FROM: U.S. STATE DEPARTMENT
Remarks at the Diplomatic and Political Joint Coordinating Committee Meeting
Remarks
John Kerry
Secretary of State
Iraqi Foreign Minister Hoshyar Zebari
Deputy Secretary Conference Room
Washington, DC
August 15, 2013
SECRETARY KERRY: Well, good morning, everyone, and welcome. We’re very, very happy to welcome Foreign Minister Zebari and Ambassador Faily from Iraq, and the rest of the Iraqi delegation who we just met with and will be coming in here for a meeting following our opening comments. We’ve just had a very good bilateral meeting in which we discussed the challenges that Iraq faces, the importance of Iraq and its relationship with the United States, and we are going to continue those discussions this morning in the Joint Coordination Committee.
I want to start just by noting that since the time that this committee met last September, Iraq has taken a number of noteworthy diplomatic strides. I visited Iraq last March, and at that time, there was great division. Parties within Iraq were not talking to each other; there’d been a two-year hiatus in meetings. Since then, a host of progress has been made. First of all, Iraq has settled a number of difficult issues with Kuwait stemming from the 1991 Gulf War. Iraq has dramatically improved relations with Jordan. It has improved its relations with Turkey. In addition, it has also begun to stabilize broader relationships in the region, and we welcome Foreign Minister Zebari’s plan to meet with Foreign Minister Davutoglu of Turkey in the very near future in order to discuss issues of mutual interest.
We also welcome the fact that they have renewed relations with Kuwait and are currently paying very serious amounts of money as a matter of settling the claims from 1991. So there are significant things that are being achieved. We also welcome the internal political process that Iraq has made over the last months. But they – nobody should make any mistake, and we haven’t this morning. We know there are very significant challenges that still remain, and we must face them together.
Iraq sits at the intersection of regional currents of increasingly turbulent, violent, and unpredictable actions. Sunni and Shia extremists on both sides of the sectarian divide throughout the region have an ability to be able to threaten Iraq’s stability if they’re not checked. And al-Qaida, as we have seen, has launched a horrific series of assaults on innocent Iraqis, even taking credit for the deplorable bombings this past weekend that targeted families that were celebrating the Eid holiday. And this al-Qaida network, we know, stretches well beyond Iraq’s borders. With many al-Qaida leaders now operating in Syria, we all need to accelerate our work in order to set the conditions for a diplomatic settlement to the Syrian crisis. Iraq was in Geneva at the first meeting of Geneva, and the Foreign Minister himself made significant contributions to that process. I know that Iraqis support the vision of a stable and peaceful Syria, and we look forward to discussing how we can work to make that a reality.
We hope also to discuss this morning the issue of weapons flowing from the Syrian conflict into Iraq for use against Iraqis or weapons flowing through Iraq and going into Syria. It’s a two-way street and it’s a dangerous street. There has been some progress in this area since my visit to Iraq in March, but Foreign Minister Zardari – Zebari agrees there is very significant progress yet to be made.
So this morning, we will discuss the ongoing efforts of Iran and Hezbollah that are trying to fuel the dangerous conflict in the region from the other side. And we agreed that we cannot allow them to play on the sectarian divides that recruit young Iraqis to go fight in a foreign war, the same way that we cannot allow al-Qaida and other extremists to recruit young men from Iraq and elsewhere to join into their twisted version of jihad. So we are committed to helping Iraq to withstand these pressures and to bolster the moderate forces throughout the region.
Finally, I want to reiterate: Everyone at this table and all of the people who will share in this discussion this morning share a determination to succeed in overcoming the challenges that we face today despite their seriousness. The United States remains very committed to working together with the Iraqi Government to address regional challenges, and we welcome the steps that have been taken by the Iraqis to build a strong, democratic, and inclusive state. The Foreign Minister agrees with me that there is much that yet can be done internally in Iraq in order to meet some of those internal political challenges, and that progress cannot be made on security issues alone. There needs to be progress within Iraq on political issues, on economic issues, as well as on the larger constitutional issues that have been outstanding for too long. The Foreign Minister agrees that these are challenges we need to beat together.
Our common roadmap in this endeavor is the Strategic Framework Agreement, and that is what has brought us here today. So with this said, I again welcome the Iraqi delegation. We look forward to having a very constructive and successful conversation over the course of the morning and the day.
Thank you, Mr. Foreign Minister, and welcome.
FOREIGN MINISTER ZEBARI: Thank you. Thank you, Mr. Secretary. I appreciate very much what you have said. And we are here with our delegation, in fact, to reaffirm our commitment to our Strategic Framework Agreement with you, also to start meeting on the Joint Coordination Committee on political and diplomatic relations, which is a subcommittee of this SFA.
We have together endured many challenges together, Mr. Secretary, and our mutual relationship have continued engagement of the United States. We’ve always emphasized the importance, the significance, of continued U.S. engagement, which is critical for the success of Iraq and the Iraqi people on our ongoing transformation to a stable, inclusive, democratic, and prosperous country in the heart of the Middle East.
In recent months, as we have seen – and in recent days, in fact – we have seen the new violence or terrorist attacks by al-Qaida more frequently, and it has cost many, many lives. But despite all these attacks, the Iraqi people have not succumbed, in fact, to these atrocities, and I’m here to inform you and the Administration that Iraq is not heading – is not crashing, and it’s not heading to civil or sectarian war. There is a clear determination by the Iraqi leadership that really we’ve been there before in 2007, 2008, we are not going to go there again, and a great deal of self-respect.
The key message here: We’ve come here to seek your help and support and security cooperation with the Iraqi Government, and in fact, in counterterrorism and to have the capacity building for our security forces to stand up to face to this increasing threat from the nexus of al-Qaida and Al-Nusrah Front, as a spillover coming over from Syria, let’s say, into Iraq. And we’ve worked before on these issues. We look forward to your continued support. Al-Qaida is not a local threat; it’s a global threat, as we’ve seen by the recent closures of so many of your diplomatic missions in the region and in North Africa.
Mr. Secretary, I would like to confirm that really Iraq is having an independent and neutral position vis-a-vis the Syrian crisis, and we have said all along we believe that a political solution is the most viable way forward for Syria. We kept our distance on both sides of the conflict, and Iraq has not provided arms, money, or oil to the Syrian regimes. We have kept equidistant with the opposition and with the regime in order to play a helpful role, but our position is difficult. We’ve taken your positions, your views on the overfly, definitely taken some steps but we will do more to make sure that Iraq is independent of its actions and there’s no influence whatsoever here and there.
No volunteers are going – no Iraqi volunteers are going to Syria with the consent of the Iraqi Government at all. I mean, any volunteers who are going may be encouraged by some militias, by some people who want to fuel the conflict and the violence. But believe me, this is not the government policy as such, and we live in a region that we cannot disassociate from what is going on in Syria.
And we’ve seen the terrible event and atrocities that happened yesterday in Egypt. We have ongoing demonstrations in cities in many parts of Iraq, and really they have been going on for the last eight months, and neither the government or even the demonstrators have reached such a level of violence.
So once again, we look forward to our meeting with you and your teams. And Mr. Secretary, I want to say that Iraq is a reliable and dependable ally and partner to the United States. Thank you.
SECRETARY KERRY: Thank you. Thank you very much, Hoshyar, and we look forward to working with you on this, and we’ll work through these issues this morning --
FOREIGN MINISTER ZEBARI: Thank you, sir.
SECRETARY KERRY: -- and obviously for some time to come.
FOREIGN MINISTER ZEBARI: Thank you.
SECRETARY KERRY: Thank you, sir.
Friday, August 16, 2013
OPENING STATEMENT BY SEC CHAIRMAN WHITE AT OPEN MEETING
FROM: SECURITIES AND EXCHANGE COMMISSION
Opening Statement at the SEC Open Meeting
Chairman Mary Jo White
U.S. Securities and Exchange Commission
Washington, D.C.
June 5, 2013
This is an open meeting of the Securities and Exchange Commission on June 5, 2013.
Today, the Commission will consider proposals that would reform the way money market funds operate in order to make them less susceptible to runs.
As many people know, money market funds are investment vehicles that hold a pool of high-quality, short-term securities. In the early 1980s, the Commission provided money market funds with an exemption making them distinct from mutual funds and certain other investment products. That exemptive rule (Rule 2a-7) allowed these funds generally to maintain a stable share price of $1.00 instead of changing their share prices according to the market value of the securities held by the fund.
The industry has changed substantially since that time. Money market funds are now a significant piece of the nation's financial system. Over the years, money market funds have become a popular investment product for both retail and institutional investors. They also have become an important provider of short-term financing to corporations, banks and governments. All told, money market funds hold nearly $3 trillion in assets, the majority of which are in institutional funds.
While money market funds have thus long served as an important investment vehicle, the financial crisis of 2008 highlighted the susceptibility of these products to runs. In September of that year - at the height of the financial crisis - a money market fund called the Reserve Primary Fund "broke the buck" - a term used when the value of a fund drops and investors are no longer able to get back the full dollar they put in.
Within the same week of that occurrence, investors pulled approximately $300 billion from other institutional prime money market funds. The contagion effect was rapid. The short term credit market dried up, and corporations had trouble borrowing to run their businesses. This reaction contributed to the significant disruption that already was consuming the financial system.
To stop this run, the government stepped in with unprecedented support in the form of the Treasury temporary money market fund guarantee program and Federal Reserve liquidity facilities.
In the aftermath of that experience, the Commission - in 2010 - adopted a series of reforms that increased the resiliency of money market funds. But, as the Commission stated at that time, those reforms were only a first step. Today's proposal takes the critical additional step of addressing the stable value pricing of institutional prime funds - at the heart of the 2008 run - and proposing methods to stop a money market fund run before such a run becomes a systemically destabilizing event.
It has been a journey to get to this point. Commission staff has spent literally years studying different reform alternatives and performing extensive economic analysis in arriving at these recommendations.
These proposals are important in and of themselves and because they advance the public debate that will shape the final rules to address one of the most prominent events arising from the financial crisis.
Today's proposal contains two alternative reforms that could be adopted separately or combined into a single reform package to address run risk in money market funds.
Floating NAV
The first proposed alternative would require that all institutional prime money market funds operate with a floating net asset value (NAV). That is, they could no longer value their entire portfolio at amortized cost and they could not round their share prices to the nearest penny. The set "dollar" would be replaced by a share price that actually fluctuates, reflecting the changing values in these money market funds.
This floating NAV proposal specifically targets the funds where the problems during the financial crisis occurred: institutional, prime money market funds.
Retail and government money market funds - which have not historically faced runs in even the worst of times - would be exempt from the proposed floating NAV requirement.
This approach would thus preserve the stable value fund product for those retail investors who have found it to be convenient and beneficial. It also would allow municipal and corporate investors to have access to government money market funds - a stable value product - if they need it, although it would be a product that holds federal government securities as opposed to the higher-yielding investments of a prime fund.
We are soliciting commenters' views regarding the impact of targeting the floating NAV reform to institutional prime funds and whether government and retail money market funds also should operate with a floating NAV, as well as commenters' views regarding whether today's proposal would effectively differentiate retail funds from institutional funds by imposing a $1 million redemption limit. These and other important questions are specifically posed in the proposal.
I believe the floating NAV reform proposal is important for a number of reasons:
First, by eliminating the ability of early redeemers to receive $1.00 - even when the fund has experienced a loss and its shares are worth somewhat less - this proposal should reduce incentives for shareholders to redeem from institutional prime money market funds in times of stress.
Second, the proposal increases transparency and highlights investment risk because shareholders would experience price changes as an institutional prime money market fund's value fluctuates.
And, third, the proposal is targeted, by focusing reform on the segment of the market that experienced the run in the financial crisis.
Fees & Gates
The second proposed alternative seeks to directly counter potentially harmful redemption behavior during times of stress.
Under this alternative, non-government money market funds would be required to impose a 2 percent liquidity fee if the fund's level of weekly liquid assets fell below 15 percent of its total assets, unless the fund's board determined that it was not in the best interest of the fund. That determination would be subject to the board's fiduciary duty, and we believe it would be a high hurdle. After falling below the 15 percent weekly liquid assets threshold, the fund's board would also be able to temporarily suspend redemptions in the fund for up to 30 days - or "gate" the fund.
This "fees and gates" alternative potentially could enhance our regulation in several ways:
First, it could more equitably allocate liquidity risk by assigning liquidity costs in times of stress (when liquidity is expensive) to redeeming shareholders - the ones who create the liquidity costs and disruption.
Second, this alternative would provide new tools to allow funds to better manage redemptions in times of stress, and thereby potentially prevent harmful contagion effects on investors, other funds, and the broader markets. If the beginning of a run or significantly heightened redemptions occur, they would no longer continue unchecked, potentially spiraling into a crisis. The imposition of liquidity fees or gates would be an available tool to directly counteract a run.
And, third, this approach also is targeted, focusing the potential limitations on a money market fund investor's experience to times of stress when unfettered liquidity can have real costs.
The two alternative approaches in today's proposal target the common goal of reducing the incentive to redeem in times of stress, albeit in different ways. Accordingly, the proposal requests comment on whether a better reform approach would be to combine the two alternatives into a single reform package - requiring that prime institutional funds have a floating NAV and be able to impose fees and gates in times of stress, and that retail funds be able to impose fees and gates. We specifically solicit and I am interested in commenters' views on this combined approach.
Greater Diversification, Disclosure and Reporting
Importantly, the staff's recommendations also contain a number of other significant reform proposals - tightening diversification requirements, enhancing disclosure requirements, strengthening stress testing and improving reporting on both money market funds and unregistered liquidity funds that could serve as alternatives to money market funds for some investors. These proposed reforms should further enhance the resiliency and transparency of this important product and are significant complements to the other proposals.
Today's proposal is the product of very hard work by all those who have sought to meaningfully reform this investment product that is such a critical piece of the nation's financial fabric.
There have been important and thoughtful comments throughout this process, including suggestions and recommendations from investors, the industry, and fellow regulators. We have given them all very careful consideration and they have proven invaluable to us formulating the important proposals we are voting on today.
In this regard I especially would like to thank all of my fellow Commissioners for their contributions and the spirit of cooperation in which we worked leading up to today's meeting.
I want to reiterate that our goal is to implement an effective reform that decreases the susceptibility of money market funds to run risk and prevents money market fund events similar to those that occurred in 2008 from repeating themselves. With this goal in mind, I very much look forward to the comments and am very pleased that, with my fellow Commissioners, we are moving this reform process forward.
Before I ask Norm Champ, Director of the Division of Investment Management, to discuss the proposed reforms, I would like to thank Norm and his team: Diane Blizzard, Sarah ten Siethoff, Thoreau Bartmann, Brian Johnson, Adam Bolter, Amanda Wagner, Kay Vobis, Jaime Eichen, and Megan Monroe for their tireless work on this rulemaking.
This rulemaking was a true team effort between the Division of Investment Management and the Division of Risk, Strategy and Financial Innovation, so I want to also express my gratitude for the work of Craig Lewis, Kathleen Hanley, Jennifer Marietta-Westberg, Woodrow Johnson, Jennifer Bethel, Virginia Meany, Dan Hiltgen, and Mila Sherman. I also would like to acknowledge the critical work and analysis included in the staff's economic study published late last year, which was highly influential in developing today's proposed reforms.
Thanks as well to Anne Small, Meridith Mitchell, Lori Price, Cathy Ahn, Jill Felker, and Kevin Christy from the Office of the General Counsel; Jim Burns, David Blass, Haime Workie, and Natasha Greiner from the Division of Trading and Markets; and Paul Beswick, Rachel Mincin, and Jeff Minton from the Office of the Chief Accountant.
And now I'll turn the meeting over to Norm Champ to provide a fuller explanation of the proposed reforms we are considering today.
Opening Statement at the SEC Open Meeting
Chairman Mary Jo White
U.S. Securities and Exchange Commission
Washington, D.C.
June 5, 2013
This is an open meeting of the Securities and Exchange Commission on June 5, 2013.
Today, the Commission will consider proposals that would reform the way money market funds operate in order to make them less susceptible to runs.
As many people know, money market funds are investment vehicles that hold a pool of high-quality, short-term securities. In the early 1980s, the Commission provided money market funds with an exemption making them distinct from mutual funds and certain other investment products. That exemptive rule (Rule 2a-7) allowed these funds generally to maintain a stable share price of $1.00 instead of changing their share prices according to the market value of the securities held by the fund.
The industry has changed substantially since that time. Money market funds are now a significant piece of the nation's financial system. Over the years, money market funds have become a popular investment product for both retail and institutional investors. They also have become an important provider of short-term financing to corporations, banks and governments. All told, money market funds hold nearly $3 trillion in assets, the majority of which are in institutional funds.
While money market funds have thus long served as an important investment vehicle, the financial crisis of 2008 highlighted the susceptibility of these products to runs. In September of that year - at the height of the financial crisis - a money market fund called the Reserve Primary Fund "broke the buck" - a term used when the value of a fund drops and investors are no longer able to get back the full dollar they put in.
Within the same week of that occurrence, investors pulled approximately $300 billion from other institutional prime money market funds. The contagion effect was rapid. The short term credit market dried up, and corporations had trouble borrowing to run their businesses. This reaction contributed to the significant disruption that already was consuming the financial system.
To stop this run, the government stepped in with unprecedented support in the form of the Treasury temporary money market fund guarantee program and Federal Reserve liquidity facilities.
In the aftermath of that experience, the Commission - in 2010 - adopted a series of reforms that increased the resiliency of money market funds. But, as the Commission stated at that time, those reforms were only a first step. Today's proposal takes the critical additional step of addressing the stable value pricing of institutional prime funds - at the heart of the 2008 run - and proposing methods to stop a money market fund run before such a run becomes a systemically destabilizing event.
It has been a journey to get to this point. Commission staff has spent literally years studying different reform alternatives and performing extensive economic analysis in arriving at these recommendations.
These proposals are important in and of themselves and because they advance the public debate that will shape the final rules to address one of the most prominent events arising from the financial crisis.
Today's proposal contains two alternative reforms that could be adopted separately or combined into a single reform package to address run risk in money market funds.
Floating NAV
The first proposed alternative would require that all institutional prime money market funds operate with a floating net asset value (NAV). That is, they could no longer value their entire portfolio at amortized cost and they could not round their share prices to the nearest penny. The set "dollar" would be replaced by a share price that actually fluctuates, reflecting the changing values in these money market funds.
This floating NAV proposal specifically targets the funds where the problems during the financial crisis occurred: institutional, prime money market funds.
Retail and government money market funds - which have not historically faced runs in even the worst of times - would be exempt from the proposed floating NAV requirement.
This approach would thus preserve the stable value fund product for those retail investors who have found it to be convenient and beneficial. It also would allow municipal and corporate investors to have access to government money market funds - a stable value product - if they need it, although it would be a product that holds federal government securities as opposed to the higher-yielding investments of a prime fund.
We are soliciting commenters' views regarding the impact of targeting the floating NAV reform to institutional prime funds and whether government and retail money market funds also should operate with a floating NAV, as well as commenters' views regarding whether today's proposal would effectively differentiate retail funds from institutional funds by imposing a $1 million redemption limit. These and other important questions are specifically posed in the proposal.
I believe the floating NAV reform proposal is important for a number of reasons:
First, by eliminating the ability of early redeemers to receive $1.00 - even when the fund has experienced a loss and its shares are worth somewhat less - this proposal should reduce incentives for shareholders to redeem from institutional prime money market funds in times of stress.
Second, the proposal increases transparency and highlights investment risk because shareholders would experience price changes as an institutional prime money market fund's value fluctuates.
And, third, the proposal is targeted, by focusing reform on the segment of the market that experienced the run in the financial crisis.
Fees & Gates
The second proposed alternative seeks to directly counter potentially harmful redemption behavior during times of stress.
Under this alternative, non-government money market funds would be required to impose a 2 percent liquidity fee if the fund's level of weekly liquid assets fell below 15 percent of its total assets, unless the fund's board determined that it was not in the best interest of the fund. That determination would be subject to the board's fiduciary duty, and we believe it would be a high hurdle. After falling below the 15 percent weekly liquid assets threshold, the fund's board would also be able to temporarily suspend redemptions in the fund for up to 30 days - or "gate" the fund.
This "fees and gates" alternative potentially could enhance our regulation in several ways:
First, it could more equitably allocate liquidity risk by assigning liquidity costs in times of stress (when liquidity is expensive) to redeeming shareholders - the ones who create the liquidity costs and disruption.
Second, this alternative would provide new tools to allow funds to better manage redemptions in times of stress, and thereby potentially prevent harmful contagion effects on investors, other funds, and the broader markets. If the beginning of a run or significantly heightened redemptions occur, they would no longer continue unchecked, potentially spiraling into a crisis. The imposition of liquidity fees or gates would be an available tool to directly counteract a run.
And, third, this approach also is targeted, focusing the potential limitations on a money market fund investor's experience to times of stress when unfettered liquidity can have real costs.
The two alternative approaches in today's proposal target the common goal of reducing the incentive to redeem in times of stress, albeit in different ways. Accordingly, the proposal requests comment on whether a better reform approach would be to combine the two alternatives into a single reform package - requiring that prime institutional funds have a floating NAV and be able to impose fees and gates in times of stress, and that retail funds be able to impose fees and gates. We specifically solicit and I am interested in commenters' views on this combined approach.
Greater Diversification, Disclosure and Reporting
Importantly, the staff's recommendations also contain a number of other significant reform proposals - tightening diversification requirements, enhancing disclosure requirements, strengthening stress testing and improving reporting on both money market funds and unregistered liquidity funds that could serve as alternatives to money market funds for some investors. These proposed reforms should further enhance the resiliency and transparency of this important product and are significant complements to the other proposals.
Today's proposal is the product of very hard work by all those who have sought to meaningfully reform this investment product that is such a critical piece of the nation's financial fabric.
There have been important and thoughtful comments throughout this process, including suggestions and recommendations from investors, the industry, and fellow regulators. We have given them all very careful consideration and they have proven invaluable to us formulating the important proposals we are voting on today.
In this regard I especially would like to thank all of my fellow Commissioners for their contributions and the spirit of cooperation in which we worked leading up to today's meeting.
I want to reiterate that our goal is to implement an effective reform that decreases the susceptibility of money market funds to run risk and prevents money market fund events similar to those that occurred in 2008 from repeating themselves. With this goal in mind, I very much look forward to the comments and am very pleased that, with my fellow Commissioners, we are moving this reform process forward.
Before I ask Norm Champ, Director of the Division of Investment Management, to discuss the proposed reforms, I would like to thank Norm and his team: Diane Blizzard, Sarah ten Siethoff, Thoreau Bartmann, Brian Johnson, Adam Bolter, Amanda Wagner, Kay Vobis, Jaime Eichen, and Megan Monroe for their tireless work on this rulemaking.
This rulemaking was a true team effort between the Division of Investment Management and the Division of Risk, Strategy and Financial Innovation, so I want to also express my gratitude for the work of Craig Lewis, Kathleen Hanley, Jennifer Marietta-Westberg, Woodrow Johnson, Jennifer Bethel, Virginia Meany, Dan Hiltgen, and Mila Sherman. I also would like to acknowledge the critical work and analysis included in the staff's economic study published late last year, which was highly influential in developing today's proposed reforms.
Thanks as well to Anne Small, Meridith Mitchell, Lori Price, Cathy Ahn, Jill Felker, and Kevin Christy from the Office of the General Counsel; Jim Burns, David Blass, Haime Workie, and Natasha Greiner from the Division of Trading and Markets; and Paul Beswick, Rachel Mincin, and Jeff Minton from the Office of the Chief Accountant.
And now I'll turn the meeting over to Norm Champ to provide a fuller explanation of the proposed reforms we are considering today.
TWO FORMER TRADERS AT JPMORGAN & CHASE CO. CHARGED WITH FRAUD
FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
Securities and Exchange Commission v. Javier Martin-Artajo and Julien G. Grout, Civil Action No. 13-CV-5677 (S.D.N.Y.)
The Securities and Exchange Commission announced today that it charged two former traders at JPMorgan Chase & Co. with fraudulently overvaluing investments in order to hide massive losses in a portfolio they managed.
The SEC alleges that Javier Martin-Artajo and Julien Grout were required to mark the portfolio's investments at fair value in accordance with U.S. generally accepted accounting principles and JPMorgan's internal accounting policy. But when the portfolio began experiencing mounting losses in early 2012, Martin-Artajo and Grout schemed to deliberately mismark hundreds of positions by maximizing their value instead of marking them at the mid-market prices that would reveal the losses. Their mismarking scheme caused JPMorgan's reported first quarter income before income tax expense to be overstated by $660 million.
In a parallel action, the U.S. Attorney's Office for the Southern District of New York today announced criminal charges against Martin-Artajo and Grout.
According to the SEC's complaint filed in the U.S. District Court for the Southern District of New York, Martin-Artajo and Grout worked in JPMorgan's chief investment office (CIO), which created the portfolio known as Synthetic Credit Portfolio (SCP) as a hedge against adverse credit events. The portfolio was primarily invested in credit derivative indices and tranches. The market value of SCP's positions began to steadily decline in early 2012 due to improving credit conditions and a recent change in investment strategy. Martin-Artajo and Grout began concealing the losses in March 2012 by providing management with fraudulent valuations of SCP's investments.
The SEC alleges that Martin-Artajo directed Grout to revise the manner in which he marked SCP's investments. Instead of continuing to price the portfolio's positions based on the mid-market prices contained in dealer quotes the CIO received, SCP's positions were instead marked at the most aggressive end of the dealers' bid-offer spread. On several occasions, Martin-Artajo provided a desired daily loss target that would enable the concealment of the extent of the losses. Grout entered the marks every day into JPMorgan's books and records, and sent daily profit and loss reports to CIO management in which he understated SCP's losses. For a period, Grout maintained a spreadsheet to track the difference between his marks and the mid-market prices previously used to value SCP's positions. By mid-March, this spreadsheet showed that the difference had grown to $432 million.
The SEC alleges that contrary to JPMorgan's accounting policy, Martin-Artajo instructed Grout on March 30 to wait for better prices after the close of trading in London in the hope that activity in the U.S. markets could support better marks for SCP's positions. The concealment of losses continued beyond the first quarter. By late April, trading counterparties raised collateral disputes over SCP positions totaling more than a half-billion dollars. Shortly thereafter, JPMorgan's management stripped the SCP traders of their marking authority and began valuing the book at the consensus mid-market prices.
The SEC's complaint alleges that Martin-Artajo and Grout violated Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 and Rules 10b-5 and 13b2-1, and aided and abetted pursuant to Section 20(e) of the Exchange Act violations of Sections 13(a) and 13(b)(2)(A) and Rules 12b-20, 13a-11 and 13a-13.
The SEC's investigation, which is continuing, has been conducted by Michael Osnato, Steven Rawlings, Peter Altenbach, Joshua Brodsky, Daniel Michael, Kapil Agrawal, Eli Bass, Daniel Nigro, Sharon Bryant, and Christopher Mele of the New York Regional Office. The litigation will be led by Joseph Boryshansky.
The SEC acknowledges the assistance of the U.S. Attorney's Office for the Southern District of New York, Federal Bureau of Investigation, United Kingdom Financial Conduct Authority, Office of the Comptroller of the Currency, Federal Reserve Bank of New York, and Commodity Futures Trading Commission.
Securities and Exchange Commission v. Javier Martin-Artajo and Julien G. Grout, Civil Action No. 13-CV-5677 (S.D.N.Y.)
The Securities and Exchange Commission announced today that it charged two former traders at JPMorgan Chase & Co. with fraudulently overvaluing investments in order to hide massive losses in a portfolio they managed.
The SEC alleges that Javier Martin-Artajo and Julien Grout were required to mark the portfolio's investments at fair value in accordance with U.S. generally accepted accounting principles and JPMorgan's internal accounting policy. But when the portfolio began experiencing mounting losses in early 2012, Martin-Artajo and Grout schemed to deliberately mismark hundreds of positions by maximizing their value instead of marking them at the mid-market prices that would reveal the losses. Their mismarking scheme caused JPMorgan's reported first quarter income before income tax expense to be overstated by $660 million.
In a parallel action, the U.S. Attorney's Office for the Southern District of New York today announced criminal charges against Martin-Artajo and Grout.
According to the SEC's complaint filed in the U.S. District Court for the Southern District of New York, Martin-Artajo and Grout worked in JPMorgan's chief investment office (CIO), which created the portfolio known as Synthetic Credit Portfolio (SCP) as a hedge against adverse credit events. The portfolio was primarily invested in credit derivative indices and tranches. The market value of SCP's positions began to steadily decline in early 2012 due to improving credit conditions and a recent change in investment strategy. Martin-Artajo and Grout began concealing the losses in March 2012 by providing management with fraudulent valuations of SCP's investments.
The SEC alleges that Martin-Artajo directed Grout to revise the manner in which he marked SCP's investments. Instead of continuing to price the portfolio's positions based on the mid-market prices contained in dealer quotes the CIO received, SCP's positions were instead marked at the most aggressive end of the dealers' bid-offer spread. On several occasions, Martin-Artajo provided a desired daily loss target that would enable the concealment of the extent of the losses. Grout entered the marks every day into JPMorgan's books and records, and sent daily profit and loss reports to CIO management in which he understated SCP's losses. For a period, Grout maintained a spreadsheet to track the difference between his marks and the mid-market prices previously used to value SCP's positions. By mid-March, this spreadsheet showed that the difference had grown to $432 million.
The SEC alleges that contrary to JPMorgan's accounting policy, Martin-Artajo instructed Grout on March 30 to wait for better prices after the close of trading in London in the hope that activity in the U.S. markets could support better marks for SCP's positions. The concealment of losses continued beyond the first quarter. By late April, trading counterparties raised collateral disputes over SCP positions totaling more than a half-billion dollars. Shortly thereafter, JPMorgan's management stripped the SCP traders of their marking authority and began valuing the book at the consensus mid-market prices.
The SEC's complaint alleges that Martin-Artajo and Grout violated Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 and Rules 10b-5 and 13b2-1, and aided and abetted pursuant to Section 20(e) of the Exchange Act violations of Sections 13(a) and 13(b)(2)(A) and Rules 12b-20, 13a-11 and 13a-13.
The SEC's investigation, which is continuing, has been conducted by Michael Osnato, Steven Rawlings, Peter Altenbach, Joshua Brodsky, Daniel Michael, Kapil Agrawal, Eli Bass, Daniel Nigro, Sharon Bryant, and Christopher Mele of the New York Regional Office. The litigation will be led by Joseph Boryshansky.
The SEC acknowledges the assistance of the U.S. Attorney's Office for the Southern District of New York, Federal Bureau of Investigation, United Kingdom Financial Conduct Authority, Office of the Comptroller of the Currency, Federal Reserve Bank of New York, and Commodity Futures Trading Commission.
CHECK SERVICES COMPANY WILL PAY $3.5 MILLION SO SETTLE ALLEGED FCRA VIOLATIONS
FROM: U.S. FEDERAL TRADE COMMISSION
Certegy Check Services to Pay $3.5 Million for Alleged Violations of the Fair Credit Reporting Act and Furnisher Rule
Penalty is Second-largest in a Fair Credit Reporting Act Matter
Certegy Check Services, Inc., one of the nation’s largest check authorization service companies, has agreed to pay $3.5 million to settle Federal Trade Commission charges that it violated the Fair Credit Reporting Act (FCRA).
Certegy, based in St. Petersburg, Florida, is a consumer reporting agency (CRA) that compiles consumers’ personal information and uses it to help retail merchants throughout the United States determine whether to accept consumers’ checks. Under the FCRA, consumers whose checks are denied based on information Certegy provides the merchant, have the right to dispute that information and have Certegy correct any inaccuracies.
The FTC’s complaint alleges, among other things, that Certegy did not follow proper dispute procedures. The complaint further alleges that Certegy failed to follow reasonable procedures to assure maximum possible accuracy of the information it provided to its merchant clients, as required by the FCRA.
Among other things, the settlement requires Certegy to make improvements in these areas. This case is part of a broader initiative to target the practices of data brokers, which often compile, maintain, and sell sensitive consumer information. Consumer reporting agencies like Certegy are data brokers that sell information to companies making important decisions about consumers, such as their ability to get credit or pay for goods and services by check.
“Inaccurate information in a consumer reporting agency’s file can have a huge impact on a person’s everyday life, starting with their check being denied at the grocery store,” said Jessica L. Rich, Director of FTC’s Bureau of Consumer Protection. “In this case, we alleged that Certegy delivered a one-two punch: the company not only failed to assure that the information it provided to retailers was accurate, but it also failed to follow proper dispute procedures. Today’s settlement will benefit consumers who use checks to pay for essential goods and services, including many older consumers and people without alternate means of payment, such as credit cards.”
In addition to the allegations described above, the complaint alleges that Certegy violated the FCRA by failing to create a streamlined process for consumers to obtain free annual reports that they are entitled to; and establish and implement reasonable written policies and procedures regarding the accuracy and integrity of information it furnishes to other CRAs. This is the first Commission action alleging violations of the Furnisher Rule, which went into effect on July 1, 2010. The settlement requires Certegy to comply with the Furnisher Rule, as well as the requirement to maintain a streamlined process so that consumers can request their free annual reports.
Certegy Check Services to Pay $3.5 Million for Alleged Violations of the Fair Credit Reporting Act and Furnisher Rule
Penalty is Second-largest in a Fair Credit Reporting Act Matter
Certegy Check Services, Inc., one of the nation’s largest check authorization service companies, has agreed to pay $3.5 million to settle Federal Trade Commission charges that it violated the Fair Credit Reporting Act (FCRA).
Certegy, based in St. Petersburg, Florida, is a consumer reporting agency (CRA) that compiles consumers’ personal information and uses it to help retail merchants throughout the United States determine whether to accept consumers’ checks. Under the FCRA, consumers whose checks are denied based on information Certegy provides the merchant, have the right to dispute that information and have Certegy correct any inaccuracies.
The FTC’s complaint alleges, among other things, that Certegy did not follow proper dispute procedures. The complaint further alleges that Certegy failed to follow reasonable procedures to assure maximum possible accuracy of the information it provided to its merchant clients, as required by the FCRA.
Among other things, the settlement requires Certegy to make improvements in these areas. This case is part of a broader initiative to target the practices of data brokers, which often compile, maintain, and sell sensitive consumer information. Consumer reporting agencies like Certegy are data brokers that sell information to companies making important decisions about consumers, such as their ability to get credit or pay for goods and services by check.
“Inaccurate information in a consumer reporting agency’s file can have a huge impact on a person’s everyday life, starting with their check being denied at the grocery store,” said Jessica L. Rich, Director of FTC’s Bureau of Consumer Protection. “In this case, we alleged that Certegy delivered a one-two punch: the company not only failed to assure that the information it provided to retailers was accurate, but it also failed to follow proper dispute procedures. Today’s settlement will benefit consumers who use checks to pay for essential goods and services, including many older consumers and people without alternate means of payment, such as credit cards.”
In addition to the allegations described above, the complaint alleges that Certegy violated the FCRA by failing to create a streamlined process for consumers to obtain free annual reports that they are entitled to; and establish and implement reasonable written policies and procedures regarding the accuracy and integrity of information it furnishes to other CRAs. This is the first Commission action alleging violations of the Furnisher Rule, which went into effect on July 1, 2010. The settlement requires Certegy to comply with the Furnisher Rule, as well as the requirement to maintain a streamlined process so that consumers can request their free annual reports.
Thursday, August 15, 2013
DEFENSE SECRETARY HAGEL'S STATEMENT ON U.S.-EGYPT DEFENSE RELATIONSHIP
FROM: U.S. DEFENSE DEPARTMENT
Secretary of Defense Chuck Hagel Statement on U.S. - Egypt Defense Relationship
Today I called Egyptian Minister of Defense Al-Sisi to discuss the U.S. - Egypt defense relationship. Since the recent crisis began, the United States has made it clear that the Egyptian government must refrain from violence, respect freedom of assembly, and move toward an inclusive political transition. Recent developments, including the violence that has resulted in hundreds of deaths across the country, have undermined those principles. As President Obama has announced, the United States military will not conduct the Bright Star training exercise scheduled for later this year.
In my discussion with Minister Al-Sisi, I reiterated that the United States remains ready to work with all parties to help achieve a peaceful, inclusive way forward. The Department of Defense will continue to maintain a military relationship with Egypt, but I made it clear that the violence and inadequate steps towards reconciliation are putting important elements of our longstanding defense cooperation at risk.
Secretary of Defense Chuck Hagel Statement on U.S. - Egypt Defense Relationship
Today I called Egyptian Minister of Defense Al-Sisi to discuss the U.S. - Egypt defense relationship. Since the recent crisis began, the United States has made it clear that the Egyptian government must refrain from violence, respect freedom of assembly, and move toward an inclusive political transition. Recent developments, including the violence that has resulted in hundreds of deaths across the country, have undermined those principles. As President Obama has announced, the United States military will not conduct the Bright Star training exercise scheduled for later this year.
In my discussion with Minister Al-Sisi, I reiterated that the United States remains ready to work with all parties to help achieve a peaceful, inclusive way forward. The Department of Defense will continue to maintain a military relationship with Egypt, but I made it clear that the violence and inadequate steps towards reconciliation are putting important elements of our longstanding defense cooperation at risk.
'MADE IN AMERICA' STAMPS DEDICATED
FROM: U.S. DEPARTMENT OF LABOR
'Made in America' With the DOL Stamp of Approval
The contributions of America's industrial-era workers have been memorialized on Forever stamps titled "Made in America: Building a Nation." The stamps, which feature black-and-white photographs of early 20th-century industrial workers, were dedicated on Aug. 8 at the Department of Labor's headquarters. Joining Secretary of Labor Thomas E. Perez at the first-day-of-issue ceremony was Postmaster General Patrick R. Donahoe. "Stamps are like a miniature American portrait gallery," said Perez. "They are an expression of our values and a connection to our past. That's why it's so fitting that that this series depicts Americans at work. These iconic images tell a powerful story about American economic strength and prosperity. These men and women and millions like them really did build a nation." Donahoe added: "With Labor Day around the corner, the Postal Service is proud to honor the men and women who helped build this country with their own hands. They mined the coal that warmed our homes. They made the clothes we wore on our backs. Let each stamp serve as a small reminder of the dedication, work ethic, and sacrifices that make America great."
'Made in America' With the DOL Stamp of Approval
The contributions of America's industrial-era workers have been memorialized on Forever stamps titled "Made in America: Building a Nation." The stamps, which feature black-and-white photographs of early 20th-century industrial workers, were dedicated on Aug. 8 at the Department of Labor's headquarters. Joining Secretary of Labor Thomas E. Perez at the first-day-of-issue ceremony was Postmaster General Patrick R. Donahoe. "Stamps are like a miniature American portrait gallery," said Perez. "They are an expression of our values and a connection to our past. That's why it's so fitting that that this series depicts Americans at work. These iconic images tell a powerful story about American economic strength and prosperity. These men and women and millions like them really did build a nation." Donahoe added: "With Labor Day around the corner, the Postal Service is proud to honor the men and women who helped build this country with their own hands. They mined the coal that warmed our homes. They made the clothes we wore on our backs. Let each stamp serve as a small reminder of the dedication, work ethic, and sacrifices that make America great."
MULTI-INSTITUTIONAL CONSORTIA ESTABLISHED TO RESEARCH PTSD AND TBI
FROM: U.S. DEPARTMENT OF DEFENSE
DoD, VA Establish Two Multi-Institutional Consortia to Research PTSD and TBI
In response to President Obama's Executive Order, the Departments of Defense (DoD) and Veterans Affairs (VA) highlighted today the establishment of two joint research consortia, at a combined investment of $107 million to research the diagnosis and treatment of post-traumatic stress disorder (PTSD) and mild traumatic brain injury (mTBI) over a five-year period.
"VA is proud to join with its partners in the federal government and the academic community to support the President's vision and invest in research that could lead to innovative, new treatments for TBI and PTSD," said Secretary of Veterans Affairs Eric K. Shinseki. "We must do all we can to deliver the high-quality care our Service members and Veterans have earned and deserve."
The Consortium to Alleviate PTSD (CAP), a collaborative effort between the University of Texas Health Science Center – San Antonio, San Antonio Military Medical Center, and the Boston VA Medical Center will attempt to develop the most effective diagnostic, prognostic, novel treatment, and rehabilitative strategies to treat acute PTSD and prevent chronic PTSD.
The Chronic Effects of Neurotrauma Consortium (CENC), a collaborative effort between Virginia Commonwealth University, the Uniformed Services University of the Health Sciences, and the Richmond VA Medical Center will examine the factors which influence the chronic effects of mTBI and common comorbidities in order to improve diagnostic and treatment options. A key point will be to further the understanding of the relationship between mTBI and neurodegenerative disease.
Since Sep. 11, 2001, more than 2.5 million American service members have been deployed to Iraq and Afghanistan. Military service exposes service members to a variety of stressors, including risk to life, exposure to death, injury, sustained threat of injury, and the day-to-day family stress inherent in all phases of the military life cycle.
To improve prevention, diagnosis, and treatment of mental health conditions, the President released an Executive Order directing the Federal agencies to develop a coordinated National Research Action Plan. The Department of Defense (DoD), Department of Veterans Affairs (VA), the Department of Health and Human Services (HHS), and the Department of Education (ED) came forward with a wide-reaching plan to improve scientific understanding, effective treatment, and reduce occurrences of Post-Traumatic Stress Disorder (PTSD), Traumatic Brain Injury (TBI), co-occurring conditions, and suicide.
DoD, VA Establish Two Multi-Institutional Consortia to Research PTSD and TBI
In response to President Obama's Executive Order, the Departments of Defense (DoD) and Veterans Affairs (VA) highlighted today the establishment of two joint research consortia, at a combined investment of $107 million to research the diagnosis and treatment of post-traumatic stress disorder (PTSD) and mild traumatic brain injury (mTBI) over a five-year period.
"VA is proud to join with its partners in the federal government and the academic community to support the President's vision and invest in research that could lead to innovative, new treatments for TBI and PTSD," said Secretary of Veterans Affairs Eric K. Shinseki. "We must do all we can to deliver the high-quality care our Service members and Veterans have earned and deserve."
The Consortium to Alleviate PTSD (CAP), a collaborative effort between the University of Texas Health Science Center – San Antonio, San Antonio Military Medical Center, and the Boston VA Medical Center will attempt to develop the most effective diagnostic, prognostic, novel treatment, and rehabilitative strategies to treat acute PTSD and prevent chronic PTSD.
The Chronic Effects of Neurotrauma Consortium (CENC), a collaborative effort between Virginia Commonwealth University, the Uniformed Services University of the Health Sciences, and the Richmond VA Medical Center will examine the factors which influence the chronic effects of mTBI and common comorbidities in order to improve diagnostic and treatment options. A key point will be to further the understanding of the relationship between mTBI and neurodegenerative disease.
Since Sep. 11, 2001, more than 2.5 million American service members have been deployed to Iraq and Afghanistan. Military service exposes service members to a variety of stressors, including risk to life, exposure to death, injury, sustained threat of injury, and the day-to-day family stress inherent in all phases of the military life cycle.
To improve prevention, diagnosis, and treatment of mental health conditions, the President released an Executive Order directing the Federal agencies to develop a coordinated National Research Action Plan. The Department of Defense (DoD), Department of Veterans Affairs (VA), the Department of Health and Human Services (HHS), and the Department of Education (ED) came forward with a wide-reaching plan to improve scientific understanding, effective treatment, and reduce occurrences of Post-Traumatic Stress Disorder (PTSD), Traumatic Brain Injury (TBI), co-occurring conditions, and suicide.
WEST NILE VIRUS AND TRANSFUSIONS
FROM: CENTERS FOR DISEASE CONTROL AND PREVENTION
Fatal West Nile Virus Infection Following Probable Transfusion-Associated Transmission—Colorado, 2012
CDC Media Relations
404-639-3286
Starting in 2003, the U.S. blood supply has been screened for West Nile virus. Since then, approximately 3,500 West Nile virus-infected units have been removed from the blood supply and only 12 cases of transfusion-associated transmission of West Nile virus have been identified. This report describes the first probable case of transfusion-associated West Nile virus infection in which the donation was negative by individual nucleic acid testing on initial screening. The case occurred in an immunosuppressed patient who was likely more susceptible to infection at very low concentrations of West Nile virus in the transfused blood product. Transfusion-associated West Nile virus infections are rare. However, healthcare providers should consider West Nile virus disease in any patient with compatible symptoms who has received a blood transfusion during the 28 days before the onset of illness. Possible cases should be promptly reported to the blood collection agency and public health authorities
Fatal West Nile Virus Infection Following Probable Transfusion-Associated Transmission—Colorado, 2012
CDC Media Relations
404-639-3286
Starting in 2003, the U.S. blood supply has been screened for West Nile virus. Since then, approximately 3,500 West Nile virus-infected units have been removed from the blood supply and only 12 cases of transfusion-associated transmission of West Nile virus have been identified. This report describes the first probable case of transfusion-associated West Nile virus infection in which the donation was negative by individual nucleic acid testing on initial screening. The case occurred in an immunosuppressed patient who was likely more susceptible to infection at very low concentrations of West Nile virus in the transfused blood product. Transfusion-associated West Nile virus infections are rare. However, healthcare providers should consider West Nile virus disease in any patient with compatible symptoms who has received a blood transfusion during the 28 days before the onset of illness. Possible cases should be promptly reported to the blood collection agency and public health authorities
RESEARCHERS FIND THAT MOUTH BACTERIA MAY LEAD TO COLON CANCER
FROM: U.S. HEALTH AND HUMAN SERVICES
Study suggests pathway from oral bacteria to colon cells.
WEDNESDAY, Aug. 14 (HealthDay News) -- An infection from a common type of mouth bacteria can contribute to colorectal cancer, a new study suggests.
The bacteria, called Fusobacterium nucleatum, can attach to colon cells and trigger a sequence of changes that can lead to colon cancer, according to the team at Case Western Reserve University School of Dental Medicine.
The researchers also found a way to prevent the bacteria from attaching to colon cells.
"This discovery creates the potential for new diagnostic tools and therapies to treat and prevent the cancer," lead investigator Yiping Han said in a university news release.
The findings show the importance of good oral health, said Han, a professor of periodontics. She noted that levels of F. nucleatum are much higher in people with gum disease.
Although the study found a possible association between oral infection and colon cancer, it did not prove a cause-and-effect relationship.
The study was published in the journal Cell Host & Microbe, which also contained another study from a different research group showing how F. nucleatum can speed the accumulation of cancer cells.
Study suggests pathway from oral bacteria to colon cells.
WEDNESDAY, Aug. 14 (HealthDay News) -- An infection from a common type of mouth bacteria can contribute to colorectal cancer, a new study suggests.
The bacteria, called Fusobacterium nucleatum, can attach to colon cells and trigger a sequence of changes that can lead to colon cancer, according to the team at Case Western Reserve University School of Dental Medicine.
The researchers also found a way to prevent the bacteria from attaching to colon cells.
"This discovery creates the potential for new diagnostic tools and therapies to treat and prevent the cancer," lead investigator Yiping Han said in a university news release.
The findings show the importance of good oral health, said Han, a professor of periodontics. She noted that levels of F. nucleatum are much higher in people with gum disease.
Although the study found a possible association between oral infection and colon cancer, it did not prove a cause-and-effect relationship.
The study was published in the journal Cell Host & Microbe, which also contained another study from a different research group showing how F. nucleatum can speed the accumulation of cancer cells.
Wednesday, August 14, 2013
HHS ARTICLE ON VACCINATION AGAINST HUMAN PAPILLOMAVIRUS
FROM: U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
From the U.S. Department of Health and Human Services, I’m Ira Dreyfuss with HHS HealthBeat.
Infection with the human papillomavirus, or HPV, can lead to cancers of the cervix and throat, as well as other body parts. However, a vaccine protects against forms of HPV that most frequently cause cancer. At the Centers for Disease Control and Prevention, researcher Shannon Stokley:
“The HPV vaccine series consists of three doses, and it’s recommended that all girls and boys receive this vaccine at age 11 or 12.”
Stokley adds that it’s not too late to get vaccinated even up to age 26. But the vaccine has been out since 2006, and she says coverage is still very low – partly because people don’t know about it and its benefits.
From the U.S. Department of Health and Human Services, I’m Ira Dreyfuss with HHS HealthBeat.
Infection with the human papillomavirus, or HPV, can lead to cancers of the cervix and throat, as well as other body parts. However, a vaccine protects against forms of HPV that most frequently cause cancer. At the Centers for Disease Control and Prevention, researcher Shannon Stokley:
“The HPV vaccine series consists of three doses, and it’s recommended that all girls and boys receive this vaccine at age 11 or 12.”
Stokley adds that it’s not too late to get vaccinated even up to age 26. But the vaccine has been out since 2006, and she says coverage is still very low – partly because people don’t know about it and its benefits.
SECRETARY OF STATE KERRY'S LUNCHEON REMARKS AT ITAMARATY PALACE IN BRAZIL
FROM: U.S. STATE DEPARTMENT
Remarks at Luncheon With Brazilian Foreign Minister Antonio Patriota
Remarks
John Kerry
Secretary of State
Itamaraty Palace
Brasilia, Brazil
August 13, 2013
SECRETARY KERRY: Well, Mr. Foreign Minister, distinguished guests, and particularly my former colleague senators who are here, the chairman of the committee, it’s my privilege to be able to just respond a moment to Antonio’s comments. And I want to pick up on what he said, if I may. First, I just want to say thank you for a wonderful welcome, a very generous moment here. I’m not sure I should say thank you for giving me this power to be all that stands between you and your meal, but I will try to execute it very, very quickly and sensitively.
I’m amazed by this privilege of eating in this football field room that is enormous. I’m privileged to be able to be here with you in Brazil, and for me to be back in Brazil is very, very special, and I think you know why, Antonio. I have a special connection here. But I listened to your comments a moment ago as you talked about multilateralism and the world we live in, and I think as Brazil thinks about its relationship with the United States, it’s important for you to be aware that we have no pretensions that we’re still living in the age of the Cold War, where there was a bipolar division and the Cold War itself was dominated by major superpowers, in many cases without regard to the impact on a lot of other countries’ aspirations.
Today is different. The United States welcomes – welcomes the strength of nations that are emerging on their own design with their own hopes and aspirations for their people. And truly amazing stories are being written around the world by Brazil, by many other countries that are suddenly new economic powerhouses, and happily, new centers of democracy and of education, environmental concern, health care, all of the values that we share. I know sometimes people wonder sort of how does the United States react to this transformation, and I cannot tell you how much we welcome it.
We want partners in these aspirations, and the world is stronger when the world shares decisions that people come to together and work towards in partnership. The truth is that I don’t think there’s any country on the face of the planet that has won as many battles, expended as much of its treasure in the interests of democracy and freedom and universal values, whether it was on the beaches of Normandy or on the islands of the Pacific in World War II or in other great enterprises that we have engaged in. And in every single case the United States has happily welcomed a South Korea that is a powerhouse in the world today, a Japan powerhouse in the world today, Germany, France, Europe powerhouse in the world today. The truth is that our shared values are what keep us together, not our physical strength. And in the end, Brazil is now setting its own course among all of those nations, proving its ability to make a difference on the global stage as well as to grow its partnership with the United States.
So I’m proud to say that this is a time of great promise between our countries, Antonio. It’s a great promise for the world if we make the right choices. And I think we have to look forward, we have to move forward along with the currents that that will take us into that future. Your great Brazilian novelist Paulo Coelho reminds us when we least expect it, life sets us a challenge to test our courage and willingness to change; the challenge will not wait, life does not look back. What we all need is a moment, as he tells us, to decide whether or not to accept our destiny.
Brazil and the United States are at that kind of moment now. Our destiny is clear, in our judgment: If we act in common purpose, if we work together to build a more prosperous, democratic, and secure future for the Americas and for others in the world who aspire to be like us, then we will have a more effective partnership. Life will always send us challenges to test our courage, but I can tell you I’m confident Brazil and America will not wait, we will not look back, we will look forward and we will move forward together. And I toast our effort. Saude.
Remarks at Luncheon With Brazilian Foreign Minister Antonio Patriota
Remarks
John Kerry
Secretary of State
Itamaraty Palace
Brasilia, Brazil
August 13, 2013
SECRETARY KERRY: Well, Mr. Foreign Minister, distinguished guests, and particularly my former colleague senators who are here, the chairman of the committee, it’s my privilege to be able to just respond a moment to Antonio’s comments. And I want to pick up on what he said, if I may. First, I just want to say thank you for a wonderful welcome, a very generous moment here. I’m not sure I should say thank you for giving me this power to be all that stands between you and your meal, but I will try to execute it very, very quickly and sensitively.
I’m amazed by this privilege of eating in this football field room that is enormous. I’m privileged to be able to be here with you in Brazil, and for me to be back in Brazil is very, very special, and I think you know why, Antonio. I have a special connection here. But I listened to your comments a moment ago as you talked about multilateralism and the world we live in, and I think as Brazil thinks about its relationship with the United States, it’s important for you to be aware that we have no pretensions that we’re still living in the age of the Cold War, where there was a bipolar division and the Cold War itself was dominated by major superpowers, in many cases without regard to the impact on a lot of other countries’ aspirations.
Today is different. The United States welcomes – welcomes the strength of nations that are emerging on their own design with their own hopes and aspirations for their people. And truly amazing stories are being written around the world by Brazil, by many other countries that are suddenly new economic powerhouses, and happily, new centers of democracy and of education, environmental concern, health care, all of the values that we share. I know sometimes people wonder sort of how does the United States react to this transformation, and I cannot tell you how much we welcome it.
We want partners in these aspirations, and the world is stronger when the world shares decisions that people come to together and work towards in partnership. The truth is that I don’t think there’s any country on the face of the planet that has won as many battles, expended as much of its treasure in the interests of democracy and freedom and universal values, whether it was on the beaches of Normandy or on the islands of the Pacific in World War II or in other great enterprises that we have engaged in. And in every single case the United States has happily welcomed a South Korea that is a powerhouse in the world today, a Japan powerhouse in the world today, Germany, France, Europe powerhouse in the world today. The truth is that our shared values are what keep us together, not our physical strength. And in the end, Brazil is now setting its own course among all of those nations, proving its ability to make a difference on the global stage as well as to grow its partnership with the United States.
So I’m proud to say that this is a time of great promise between our countries, Antonio. It’s a great promise for the world if we make the right choices. And I think we have to look forward, we have to move forward along with the currents that that will take us into that future. Your great Brazilian novelist Paulo Coelho reminds us when we least expect it, life sets us a challenge to test our courage and willingness to change; the challenge will not wait, life does not look back. What we all need is a moment, as he tells us, to decide whether or not to accept our destiny.
Brazil and the United States are at that kind of moment now. Our destiny is clear, in our judgment: If we act in common purpose, if we work together to build a more prosperous, democratic, and secure future for the Americas and for others in the world who aspire to be like us, then we will have a more effective partnership. Life will always send us challenges to test our courage, but I can tell you I’m confident Brazil and America will not wait, we will not look back, we will look forward and we will move forward together. And I toast our effort. Saude.
SECRETARY OF STATE KERRY'S REMARKS AT U.S. EMBASSY IN BRASILIA, BRAZIL
FROM: U.S. STATE DEPARTMENT
Meeting With Staff and Families of Embassy Brasilia
Remarks
John Kerry
Secretary of State
U.S. Embassy Brasilia
Brasilia, Brazil
August 13, 2013
AMBASSADOR SHANNON: (In progress.) -- serve the United States and serve Brazil in building a relationship that we think holds enormous potential for us. So, sir, thank you very much for being here.
SECRETARY KERRY: Thank you, Tom. Thank you very, very much. Thank you, everybody. (Applause.) Thank you. Thank you very much.
Thank you. Muito Obrigado. I am very happy to be here. Bom Dia. (Laughter.) I have Portuguese around my house every day, guys. I sit there and I go (in Portuguese). That’s right. But I learned a little bit. My wife – her native tongue, my wife’s native language is Portuguese. She was born in Mozambique, and we actually had to come to Rio to meet. We actually met in Rio at the Earth Summit back in 1992, and the rest is history, as they say. (Laughter.) Anyway, but it’s a real pleasure for me to be here, and I’m listening to my wife speak Portuguese all the time and I’ve been very bad about not learning it. I’m struggling with some other languages.
Anyway, it’s great to see you all. Everybody good?
AUDIENCE: Yes.
SECRETARY KERRY: Good. I’m delighted to hear that. You have to be. I just saw three tennis courts out here. (Laughter.) I said, man, this can’t be that tough. I don’t know. (Laughter.) Looks pretty good to me. But it’s really wonderful to be able to be here, and thank you to all the kids. Where are all the kids here? Hey, guys. Why don’t you guys come up here with me? I like having kids come up here with me. Come on. Come on, guys. Come on.
You’re the future and this is what it’s all about, so I’m happy to have you here. Is this – and we have a six-month-old over here, very patriotically dressed. (Laughter.) What’s the name of our six-year-old patriot? Has everybody seen how patriotic this six-month-old is here? (Laughter.) Come here. Look at this. Yeah. There you are. What’s --
PARTICIPANT: Her name’s Willow Grace.
SECRETARY KERRY: Her name is Willow Grace, and --
PARTICIPANT: Nine months.
SECRETARY KERRY: Nine months, okay. All right. How we doing? Yeah. I have a new grandchild, a new grandchild on the way, a couple of other grand – so it’s really great. I love to see it. Anyway, you have to stand up here the whole time. (Laughter.)
Anyway, how are you guys doing? You having fun? How old are you?
PARTICIPANT: I’m 11.
PARTICIPANT: I’m 13.
SECRETARY KERRY: Wow. You’re 11. She is exactly the age that I was when my dad joined the Foreign Service and we went off to Berlin, Germany not too long after the war, World War II. I’m really dating myself now. (Laughter.) But it was a great adventure. You having fun? You like the adventure?
PARTICIPANT: Yes.
SECRETARY KERRY: This your first posting?
PARTICIPANT: Yeah, this is my first.
SECRETARY KERRY: Pretty cool. How’s your language coming?
PARTICIPANT: Oh, it’s okay. (Laughter.)
SECRETARY KERRY: Okay. Alright. I won’t push you any further. (Laughter.) I won’t push you any further.
Anyway, so the rest of you all, you go to school – at which school, international? American?
PARTICIPANT: (Off-mike.)
SECRETARY KERRY: Cool, and that’s fun, isn’t it? How big is it? How many kids are in it?
PARTICIPANT: Like, 50.
SECRETARY KERRY: Fifty? (Laughter.) That’s pretty small.
PARTICIPANT: Six hundred and fifty.
SECRETARY KERRY: Six hundred and fifty, that’s better. All right, that’s better. (Laughter.) All right.
Well, listen, I just want to – where’s (inaudible)? Is (inaudible) here? Is she out here?
PARTICIPANT: She couldn’t come.
SECRETARY KERRY: She couldn’t come. Forty-two years of service, I understand. That’s one of – that’s the longest period of service. I’ve now been to, what, 29 countries, I think, as Secretary. I haven’t met anybody who’s done 42 years, so – I haven’t met her either, so what I can say? (Laughter.) But I met a bunch of people who have 37, 38, 39, things like that, which is pretty amazing.
I just want to say thank you to everybody. I really appreciate the chance to be back in Brazil. Thank you.
PARTICIPANT: We have an employee here, who is 42 years of service.
SECRETARY KERRY: Forty-two years? Come on. Come up here and let me tell who you are. (Applause.) What’s your name?
PARTICIPANT: Maria Salle Jorgia.
SECRETARY KERRY: Maria Salle what?
PARTICIPANT: Jorgia.
SECRETARY KERRY: Maria Salle Jorgia, and she has 42 years of service. I can’t believe it. And you look like you’re only, like, 28 years old. (Laughter.) It’s very – how did you do that?
PARTICIPANT: (Inaudible.)
SECRETARY KERRY: Well, it’s really fabulous.
PARTICIPANT: I started here at the Embassy back in ’71.
SECRETARY KERRY: Wow. That’s incredible. So you’ve been through a few secretaries. (Laughter.) Okay. I won’t --
PARTICIPANT: Happy to be here with you.
SECRETARY KERRY: Thank you. Thank you so much. We really appreciate it.
PARTICIPANT: You have so much hair. It’s amazing. (Laughter.)
SECRETARY KERRY: I know. I need a haircut. (Laughter.) Thank you very much. It’s not every day I get my hair cut, but the truth is I’ve been so busy, I literally have not been able to get a haircut. (Laughter.) I got up this morning and I looked at myself and I said, “Oh my God, I got to get a haircut,” but anyway, isn’t there something more serious to talk about here? (Laughter.)
I just, really, on behalf of the President and behalf of everybody in the country really want to say thank you for what you do. And it’s a mix of so many different people. We got Foreign Service officers and civil servants and locally employed and contractors and different agencies. I think there are something like 25 or – how many do you have – about 25 agencies here with whom we cooperate, and then a whole bunch of TDY-ers and others who come through, and then three consulates and five consul agencies, so it’s extraordinary. And you guys have processed something like a record million-plus visas last year, which is absolutely extraordinary.
And it’s a reflection of a lot of things, not the least of which is the efforts by President Rousseff and the Brazilians to send more of their young folks to study in the United States, and of course, our reciprocal efforts to bring people to study here. And I can’t tell you how sometimes that seems sort of like light diplomacy or soft diplomacy, whatever you want to call it. I have always found it’s amazing when I’m meeting with people – and I’ve been meeting with people now for 35 years or more, 29 of them in the United States Senate, and some of them this term in the Foreign Relations Committee, so I would meet everybody. And the numbers of foreign ministers, finance ministers, environment ministers, prime ministers, presidents who look at me and say, “I studied at the University of Chicago,” or “I studied at Stanford,” or Berkeley or Harvard or wherever it is, University of Mississippi – it’s just amazing how they are – they take pride in it, they love it. And it’s an experience that stays with people for a lifetime.
Most recently I’ve been talking with Prince Saud al-Faisal, the Foreign Minister – longest-serving foreign minister in the world incidentally – of Saudi Arabia, and he is a proud Princeton graduate, and he’s always talking to me about his years at Princeton, what it meant to him, and what it means to him now. And more often than not, I’m meeting now even more of these officials whose sons and daughters are all studying abroad. I mean, yesterday when I was in Colombia, the President was telling me how his youngest son is about to go off to UVA. He has another son who just graduated from Brown and another one – I forget where, but this is important, so this is a very important part of what we do, and in the long run, it will do more to bring people together than anything that I can think of.
Years ago, when I was a younger senator, I started the Fulbright Program in Vietnam when we were first trying to open up our relations after the war, and that program became the largest Fulbright Program in the world. It’s now the second largest, the largest being in Pakistan. But the other day I met the Foreign Minister of Vietnam, and he pulled out a photograph, and he showed me the photograph, and it was me as a young senator 25 years ago meeting him as a student at Fletcher School of Law and Diplomacy, and he proudly showed it to me, and here I am dealing with him now, and boy did I feel old. Huh? (Laughter.) Scary.
But I just very quickly – I don’t want to tie you all up too long. What we are doing – and I mean we. I get to be the Secretary and run around and get to a lot of countries and you all are doing different things here in one place for a period of time, and then you move somewhere else. But this is a family effort. The State Department is a great family, and no way has that come home to us more than with some of our losses in the last few years. Ambassador Chris Stevens and Anne Smedinghoff recently in Afghanistan, who happened to have been my control officer only a week and a half before that.
So there are risks, and there are hardships. People leave home, you have to pack up, you’ve got to repack, go another place, leave friends behind, take your kids to another school, but in the end I can’t think of anything – very few things at least where you get up in the morning every day and go to work and know – not just feel like, but know that you are contributing to making a difference to the relationships between peoples, to the opportunities that some people will have in a lifetime: that person who gets a visa, that person whose human rights are protected in some country or someplace, the person we fight for because no one else will fight for them, the kids that we feed in one country or another, the young people who will grow up now AIDS-free because of a program called PEPFAR and because of the health programs we bring to people.
We are making a difference every day in the relationships between countries, the relationship between peoples, and the aspirations and opportunities that people will have somewhere in the world. That’s a great adventure. It’s also a well-spent life. It’s a way to do things where you can say there’s a real reward to risk factor, and you know you’re contributing to something bigger than yourself. We are dealing in the most complicated world ever, and I mean ever.
I’m a student of history, and I love to go back and read a particularly great book like Kissinger’s book about diplomacy where you think about the 18th, 19th centuries and the balance of power and how difficult it was for countries to advance their interests and years and years of wars. And we sometimes say to ourselves, boy, aren’t we lucky. Well, folks, ever since the end of the Cold War, forces have been unleashed that were tamped down for centuries by dictators, and that was complicated further by this little thing called the internet and the ability of people everywhere to communicate instantaneously and to have more information coming at them in one day than most people can process in months or a year.
It makes it much harder to govern, makes it much harder to organize people, much harder to find the common interest, and that is complicated by a rise of sectarianism and religious extremism that is prepared to employ violent means to impose on other people a way of thinking and a way of living that is completely contrary to everything the United States of America has ever stood for. So we need to keep in mind what our goals are and how complicated this world is that we’re operating in.
So I thank you, every single one of you, about 1,322 people here I think representing all those different entities that I talked about. You really do make a great team, and you are engaged in a great enterprise. And on behalf of President Obama, on behalf of the American people, and on my behalf as the Secretary who has the privilege of leading this great Department, I want to thank you. This is the adventure of a lifetime, and as these kids will learn and look back on it years from now, they have pretty special parents, and they have pretty special opportunities made available to them because of what you all do. So thank you all, and God bless. Thank you. (Applause.)
Meeting With Staff and Families of Embassy Brasilia
Remarks
John Kerry
Secretary of State
U.S. Embassy Brasilia
Brasilia, Brazil
August 13, 2013
AMBASSADOR SHANNON: (In progress.) -- serve the United States and serve Brazil in building a relationship that we think holds enormous potential for us. So, sir, thank you very much for being here.
SECRETARY KERRY: Thank you, Tom. Thank you very, very much. Thank you, everybody. (Applause.) Thank you. Thank you very much.
Thank you. Muito Obrigado. I am very happy to be here. Bom Dia. (Laughter.) I have Portuguese around my house every day, guys. I sit there and I go (in Portuguese). That’s right. But I learned a little bit. My wife – her native tongue, my wife’s native language is Portuguese. She was born in Mozambique, and we actually had to come to Rio to meet. We actually met in Rio at the Earth Summit back in 1992, and the rest is history, as they say. (Laughter.) Anyway, but it’s a real pleasure for me to be here, and I’m listening to my wife speak Portuguese all the time and I’ve been very bad about not learning it. I’m struggling with some other languages.
Anyway, it’s great to see you all. Everybody good?
AUDIENCE: Yes.
SECRETARY KERRY: Good. I’m delighted to hear that. You have to be. I just saw three tennis courts out here. (Laughter.) I said, man, this can’t be that tough. I don’t know. (Laughter.) Looks pretty good to me. But it’s really wonderful to be able to be here, and thank you to all the kids. Where are all the kids here? Hey, guys. Why don’t you guys come up here with me? I like having kids come up here with me. Come on. Come on, guys. Come on.
You’re the future and this is what it’s all about, so I’m happy to have you here. Is this – and we have a six-month-old over here, very patriotically dressed. (Laughter.) What’s the name of our six-year-old patriot? Has everybody seen how patriotic this six-month-old is here? (Laughter.) Come here. Look at this. Yeah. There you are. What’s --
PARTICIPANT: Her name’s Willow Grace.
SECRETARY KERRY: Her name is Willow Grace, and --
PARTICIPANT: Nine months.
SECRETARY KERRY: Nine months, okay. All right. How we doing? Yeah. I have a new grandchild, a new grandchild on the way, a couple of other grand – so it’s really great. I love to see it. Anyway, you have to stand up here the whole time. (Laughter.)
Anyway, how are you guys doing? You having fun? How old are you?
PARTICIPANT: I’m 11.
PARTICIPANT: I’m 13.
SECRETARY KERRY: Wow. You’re 11. She is exactly the age that I was when my dad joined the Foreign Service and we went off to Berlin, Germany not too long after the war, World War II. I’m really dating myself now. (Laughter.) But it was a great adventure. You having fun? You like the adventure?
PARTICIPANT: Yes.
SECRETARY KERRY: This your first posting?
PARTICIPANT: Yeah, this is my first.
SECRETARY KERRY: Pretty cool. How’s your language coming?
PARTICIPANT: Oh, it’s okay. (Laughter.)
SECRETARY KERRY: Okay. Alright. I won’t push you any further. (Laughter.) I won’t push you any further.
Anyway, so the rest of you all, you go to school – at which school, international? American?
PARTICIPANT: (Off-mike.)
SECRETARY KERRY: Cool, and that’s fun, isn’t it? How big is it? How many kids are in it?
PARTICIPANT: Like, 50.
SECRETARY KERRY: Fifty? (Laughter.) That’s pretty small.
PARTICIPANT: Six hundred and fifty.
SECRETARY KERRY: Six hundred and fifty, that’s better. All right, that’s better. (Laughter.) All right.
Well, listen, I just want to – where’s (inaudible)? Is (inaudible) here? Is she out here?
PARTICIPANT: She couldn’t come.
SECRETARY KERRY: She couldn’t come. Forty-two years of service, I understand. That’s one of – that’s the longest period of service. I’ve now been to, what, 29 countries, I think, as Secretary. I haven’t met anybody who’s done 42 years, so – I haven’t met her either, so what I can say? (Laughter.) But I met a bunch of people who have 37, 38, 39, things like that, which is pretty amazing.
I just want to say thank you to everybody. I really appreciate the chance to be back in Brazil. Thank you.
PARTICIPANT: We have an employee here, who is 42 years of service.
SECRETARY KERRY: Forty-two years? Come on. Come up here and let me tell who you are. (Applause.) What’s your name?
PARTICIPANT: Maria Salle Jorgia.
SECRETARY KERRY: Maria Salle what?
PARTICIPANT: Jorgia.
SECRETARY KERRY: Maria Salle Jorgia, and she has 42 years of service. I can’t believe it. And you look like you’re only, like, 28 years old. (Laughter.) It’s very – how did you do that?
PARTICIPANT: (Inaudible.)
SECRETARY KERRY: Well, it’s really fabulous.
PARTICIPANT: I started here at the Embassy back in ’71.
SECRETARY KERRY: Wow. That’s incredible. So you’ve been through a few secretaries. (Laughter.) Okay. I won’t --
PARTICIPANT: Happy to be here with you.
SECRETARY KERRY: Thank you. Thank you so much. We really appreciate it.
PARTICIPANT: You have so much hair. It’s amazing. (Laughter.)
SECRETARY KERRY: I know. I need a haircut. (Laughter.) Thank you very much. It’s not every day I get my hair cut, but the truth is I’ve been so busy, I literally have not been able to get a haircut. (Laughter.) I got up this morning and I looked at myself and I said, “Oh my God, I got to get a haircut,” but anyway, isn’t there something more serious to talk about here? (Laughter.)
I just, really, on behalf of the President and behalf of everybody in the country really want to say thank you for what you do. And it’s a mix of so many different people. We got Foreign Service officers and civil servants and locally employed and contractors and different agencies. I think there are something like 25 or – how many do you have – about 25 agencies here with whom we cooperate, and then a whole bunch of TDY-ers and others who come through, and then three consulates and five consul agencies, so it’s extraordinary. And you guys have processed something like a record million-plus visas last year, which is absolutely extraordinary.
And it’s a reflection of a lot of things, not the least of which is the efforts by President Rousseff and the Brazilians to send more of their young folks to study in the United States, and of course, our reciprocal efforts to bring people to study here. And I can’t tell you how sometimes that seems sort of like light diplomacy or soft diplomacy, whatever you want to call it. I have always found it’s amazing when I’m meeting with people – and I’ve been meeting with people now for 35 years or more, 29 of them in the United States Senate, and some of them this term in the Foreign Relations Committee, so I would meet everybody. And the numbers of foreign ministers, finance ministers, environment ministers, prime ministers, presidents who look at me and say, “I studied at the University of Chicago,” or “I studied at Stanford,” or Berkeley or Harvard or wherever it is, University of Mississippi – it’s just amazing how they are – they take pride in it, they love it. And it’s an experience that stays with people for a lifetime.
Most recently I’ve been talking with Prince Saud al-Faisal, the Foreign Minister – longest-serving foreign minister in the world incidentally – of Saudi Arabia, and he is a proud Princeton graduate, and he’s always talking to me about his years at Princeton, what it meant to him, and what it means to him now. And more often than not, I’m meeting now even more of these officials whose sons and daughters are all studying abroad. I mean, yesterday when I was in Colombia, the President was telling me how his youngest son is about to go off to UVA. He has another son who just graduated from Brown and another one – I forget where, but this is important, so this is a very important part of what we do, and in the long run, it will do more to bring people together than anything that I can think of.
Years ago, when I was a younger senator, I started the Fulbright Program in Vietnam when we were first trying to open up our relations after the war, and that program became the largest Fulbright Program in the world. It’s now the second largest, the largest being in Pakistan. But the other day I met the Foreign Minister of Vietnam, and he pulled out a photograph, and he showed me the photograph, and it was me as a young senator 25 years ago meeting him as a student at Fletcher School of Law and Diplomacy, and he proudly showed it to me, and here I am dealing with him now, and boy did I feel old. Huh? (Laughter.) Scary.
But I just very quickly – I don’t want to tie you all up too long. What we are doing – and I mean we. I get to be the Secretary and run around and get to a lot of countries and you all are doing different things here in one place for a period of time, and then you move somewhere else. But this is a family effort. The State Department is a great family, and no way has that come home to us more than with some of our losses in the last few years. Ambassador Chris Stevens and Anne Smedinghoff recently in Afghanistan, who happened to have been my control officer only a week and a half before that.
So there are risks, and there are hardships. People leave home, you have to pack up, you’ve got to repack, go another place, leave friends behind, take your kids to another school, but in the end I can’t think of anything – very few things at least where you get up in the morning every day and go to work and know – not just feel like, but know that you are contributing to making a difference to the relationships between peoples, to the opportunities that some people will have in a lifetime: that person who gets a visa, that person whose human rights are protected in some country or someplace, the person we fight for because no one else will fight for them, the kids that we feed in one country or another, the young people who will grow up now AIDS-free because of a program called PEPFAR and because of the health programs we bring to people.
We are making a difference every day in the relationships between countries, the relationship between peoples, and the aspirations and opportunities that people will have somewhere in the world. That’s a great adventure. It’s also a well-spent life. It’s a way to do things where you can say there’s a real reward to risk factor, and you know you’re contributing to something bigger than yourself. We are dealing in the most complicated world ever, and I mean ever.
I’m a student of history, and I love to go back and read a particularly great book like Kissinger’s book about diplomacy where you think about the 18th, 19th centuries and the balance of power and how difficult it was for countries to advance their interests and years and years of wars. And we sometimes say to ourselves, boy, aren’t we lucky. Well, folks, ever since the end of the Cold War, forces have been unleashed that were tamped down for centuries by dictators, and that was complicated further by this little thing called the internet and the ability of people everywhere to communicate instantaneously and to have more information coming at them in one day than most people can process in months or a year.
It makes it much harder to govern, makes it much harder to organize people, much harder to find the common interest, and that is complicated by a rise of sectarianism and religious extremism that is prepared to employ violent means to impose on other people a way of thinking and a way of living that is completely contrary to everything the United States of America has ever stood for. So we need to keep in mind what our goals are and how complicated this world is that we’re operating in.
So I thank you, every single one of you, about 1,322 people here I think representing all those different entities that I talked about. You really do make a great team, and you are engaged in a great enterprise. And on behalf of President Obama, on behalf of the American people, and on my behalf as the Secretary who has the privilege of leading this great Department, I want to thank you. This is the adventure of a lifetime, and as these kids will learn and look back on it years from now, they have pretty special parents, and they have pretty special opportunities made available to them because of what you all do. So thank you all, and God bless. Thank you. (Applause.)
DOJ REMARKS ON LAWSUIT CHALLENGING US AIRWAYS PROPOSED MERGER WITH AMERICAN AIRLINES
FROM: U.S. DEPARTMENT OF JUSTICE
REMARKS AS PREPARED FOR DELIVERY BY ASSISTANT ATTORNEY GENERAL BILL BAER AT THE CONFERENCE CALL REGARDING THE JUSTICE DEPARTMENT’S LAWSUIT CHALLENGING US AIRWAYS’ PROPOSED MERGER
WITH AMERICAN AIRLINES WASHINGTON, D.C.
As you are aware, this morning, the Department of Justice, six state attorneys general plus the District of Columbia, filed a lawsuit in U.S. District Court in Washington, D.C., to block the proposed merger of American Airlines and US Airways.
Those attorneys general participating in the lawsuit are: Texas, from American’s home state; Arizona, from US Airways’ home state; Pennsylvania, home to one of US Airways’ largest hubs; Florida; Tennessee; and Virginia and Washington, D.C. – where both airlines operate. We filed the lawsuit today because we determined that the merger – which would create the world’s largest airline and leave just three legacy carriers remaining in the U.S. – would substantially lessen competition for commercial air travel throughout the United States. Importantly, neither airline needs this merger to succeed. We simply cannot approve a merger that would result in U.S. consumers paying higher fares, higher fees and receiving less service. Americans spent more than $70 billion flying around the country last year. Increases in the price of airline tickets, checked bags or flight change fees resulting from this merger would result in hundreds of millions of dollars of harm to American consumers.
If this merger were to go forward, consumers will lose the benefit of head-to-head
competition between US Airways and American on thousands of airline routes across the country – in cities big and small. They will pay more for less service because the remaining three legacy carriers – United, Delta and the new American – will have very little incentive to compete on price. Indeed, as our complaint shows, the management of US Airways, which will run the new airline, sees consolidation as a vehicle to reduce competition between the airlines and raise fees and fares. Here is one powerful example. Today, US Airways competes vigorously by offering discounts of up to 40 percent if a consumer takes its one stop instead of another airline’s nonstop route. This means that if you need to catch a flight at the last minute for any reason –
celebration or emergency – you will find it is 40 percent cheaper to take US Airways’ connecting service than the non-stop fare offered by American, Delta and United. The big three airlines – American, Delta and United – don’t like this aggressive price cutting by US Airways. For example, for round-trip flights leaving on August 13 and returning on August 14 from Miami to Cincinnati, you can see the benefits of US Airways’ discount program. American is the only airline on this route to offer nonstop service, charging $740. Delta and United don’t have offer competition since they both charge more for their connecting service than American charges for nonstop service. In this instance, a consumer who bought a US Airways one-stop ticket would save $269 compared to American’s nonstop service. You can see the benefits of competition between US Airways and American on hundreds of other flights. For example, on round-trip flights leaving on August 13 and returning on August 14 from New York to Houston, US Airways’ one stop fare is about $870 cheaper than the other legacy carriers’ nonstop flights, and even beats JetBlue and AirTran by more than $300. Although Southwest doesn’t participate in the standard online travel sites, a cross-check against the Southwest website for the same dates demonstrates that US Airways also beats Southwest’s $887 nonstop fare by more than $300. If this merger happens, US Airways’ aggressive discounting – called Advantage Fares –
will disappear. As a bigger airline with many more hubs, there will be no incentive for the merged company to offer any of the discounts I just described, resulting in higher prices, less choice and fewer services for the more than two million travelers who today benefit from the program. How do we know it? We know this from the internal analyses and the planning documents put together by American in considering the likely effects of this merger. The elimination of the Advantage Fares program is just one example. If the merger goes forward, consumers can also expect to pay higher fees for things like checked bags, flight changes, more legroom and frequent flyer benefits. Today, American does not charge if you redeem frequent flyer miles. US Airways charges an average of $40. If the merger is allowed, US Airways is planning to take this frequent flyer benefit away and make American’s frequent flyers pay redemption fees. By eliminating this competitive distinction between American and US Airways, the new airline generates an additional $120 million in revenue. But you pay the price. Consumers will also pay more on routes where US Airways and American today offer competing nonstop service. We know from prior mergers that elimination of head-to-head competition on nonstop routes results in substantial price increases for consumers.
Expect similar fare increases if this merger is allowed. For example, US Airways and American offer competing nonstop service between Charlotte, North Carolina and Dallas-Ft. Worth. Consumers will likely pay more than $3 million more per year for travel on that route alone. You don’t need to go far from this very city to see another worrisome effect from the proposed merger. Across the Potomac River, the merged airline would dominate Washington Reagan National Airport, by controlling 69 percent of the take-off and landing slots at DCA. And, it would have a monopoly on 63 percent of the nonstop routes out of Reagan.
National. By allowing one airline to control that many slots, the merger will prevent other airlines, including low-fare carriers like JetBlue and Southwest from competing at Reagan National. It would face little or NO competition. Indeed, this would get worse. Recently JetBlue started service from Reagan National to Boston, competing with US Airways, and fares dropped by more than 30 percent saving consumers about $50 million a year. Similarly, consumers saved about $14 million in lower fares between Tampa and Reagan National after JetBlue started competing against US Airways. But – and this is important – half of JetBlue’s slots at Reagan National are leased from American. If this deal is allowed, new American can terminate that lease and JetBlue’s ability to compete will be severely diminished. Consumers will pay the price.
Blocking the merger will preserve current competition and service at Reagan National airport, including flights that US Airways currently offers to large and small communities around the country. The complaint also describes other ways in which consumers are at risk if we allow this deal to further reduce the number of competitors in this industry.
You do not need to take my word for this. High level executives at US Airways have talked about how consolidation allows for capacity reductions that “enable” fare increases. One US Airways executive recently stated that this merger is “the last major piece needed to fully rationalize the industry.” In the airline business the word “rationalize” is a code word for less competition, higher costs for consumers and fewer choices.
Both US Airways and American have publicly stated that they can do well without this merger. American has used the bankruptcy process to lower its costs and revitalize its fleet. It has repeatedly said that it can thrive as a standalone competitor. Just this January, American’s management presented plans that would increase the destinations and frequency of its flights in the U.S., allowing it to compete independently and vigorously with plans to grow.
And, executives of US Airways agree about American’s ability to make it on its own. They have noted that American will be stronger post-bankruptcy and that “[t]here is NO question” about American’s ability “to survive on a standalone basis.”
US Airways also has said that US Airways itself does not need the merger – that it can thrive as a standalone firm.
The lawsuit we filed today to block this deal gives consumers the best possible chance for continued competition in an important industry that they have come to rely upon.
I want to thank the litigation team from the division’s Transportation, Energy and
Agriculture Section, led by Chief Bill Stallings and Assistant Chief Kathy O’Neill, as well as the Economic Analysis Group led by Bob Majure and Oliver Richard for their hard work on this. And, I want to thank the attorneys general who have joined this lawsuit and are working with us to protect the consumers of their respective states.
And with that, I’m happy to take any questions you have.
REMARKS AS PREPARED FOR DELIVERY BY ASSISTANT ATTORNEY GENERAL BILL BAER AT THE CONFERENCE CALL REGARDING THE JUSTICE DEPARTMENT’S LAWSUIT CHALLENGING US AIRWAYS’ PROPOSED MERGER
WITH AMERICAN AIRLINES WASHINGTON, D.C.
As you are aware, this morning, the Department of Justice, six state attorneys general plus the District of Columbia, filed a lawsuit in U.S. District Court in Washington, D.C., to block the proposed merger of American Airlines and US Airways.
Those attorneys general participating in the lawsuit are: Texas, from American’s home state; Arizona, from US Airways’ home state; Pennsylvania, home to one of US Airways’ largest hubs; Florida; Tennessee; and Virginia and Washington, D.C. – where both airlines operate. We filed the lawsuit today because we determined that the merger – which would create the world’s largest airline and leave just three legacy carriers remaining in the U.S. – would substantially lessen competition for commercial air travel throughout the United States. Importantly, neither airline needs this merger to succeed. We simply cannot approve a merger that would result in U.S. consumers paying higher fares, higher fees and receiving less service. Americans spent more than $70 billion flying around the country last year. Increases in the price of airline tickets, checked bags or flight change fees resulting from this merger would result in hundreds of millions of dollars of harm to American consumers.
If this merger were to go forward, consumers will lose the benefit of head-to-head
competition between US Airways and American on thousands of airline routes across the country – in cities big and small. They will pay more for less service because the remaining three legacy carriers – United, Delta and the new American – will have very little incentive to compete on price. Indeed, as our complaint shows, the management of US Airways, which will run the new airline, sees consolidation as a vehicle to reduce competition between the airlines and raise fees and fares. Here is one powerful example. Today, US Airways competes vigorously by offering discounts of up to 40 percent if a consumer takes its one stop instead of another airline’s nonstop route. This means that if you need to catch a flight at the last minute for any reason –
celebration or emergency – you will find it is 40 percent cheaper to take US Airways’ connecting service than the non-stop fare offered by American, Delta and United. The big three airlines – American, Delta and United – don’t like this aggressive price cutting by US Airways. For example, for round-trip flights leaving on August 13 and returning on August 14 from Miami to Cincinnati, you can see the benefits of US Airways’ discount program. American is the only airline on this route to offer nonstop service, charging $740. Delta and United don’t have offer competition since they both charge more for their connecting service than American charges for nonstop service. In this instance, a consumer who bought a US Airways one-stop ticket would save $269 compared to American’s nonstop service. You can see the benefits of competition between US Airways and American on hundreds of other flights. For example, on round-trip flights leaving on August 13 and returning on August 14 from New York to Houston, US Airways’ one stop fare is about $870 cheaper than the other legacy carriers’ nonstop flights, and even beats JetBlue and AirTran by more than $300. Although Southwest doesn’t participate in the standard online travel sites, a cross-check against the Southwest website for the same dates demonstrates that US Airways also beats Southwest’s $887 nonstop fare by more than $300. If this merger happens, US Airways’ aggressive discounting – called Advantage Fares –
will disappear. As a bigger airline with many more hubs, there will be no incentive for the merged company to offer any of the discounts I just described, resulting in higher prices, less choice and fewer services for the more than two million travelers who today benefit from the program. How do we know it? We know this from the internal analyses and the planning documents put together by American in considering the likely effects of this merger. The elimination of the Advantage Fares program is just one example. If the merger goes forward, consumers can also expect to pay higher fees for things like checked bags, flight changes, more legroom and frequent flyer benefits. Today, American does not charge if you redeem frequent flyer miles. US Airways charges an average of $40. If the merger is allowed, US Airways is planning to take this frequent flyer benefit away and make American’s frequent flyers pay redemption fees. By eliminating this competitive distinction between American and US Airways, the new airline generates an additional $120 million in revenue. But you pay the price. Consumers will also pay more on routes where US Airways and American today offer competing nonstop service. We know from prior mergers that elimination of head-to-head competition on nonstop routes results in substantial price increases for consumers.
Expect similar fare increases if this merger is allowed. For example, US Airways and American offer competing nonstop service between Charlotte, North Carolina and Dallas-Ft. Worth. Consumers will likely pay more than $3 million more per year for travel on that route alone. You don’t need to go far from this very city to see another worrisome effect from the proposed merger. Across the Potomac River, the merged airline would dominate Washington Reagan National Airport, by controlling 69 percent of the take-off and landing slots at DCA. And, it would have a monopoly on 63 percent of the nonstop routes out of Reagan.
National. By allowing one airline to control that many slots, the merger will prevent other airlines, including low-fare carriers like JetBlue and Southwest from competing at Reagan National. It would face little or NO competition. Indeed, this would get worse. Recently JetBlue started service from Reagan National to Boston, competing with US Airways, and fares dropped by more than 30 percent saving consumers about $50 million a year. Similarly, consumers saved about $14 million in lower fares between Tampa and Reagan National after JetBlue started competing against US Airways. But – and this is important – half of JetBlue’s slots at Reagan National are leased from American. If this deal is allowed, new American can terminate that lease and JetBlue’s ability to compete will be severely diminished. Consumers will pay the price.
Blocking the merger will preserve current competition and service at Reagan National airport, including flights that US Airways currently offers to large and small communities around the country. The complaint also describes other ways in which consumers are at risk if we allow this deal to further reduce the number of competitors in this industry.
You do not need to take my word for this. High level executives at US Airways have talked about how consolidation allows for capacity reductions that “enable” fare increases. One US Airways executive recently stated that this merger is “the last major piece needed to fully rationalize the industry.” In the airline business the word “rationalize” is a code word for less competition, higher costs for consumers and fewer choices.
Both US Airways and American have publicly stated that they can do well without this merger. American has used the bankruptcy process to lower its costs and revitalize its fleet. It has repeatedly said that it can thrive as a standalone competitor. Just this January, American’s management presented plans that would increase the destinations and frequency of its flights in the U.S., allowing it to compete independently and vigorously with plans to grow.
And, executives of US Airways agree about American’s ability to make it on its own. They have noted that American will be stronger post-bankruptcy and that “[t]here is NO question” about American’s ability “to survive on a standalone basis.”
US Airways also has said that US Airways itself does not need the merger – that it can thrive as a standalone firm.
The lawsuit we filed today to block this deal gives consumers the best possible chance for continued competition in an important industry that they have come to rely upon.
I want to thank the litigation team from the division’s Transportation, Energy and
Agriculture Section, led by Chief Bill Stallings and Assistant Chief Kathy O’Neill, as well as the Economic Analysis Group led by Bob Majure and Oliver Richard for their hard work on this. And, I want to thank the attorneys general who have joined this lawsuit and are working with us to protect the consumers of their respective states.
And with that, I’m happy to take any questions you have.
ANTIQUES DEALER PLEADS GUILTY FOR ROLE IN WILDLIFE SMUGGLING CONSPIRACY
FROM: U.S. JUSTICE DEPARTMENT
Wednesday, August 7, 2013
Antiques Dealer Pleads Guilty in New York City Federal Court to Wildlife Smuggling Conspiracy
Qiang Wang, a/k/a Jeffrey Wang, a New York antiques dealer, pleaded guilty today in federal court in New York City to conspiracy to smuggle Asian artifacts made from rhinoceros horns and ivory and violate wildlife trafficking laws, announced Robert G. Dreher, the Acting Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice, Preet Bharara, U.S. Attorney for the Southern District of New York, and Dan Ashe, Director of the U.S. Fish and Wildlife Service.
Wang was arrested in February 2013 as part of “Operation Crash,” a nation-wide crackdown in the illegal trafficking in rhinoceros horns, for his role in smuggling libation cups carved from rhinoceros horns from New York to Hong Kong and China. He pleaded guilty today before U.S. District Judge Katherine B. Forrest of the Southern District of New York.
“Wang and others conspired in an illegal trade that is threatening the future of these species,” said Acting Assistant Attorney General Dreher. “This prosecution and continuing investigation should send a clear message to buyers and sellers that we will vigorously investigate and prosecute those who are involved in this devastating trade.”
“Today’s guilty plea ensures that Qiang Wang, who flouted domestic and international regulations by smuggling artifacts made from an endangered species out of the United States, will be held to account for his crimes,” said U.S. Attorney Bharara. “This Office will continue to work with its law enforcement partners to hold to account anyone engaged in this illegal trade.”
“Poaching and profiteering are undermining decades of work by conservationists to stabilize and rebuild rhino and elephant populations,” said Fish and Wildlife Service Director Ashe. “As this latest guilty plea demonstrates, we continue working with our partners in the United States and overseas to stop the slaughter and crack down on the illegal trafficking that fuels it.”
According to the information, plea agreement, and statements made during court proceedings:
In China, there is a tradition dating back centuries of intricately carving rhinoceros horn cups. Drinking from such a cup was believed by some to bring good health, and antique carvings are highly prized by collectors. Libation cups and other ornamental carvings are particularly sought after in China and in other Asian countries, as well as in the United States. The escalating value of such items has resulted in an increased demand for rhinoceros horn that has helped fuel a thriving black market, including fake antiques made from recently hunted rhinoceros.
Between approximately January 2011 and February 2013, Wang conspired with at least two others to smuggle objects containing rhinoceros horn and elephant ivory out of the United States knowing that it was illegal to export such items without required permits. Due to their dwindling populations, all rhinoceros and elephant species are protected under international trade agreements. Wang made and used false U.S. Customs Declarations for the packages containing rhinoceros horn and ivory objects in order to conceal the true contents of the packages, and did not declare them to the U.S. Fish and Wildlife Service or U.S. Customs and Border Protection as required under U.S. law and international trade agreements.
Wang, 34, of Flushing, N.Y., pleaded guilty to one count of conspiracy, which carries a maximum penalty of five years in prison. Under the terms of the plea agreement, items recovered from Wang’s apartment, including an ivory statute found hidden behind his bed, will be forfeited. He is scheduled to be sentenced by Judge Forrest on Oct. 25, 2013.
Rhinoceros are an herbivore species of prehistoric origin and one of the largest remaining mega-fauna on earth. They have no known predators other than humans. All species of rhinoceros are protected under United States and international law. Since 1976, trade in rhinoceros horn has been regulated under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), a treaty signed by over 170 countries around the world to protect fish, wildlife, and plants that are or may become imperiled due to the demands of international markets.
Operation Crash is a continuing investigation being conducted by the Department of the Interior’s Fish and Wildlife Service (FWS), in coordination with other federal and local law enforcement agencies including U.S. Immigration and Customs Enforcement’s Homeland Security Investigations. A “crash” is the term for a herd of rhinoceros. Operation Crash is an ongoing effort to detect, deter and prosecute those engaged in the illegal killing of rhinoceros and the unlawful trafficking of rhinoceros horns.
Mr. Bharara and Mr. Dreher commended the U.S. Fish and Wildlife Service for its outstanding work in this investigation. They also thanked the New York State Department of Environmental Conservation Division of Law Enforcement and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations for their assistance.
The case is being handled by the U.S. Attorney’s Office Complex Frauds Unit and the Justice Department’s Environment and Natural Resources Division. Assistant United States Attorney Janis M. Echenberg and Senior Trial Attorney Richard A. Udell of the Justice Department’s Environmental Crimes Section are in charge of the prosecution.
Wednesday, August 7, 2013
Antiques Dealer Pleads Guilty in New York City Federal Court to Wildlife Smuggling Conspiracy
Qiang Wang, a/k/a Jeffrey Wang, a New York antiques dealer, pleaded guilty today in federal court in New York City to conspiracy to smuggle Asian artifacts made from rhinoceros horns and ivory and violate wildlife trafficking laws, announced Robert G. Dreher, the Acting Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice, Preet Bharara, U.S. Attorney for the Southern District of New York, and Dan Ashe, Director of the U.S. Fish and Wildlife Service.
Wang was arrested in February 2013 as part of “Operation Crash,” a nation-wide crackdown in the illegal trafficking in rhinoceros horns, for his role in smuggling libation cups carved from rhinoceros horns from New York to Hong Kong and China. He pleaded guilty today before U.S. District Judge Katherine B. Forrest of the Southern District of New York.
“Wang and others conspired in an illegal trade that is threatening the future of these species,” said Acting Assistant Attorney General Dreher. “This prosecution and continuing investigation should send a clear message to buyers and sellers that we will vigorously investigate and prosecute those who are involved in this devastating trade.”
“Today’s guilty plea ensures that Qiang Wang, who flouted domestic and international regulations by smuggling artifacts made from an endangered species out of the United States, will be held to account for his crimes,” said U.S. Attorney Bharara. “This Office will continue to work with its law enforcement partners to hold to account anyone engaged in this illegal trade.”
“Poaching and profiteering are undermining decades of work by conservationists to stabilize and rebuild rhino and elephant populations,” said Fish and Wildlife Service Director Ashe. “As this latest guilty plea demonstrates, we continue working with our partners in the United States and overseas to stop the slaughter and crack down on the illegal trafficking that fuels it.”
According to the information, plea agreement, and statements made during court proceedings:
In China, there is a tradition dating back centuries of intricately carving rhinoceros horn cups. Drinking from such a cup was believed by some to bring good health, and antique carvings are highly prized by collectors. Libation cups and other ornamental carvings are particularly sought after in China and in other Asian countries, as well as in the United States. The escalating value of such items has resulted in an increased demand for rhinoceros horn that has helped fuel a thriving black market, including fake antiques made from recently hunted rhinoceros.
Between approximately January 2011 and February 2013, Wang conspired with at least two others to smuggle objects containing rhinoceros horn and elephant ivory out of the United States knowing that it was illegal to export such items without required permits. Due to their dwindling populations, all rhinoceros and elephant species are protected under international trade agreements. Wang made and used false U.S. Customs Declarations for the packages containing rhinoceros horn and ivory objects in order to conceal the true contents of the packages, and did not declare them to the U.S. Fish and Wildlife Service or U.S. Customs and Border Protection as required under U.S. law and international trade agreements.
Wang, 34, of Flushing, N.Y., pleaded guilty to one count of conspiracy, which carries a maximum penalty of five years in prison. Under the terms of the plea agreement, items recovered from Wang’s apartment, including an ivory statute found hidden behind his bed, will be forfeited. He is scheduled to be sentenced by Judge Forrest on Oct. 25, 2013.
Rhinoceros are an herbivore species of prehistoric origin and one of the largest remaining mega-fauna on earth. They have no known predators other than humans. All species of rhinoceros are protected under United States and international law. Since 1976, trade in rhinoceros horn has been regulated under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), a treaty signed by over 170 countries around the world to protect fish, wildlife, and plants that are or may become imperiled due to the demands of international markets.
Operation Crash is a continuing investigation being conducted by the Department of the Interior’s Fish and Wildlife Service (FWS), in coordination with other federal and local law enforcement agencies including U.S. Immigration and Customs Enforcement’s Homeland Security Investigations. A “crash” is the term for a herd of rhinoceros. Operation Crash is an ongoing effort to detect, deter and prosecute those engaged in the illegal killing of rhinoceros and the unlawful trafficking of rhinoceros horns.
Mr. Bharara and Mr. Dreher commended the U.S. Fish and Wildlife Service for its outstanding work in this investigation. They also thanked the New York State Department of Environmental Conservation Division of Law Enforcement and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations for their assistance.
The case is being handled by the U.S. Attorney’s Office Complex Frauds Unit and the Justice Department’s Environment and Natural Resources Division. Assistant United States Attorney Janis M. Echenberg and Senior Trial Attorney Richard A. Udell of the Justice Department’s Environmental Crimes Section are in charge of the prosecution.
THE NEXT MARS MISSION IS READIED
NASA's Next Mars Mission Arrives at Kennedy Space Center for Launch Processing
A crane lifts NASA's Mars Atmosphere and Volatile Evolution (MAVEN) spacecraft inside the Payload Hazardous Servicing Facility on Aug. 3, 2013, at the agency’s Kennedy Space Center in Florida. The spacecraft was flown to Kennedy Space Center for launch processing from Buckley Air Force Base in Colorado near the Lockheed Martin facility in Littleton, Colo., where it was built. MAVEN is to lift off on a United Launch Alliance Atlas V rocket in November, 2013 to begin a 10-month voyage to Mars. It is the first mission dedicated to studying Mars' upper atmosphere and scientists hope to find traces of the ancient environment thought to have existed there.
Image Credit: NASA/Tim Jacobs.
Tuesday, August 13, 2013
JOHN KERRY'S REMARKS AT THE ARCANGELES WOUNDED WARRIOR PROGRAM
FROM: U.S. STATE DEPARTMENT
Remarks at the Arcangeles Wounded Warrior Program
Remarks
John Kerry
Secretary of State
Coldeportes Bogota, Colombia
August 12, 2013
Buenos dias. Estoy encantado de estar aqui en Bogota and it's a great pleasure for me to meet with all of the teams here. I myself am a veteran. I fought in Vietnam. So for many years I’ve been involved with programs in America to work to try to make sports part of the reentry into life and part of an awareness for people about possibilities after injuries. And what I’ve learned is there are no limits, everything is possible. And you can be an amazing inspiration to so many people about how they can deal with either an accident or one of the things that happens in life that people think is somehow a setback, but people can turn it into something very positive and be an inspiration to millions of people.
The United States is very happy to be supportive of this program. And I understand that a lot of these chairs came from our support and I’m delighted, though I’m a little bit surprised to see how hard you guys bump into each other. That’s a tough sport, but I congratulate you and I really want to thank you for your service, for what you have done for your country, for your people, and what you continue to do even now. And we will do everything possible that we can do to try to be helpful to support this program and other programs and ultimately to try to help bring peace in Colombia.
So thank you for the honor of visiting with you today. Thank you for letting me play a little bit of the volleyball and thank you for my shirt with numero uno. Take care of yourselves. Thank you. (Applause.) And let me congratulate – and Pablo, I want to thank him for his incredible inspiration in helping to start this program and my great congratulations to Minister Botero and everything that you’re doing here in the country. God bless you. Thank you very much.
Remarks at the Arcangeles Wounded Warrior Program
Remarks
John Kerry
Secretary of State
Coldeportes Bogota, Colombia
August 12, 2013
Buenos dias. Estoy encantado de estar aqui en Bogota and it's a great pleasure for me to meet with all of the teams here. I myself am a veteran. I fought in Vietnam. So for many years I’ve been involved with programs in America to work to try to make sports part of the reentry into life and part of an awareness for people about possibilities after injuries. And what I’ve learned is there are no limits, everything is possible. And you can be an amazing inspiration to so many people about how they can deal with either an accident or one of the things that happens in life that people think is somehow a setback, but people can turn it into something very positive and be an inspiration to millions of people.
The United States is very happy to be supportive of this program. And I understand that a lot of these chairs came from our support and I’m delighted, though I’m a little bit surprised to see how hard you guys bump into each other. That’s a tough sport, but I congratulate you and I really want to thank you for your service, for what you have done for your country, for your people, and what you continue to do even now. And we will do everything possible that we can do to try to be helpful to support this program and other programs and ultimately to try to help bring peace in Colombia.
So thank you for the honor of visiting with you today. Thank you for letting me play a little bit of the volleyball and thank you for my shirt with numero uno. Take care of yourselves. Thank you. (Applause.) And let me congratulate – and Pablo, I want to thank him for his incredible inspiration in helping to start this program and my great congratulations to Minister Botero and everything that you’re doing here in the country. God bless you. Thank you very much.
REMARKS BY SECRETARY OF STATE KERRY REGARDING INTERNATIONAL YOUTH DAY
FROM: U.S. STATE DEPARTMENT
International Youth Day, August 12, 2013
Press Statement
John Kerry
Secretary of State
Washington, DC
August 12, 2013
The United States joins the international community today in celebrating International Youth Day.
The Department of State is committed to ensuring that we are engaging not only with the leaders of today, but also with the leaders of tomorrow. Today’s generation of young people is the largest and most interconnected the world has ever seen, defined by energy, talent, and optimism. Whether mobilizing for climate change or demanding democracy and equality, we are witnessing the unprecedented impact that young people can have in the 21st century.
Young people communicate with peers from all corners of the globe, on Twitter or Facebook or Google Hangout. They take to the streets to demand dignity and democracy. And they work across borders to find innovative solutions to some of the world’s toughest challenges.
On this year’s International Youth Day, we mark an important aspect of life for young populations around the world: youth migration. In 2010, there were an estimated 27 million young migrants throughout the world. Some of these young people migrate to find new opportunity; others are forced to flee from poverty or war.
As a nation founded by immigrants, and as a country with a long tradition of welcoming the “huddled masses yearning to breathe free,” the United States takes great pride in our commitment to the rights of migrants to realize educational and professional opportunities in their new homes.
So, today, I encourage you to celebrate International Youth Day by taking action that will positively impact young migrants in your community.
International Youth Day, August 12, 2013
Press Statement
John Kerry
Secretary of State
Washington, DC
August 12, 2013
The United States joins the international community today in celebrating International Youth Day.
The Department of State is committed to ensuring that we are engaging not only with the leaders of today, but also with the leaders of tomorrow. Today’s generation of young people is the largest and most interconnected the world has ever seen, defined by energy, talent, and optimism. Whether mobilizing for climate change or demanding democracy and equality, we are witnessing the unprecedented impact that young people can have in the 21st century.
Young people communicate with peers from all corners of the globe, on Twitter or Facebook or Google Hangout. They take to the streets to demand dignity and democracy. And they work across borders to find innovative solutions to some of the world’s toughest challenges.
On this year’s International Youth Day, we mark an important aspect of life for young populations around the world: youth migration. In 2010, there were an estimated 27 million young migrants throughout the world. Some of these young people migrate to find new opportunity; others are forced to flee from poverty or war.
As a nation founded by immigrants, and as a country with a long tradition of welcoming the “huddled masses yearning to breathe free,” the United States takes great pride in our commitment to the rights of migrants to realize educational and professional opportunities in their new homes.
So, today, I encourage you to celebrate International Youth Day by taking action that will positively impact young migrants in your community.
DOJ FILES LAWSUIT CHALLENGING MERGER OF US AIRWAYS AND AMERICAN AIRLINES
FROM: U.S. JUSTICE DEPARTMENT
Tuesday, August 13, 2013
Justice Department Files Antitrust Lawsuit Challenging Proposed Merger Between US Airways and American Airlines
Merger Would Result in U.S. Consumers Paying Higher Airfares and Receiving Less Service; Lawsuit Seeks to Maintain Competition in the Airline Industry
The Department of Justice, six state attorneys general and the District of Columbia filed a civil antitrust lawsuit today challenging the proposed $11 billion merger between US Airways Group Inc. and American Airlines’ parent corporation, AMR Corp. The department said that the merger, which would result in the creation of the world’s largest airline, would substantially lessen competition for commercial air travel in local markets throughout the United States and result in passengers paying higher airfares and receiving less service.
The Department of Justice’s Antitrust Division, along with the attorneys general, filed a lawsuit in the U.S. District Court for the District of Columbia, which seeks to prevent the companies from merging and to preserve the existing head-to-head competition between the firms that the transaction would eliminate. The participating attorneys general are: Texas, where American Airlines is headquartered; Arizona, where US Airways is headquartered; Florida; the District of Columbia; Pennsylvania; Tennessee; and Virginia.
“Airline travel is vital to millions of American consumers who fly regularly for either business or pleasure,” said Attorney General Eric Holder. “By challenging this merger, the Department of Justice is saying that the American people deserve better. This transaction would result in consumers paying the price – in higher airfares, higher fees and fewer choices. Today’s action proves our determination to fight for the best interests of consumers by ensuring robust competition in the marketplace.”
Last year, business and leisure airline travelers spent more than $70 billion on airfare for travel throughout the United States. In recent years, major airlines have, in tandem, raised fares, imposed new and higher fees and reduced service, the department said.
“The department sued to block this merger because it would eliminate competition between US Airways and American and put consumers at risk of higher prices and reduced service,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “If this merger goes forward, even a small increase in the price of airline tickets, checked bags or flight change fees would result in hundreds of millions of dollars of harm to American consumers. Both airlines have stated they can succeed on a standalone basis and consumers deserve the benefit of that continuing competitive dynamic.”
American and US Airways compete directly on more than a thousand routes where one or both offer connecting service, representing tens of billions of dollars in annual revenues. They engage in head-to-head competition with nonstop service on routes worth about $2 billion in annual route-wide revenues. Eliminating this head-to-head competition would give the merged airline the incentive and ability to raise airfares, the department said in its complaint.
According to the department’s complaint, the vast majority of domestic airline routes are already highly concentrated. The merger would create the largest airline in the world and result in four airlines controlling more than 80 percent of the United States commercial air travel market.
The merger would also entrench the merged airline as the dominant carrier at Washington Reagan National Airport, with control of 69 percent of the take-off and landing slots. The merged airline would have a monopoly on 63 percent of the nonstop routes served out of Reagan National airport. As a result, Washington, D.C., area passengers would likely see higher prices and fewer choices if the merger is allowed, the department said in its complaint. Blocking the merger will preserve current competition and service, including flights that US Airways currently offers from Washington’s Reagan National Airport.
The complaint also describes how, in recent years, the major airlines have succeeded in raising prices, imposing new fees and reducing service. The complaint quotes several public statements by senior US Airways executives directly attributing this trend to a reduction in the number of competitors in the U.S. market:
· President Scott Kirby said, “Three successful fare increases – [we are] able to pass along to customers because of consolidation.”
· At an industry conference in 2012, Kirby said, “Consolidation has also…allowed the industry to do things like ancillary revenues…. That is a structural permanent change to the industry and one that’s impossible to overstate the benefit from it.”
· As US Airways CEO Parker stated in February 2013, combining US Airways and American would be “ the last major piece needed to fully rationalize the industry.”
· A US Airways document said that capacity reductions have “enabled” fare increases.
“The merger of these two important competitors will just make things worse –exacerbating current airline industry trends toward reduced service, increasing fares and increasing passenger fees,” added Baer.
As the complaint describes, absent the merger, US Airways and American will continue to provide important competitive constraints on each other and on other airlines. Today, US Airways competes vigorously for price-conscious travelers by offering discounts of up to 40 percent for connecting flights on other airlines’ nonstop routes under its Advantage Fares program. The other legacy airlines – American, Delta and United – routinely match the nonstop fares where they offer connecting service in order to avoid inciting costly fare wars. The Advantage Fares strategy has been successful for US Airways because its network is different from the networks of the larger carriers. If the proposed merger is completed, the combined airline’s network will look more like the existing American, Delta and United networks, and as a result, the Advantage Fares program will likely be eliminated, resulting in higher prices and less services for consumers. An internal analysis at American in October 2012, concluded, “The [Advantage Fares] program would have to be eliminated in a merger with American, as American’s large, nonstop markets would now be susceptible to reactionary pricing from Delta and United.” And, another American executive said that same month, “The industry will force alignment to a single approach–one that aligns with the large legacy carriers as it is revenue maximizing.” By ending the Advantage Fares program, the merger would eliminate lower fares for millions of consumers, the department said.
The complaint also alleges that the merger is likely to result in higher ancillary fees, such as fees charged for checked bags and flight changes. In recent years, the airlines have introduced fees for those services, which were previously included in the price of a ticket. These fees have become huge profit centers for the airlines. In 2012, domestic airlines generated more than $6 billion in fees from checked bags and flight changes alone. The legacy carriers often match each other when one introduces or increases a fee, and if others do not match the initiating carrier tends to withdraw the change. By reducing the number of airlines, the merger will likely make it easier for the remaining carriers to coordinate fee increases, resulting in higher fees for consumers.
The department also said that the merger will make coordination easier among the legacy carriers. Although low-cost carriers such as Southwest and JetBlue offer consumers many benefits, they fly to fewer locations and are unlikely to be able to constrain the coordinated behavior among those carriers.
American Airlines is currently operating in bankruptcy. Absent the merger, American is likely to exit bankruptcy as a vigorous competitor, with strong incentives to grow to better compete with Delta and United, the department said. American recently made the largest aircraft order in industry history, and its post-bankruptcy standalone plan called for increasing both the number of flights and the number of destinations served by those flights at each of its hubs.
The department’s complaint describes US Airways executives’ fear of American’s standalone growth plan as “industry destabilizing.” The complaint states that US Airways worries that American’s growth plan would cause “others” to react “with their own enhanced growth plans…,” and that the resulting effect would increase competitive pressures throughout the industry. The department said the merger will allow US Airways’ management to abandon these aggressive growth plans and continue the industry’s current trend toward higher prices and less service.
The department’s complaint states that executives of both airlines have repeatedly said that they do not need the merger to succeed. The complaint states that US Airways’ CEO observed in December 2011, that “A[merican] is not going away, they will be stronger post-bankruptcy because they will have less debt and reduced labor costs.” US Airways’ executive vice president wrote in July 2012, that, “There is NO question about AMR’s ability to survive on a standalone basis.” And, as recently as January 2013, American’s management presented plans that would increase the destinations it serves in the United States and the frequency of its flights, and would position American to compete independently as a profitable airline with aggressive plans for growth.
AMR is a Delaware corporation with its principal place of business in Fort Worth, Texas. AMR is the parent company of American Airlines. Last year American flew more than 80 million passengers to more than 250 destinations worldwide and took in more than $24 billion in revenue. In November 2011, American filed for bankruptcy reorganization.
US Airways is a Delaware corporation with its principal place of business in Tempe, Ariz. Last year US Airways flew more than 50 million passengers to more than 200 destinations worldwide and took in more than $13 billion in revenue.
Tuesday, August 13, 2013
Justice Department Files Antitrust Lawsuit Challenging Proposed Merger Between US Airways and American Airlines
Merger Would Result in U.S. Consumers Paying Higher Airfares and Receiving Less Service; Lawsuit Seeks to Maintain Competition in the Airline Industry
The Department of Justice, six state attorneys general and the District of Columbia filed a civil antitrust lawsuit today challenging the proposed $11 billion merger between US Airways Group Inc. and American Airlines’ parent corporation, AMR Corp. The department said that the merger, which would result in the creation of the world’s largest airline, would substantially lessen competition for commercial air travel in local markets throughout the United States and result in passengers paying higher airfares and receiving less service.
The Department of Justice’s Antitrust Division, along with the attorneys general, filed a lawsuit in the U.S. District Court for the District of Columbia, which seeks to prevent the companies from merging and to preserve the existing head-to-head competition between the firms that the transaction would eliminate. The participating attorneys general are: Texas, where American Airlines is headquartered; Arizona, where US Airways is headquartered; Florida; the District of Columbia; Pennsylvania; Tennessee; and Virginia.
“Airline travel is vital to millions of American consumers who fly regularly for either business or pleasure,” said Attorney General Eric Holder. “By challenging this merger, the Department of Justice is saying that the American people deserve better. This transaction would result in consumers paying the price – in higher airfares, higher fees and fewer choices. Today’s action proves our determination to fight for the best interests of consumers by ensuring robust competition in the marketplace.”
Last year, business and leisure airline travelers spent more than $70 billion on airfare for travel throughout the United States. In recent years, major airlines have, in tandem, raised fares, imposed new and higher fees and reduced service, the department said.
“The department sued to block this merger because it would eliminate competition between US Airways and American and put consumers at risk of higher prices and reduced service,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “If this merger goes forward, even a small increase in the price of airline tickets, checked bags or flight change fees would result in hundreds of millions of dollars of harm to American consumers. Both airlines have stated they can succeed on a standalone basis and consumers deserve the benefit of that continuing competitive dynamic.”
American and US Airways compete directly on more than a thousand routes where one or both offer connecting service, representing tens of billions of dollars in annual revenues. They engage in head-to-head competition with nonstop service on routes worth about $2 billion in annual route-wide revenues. Eliminating this head-to-head competition would give the merged airline the incentive and ability to raise airfares, the department said in its complaint.
According to the department’s complaint, the vast majority of domestic airline routes are already highly concentrated. The merger would create the largest airline in the world and result in four airlines controlling more than 80 percent of the United States commercial air travel market.
The merger would also entrench the merged airline as the dominant carrier at Washington Reagan National Airport, with control of 69 percent of the take-off and landing slots. The merged airline would have a monopoly on 63 percent of the nonstop routes served out of Reagan National airport. As a result, Washington, D.C., area passengers would likely see higher prices and fewer choices if the merger is allowed, the department said in its complaint. Blocking the merger will preserve current competition and service, including flights that US Airways currently offers from Washington’s Reagan National Airport.
The complaint also describes how, in recent years, the major airlines have succeeded in raising prices, imposing new fees and reducing service. The complaint quotes several public statements by senior US Airways executives directly attributing this trend to a reduction in the number of competitors in the U.S. market:
· President Scott Kirby said, “Three successful fare increases – [we are] able to pass along to customers because of consolidation.”
· At an industry conference in 2012, Kirby said, “Consolidation has also…allowed the industry to do things like ancillary revenues…. That is a structural permanent change to the industry and one that’s impossible to overstate the benefit from it.”
· As US Airways CEO Parker stated in February 2013, combining US Airways and American would be “ the last major piece needed to fully rationalize the industry.”
· A US Airways document said that capacity reductions have “enabled” fare increases.
“The merger of these two important competitors will just make things worse –exacerbating current airline industry trends toward reduced service, increasing fares and increasing passenger fees,” added Baer.
As the complaint describes, absent the merger, US Airways and American will continue to provide important competitive constraints on each other and on other airlines. Today, US Airways competes vigorously for price-conscious travelers by offering discounts of up to 40 percent for connecting flights on other airlines’ nonstop routes under its Advantage Fares program. The other legacy airlines – American, Delta and United – routinely match the nonstop fares where they offer connecting service in order to avoid inciting costly fare wars. The Advantage Fares strategy has been successful for US Airways because its network is different from the networks of the larger carriers. If the proposed merger is completed, the combined airline’s network will look more like the existing American, Delta and United networks, and as a result, the Advantage Fares program will likely be eliminated, resulting in higher prices and less services for consumers. An internal analysis at American in October 2012, concluded, “The [Advantage Fares] program would have to be eliminated in a merger with American, as American’s large, nonstop markets would now be susceptible to reactionary pricing from Delta and United.” And, another American executive said that same month, “The industry will force alignment to a single approach–one that aligns with the large legacy carriers as it is revenue maximizing.” By ending the Advantage Fares program, the merger would eliminate lower fares for millions of consumers, the department said.
The complaint also alleges that the merger is likely to result in higher ancillary fees, such as fees charged for checked bags and flight changes. In recent years, the airlines have introduced fees for those services, which were previously included in the price of a ticket. These fees have become huge profit centers for the airlines. In 2012, domestic airlines generated more than $6 billion in fees from checked bags and flight changes alone. The legacy carriers often match each other when one introduces or increases a fee, and if others do not match the initiating carrier tends to withdraw the change. By reducing the number of airlines, the merger will likely make it easier for the remaining carriers to coordinate fee increases, resulting in higher fees for consumers.
The department also said that the merger will make coordination easier among the legacy carriers. Although low-cost carriers such as Southwest and JetBlue offer consumers many benefits, they fly to fewer locations and are unlikely to be able to constrain the coordinated behavior among those carriers.
American Airlines is currently operating in bankruptcy. Absent the merger, American is likely to exit bankruptcy as a vigorous competitor, with strong incentives to grow to better compete with Delta and United, the department said. American recently made the largest aircraft order in industry history, and its post-bankruptcy standalone plan called for increasing both the number of flights and the number of destinations served by those flights at each of its hubs.
The department’s complaint describes US Airways executives’ fear of American’s standalone growth plan as “industry destabilizing.” The complaint states that US Airways worries that American’s growth plan would cause “others” to react “with their own enhanced growth plans…,” and that the resulting effect would increase competitive pressures throughout the industry. The department said the merger will allow US Airways’ management to abandon these aggressive growth plans and continue the industry’s current trend toward higher prices and less service.
The department’s complaint states that executives of both airlines have repeatedly said that they do not need the merger to succeed. The complaint states that US Airways’ CEO observed in December 2011, that “A[merican] is not going away, they will be stronger post-bankruptcy because they will have less debt and reduced labor costs.” US Airways’ executive vice president wrote in July 2012, that, “There is NO question about AMR’s ability to survive on a standalone basis.” And, as recently as January 2013, American’s management presented plans that would increase the destinations it serves in the United States and the frequency of its flights, and would position American to compete independently as a profitable airline with aggressive plans for growth.
AMR is a Delaware corporation with its principal place of business in Fort Worth, Texas. AMR is the parent company of American Airlines. Last year American flew more than 80 million passengers to more than 250 destinations worldwide and took in more than $24 billion in revenue. In November 2011, American filed for bankruptcy reorganization.
US Airways is a Delaware corporation with its principal place of business in Tempe, Ariz. Last year US Airways flew more than 50 million passengers to more than 200 destinations worldwide and took in more than $13 billion in revenue.
REMARKS BY SECRETARY OF STATE KERRY AT COUNTER-NARCOTICS DIRECTORATE HEADQUARTERS
FROM: U.S. STATE DEPARTMENT
Remarks at Counter-Narcotics Directorate Headquarters
Remarks
John Kerry
Secretary of State
Bogota, Colombia
August 12, 2013
SECRETARY KERRY: Muchas gracias, Senora Ministra. It’s a great privilege for me to be here this afternoon with all of you. Thank you for a remarkable demonstration of Colombia’s capacity to fight against illegal narcotics and against terrorism.
This is a very impressive display of Colombia’s commitment to try to make a difference in this effort. We all know it’s a very difficult one. And I particularly want to express our gratitude to those police officers, those members of the military also, who have been wounded or have sacrificed their lives in the effort to try to make the world safe from narcotics traffickers, criminals and terrorists.
I want to say thank you on behalf of the United States of America because we’re very grateful for the partnership in working with you. A lot of what is happening here is happening in joint training and in joint support. And I am very impressed personally, because I served for many years in the United States Senate and I used to vote for the money that would help support this kind of program. But this is the first time I’ve seen it in person here in Colombia, and I’m very impressed by what I see.
So thank you very, very much, all of you, for being part of this fight. I know sometimes it may seem frustrating, but I will tell you that it is making a difference, and it is making a difference nowhere more than here in Colombia.
So I will take back with me the impressions that I have from today, and I am very happy to share with you, on behalf of President Obama and the American people, our gratitude for your partnership in this very important fight. Thank you, and keep working at it, and stay safe.
Thank you very much. Thank you. Thank you so much. Thank you, Minister. Great guy. You’re doing a great job. It’s very impressive. All right. (Applause.)
Remarks at Counter-Narcotics Directorate Headquarters
Remarks
John Kerry
Secretary of State
Bogota, Colombia
August 12, 2013
SECRETARY KERRY: Muchas gracias, Senora Ministra. It’s a great privilege for me to be here this afternoon with all of you. Thank you for a remarkable demonstration of Colombia’s capacity to fight against illegal narcotics and against terrorism.
This is a very impressive display of Colombia’s commitment to try to make a difference in this effort. We all know it’s a very difficult one. And I particularly want to express our gratitude to those police officers, those members of the military also, who have been wounded or have sacrificed their lives in the effort to try to make the world safe from narcotics traffickers, criminals and terrorists.
I want to say thank you on behalf of the United States of America because we’re very grateful for the partnership in working with you. A lot of what is happening here is happening in joint training and in joint support. And I am very impressed personally, because I served for many years in the United States Senate and I used to vote for the money that would help support this kind of program. But this is the first time I’ve seen it in person here in Colombia, and I’m very impressed by what I see.
So thank you very, very much, all of you, for being part of this fight. I know sometimes it may seem frustrating, but I will tell you that it is making a difference, and it is making a difference nowhere more than here in Colombia.
So I will take back with me the impressions that I have from today, and I am very happy to share with you, on behalf of President Obama and the American people, our gratitude for your partnership in this very important fight. Thank you, and keep working at it, and stay safe.
Thank you very much. Thank you. Thank you so much. Thank you, Minister. Great guy. You’re doing a great job. It’s very impressive. All right. (Applause.)
SHIPPING COMPANY AND ENGINEERS CONVICTED IN "MAGIC PIPE CASE"
FROM: U.S. JUSTICE DEPARTMENT
Thursday, August 8, 2013
Shipping Corporation and Two Engineers Convicted in ‘Magic Pipe’ Case in Norfolk, Va.
Diana Shipping Services S.A., a Panamanian corporation headquartered in Greece, Ioannis Prokakis and Antonios Boumpoutelos, both citizens of Greece, were convicted today after an 12-day bench trial on charges related to the illegal discharge of waste oil and oil-contaminated waste water from the M/V Thetis, a cargo vessel operated by Diana Shipping Services, announced Robert G. Dreher, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division, Neil H. MacBride, U.S. Attorney for the Eastern District of Virginia, Otis E. Harris, Jr., Special Agent in Charge, Coast Guard Investigative Service, Chesapeake Region, and David G. McLeod, Jr., Special Agent in Charge of EPA’s criminal enforcement program for the Middle Atlantic States.
All the defendants were convicted of conspiracy, knowing failure to fully maintain an oil record book, falsification of records and concealing tangible objects in a federal investigation. In addition, Prokakis was also convicted of obstruction of justice for ordering crewmembers to lie to U.S. Coast Guard inspectors on board the ship. The guilty verdicts were handed down by U.S. District Judge Mark S. Davis of the Eastern District of Virginia.
“The pollution of our oceans, the falsification of environmental records, and lying to the U.S. Coast Guard are serious crimes,” said Acting Assistant Attorney General Dreher. “Companies and individuals that intentionally attempt to cover up these crimes and obstruct U.S. Coast Guard investigations, will be prosecuted to the fullest extent of the law.”
“These defendants not only violated the law when they illegally discharged contaminated waste into our waters, but then conspired to cover up their nefarious conduct,” said United States Attorney Neil H. MacBride. “Those who choose to continue to violate the law, even after being confronted, will find themselves in the same, serious trouble as these defendants.”
“The Coast Guard protects not only the environment of our nation, but the world’s,” said Capt. John Little, Commander of Coast Guard Sector Hampton Roads. “Our Port State Control Teams board thousands of vessels annually to ensure compliance with U.S. law, regulations, and international treaties on pollution prevention. This case affirms the strength of our partnerships with the Department of Justice, the U.S. Attorney’s Office and our Coast Guard Investigative Service in holding accountable those vessel operators who deliberately discharge oil and falsify ship records.”
“The oceans must be protected from shipping companies that cut corners and dump waste improperly,” said David G. McLeod, Jr., Special Agent in Charge of EPA’s criminal enforcement program for the Middle Atlantic States. “The defendants conspired to discharge oily waste from the M/V Thetis into the open water, falsified the ship’s record books and attempted to thwart the investigation. Today's guilty verdict should send a clear message that our collaborative efforts will lead to the vigorous prosecution of those who despoil our oceans and violate our nation’s environmental laws.”
Diana Shipping Services, S.A. faces a maximum fine of $5.5 million and five years of probation. Prokakis and Boumpoutelos face a maximum sentence of five years for the conspiracy conviction, six years per failure to maintain an oil record book conviction, and 20 years per falsification of record conviction. Prokakis faces an additional five year sentence for obstruction of justice. All three defendants will be sentenced on Nov. 8, 2013.
Diana Shipping Services S.A., Prokakis, and Boumpoutelos, were indicted on May 22, 2013, in an 11-count superseding indictment alleging the illegal discharging of waste oil and oil-contaminated waste water in violation of the Act to Prevent Pollution from Ships. In September 2012, crewmembers of the M/V Thetis, a cargo vessel operated by Diana Shipping Services, reported that the vessel was discharging its bilge waste and sludge illegally by various means, including a “magic pipe” that bypassed the oily water separator. Coast Guard inspectors boarded the vessel when it entered port in Norfolk and discovered the “magic pipe” and that the oily water separator was non-functioning. The inspectors were also presented with an oil record book that contained false entries made by the ship’s Chief Engineer, Ioannis Prokakis and the Second Engineer Antonios Boumpoutelos. During the inspection, Prokakis lied to inspectors about the “magic pipe” and told other members of the engineering crew to not disclose its existence to the Coast Guard inspectors.
This case was investigated by the Coast Guard Investigative Service and the EPA’s Criminal Investigations Division. Assistant U.S. Attorney Joseph L. Kosky of the Eastern District of Virginia and Trial Attorney Kenneth E. Nelson of the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division are prosecuting the case on behalf of the United States.
Thursday, August 8, 2013
Shipping Corporation and Two Engineers Convicted in ‘Magic Pipe’ Case in Norfolk, Va.
Diana Shipping Services S.A., a Panamanian corporation headquartered in Greece, Ioannis Prokakis and Antonios Boumpoutelos, both citizens of Greece, were convicted today after an 12-day bench trial on charges related to the illegal discharge of waste oil and oil-contaminated waste water from the M/V Thetis, a cargo vessel operated by Diana Shipping Services, announced Robert G. Dreher, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division, Neil H. MacBride, U.S. Attorney for the Eastern District of Virginia, Otis E. Harris, Jr., Special Agent in Charge, Coast Guard Investigative Service, Chesapeake Region, and David G. McLeod, Jr., Special Agent in Charge of EPA’s criminal enforcement program for the Middle Atlantic States.
All the defendants were convicted of conspiracy, knowing failure to fully maintain an oil record book, falsification of records and concealing tangible objects in a federal investigation. In addition, Prokakis was also convicted of obstruction of justice for ordering crewmembers to lie to U.S. Coast Guard inspectors on board the ship. The guilty verdicts were handed down by U.S. District Judge Mark S. Davis of the Eastern District of Virginia.
“The pollution of our oceans, the falsification of environmental records, and lying to the U.S. Coast Guard are serious crimes,” said Acting Assistant Attorney General Dreher. “Companies and individuals that intentionally attempt to cover up these crimes and obstruct U.S. Coast Guard investigations, will be prosecuted to the fullest extent of the law.”
“These defendants not only violated the law when they illegally discharged contaminated waste into our waters, but then conspired to cover up their nefarious conduct,” said United States Attorney Neil H. MacBride. “Those who choose to continue to violate the law, even after being confronted, will find themselves in the same, serious trouble as these defendants.”
“The Coast Guard protects not only the environment of our nation, but the world’s,” said Capt. John Little, Commander of Coast Guard Sector Hampton Roads. “Our Port State Control Teams board thousands of vessels annually to ensure compliance with U.S. law, regulations, and international treaties on pollution prevention. This case affirms the strength of our partnerships with the Department of Justice, the U.S. Attorney’s Office and our Coast Guard Investigative Service in holding accountable those vessel operators who deliberately discharge oil and falsify ship records.”
“The oceans must be protected from shipping companies that cut corners and dump waste improperly,” said David G. McLeod, Jr., Special Agent in Charge of EPA’s criminal enforcement program for the Middle Atlantic States. “The defendants conspired to discharge oily waste from the M/V Thetis into the open water, falsified the ship’s record books and attempted to thwart the investigation. Today's guilty verdict should send a clear message that our collaborative efforts will lead to the vigorous prosecution of those who despoil our oceans and violate our nation’s environmental laws.”
Diana Shipping Services, S.A. faces a maximum fine of $5.5 million and five years of probation. Prokakis and Boumpoutelos face a maximum sentence of five years for the conspiracy conviction, six years per failure to maintain an oil record book conviction, and 20 years per falsification of record conviction. Prokakis faces an additional five year sentence for obstruction of justice. All three defendants will be sentenced on Nov. 8, 2013.
Diana Shipping Services S.A., Prokakis, and Boumpoutelos, were indicted on May 22, 2013, in an 11-count superseding indictment alleging the illegal discharging of waste oil and oil-contaminated waste water in violation of the Act to Prevent Pollution from Ships. In September 2012, crewmembers of the M/V Thetis, a cargo vessel operated by Diana Shipping Services, reported that the vessel was discharging its bilge waste and sludge illegally by various means, including a “magic pipe” that bypassed the oily water separator. Coast Guard inspectors boarded the vessel when it entered port in Norfolk and discovered the “magic pipe” and that the oily water separator was non-functioning. The inspectors were also presented with an oil record book that contained false entries made by the ship’s Chief Engineer, Ioannis Prokakis and the Second Engineer Antonios Boumpoutelos. During the inspection, Prokakis lied to inspectors about the “magic pipe” and told other members of the engineering crew to not disclose its existence to the Coast Guard inspectors.
This case was investigated by the Coast Guard Investigative Service and the EPA’s Criminal Investigations Division. Assistant U.S. Attorney Joseph L. Kosky of the Eastern District of Virginia and Trial Attorney Kenneth E. Nelson of the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division are prosecuting the case on behalf of the United States.
DOJ FILES SUIT TO STOP MAN FROM PREPARING TAX RETURNS, ALLEGING MAN HAD ROLE IN BOGUS RETURNS
FROM: U.S. JUSTICE DEPARTMENT
Wednesday, August 7, 2013
Justice Department Files Suit to Stop San Diego Man from Preparing Tax Returns
The Justice Department announced today that the United States has filed a civil injunction suit against Michael I. Turner, of San Diego to stop him from preparing federal tax returns.
The government complaint, filed in the U.S. District Court for the Southern District of California, alleges that Turner, who has prepared returns since at least 2004, has failed to sign or affix a Preparer Tax Identification Number (PTIN) to many of the returns that he has prepared. In addition and according to the government, Turner takes bogus deductions on his customers’ returns in order to claim larger refunds for his customers. His customers then recommend Turner as a tax preparer to their friends, which helps Turner to expand his customer base and further increase his own profits. Specifically, the government alleges that Turner claims inflated or fabricated deductions on the Schedule A of his customers’ Form 1040 tax returns, claiming that his customers have large non-cash charitable contributions and unreimbursed employee expenses. The complaint also alleges that when Turner’s customers are audited, Turner has provided false documents to those customers in an attempt to assist them in substantiating charitable contributions and employee expenses that they did not incur. According to the complaint, however, Turner has instructed his customers not to identify him as their tax return preparer in communications with the Internal Revenue Service (IRS).
The government alleges that Turner continues to prepare tax returns. According to the complaint, Turner applied for a PTIN in 2010, and has prepared at least 68 tax returns for the 2012 tax year using that PTIN.
The government seeks, among other things, that the court bar Turner from acting as a tax return preparer or assisting others in preparing or filing federal tax returns or other tax forms or documents. The government also requests that the court bar Turner from appearing as a representative on behalf of any person or entity before the IRS, and from owning, managing, controlling, working for or volunteering for a tax-return preparation business.
In the past decade the Justice Department Tax Division has obtained injunctions against hundreds of tax preparers.
Wednesday, August 7, 2013
Justice Department Files Suit to Stop San Diego Man from Preparing Tax Returns
The Justice Department announced today that the United States has filed a civil injunction suit against Michael I. Turner, of San Diego to stop him from preparing federal tax returns.
The government complaint, filed in the U.S. District Court for the Southern District of California, alleges that Turner, who has prepared returns since at least 2004, has failed to sign or affix a Preparer Tax Identification Number (PTIN) to many of the returns that he has prepared. In addition and according to the government, Turner takes bogus deductions on his customers’ returns in order to claim larger refunds for his customers. His customers then recommend Turner as a tax preparer to their friends, which helps Turner to expand his customer base and further increase his own profits. Specifically, the government alleges that Turner claims inflated or fabricated deductions on the Schedule A of his customers’ Form 1040 tax returns, claiming that his customers have large non-cash charitable contributions and unreimbursed employee expenses. The complaint also alleges that when Turner’s customers are audited, Turner has provided false documents to those customers in an attempt to assist them in substantiating charitable contributions and employee expenses that they did not incur. According to the complaint, however, Turner has instructed his customers not to identify him as their tax return preparer in communications with the Internal Revenue Service (IRS).
The government alleges that Turner continues to prepare tax returns. According to the complaint, Turner applied for a PTIN in 2010, and has prepared at least 68 tax returns for the 2012 tax year using that PTIN.
The government seeks, among other things, that the court bar Turner from acting as a tax return preparer or assisting others in preparing or filing federal tax returns or other tax forms or documents. The government also requests that the court bar Turner from appearing as a representative on behalf of any person or entity before the IRS, and from owning, managing, controlling, working for or volunteering for a tax-return preparation business.
In the past decade the Justice Department Tax Division has obtained injunctions against hundreds of tax preparers.
LOOKING FOR THE ANSWERS TO THE INCREASE IN WESTERN WILDFIRE
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| The Yarnell Hill wildfire began on June 28, 2013, after a lightning strike. |
FROM: NATIONAL SCIENCE FOUNDATION
As large Western wildfires increase, scientists look for answers
Barely halfway into the summer of 2013, this year's wildfire season is already a record breaker. The Yarnell Hill wildfire, which started on June 28, was the deadliest fire in Arizona's history, killing 19 firefighters. The Black Forest wildfire, which started on June 11, was the most destructive wildfire in Colorado's history; it scorched more than 14,000 acres, destroyed more than 500 homes and killed two people.
The western U.S. has seen large, destructive wildfires on a daily basis this summer. Already in 2013, the acreage burned is more than three times the size of Rhode Island. What's more, the worst may be yet to come. Large swathes of the western U.S. will remain at risk of significant burning through September, according to the National Interagency Fire Center (NIFC). NIFC attributes this prolonged risk to long-term drought along with record high temperatures and dry weather.
Our flammable planet
"Wildfires are not new. They have continuously occurred on Earth for at least the last 400 million years," says Jennifer Balch of Penn State University. But, she adds, research shows that since the 1970s, the frequency of wildfires has increased at least four-fold.
According to this research--a study published in 2006 by a team led by A.L. Westerling of the Scripps Institution of Oceanography and the University of California, Merced--the total size of burn areas in the western U.S. increased at least six-fold in the later part of the 20th century. In addition, studies show that wildfires at high altitudes, which used to be rare, are increasing. (Thomas Swetnam of the University of Arizona discussed this finding during a 2009 National Science Foundation- (NSF) sponsored teleconference.) All of this means that large western wildfires are becoming more frequent and more intense.
Steadily rising, the cost of fighting U.S. wildfires totaled close to $2 billion in 2012, according to NIFC. According to Balch's most recent analysis, more than 80 percent of reported landscape fires that burned in the U.S. from 2001 to 2008 were started by people.
Invasive species fan the flames
Bigger and more frequent fires are linked to various types of human activities, including those that spread invasive species. A case in point: During the westward expansion, around 1880, settlers accidentally introduced to the west from Europe and Asia an invasive grass known as cheatgrass. Today, this plant covers more than 40,000 square kilometers of the western U.S., says Balch.
Scientists suspect that cheatgrass increases the number and severity of fires because it grows in arid lands and dries out before native vegetation does--a continuous carpet of fuel for fires.
An NSF-funded study conducted by Balch and other scientists shows that cheatgrass has been involved in a disproportionately large number of fires in the Great Basin, a 600,000-square kilometer area that includes parts of Nevada, Utah, Colorado, California and Oregon.
"Over the past decade, cheatgrass fueled the majority of the largest fires, including 39 of the largest 50 fires, even though this species only dominates about 6 percent of the land in the Great Basin," said Balch. "In addition, cheatgrass burned twice as frequently as any other vegetation."
The heat is on
Another factor promoting increased wildfires in the western U.S. is climate change, which is characterized by increased year-round temperatures, reduced precipitation and earlier springs. These changes:
create hot, dry conditions that are conducive to fires,
increase the length of the wildfire season, and
generate fuel for wildfires by increasing infestations of mountain bark beetles that kill trees. Since the mid-2000s, mountain bark beetles have felled millions of acres of forests, from New Mexico to British Columbia.
Climate change promotes fire-friendly infestations of bark beetles via a double whammy: Milder winters enable populations of bark beetles to survive the winter, and thereby increase their numbers and amplify their killing power. By contrast, populations of these pests used to be thinned, and thereby neutralized, by the killing cold of winter.
At the same time, climate change increases the vulnerability of forests to bark beetle attacks. It does so by triggering droughts that subject trees to water stress, which reduces their resistance to bark beetle infestations--much the way that starvation reduces the resistance of people to infections.
Climate change and wildfires reinforce each other
To make matters worse, the problem is not only that climate change promotes wildfires--but also that the reverse is true. That is, wildfires promote climate change. How? For one thing, wildfires char and darken the land. Darkened land absorbs more heat than non-charred, vegetated land. In addition, wildfires release carbon dioxide and methane--both of which are greenhouse gases that trap heat in the atmosphere and thereby help raise global temperatures. In fact, fires that people intentionally start to clear land of vegetation currently contribute up to one-fifth of human-caused increases in carbon dioxide emissions, according to a study conducted by Balch and other scientists.
The complex relationship between climate change and wildfires mean that areas that experience temperature increases and altered precipitation patterns may also experience more wildfires. And if wildfires occur more frequently across the globe, they will emit more greenhouse gases into the atmosphere.
Fighting fire with fire
An upsurge in wildfires raises pressing questions about fire management, says Balch. One management option, she says, is to reduce fuel for intense fires through prescribed and controlled burns--a trend that began during recent decades following almost 100 years of widespread fire suppression. But efforts to increase prescribed and controlled burns face major obstacles, including funding shortages during these lean economic times and a lack of support from the public, which is generally fearful of fires.
After the fire...
NSF is continuing to support research that will improve our understanding wildfire behavior. This topic is important because wildfire characteristics can change with maddening capriciousness over short distances and short time periods. In fact, a single wildfire may devastate one particular area but leave a similar, nearby area relatively unscathed because of even slight changes in time and space involving weather conditions, local winds, landscape features, microclimates, day-to-night changes in atmospheric conditions, soil moisture and the types and distribution of vegetation.
To better define the influence of these and other factors on wildfire behavior, a study of the causes and impacts of the High Park wildfire in northern Colorado, which started on June 9, 2012, is being jointly conducted by Colorado State University (CSU) and the NSF-funded National Ecological Observatory Network (NEON), headquartered in Boulder, Colo. (See this Science Nation video.)
The High Park wildfire was selected for study because it was among the worst wildfires in Colorado history and because CSU researchers had fortuitously been studying the area before the fire started, and had thereby generated rare, pre-fire baseline data on area ecology.
Critical components of the High Park study are flyovers of the burn scar and adjacent areas by a Twin Otter airplane that collects ecological measurements with state-of-the-art remote-sensing instruments. These instruments can quickly collect high-resolution measurements down to 1 meter and capture data from much larger areas than can ground sensors or field crews. In fact, these instruments may measure the individual tree heights, leaf area and leaf chemistry of 15 million trees in a single flyover.
High Park data--which will offer unparalleled precision related to the extent and condition of surviving vegetation, plant species, ash cover, soil properties and other factors--are being incorporated into high-definition, 3-D images as well as other types of rich ecological data covering the study area. Release to the public of High Park data is slated to begin later in 2013.
Results from the High Park study may help scientists understand how preexisting conditions defined by the CSU data influenced the behavior and severity of the fire and how the fire's burn patterns are affecting recovery of vegetation, wildlife and water resources. They may also support regional recovery efforts conducted by the U.S. and state forest service and the cities of Fort Collins and Greeley, Colo.--both of which have water supplies that are likely to be affected by post-fire erosion. And they may ultimately be used to help refine models of fire behavior and help improve future firefighting and post-fire management decisions.
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