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Cleaning House: Will Obama Go After the Big Boys?

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By Jen Alic of Oilprice.com, a geopolitical analyst, co-founder of ISA Intel in Sarajevo, and the former editor-in-chief of ISN Security Watch in Zurich. Cross posted from OilPrice.

* * *

Lambert here: Simple answers to simple questions:

No.

* * *

The ban on BP (NYSE:BP) is only the tip of the iceberg. In the wake of oil spills, deaths, murky war contracts, sharing of government secrets and other lapses in ethics, Obama’s 2012 house-cleaning project will continue into the New Year.

Cleaning up the messes of the past decade of contractual chaos in the US is a formidable task, and so far the Obama administration has slapped bans on more than 3,800 contractors in 2012—though the punishments aren’t exactly tough. 

The most highlighted case is that of BP Plc (BP/), suspended last month from new federal contracts for an undefined period. Eleven people were killed in the 2010 Deepwater Horizon oil spill—the worst in US history and the company was accused by the Environmental Protection Agency (EPA) of demonstrating a “lack of business integrity”. BP will survive the punishment—which isn’t as stringent as it could be as it has no effect on existing contracts. But we may see a carve up of the company in the New Year, in the aftermath of a settlement it reached with the US Justice Department to pay $4.5 billion in return for an end to criminal charges and to cover securities claims as a result of the spill.

Why is this case getting the bulk of the media attention? Because the government doesn’t typically want to punish the big boys—especially big oil–so it’s a significant precedent that certainly has some other big players worried about what 2013 will bring.

A Texas unit of Booz Allen Hamilton Holding Corp (BAH)—a slightly smaller fish–was also suspended for nine weeks in February when it hired a former government employee who agreed to share sensitive secrets about a pending technology project. It wasn’t much of a punishment.

Oil spills aside, we’re also likely to see some serious house-cleaning related to war contracts handed out like candy.

And in this atmosphere, companies are turning on each other and the ranks of whistleblowers are inflating. The Whistleblower ranks are set to grow further in 2013 thanks to December legislation that grants new legal protection to whistleblowers who work for federal contractors or grant recipients. These provisions are part of the $633 billion defense bill passed by Senate, and the point is to protect people from being fired or harassed with the government’s complicity for exposing fraud, waste, abuse or ethical lapses. The legislation essentially sets up a channel for whistleblowers to protect themselves through federal internal watchdogs (inspectors general) or the courts.   

At the same time, companies are abusing the whistleblower role, using it as a tool to knock down the competition. As such, weeding out the true whistleblowers from those with disingenuous agendas will be challenging, and 2013 is set to be a very aggressive year in this respect.

Though perhaps still a bit lacking, the contracting house certainly needs to be cleaned—and vendors need to be more thoroughly vetted. After all, we’re talking about an annual federal contract market of around $500 billion in taxpayers’ money.  

So far, though, house-cleaning has been disappointing, despite the big numbers. Of the 3,800 companies targeted for disciplinary action, try to find a big dog outside of BP or Booz Hamilton, whose 9-week suspension falls short of real punishment. The game is to go after the small fish to inflate the numbers. When those numbers start to include the big boys—and big oil beyond the obvious BP—then we can talk about cleaning house.

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36 comments

  1. psychohistorian

    Sorry Lambert, I have a very jaded opinion of the slap on the wrist to BP.

    The way I see it, for that little slap on the wrist they are going to get future immunity for the damage to the gulf they set in motion that is yet to be measured and realized.

    Much like Fukushima, the Gulf of Mexico BP disaster is one of those “gifts” that is going to keep on giving and giving and giving.

    1. from Mexico

      Your take is much closer to my perception of the situation, which is the ethic ushered in by Ronald Reagan and which has been the accepted standard of governance ever since. It is a double morality. It entails impunity for the BPs of the world, and the jack boot of the state against the neck of the small businessman (Folks like me!). Libertarianism for the the BPs of the world, and the police state for the little guy. Lavish state subsidies for the BPs of the world, and the harsh realities of markets for you and me.

      1. psychohistorian

        As another small businessman I agree. I “get” to suspend operation of my successful failure of a business tonight to try and recharge as well as overcome the agnotology of the bicycle industry and secure funding to continue…..after 14 years of beating my head against the wall of manufactured ignorance.

      2. American Slave

        As a would be small businessman who has over 7 years in the electrical trade the contractor board does not want to give out licenses to anyone since the people on the board are license holders themselves why would they want compition and im finding out it’s the same for pest control people too. What a joke of an ugly ugly system we have it’s a monster that needs to be destroyed.

    2. from Mexico

      By the way, I found the conversation yesterday evening between you, knowbuddhau and Aquifer regarding religion, mythology and evolution to be most interesting. It’s a topic I am intrigued by. I don’t self-classify as either a religionist or an atheist, but more of an agnostic or skeptic. The underbelly of agnosticsm and skepticism (and Buddhism has also been accused of this) is pessimism and defeatism, inaction and passive nihilism. This is the opposite problem that typically plagues atheism and Abrahamic religions, which is active nihilism. Nietzche thought he had found a solution to this paradox with his Dionysian man, but all he gave us was another dose of active nihilism. So the problem of finding a balance between active and passive nihilism lives on.

      1. ohmyheck

        Agreed. So, there is an interesting article in today’s links. (Churches in art galleries and cafes)

        “…nearly 80 percent of unaffiliated Americans say they believe in God, and close to half say they pray at least once a month.

        The “spiritual but not religious” category is an important audience that evangelical leaders hope to reach…”

        I guess I wonder what the phenomenon of “evangelicalism” is about? Why do some human beings have this need? Personally, I just don’t get it.

        1. Yes, but...

          Of the 80% who classify themselves as “believers” and/or “religious,” I would classify most as merely “superstitious,” in that their belief is based mostly on the idea of covering their bets regarding the Christian idea of “eternal damnation.” I’ve actually had many of the more unaffected members of the flock come right out and admit that in no uncertain terms in a way that let me know they were surprised that anyone would even ask. “Religion” in such cases amounts to just so much “don’t step on the sidewalk crackism.” Yeah, we Americans ain’t the most deep seated intellectual of lots, are we?

      2. mlopes

        why does atheism have to imply some sort of nihilism? that is bullshit and intellectually offensive, just like the statement that one cannot be good without a belief in a god. yes, some people believe that we are a product of biological evolution, that the earth and mankind are tiny and irrelevant details in the immensity of the cosmos, and are completely fine with it, valuing and cherishing their short time as living beings, often in greater ways than many religious people.

        1. Dan h

          Agreed. Ive always felt that the need to believe in a higher power who has to provide a set of rules in order for one to treat others kindly is a massively disgusting situation…we were lucky enough to develop theory of mind/empathy, wtf cant we just cooperate…but then again who knows how accurate the estimates of the prevalence of those abilities are…my pessimism grows with each day.

        2. Jimbo

          Between the eternalism of the God Fantasy and the nowheresville of nihilism dwells the awakened mind of the great Middle Way.

      3. psychohistorian

        Thanks for your and other comments.

        Aquifer asked me what I believed and my current answer is:

        The way that can be named is not the real way…Lao Tze

        The idea that religion has all the answers was debunked during the Enlightenment period but many folks keep abdicating personal responsibility for their actions and let their faith tell them what to believe and how to act so they don’t have to.

        I would much rather struggle in my body with right and wrong than embrace scripture and others interpretation of what right and wrong are as leaps of faith….its a cop out, IMO.

      1. psychohistorian

        Lambert,

        I have to admit I missed the NO….sorry.

        Its not that your aren’t radical enough for me…..grin
        That’s why we are all here.

  2. John Puma

    After disasters such as Deepwater, for the government to give ONLY cash fines (and these only on the order of quarterly earnings) specifically “in return for an end to criminal charges” makes the government a co-conspirator in the crime.

  3. Foppe

    So this is what passes for “geopolitical analysis”? Or is this speculative liberal make-believe only allowed to be published as “analysis” when a new calendar year is nearly upon us? I’ll just continue to wait for the second leg down..

    1. from Mexico

      And you think your trite, frivolous and cavalier comment, with its catch phrases and blanket condemnations, adds to the quality of the analysis?

      If you have something to add other than spouting off a bunch of vapid platitudes, why don’t you just do it?

    1. Synopticist

      You just wait you cynic.
      Super-Obama is going to send all those horrible bankers to jail, and usher in a new progressive era.

      Definatelly. He’s such a great guy. Happy new year.

  4. bahksheeesh

    So then Booz Allen hired a former DoD IG, Heddell, in the kind of advisory job where you sit him at a table once a month and feed him dainties and get partners to ask him earnest questions and let him talk out his ass and pretend they give a shit what he thinks – problem solved!

  5. Norman

    Correct me if I’m wrong here, but hasn’t the DoJ been attacking the wistleblowers, especially in the government? Congress may write a law & pass it, but if the DoJ doesn’t enforce the laws already on the books, then what are the chances that it will with “new” ones?

  6. enraged

    Dumb, dumb, dumb question… but I have to ask it.

    We keep learning that, in addition to that insulting settlement for demonstrated mortgage servicing fraud, some banks have been assessed hefty penalties (although still grossly inadequate) for additional misdeeds such as money laundering, corruption and other big legal no-no; BP did get fined a few billions for that environmental calamity, etc.

    Where is all that money going? I sure haven’t seen one cent of it and I’m still fighting to keep a roof over my head. My taxes are about to be jacked up, my income still isn’t improving, I don’t see much in terms of infrastructure development anywhere, teachers keep being laid off, Has anyone seen any of that money? Can we have a show of hands here?

    Oh! I forget! Didn’t Biden and Congress just get a pay raise for such a job well done?

    This country has become a real joke!

  7. scraping_by

    “At the same time, companies are abusing the whistleblower role, using it as a tool to knock down the competition. As such, weeding out the true whistleblowers from those with disingenuous agendas will be challenging…”

    Au contraire.

    Doesn’t matter if the whistleblower’s motivated by competition, greed, self-agrandizement, religious creed, personal vendetta, romantic disappointment, self-respect, old fashioned ethics, or the voices in his head.

    All that matters is having the evidence to prove the crime. And that the authorities use the evidence provided to prosecute. And the malefactors get punished and the whistleblower doesn’t.

    It doesn’t stop being a crime for remaining undetected. The crime does the same amount of damage whether prosecuted or not. The people involved are felons, normally, whether they see the inside of a prison cell or not. The P/L statement is not the final yardstick

    Ms. Alic has a corporate viewpoint, and is writing for the corporate viewpoint. Once again, profits above the law.

  8. Pasarica

    “So far, though, house-cleaning has been disappointing, despite the big numbers. Of the 3,800 companies targeted for disciplinary action, try to find a big dog outside of BP or Booz Hamilton, whose 9-week suspension falls short of real punishment. The game is to go after the small fish to inflate the numbers. When those numbers start to include the big boys—and big oil beyond the obvious BP—then we can talk about cleaning house.”
    In my opinion he is the greatest and he cand do many thing , but things like this takes time , he cannot do them in an instant. Be patient and you will see !

  9. kaj

    This man, Obama. I just can believe how sick he is. One despairs of his cant and nonsense and it is difficult to not stop worrying about the next 4 years hold. Always trying to please, always giving in, the small, orphaned black boy always trying to please his white grandparents. I hope that there are about 20 senators who can stop this awful gravy train. Even Bill Clinton, though quite deceptive, was a lot stronger and cagier than this jerk who lives to please his white Republican masters.

  10. cripes

    kaj:
    Although I wasn’t pleased with the “orphaned black boy” characterization, I have to say that “lives to please his white republican masters” just about nails it.

    Now if we could just enlighten the pwogrwessives and the colorstruck faction of the black community…

  11. Butch in Waukegan

    “The most highlighted case is that of BP Plc (BP/), suspended last month from new federal contracts for an undefined period. . . .

    “Why is this case getting the bulk of the media attention? Because the government doesn’t typically want to punish the big boys—especially big oil–so it’s a significant precedent that certainly has some other big players worried about what 2013 will bring.”

    Oh come on now. This analysis assumes that the government is a strictly neutral referee between capitalist contenders. After all that has been revealed how industry has thoroughly captured the regulatory apparatus of the state, there’s a much better explanation.

    Some company is going to win the contracts that BP lost. Isn’t it more likely Obama helped clear the competition while winning himself PR points from the gullible?

Comments are closed.