes, which could have been used to repair the decaying Soviet infrastructure, Khodorkovsky and his colleagues were depositing the funds in an offshore network.
"Whole regions of Russia are being impoverished," Wolosky said.

And we can hardly bypass Moneybags Mikey's anounced vision for the future:
Khodorkovsky is preparing for a revolution, convinced that Putin, despite his overwhelming popularity and his support inside the military and the security services, will soon fall from power. Khodorkovsky’s efforts may seem quixotic or irrelevant to almost everyone in Russia who bothers to pay attention, and yet he persists. He has people inside Russia organizing activists and preparing them for the 2016 parliamentary elections, even though he doesn’t believe that they will have an effect on real politics in the country. He has launched a Web site where Russian journalists write about the government’s many sins. One of his allies is busy working on a post-Putin constitution. Less than a year out of prison, Khodorkovsky has grandly declared that he would guarantee Putin’s safety if he left power peacefully.

“When the moment comes, the leftists will be organized, the neo-Nazis will be organized, and Putin will have the special services at his disposal,” an Open Russia activist told me. “And, when it’s go time, we want to have our hundred thousand people in the mix, too.”
But to get back to our subject, I did promise you a story I think relates, concerning the problematic relationship between Khodorkovsky and his future nemesis Putin. By the time the latter came to power, Ioffe tells us, Mikey had already performed his most recent self-reinvention, this one breaking out of oligarchitude. The time had come for him to stabilize his wealth, for which it was necessary to make Yukos a regular international-trading-and-investment-partner-grade company, and the stark reality was that "in order for our capitalization to grow, we needed a more transparent political system."

This was certainly not a traditional oligarchical position. Surely the last thing economic pillagers and plunderers want is political transparency. But Mikey's situation had changed. He wasn't trying to make a fortune; he'd already made it, and now he wanted to hold onto it.

Which seems, alas, to have somewhat clouded his perception of what was going on around him. Putin, we're reminded, came to power "promising to rein in the oligarchs." Does it really need saying that just about the last thing he had in mind was "a more transparent political system"? Yikes!

This situation was sketched for Ioffe by Natalia Gevorkyan, "who helped conduct the interviews with Putin that make up his autobiography, First Person." Ioffe writes (with, again, some highlighting from me):
After being elected to the Presidency, in 2000, Putin began to surround himself with K.G.B. alumni and friends from St. Petersburg, men who had fallen behind in the nineties. Now that they were in power, the imposition of legal structures and transparency was not in their interest; it would only prevent them from amassing the sort of wealth that Khodorkovsky had.

By 2002, Putin had driven two powerful oligarchs––Boris Berezovsky and Vladimir Gusinsky––out of the country and seized their media assets. According to [onetime Khdorkovsky business partner Leo] Nevzlin, Khodorkovsky didn’t understand the signals the Kremlin was sending: show fealty or leave. On February 20, 2003, at a business round-table with Putin, Khodorkovsky pointed to a questionable deal that had caught his attention as an oilman. He implied that Igor Sechin, an old friend of Putin’s who was also in the K.G.B., had enriched himself through the deal. When Khodorkovsky asked Putin to look into it, Putin snapped, “Yukos has excess reserves, and how did it get them?” The message was clear: you got yours, now stay out of the way as we get ours.

In the months that followed, Yukos’s offices were raided by the prosecutor general’s office. That summer, shortly after Khodorkovsky’s fortieth birthday, his lieutenant Platon Lebedev was arrested. Yukos employees fled the country, and Khodorkovsky’s friends and lawyers advised him to do the same. He refused.
The rest is history.


Still, there is a certain angle from which the view looks kind of similar. Think of the way those NYS legislators bridle at outside interference in their little empire. (Say, is this not the Empire State?) Ethics-mongerers come and go, sometimes even in the governor's office, or a U.S. attorney's. But the principle that seems honored above all else in our State Legislature is: The people who came before us got theirs; now it's our turn to get ours.

I bet President Putin would understand.

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