WHITE HOUSE BRIEFING ON EXECUTIVE ORDER ON UKRAINE

FROM:  THE WHITE HOUSE 

Background Briefing by Senior Administration Officials on Executive Order on Ukraine -- Via Conference Call

Via Conference Call

8:38 A.M. EST

MS. HAYDEN:  Thank you very much.  Good morning, everyone.  Thank you so much for joining.  This conference call is to discuss the visa restrictions and executive order that were released today in relation to Ukraine.  We have several speakers today, all of whom are senior administration officials.  The call is on background so they should be referred to and this attributed to senior administration officials.  There is no embargo on this call.

With that, I will turn it over to our first senior administration official.

SENIOR ADMINISTRATION OFFICIAL:  Thanks, everybody, for joining the call.  I just want to give you a bit of an overview of where things stand and the actions we've taken today.

To begin with, since the Russian intervention in Ukraine you have seen us work on several lines of effort to mobilize international unity, to condemn the Russian intervention, to impose costs on Russia for that intervention so that they are isolated politically and economically, to provide additional support for the government in Kyiv.  And you’ve seen both the United States and the European Union make important announcements about our support for the Ukrainian people over the last several days while also, again, indicating that there is an opportunity for Russia to deescalate going forward.

In terms of how that's manifested, you have seen broad international unity in the condemnations out of the North Atlantic Council, out of our European allies, and out of the G7 countries.  We suspended preparatory meetings for the G8 in Sochi.  The United States has pulled down and cancelled discussions associated with keeping trade and commercial ties to Russia.  We've also cancelled military exercises and joint consultations with Russia on those specific issues, while providing additional reassurance to our European allies about our commitment to their security.

With today’s actions we have taken additional steps to impose costs on Russia and those who are responsible for the violation of Ukraine’s sovereignty and territorial integrity.  That includes an executive order that gives us a great deal of flexibility to target individuals and entities who are responsible for this violation of international law and of Georgian -- sorry -- Ukrainian sovereignty.  And we are also imposing visa restrictions, which further imposes a cost on individuals responsible for the violation of Ukraine’s sovereignty and territorial integrity.

So this should send a strong message that we intend to impose costs on Russia for this intervention.  It also gives us flexibility, however, to respond in the coming days based on Russia’s continued actions.  So, again, we already have grave concerns over the intervention in Crimea.  The situation, of course, could escalate further if we see actions into Eastern Ukraine, and we have the flexibility, therefore, to calibrate and escalate our own response if we see further Russian destabilizing actions, just as we are going to impose a cost for what has already taken place in Crimea.

At the same time, there continues to be a way to deescalate the situation, to allow international monitors into not just Eastern Ukraine but also Crimea to assure the protection of all Ukrainian citizens including ethnic Russians; to have immediate discussions between the Russian government and the government in Kyiv with the support of the international community; and to work towards the elections that the Ukrainian people will have in May to determine their next democratically elected government.

With that, I'll turn it over to my Treasury colleague to discuss the EO.

SENIOR ADMINISTRATION OFFICIAL:  Thank you.  Today the EO issued by the President allows the Secretary of the Treasury to impose powerful financial sanctions on individuals and entities responsible for an array of activities related to the situation developing in Ukraine. 

There’s four main criteria for designation:  First, it allows us to target those undermining democratic processes or   institutions in Ukraine; second, those threatening the peace, security, stability, sovereignty or territorial integrity of Ukraine; third, those misappropriating state assets of Ukraine;  and fourth, those purporting to assert governmental authority over any part of Ukraine without authorization from the Ukrainian government in Kyiv.

In addition, we also are afforded in this executive order the authority to target derivatives -- in other words, those who are acting on behalf of, or providing material support to, or those who are under control by anyone listed.

This is a powerful and flexible tool that will allow us to target those who are most directly involved in destabilizing Ukraine, including the military intervention in Crimea.  It does not preclude further steps should the situation deteriorate. 

Finally, we have not listed specific individuals or entities today, but this authority is now in place and we will be looking to use it as appropriate in response to developments on the ground.

Thank you.

SENIOR ADMINISTRATION OFFICIAL:  The State Department is putting in place visa restrictions on a number of officials and individuals, which reflects a policy decision to deny visas to officials or other persons who have been complicit in or responsible for supporting actions which threaten the sovereignty, territorial integrity or political independence of Ukraine, including the Russian troop movements not authorized to or consented to by the government of Ukraine, and potentially, any other unauthorized actions by regional authorities in Ukraine.

So we have put this -- we have this authority, are implementing it, and we will be restricting visas as well as pulling a number of visas where people already have them.

Q    A couple quick questions.  I know you can’t give us the names of those on the visa ban.  Can you give us a sense of the scope of it, rough numbers of some sort?  And you mentioned that those who have visas will have them pulled.  Are they notified of that?  And then, secondly, why now, this morning, before the Lavrov talks, not after?  Did the Crimea referendum thing that they talked about today play a part?  And are we going to -- and are you saying you’re not going to do these other sanctions except in response to further actions by the Russians, or we’re going to take further actions even without further escalation?

SENIOR ADMINISTRATION OFFICIAL:  I’ll go first and then turn it over to my colleague.  First, on the why now, Peter, we’ve been preparing very quickly this executive order.  We believe that there need to be costs and consequences for Russia for what they’ve already done in Crimea.  That is a violation of international law, a violation of Ukraine’s sovereignty and territorial integrity.  So there will be individuals who are designated pursuant to what we’ve already seen in Crimea.

The point I was making is that we also have flexibility under this EO and any other additional sanctions we may impose should we see further escalatory behavior by the Russian Federation. 

We’ve been working on this in close consultation and coordination with our European allies.  They were aware that we are taking this step.  They have taken some steps related to the events in Ukraine -- they’ll make their own decisions, of course, going forward.  But it’s important to note that we have been closely coordinating with them in this effort.

Again, the Russian Federation continues to have the opportunity to deescalate the situation.  I know Secretary Kerry is meeting with Prime Minister Lavrov this morning to continue those discussions.  But we’re not going to put on hold our efforts to impose a cost for what has been a violation of international law already.

I’ll turn it over to my colleague for the visa question.

SENIOR ADMINISTRATION OFFICIAL:  Yes, Peter, we would notify anyone who holds a U.S. visa that that visa had been revoked.  And we will do so as occasion arises.  The authority allows us to add people to the visa ban list, and we will be looking at additional names as more information unfolds.

Q    Can you just give us sort of the U.S. reaction to the announcement of the referendum today? And secondly, you’ve talked a lot about watching for other movement into Eastern Ukraine.  Is it still the U.S. assessment that you’re not seeing that kind of movement at this point?

SENIOR ADMINISTRATION OFFICIAL:  Sure, thanks, Julie.  First of all, with respect to the referendum that was announced, it is the belief of the United States that decisions about Crimea or any part of Ukraine needs to be made with the government in Kyiv. This is a country with clearly defined international borders, and ultimately only the people of Ukraine can make determinations about their political future.  And the government in Kyiv has to be a part of any decisions that are made about the future of Crimea or any other region.

And I think you saw the Prime Minister make comments about their openness to discussions about various arrangements going forward.  They have to be at the table.  You can’t have a situation in which the legitimate government of the country is excluded from decision-making about different parts of that country.  That is clearly a violation of international law and of how these things are done. 

So we will continue to support the sovereignty and the territorial integrity of Ukraine as a whole, and we will continue to insist that the government in Kyiv be engaged in any discussion about the future of any and all parts of Ukraine.

With respect to movements, what we have seen to date, of course, is a violation of Ukraine’s borders, its territorial integrity, and also the basing agreement that the Russians had with respect to their facility on the Black Sea.  We have not seen movements into Eastern Ukraine.  Were we to see that, we believe that would be a significant escalation of the situation, would further destabilize the situation, and would invite a further response from the United States and the international community.  So it’s something that we’re watching closely.

We’ve also said that international monitors are the best way to assure that the rights of all Ukrainians are being protected, including ethnic Russians.  And a monitoring team from the OSCE has arrived in Ukraine, has moved out to different parts of the country, has an important set of experiences and capabilities to ensure that basic rights are being protected.  We believe that that monitoring mission should expand into Crimea and can be the basis for a way of deescalating the crisis.

Q    For those of us who are here in Crimea, it’s very obvious kind of what’s going on -- law and order is increasingly being run by Russian soldiers and what is essentially their proxies, pro-Russian activists.  Do you have any notion that the sanctions today or the actions today will actually impact the people who are delivering orders to these soldiers on the ground, to these people who are doing things like detaining Robert Serry yesterday?  Do you have any sense of who the people are who are pulling strings in Crimea and whether there’s even a command structure that would allow you to target people who are making decisions here and who are increasingly targeting journalists and Westerners, not only including Serry but including OSCE members yesterday as well?  Thanks.

SENIOR ADMINISTRATION OFFICIAL:  Thanks, Nate.  I’ll make a couple comments and then my colleague may want to comment as well. 

We have seen, obviously in addition to the basic violation of Ukraine’s borders and the basing agreement in Crimea, we have seen those concerning reports that you mention.  I think we do have an ability to establish individuals or entities that we believe are responsible for supporting those actions.  Frankly, the very flexibility of this tool, the fact, frankly, that we have not yet designated individuals I think should be leading people in Russia, people in Crimea to be asking whether or not they’re going to see their name in a designation. 

So I think this is a very clear message that the United States is going to use the authorities that we have to target the assets, the travel of individuals who are responsible for that concerning behavior.  And the flexibility it affords us I think should lead some of those individuals to be questioning whether or not they’re going to find their name on a list.  But I turn it over to Treasury to say anything else.

SENIOR ADMINISTRATION OFFICIAL:  Nothing to add.

Q    I want to return to Peter’s question about the connection and timing with the referendum announcement.  I hear what you’re saying on your concerns about the referendum.  Our guidance earlier this week from administration officials was that you would take the week to watch how things played out.  We were not expecting to see even the step towards sanctions this week.  Did something expedite your timeframe?  And also, can you talk about whether the concerns of countries like Moldova and former Soviet republics are considering -- are making the U.S. consider expanding its approach in doing any sort of preemptive assistance to any other countries besides Ukraine?  Thanks.

SENIOR ADMINISTRATION OFFICIAL:  Margaret, no, the referendum announcement had nothing to do with the timing of this.  We were planning this action -- frankly, we had to prepare the EO, to get it ready.  We were also coordinating with our European allies.  And I believe what we said throughout the week was not that we were going to hold off on any action until the end of the week; it was that we were going to have to prepare our various tools and make decisions about the timing of implementing them.

And now that we have this EO ready to go, we felt it was appropriate to signal the types of tools that are available to the United States, the types of costs that we’re prepared to impose on Russia and those who are responsible for what we’re seeing in Crimea. 

So it wasn’t tied to the referendum; it was tied to basically the preparation of this tool, the consultations that we’ve had with European partners, and President Obama was able to discuss these issues with Chancellor Merkel, with Prime Minister Cameron.  I know Secretary Kerry has been in touch with the Foreign Ministers of Italy, France, the United Kingdom, Germany, as well as Cathy Ashton.  And I think this sends a signal that Russia is not going to be able to avoid accountability for the types of actions that we’ve seen to date.

SENIOR ADMINISTRATION OFFICIAL:  Just to add something to the question about Moldova, the Moldovan Prime Minister was here early this week on the snow day.  The Georgian Prime Minister was here the last couple of weeks.  Secretary Kerry hosted a U.S-Georgia bilateral working group, and I believe the Vice President saw both of those leaders during their respective visits.  So we’ve had, because of earlier scheduled visits, good opportunities to see these leaders.

SENIOR ADMINISTRATION OFFICIAL:  I should have added, Margaret -- that’s a good addition by my State colleague -- the President was able to see the Moldovan Prime Minister and the Georgian Prime Minister, along with the Vice President.  I think separate and apart from how we’re responding specifically to events in Ukraine with these types of actions, we’re also providing additional reassurance to our allies in Eastern Europe and partners like Moldova and Georgia. 

In addition to those meetings, you saw DOD, for instance, yesterday announce that they are going to be expanding their Baltic overflights, which provide additional reassurance to Lithuania, Latvia, and Estonia.  They are going to be reinforcing our aviation detachment in Poland, and there is going to be a meeting of the Chiefs of Defense of Central and Eastern Europe with General Breedlove.  So we continue to reassure our Eastern European allies that at this very delicate and potentially destabilizing time, the United States is strongly committed to their security.

Q    I was hoping you might be able to just clarify something for me.  Have individuals been identified for the sanctions, on listing them?  Or now that the EO is in place, can you begin to identify people to take sanctions against?  And additionally, you mentioned that this is an attempt to impose a cost on the Russians.  If they do pull their troops back to their bases, will these be rolled back as well, or will these stay in place as sort of a punitive measure?
SENIOR ADMINISTRATION OFFICIAL:  We can calibrate our sanctions and our actions based on what the Russians do.  And, obviously, were they to deescalate the situation, pull back into their base, that would very much affect our calculus as to how we move forward with these types of actions.  Like I said, we believe that there should be measures taken based on what’s already happened in Crimea.  We’ve already taken a number of those measures in our bilateral actions and statements out of the international community.  But we would certainly evaluate the situation if there were to be that type of constructive action taken by the Russians.

On individuals, Treasury can speak to the EO.  And as my State colleague said, we don’t publish the names of those who are affected by visa bans.  Suffice to say, that -- well, I’ll leave it to Treasury, actually, to describe their process for reviewing individuals. 

SENIOR ADMINISTRATION OFFICIAL:  So as I noted at the outset, the financial sanctions authority put in place today does not contain an annex.  So no individuals or companies have been blocked or designated for sanctions this morning.  What the authority does, though, is put in place a powerful tool that will allow us to target individuals and companies in the future that we see directly responsible for these destabilizing activities, as well as assets -- that we identified in the executive order today.

SENIOR ADMINISTRATION OFFICIAL:  Just to answer the questions about visas, just to clarify, there are individuals who have had their visas pulled or would be banned from visas.  And those individuals, while I won’t give names or numbers, this does include Russians and Ukrainians. 

Q    Well, you answered one of my questions here.  Thanks for doing the call.  I was going to ask about former President Yanukovych, because he has been targeted by the European Union, but I suppose you’re not willing to go that far.  But yesterday, the Russians were threatening retaliatory sanctions of their own and I’m just curious if that’s been taken into consideration here.

SENIOR ADMINISTRATION OFFICIAL:  I’ll take the first and if anybody wants to add on Yanukovych.  We’ve seen those comments by the Russians.  Frankly, that does not concern us or factor into our decision-making on this.  We believe, number one, that Russia has already paid a cost in terms of seeing its stock market contract, seeing significant instability with its currency.  I think they have a fragile economy.  And similarly, they also have a set of individuals who have been engaged in supporting corruption and supporting the destabilizing actions we’ve seen in Crimea.  So there are specific vulnerabilities there, given the nature of the Russian system and the Russian economy, that these types of sanctions can be brought to bear on.

In terms of individuals, we have a process of reviewing who could be designated.  That is underway so we have begun the process of identifying potential individuals.  I’ll send it over to my colleague to see if he has anything to add on that or Yanukovych.

SENIOR ADMINISTRATION OFFICIAL:  Nothing to add in particular on Yanukovych.  I would just say that anybody who is involved or complicit in activities that are threatening the sovereignty, territorial integrity, or stability of Ukraine is as of this morning on notice that they may be targeted for U.S. sanctions.

Q    In the context of your last comment on the vulnerability of the Russian economy, one of the (inaudible) of Russia’s influence in the region is its supply of energy.  I’m wondering whether the administration is giving any thought to pressuring Russia through energy moves such as tapping the Strategic Petroleum Reserve or through expediting approvals to export U.S. natural gas as a way to put pressure on Russia.  Thank you.  

SENIOR ADMINISTRATION OFFICIAL:  I wouldn’t want to speculate about some of the specific steps you mention.  We’re certainly aware of the Russian reliance on energy as a source of support for its economy.  I do know that this has been a subject that we and the Europeans have taken into account.  As I’ve said, you’ve already seen instability in the Russian economy based on their destabilizing actions.  Again, the further Russia escalates this, the more they’re going to face potential costs from the United States, Europe, and other countries around the world. 

So I don’t want to speculate on the specific actions associated with energy markets or U.S. tools in that regard.  But we are very aware of that dynamic.  It is something that we take into account as we make these decisions. 

And again, frankly, I think, over time, what you’re going to see is that if Russia continues to perpetuate this crisis, this violation of Ukraine’s sovereignty and territorial integrity, it is going to bring greater isolation to their economy.  It is going to, I think, carry with it not just the costs that are imposed through punitive actions like this, but the costs for having instability in the neighborhood.  And that is not something that they are going to be able to compensate for.

And so we believe that there is a significant vulnerability over time that should affect Russia’s calculus.  And that’s why we’re seeking through these types of punitive measures taken by the United States and through our coordination with other allies and partners to make clear that we’re not going to accept a status quo in which Russia can violate the sovereignty of its neighbors with some type of impunity.  And so today’s action builds on the steps we’ve already taken.  I think if the situation continues, you can see further steps that we would anticipate and that we would coordinate with our European allies on.

Anything my colleagues want to add before we wrap up the call?

SENIOR ADMINISTRATION OFFICIAL:  Only to say that the State Department and the USG has been working on long-term efforts to help Europe diversify its gas sources.  This has been in motion for a number of years and is beginning to yield results.

SENIOR ADMINISTRATION OFFICIAL:  Well, thanks everybody for joining the call.

MS. HAYDEN:  Just a reminder -- this is Caitlin -- that the call was on background.  These were senior administration officials and there’s no embargo.  So thanks for joining us.  Bye.

END
9:05 A.M. EST

PRESIDENT OBAMA'S STATEMENT ON RUSSIAN INTERVENTION IN UKRAINE

FROM:  THE WHITE HOUSE 

Statement by the President on Ukraine

James S. Brady Press Briefing Room

1:05 P.M. EST

THE PRESIDENT:  Good afternoon, everybody.  Before Jay takes some of your questions, I wanted to provide a brief update on our efforts to address the ongoing crisis in Ukraine.

Since the Russian intervention, we’ve been mobilizing the international community to condemn this violation of international law and to support the people and government of Ukraine.

This morning I signed an executive order that authorizes sanctions on individuals and entities responsible for violating the sovereignty and territorial integrity of Ukraine, or for stealing the assets of the Ukrainian people.

According to my guidance, the State Department has also put in place restrictions on the travel of certain individuals and officials.  These decisions continue our efforts to impose a cost on Russia and those responsible for the situation in Crimea.  And they also give us the flexibility to adjust our response going forward based on Russia’s actions.

We took these steps in close coordination with our European allies.  I’ve spoken to several of our closest friends around the world, and I’m pleased that our international unity is on display at this important moment.  Already, we’ve moved together to announced substantial assistance for the government in Kyiv, and today in Brussels, our allies took similar steps to impose costs on Russia.  I am confident that we are moving forward together, united in our determination to oppose actions that violate international law and to support the government and people of Ukraine.

And that includes standing up for the principle of state sovereignty.  The proposed referendum on the future of Crimea would violate the Ukrainian constitution and violate international law.  Any discussion about the future of Ukraine must include the legitimate government of Ukraine.  In 2014, we are well beyond the days when borders can be redrawn over the heads of democratic leaders.

While we take these steps, I want to be clear that there is also a way to resolve this crisis that respects the interests of the Russian Federation, as well as the Ukrainian people.  Let international monitors into all of Ukraine, including Crimea, to ensure the rights of all Ukrainians are being respected, including ethnic Russians.  Begin consultations between the government of Russia and Ukraine, with the participation of the international community.  Russia would maintain its basing rights in Crimea, provided that it abides by its agreements and respects Ukraine’s sovereignty and territorial integrity.  And the world should support the people of Ukraine as they move to elections in May.

That's the path of de-escalation, and Secretary Kerry is engaged in discussions with all of the relevant parties, including Russia and Ukraine to pursue that path.  But if this violation of international law continues, the resolve of the United States, and our allies and the international community will remain firm.  Meanwhile, we’ve taken steps to reaffirm our commitment to the security and democracy of our allies in Eastern Europe and to support the people of Ukraine.

One last point -- there’s been a lot of talk in Congress about these issues.  Today, once again, I’m calling on Congress to follow up on these words with action, specifically to support the IMF’s capacity to lend resources to Ukraine and to provide American assistance for the Ukrainian government so that they can weather this storm and stabilize their economy, make needed reforms, deliver for their people, all of which will provide a smoother pathway for the elections that have already been scheduled in May.

Today the world can see that the United States is united with our allies and partners in upholding international law and pursuing a just outcome that advances global security and the future that the Ukrainian people deserve.  That's what we’re going to continue to do in the days to come until we have seen a resolution to this crisis.

Thanks very much.  And Jay and Ben and others will be happy to take your questions.

END

SECRETARY KERRY'S REMARKS AFTER MEETING OF INTERNATIONAL SUPPORT GROUP ON LEBANON

FROM:  U.S. STATE DEPARTMENT 
Remarks After Meeting of International Support Group on Lebanon
Press Availability
John Kerry
Secretary of State
Chief of Mission Residence
Paris, France
March 5, 2014

SECRETARY KERRY: Well, good evening everybody. Thank you very much. I know you’ve all been extremely patient and it’s been a long day.

First of all, I want to thank Foreign Minister Fabius and the French Government for a tremendous job of hosting the International Support Group on Lebanon today. And I really don’t want – none of us want the importance of what we came here to talk about with respect to Lebanon to be lost in all of the obvious discussions that have taken place with respect to the question of Ukraine.

But the countries that came to Paris today for this very important and timely meeting are – all of us – bound together by a very strong commitment to Lebanon. As Syria’s conflict spills over Lebanon’s borders, and as the refugee crisis grows, we are deeply concerned for the security and the sovereignty of the people of Lebanon and for their simple ability to be able to chart their own futures and fulfill the same basic aspirations that they share with everybody else on this planet.

The president, President Suleiman, pulled out and showed me a very dramatic charting that goes for the last few years – four different charts that show you the extraordinary change in Lebanon of the numbers of refugees as every year upwards, the entire country has become a swatch of red. Instead of red dots, the entire border is really red today because there are almost a million refugees in Lebanon. This has an extraordinary impact on the internal dynamics of a country: people who are looking for work, people who work for less; it drives wages down; it changes the nature of that nation. So the United States is very proud to have provided Lebanon just in the last year or so with respect to its development process $340 million the last few years in humanitarian aid. And we will continue to support the Lebanese Armed Forces and other security institutions.

Of course, you can’t talk about the values of sovereignty, security, and determination, and economic opportunity without coming quickly back to the events of the last days in Ukraine. Ukrainians told me yesterday in Kyiv how desperately they want a government that has the consent of the people and an economy that gives them a chance to be able to live just like everybody else. I told the story of a person who had been to Australia who came back and said “We just want to be able to live the way other people live, the way we’ve seen them live.”

Well, today our fellow foreign ministers and I met separately with our Ukrainian counterpart Foreign Minister Deshchytsia and our Russian counterpart Foreign Minister Lavrov. And we met as a group also, a group of concerned countries. We agreed to continue intense discussions in the coming days with Russia, with the Ukrainians, in order to see how we can help normalize the situation, stabilize it, and overcome the crisis. And those intentions are intentions that are shared exactly as I have described them between Russia, the United States, the European countries, and Ukrainians who were here.

All parties agreed today that it is important to try to resolve these issues through dialogue. The United States, with our partners, is focusing intensely on a remedy. And I don’t believe as any of us believe – President Obama doesn’t believe it, I don’t believe, the other countries we’re working with I know they don’t believe – that any of us are served by greater or further confrontation. And also, we met today to discuss these issues because we cannot and will not allow the integrity of the sovereignty of the country of Ukraine to be violated and for those violations to go unanswered.

Russia’s violation of Ukraine’s sovereignty and territorial integrity has actually united the world in support of the Ukrainian people. And this morning, Secretary Hagel announced that the Defense Department is taking concrete steps to reassure our NATO allies, steps like expanding our aviation detachment in Poland and our contributions to NATO’s Baltic Air Policing Mission.

This is on top of other steps that the United States has already taken, steps like suspending our bilateral discussions with Russia on trade and investment, suspending U.S.-Russia military engagement, and suspending preparations for the G8 summit in Sochi.

As I said yesterday in Kyiv and as President Obama has said as well, and as I said to Foreign Minister Lavrov today, Russia made a choice, and we have clearly stated that we believe it is the wrong choice, that is, the choice to move troops into Crimea. Russia can now choose to deescalate this situation, and we are committed to working with Russia and together with our friends and allies in an effort to provide a way for this entire situation to find the road to de-escalation. The United States is ready to work with all parties to make that happen and to make it happen as soon as possible.

We renew our call for Russia to speak directly with the Government of Ukraine, to send troops back to their bases, and to welcome international observers and human rights monitors. And we’ve seen today with what happened with Special Envoy Serry just how important it is to ensure the safety of those monitors and of those observers. Ukraine’s territorial integrity must be restored and must be respected.

From Lebanon to Ukraine, the United States stands ready to help our friends in a time of need. And today, those needs obviously are great in different places, different kinds of needs in different places. We especially thank our friends here in France for their partnership as we work to address these challenges and many others. For instance, Iran’s nuclear program – we’re working together. Violence in the Central African Republic – we’re working together. In the pursuit of reconciliation in Mali, we are working together.

All of these efforts require international cooperation, so coming together as a community of nations, as we did today, is the best way to resolve these kinds of problems that concern us. And today, I believe we initiated a process that over the next couple of days we hope can bring us to that de-escalation and to a path for the protection of the integrity of a country and for the building of stronger relationships between other nations.

On that note, I’d be delighted to take any questions.

MS. HARF: Great. Our first question comes from Anne Gearan of The Washington Post (inaudible).

QUESTION: Thank you. Mr. Secretary, you just renewed the U.S. call to Russia to speak directly to the new Ukrainian Government. You were hoping that that would happen today, right, here between Lavrov and the Ukrainian foreign minister who accompanied you here, apparently for that purpose. Why did that effort fail, and what assurance did you get, if any, from the Russians that they might be willing to have that kind of conversation in the future?

SECRETARY KERRY: Well, Anne, let me make it absolutely crystal clear: I had no expectation, zero expectation, that today that kind of a meeting would take place. I did not expect it and we did not ask the foreign minister to come here for that purpose. So the premise of the question is really just not factual in terms of what we were expecting.

We brought him here because we knew that it was inappropriate for us to have discussions with Minister Lavrov, whom I knew I had a meeting with, without being able to consult with our Ukrainian friends. And it would have been inappropriate for us to come here to Paris and for a group of nations to join together and make some kind of an agreement without the appropriate consultation and engagement and involvement and signoff from the people who are concerned. This is a Ukrainian decision, and we respect that.

So we met – all of us – as a group of foreign ministers with the foreign minister from Ukraine. We went through the things that we have discussed today. We solicited opinion. I will be in touch later tonight with the foreign minister as well as with the prime minister of Ukraine. They’re traveling to Brussels for meetings tomorrow with the EU, and we will continue that discussion. I will also continue that discussion.

I will also continue the discussion with Foreign Minister Lavrov in Rome tomorrow. Foreign Minister Lavrov will then return to have discussions with President Putin, which he also did today. He will continue to have that discussion. And I will, obviously, have an opportunity to have a discussion with President Obama and with the team in the White House in order to discuss the road forward.

But we had very thorough discussions today, very extensive, exchanged ideas. We both have thoughts to take back to our capitals and to our respective bosses, and I intend to do that, and with hopes – with hopes – that the ideas that have been put on the table today can lead us to that place of de-escalation that I talked about.

MS. HARF: Great. Thank you. Our next question is from (inaudible) of Le Monde. And wait for the microphone. I think it’s right there. Thank you.

QUESTION: (In French.)

MS. HARF: Hold on one second.

SECRETARY KERRY: (In French.)

QUESTION: (In French.)

SECRETARY KERRY: (In French.)

QUESTION: (In French.)

SECRETARY KERRY: Well, the decisions for the Europeans are decisions for the Europeans, and they’re meeting tomorrow, and I don’t think it’s appropriate for me to weigh in publicly on their deliberations.

With respect to the premise, again, of your question, don’t assume that we did not make – have serious conversations which produced creative and appropriate ideas and possibilities for how we can resolve this. I think that we have a number of ideas on the table. I personally feel as if I have something concrete to take back and talk to President Obama about so that I can get his input and thinking, advice, on what he’s prepared to do. And I believe that Foreign Minister Lavrov is in exactly the same position with respect to President Putin.

I don’t think any of us had an anticipation that we were coming here, at this moment in this atmosphere of heightened tension and confrontation, that we were suddenly going to resolve that here this afternoon. But I believe we are doing what is appropriate and what offers the best chance of finding a way forward that the world would welcome that is without conflict. As we said, we agreed today, both sides, and the Ukrainians also, that we are all better served if this can be resolved through dialogue. That’s important. I think it was a strong indication in the conversations that took place, not just between us but between us and our capitals, that everybody is taking seriously the effort to try to find a way forward, but a way forward that satisfies the needs, that protects the integrity and the sovereignty of the state of Ukraine, and one that obviously charts a path forward that has respect for the people of Ukraine and the direction that they have chosen to move in.

So I look forward to the conversations over the course of the next days, and we’ll see where we are. But I think today was very constructive, without promising something that is not defined yet, without raising hopes that are inappropriate to raise. I want to be realistic. This is hard, tough stuff and a very serious moment, but I’d rather be where we are today than where we were yesterday.

MS. HARF: Great. And the final question comes from Margaret Brennan of CBS.

QUESTION: Thank you. Thank you very much, Mr. Secretary. Was there anything in your direct conversation with Sergey Lavrov today that makes you believe that Russia is no longer creating a pretext for further invasion? And did you hear anything that would assure you – make you re-think the U.S. threat to put sanctions on Russia? That threat seems to have been weakened by European reluctance.

SECRETARY KERRY: I don’t think it’s been weakened at all by what you call European reluctance. The conversations I had today with the foreign minister of Germany, the foreign minister of France, the foreign minister of Great Britain, with the EU representative, and with a number of other foreign ministers, indicated to me that people are very serious about that. There’s been no movement away from the possibility.

And everything I said yesterday and the day before and through the week stands. That is where we are. But we are pursuing, as President Obama indicated he would like to in his comments yesterday and the day before, as I indicated on Sunday in my comments on television shows, we would prefer to find an appropriate, diplomatic solution to this, and I think everybody is better served through that.

But we’ve also made it clear our determination to stand up for the integrity and the sovereignty of this nation, our disagreement with the choice that Russia has made, and our hope that we can find a way forward that respects the rights and aspirations of the people of Ukraine writ large – east, west, south, all of Ukraine. That’s our goal. Nothing has changed with respect to that. And what the Europeans choose to do is obviously their choice. And we’ve made it clear that the decision to go into Crimea is not without cost. And now we need to go forward and see if we can avoid everybody being put in a corner where it’s more and more difficult to find a path that presents you with the solution of dialogue.

I was encouraged today that Russia indicated that they would prefer to see us be able to find that path. That’s the beginning of a negotiation. And as I said, this will belong in this discussion for whatever period of time to come. But our position has not changed one bit.

Thank you all very much. Appreciate it.

QUESTION: Did you all discuss the February 21st initiative, the February 21st agreement? Did you all discuss it with Lavrov?

SECRETARY KERRY: Nothing is agreed – nothing is agreed on that. There is no agreement at all. (Inaudible) discussion about having him in it, but nothing’s been agreed.

QUESTION: So you refute Sergey Lavrov’s comments about --

SECRETARY KERRY: I don’t think there was an agreement. There’s no agreement.

MS. HARF: Thank you, guys.

QUESTION: Thank you.

RECENT U.S. DOD PHOTOS FROM AFGHANISTAN

FROM:  U.S. DEFENSE DEPARTMENT 

As seen through a night-vision device, a U.S. CH-47 Chinook helicopter takes off as Afghan commandos and U.S. Special Forces soldiers move toward Kharkrezwal village in Afghanistan's Kandahar province, Feb. 14, 2014. The U.S. soldiers, assigned to Special Forces Operational Detachment Afghanistan, assisted the Afghan commandos with clearing operations to disrupt insurgents from using Kharkrezwal village as a safe haven. U.S. Army photo by Staff Sgt. Bertha A. Flore.

As seen through a night-vision device, Afghan commandos walk toward a compound during a clearing operation in Galenketcha village in Afghanistan's Kandahar province, Feb. 16, 2014. U.S. Army photo by Staff Sgt. Bertha A. Flores.

REMARKS AT EXECUTIVE COUNCIL ORGANIZATION FOR THE PROHIBITION OF CHEMICAL WEAPONS

United States Delegation to the Seventy-Fifth Session of the Executive Council Organization for the Prohibition of Chemical Weapons

Remarks

Robert P. Mikulak
U.S. Permanent Representative to the Organization for the Prohibition of Chemical Weapons 

Meeting of the Organization for the Prohibition of Chemical Weapons Executive Committee

The Hague, Netherlands

March 4, 2014

---

At the opening of this Seventy-Fifth Session of the Executive Council, Mr. Chairman, I would like to assure you of the continued support of my Delegation to the OPCW. We look forward to your leadership of the Council as we maneuver through these challenging times.

Mr. Chairman, Mr. Director-General, Distinguished Delegates,
Over the last few weeks we all have witnessed two extraordinary meetings of the Council. On January 30, delegation after delegation after delegation expressed concern about the slow pace of removal of chemicals from Syria and called for acceleration of the CW removal process. Again, on February 21, delegation after delegation after delegation – nearly the entire Council, in fact, – repeated and strengthened their expressions of concern. Now, due to the insistence of members of the Council that Syria meet its commitments, there is the possibility that Syria may at last be starting to take its removal obligations seriously. Syria has now withdrawn its 100-day removal plan, which was indefensible, and presented a 65-day removal plan. Although, this is useful, the Operational Planning Group had earlier recommended steps that would allow all the chemicals to be removed in just 37 days. Moreover, the revised Syrian plan appears vulnerable to quickly expanding back to its original length since the gains were made by simply shrinking the original time devoted to packaging the chemicals at each site. There are few or no gains made by other means, for example consolidating movements into fewer than 24 missions. The Director-General made it clear that the OPG plan offered a faster timeline while also addressing Syrian concerns regarding security and the availability of equipment and personnel.

The United States believes that Syria should implement and, with the assistance of the Operational Planning Group, accelerate the new Syrian plan immediately to ensure that these deadly chemicals are out of Syria as soon as possible. We look forward to learning the Director-General’s detailed assessment, and the further recommendations of the OPCW.
To any members of this Council who might be flush with optimism over the new Syrian plan, a word of caution is appropriate and necessary. What counts is not a plan on paper, but actual performance on the ground. This Council should resist any temptation to simply assume that the government of Syria will follow through on its new plan to remove chemicals from its territory. Syria’s dismal record of compliance to date with the Council’s removal decisions should belie any such assumption. Now is not the time for complacency, but rather for circumspection and diligent exercise of the oversight responsibilities of this Council.

As it has repeatedly done, after weeks of inaction, Syria has moved chemicals just before an Executive Council session. Perhaps more will be moved while the Council is in session this week. What counts is what happens on a consistent and regular basis going forward. The Council needs to see a systematic, sustained, and accelerated series of movements of chemicals to Latakia for removal.

This Council should consider the acceleration of the new plan to be a test of Syria’s commitment to finally comply with its elimination obligations under Executive Council Decisions and UN Security Council Resolution 2118. Syria should be held to account for the plan it has put forward and directed to work with the Joint Mission to substantially accelerate the timeline for completing removal. It should immediately begin to make substantial and regular deliveries of chemicals, particularly Priority One chemicals, to Latakia. We request that the Director-General provide the Council with a chart showing the aggregate amount of chemicals to be moved each week under the plan so that the Council can monitor Syria’s efforts. Weekly reports on removal actions should be provided to the Council by the Technical Secretariat. This Council should not tolerate any slippage on removal actions or political backsliding by the Syrian government.

Mister Chairman,
As you are well aware, this Council has held two successive meetings to discuss the Syria CW situation – on January 30^th and February 21^st – without issuing a report, unfortunately, because consensus could not be achieved. On September 27^th, this Council put politics aside and let itself be guided by the moral compass of the Chemical Weapons Convention. Every State Party on this Council has pledged through the Convention’s preamble “for the sake of all mankind to exclude completely the possibility of the use of chemical weapons ...” So long as those chemicals remain in Syria, the possibility of use remains. For the sake of the Syrian people, let us once again put politics aside and ensure through the actions of this Council that the Syrian government completes, with urgency and dispatch, the removal effort it has begun. To that honorable end, the report of this session should unequivocally reflect the Council’s determination and commitment to closely monitor the government of Syria’s efforts to implement and accelerate its new removal plan.

Mister Chairman,
Let us also not forget that Syria is about to disregard yet another deadline set by this Council. The date set by this Council for completing destruction of Syria’s twelve chemical weapons production facilities is March 15 – two weeks from today. The United States has made every effort to work with Syria to reach an understanding on a destruction plan. Syria has refused to negotiate, and has adamantly clung to its proposal to inactivate, rather than destroy, these CW production facilities.

Mister Chairman,
The Convention is clear with respect to the physical destruction requirement and this Council should also be clear. Since Syria has failed to propose destruction methods that meet the Convention’s requirements, the United States has tabled a draft decision for this Council’s consideration for addressing Syria’s inertia and calculated misreading of the Convention. In our view, a Council decision should have two principal components:
-- First, with respect to the seven hardened aircraft shelters, this Council should require that Syria by March 15 collapse the roofs using precision explosives. The United States and a number of Council members have carefully analyzed this approach, and concluded that it would meet the Convention standard for physical destruction in an expedited and cost-effective manner that ensures the safety of the population and the protection of the environment.
-- Second, with respect to the five underground structures, this Council, noting the additional technical challenges they entail, should extend the deadline for destruction but only on the condition that specified measures be undertaken by Syria first to inactivate them and then to physically destroy the entire underground structure.

Mister Chairman,
The physical destruction of CW production facilities is a fundamental requirement of the Convention, and a prudent protection against the retainment or restart of a chemical weapons program. The seriousness attached to this requirement by the Council is attested to by the past practice of completely leveling all such facilities to the ground. Given the extraordinary circumstances associated with Syria’s accession to the Convention, it would be irresponsible for this Council to exhibit the same inertia and disregard for the Convention as the Syrian government has on this issue. This Council needs to summon the same resolve it evinced in December when it categorically rejected Syria’s request to convert these CW production facilities to allegedly peaceful uses.
Mister Chairman,

In closing, let me emphasize that March will be a critical test for the international effort to eliminate Syria’s chemical weapons program. Syrian action – or inaction -- will tell the international community whether Syria is truly committed to giving up its CW arsenal or choosing instead to play political games. As the world waits to see what path Syria takes, this Council, along with its members, should work to ensure that Syria remains committed to giving up its chemical weapons. Every step that Syria has taken has been the result of international monitoring and prodding, not because of Syria’s moral abhorrence of chemical weapons. Indeed, less than a month before it announced its intent to accede to the Chemical Weapons Convention, Syria on August 21 launched a brutal chemical attack in the suburbs of Damascus. Let us not be swayed by any illusions about the nature or good faith of the Assad regime. Four-and-a-half months after Syria’s accession, we are here in this Council talking about Syria’s failure to meet two deadlines on the path that was set before it by this Council to eliminate the Syrian chemical weapons program. This Council has an essential role to play in keeping the pressure on the Syrian government to ensure that Syria is completely disarmed of its chemical arsenal. Syria is testing the resolve of this Council to defend its own decisions – we as a Council should not fail this test.

Mister Chairman,
As all of us walked into this room today, we passed the Nobel Prize for Peace awarded to the OPCW. That prize honors what this Organization has accomplished and also challenges us to remain a force for peace in the future. The historic effort in which this Organization embarked on September 27, 2013, to eliminate the Syrian chemical weapons program, is not finished; in fact, the end is regrettably not yet in sight. Let us continue to remain a force for peace and finish what we have started. Let us end the silence of this Council and speak loudly and clearly so that the Assad regime knows that we will not relent until Syria’s chemical weapons program – and the threat it poses to peace and security - has been completely eliminated.
I ask that this statement be considered an official document of this Executive Council session and placed on the OPCW website and external server.

Thank you, Mister Chairman.

PRESIDENT OBAMA'S REMARKS IN NEW BRITAIN, CONNECTICUT ON MINIMUM WAGE

FROM:  THE WHITE HOUSE 
Remarks by the President to the Traveling Press at Café Beauregard -- New Britain, CT
Café Beauregard
New Britain, Connecticut

THE PRESIDENT:  I’ll have a chance to talk to everybody a little bit later, but obviously part of the reason that we’re here is because we’ve got a group of outstanding Democratic governors here in the Northwest [sic] that are committed to making sure that work pays.

And we were just talking to the owners of this establishment, who pay their employees more than the minimum wage because, as the owner put it, he knows what’s it like to work all his life and understands that if people are working hard, they shouldn’t be in poverty and that we should be able to do everything we can to make sure that happens.

And Dan Malloy here in Connecticut is making this a top priority.  I know Pete Shumlin, Lincoln Chafee, and Deval Patrick are all -- are working with Tom Perez, our Secretary of Labor.  And this is an important tool for us to help create more pathways into the middle class and make sure that if you work hard in this country, you can succeed.

There are other tools that are reflected in my budget like the Earned Income Tax Credit expansion that we’ve proposed that will also make a difference.  But I’m just very proud of these governors for the work they're doing.  So thank you.

COURT ACTS TO STOP FRAUDULENT PYRAMID SCHEME ON FACEBOOK, TWITTER

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

The Securities and Exchange Commission announced an emergency enforcement action to stop a fraudulent pyramid scheme by phony companies masquerading as a legitimate international investment firm.

The SEC has obtained a federal court order to freeze accounts holding money stolen from U.S. investors by Fleet Mutual Wealth Limited and MWF Financial – collectively known as Mutual Wealth.  The SEC alleges that Mutual Wealth has been exploiting investors through a website and social media accounts on Facebook and Twitter, falsely promising extraordinary returns of 2 to 3 percent per week for investors who open accounts with the firm.  Mutual Wealth purports to invest customer funds using an “innovative” high-frequency trading strategy that allows “capital to be invested into securities for no more than a few minutes.”  In classic pyramid scheme fashion, Mutual Wealth encourages existing investors to become “accredited advisors” and recruit new investors in exchange for a referral fee or commission.

According to the SEC’s complaint filed in U.S. District Court for the Central District of California, almost nothing that Mutual Wealth represents to investors is true.  The company does not purchase or sell securities on behalf of investors, and instead merely diverts investor money to offshore bank accounts held by shell companies.  Mutual Wealth’s purported headquarters in Hong Kong does not exist, nor does its purported “data-centre” in New York.  Mutual Wealth also lists make-believe “executives” on its website, and falsely claims in e-mails to investors that it is “registered” or “duly registered” with the SEC.  Approximately 150 U.S. investors have opened accounts with Mutual Wealth and collectively invested a total of at least $300,000.

“Mutual Wealth used Facebook and Twitter as well as a team of recruiters to spread a steady stream of lies that tricked investors out of their money,” said Gerald W. Hodgkins, an associate director in the SEC’s Division of Enforcement.  “Fortunately we were able to quickly trace the fraud overseas and obtain a court order requiring Mutual Wealth to shut down its website before the scheme gains more momentum.”

According to the SEC’s complaint, Mutual Wealth operates through entities in Panama and the United Kingdom and uses offshore bank accounts in Cyprus and Latvia and offshore “payment processors” to divert money from investors.  Mutual Wealth’s sole director and shareholder presented forged and stolen passports and a bogus address to foreign government authorities and payment processors.

The SEC alleges that Mutual Wealth leverages the scope and reach of social media to solicit investors with its fraudulent pitch.  Mutual Wealth maintains Facebook and Twitter accounts that link to its website and serve as platforms through which it lures new investors.  Some of Mutual Wealth’s “accredited advisors” then use social media channels ranging from Facebook and Twitter to YouTube and Skype to recruit additional investors and earn referral fees and commissions.  Mutual Wealth’s Facebook page spreads such misrepresentations as “HFT portfolios with ROI of up to 250% per annum.  Income yield up to 8% per week.”  A Facebook post on Aug. 12, 2013, boasted “$1000 investment into the Growth and Income Portfolio made on April 8th, 2013 is now worth $2,112.77.”  Mutual Wealth regularly posts status updates for investors on its Facebook page, and the comment sections beneath the posts are often filled with solicitations by the accredited advisors.  Mutual Wealth also tweets announcements posted on its Facebook page.

The SEC’s complaint charges Mutual Wealth with violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.  For the purposes of recovering investor money in their possession, the complaint names several relief defendants linked to offshore accounts to which investor funds were diverted from the scheme: Risort Partners Inc., Hullstar Capital LLP, Camber Alliance LLP, Kimrod Estate LLP, and Midlcorp Trade LTD.

The Honorable Dolly M. Gee has granted the SEC’s request for a court order deactivating Mutual Wealth’s website and freezing assets in all accounts at any bank, financial institution, brokerage firm, or third-payment payment processor (including those commercially known as SolidTrust Pay, EgoPay, and Perfect Money) maintained for the benefit of Mutual Wealth.

The SEC’s investigation, which is continuing, has been conducted by H. Norman Knickle and Mark M. Oh and supervised by Conway T. Dodge.  The SEC’s litigation will be led by Melissa Armstrong and Mr. Knickle.  The SEC appreciates the assistance of the Federal Bureau of Investigation, Financial and Capital Market Commission of Latvia, Ontario Securities Commission, and Cyprus Securities and Exchange Commission.

DEFENSE SECRETARY, CHAIRMAN JOINT CHIEFS TESTIFY ON BUDGET BEFORE SENATE ARMED SERVICES COMMITTEE

FROM:  DEFENSE DEPARTMENT 
Hagel: Severe Budget Cuts Will Compromise National Security
By Cheryl Pellerin
American Forces Press Service

WASHINGTON, Mar. 5, 2014 – Congressional failure to fund the Defense Department above levels required by sequestration in fiscal years 2015, 2016 and beyond will compromise national security, Defense Secretary Chuck Hagel said here today.

The secretary testified with Chairman of the Joint Chiefs of Staff Army Gen. Martin E. Dempsey this morning before the Senate Armed Services Committee on the president’s fiscal year 2015 budget request.

The abrupt and severe budget cuts known as sequestration would result in “a military that could not fulfill its defense strategy, putting at risk America’s traditional role as guarantor of global security and, ultimately, our own security,” Hagel told the panel.

The president’s defense budget is responsible, balanced and realistic, he said, supporting the U.S. defense strategy, defending the nation and keeping Defense Department’s compensation and training commitments to its people.

“These commitments will be seriously jeopardized by a return to sequestration-level spending,” the secretary said. “That is not the military the president and I want for America’s future. I don’t think that’s the military this committee wants for America’s future, but it’s the path we’re on.”

Hagel called the defense budget far more than a set of numbers or a list of decisions.

“It is a statement of values and priorities,” the secretary said. “It is a budget grounded in reality … that prepares the U.S. military to defend our national security in a world that is becoming less predictable, more volatile and, in some ways, more threatening to our country and our interests.”

The department’s fiscal 2015 base budget request is about $496 billion and includes an extra $26 billion, a proposal called the president’s Opportunity Growth and Security Initiative that DOD would use next year to improve readiness and modernization.

“That $26 billion represents an effort that would help dig us back out of the hole that we have been in for the last two years on readiness, and particularly focused on modernization,” Hagel said.

And the president’s five-year plan offers what the secretary called a realistic alternative to sequestration, projecting $115 billion more than the current law allows.

DOD requires the added funding to implement its updated defense strategy as outlined in the 2014 Quadrennial Defense Review, a study by the department undertaken every four years that analyzes strategic objectives and potential military threats.

“The strategic priorities articulated in the QDR represent America’s highest security interests -- defending the homeland, building security globally, deterring aggression and being ready and capable to win decisively against the adversary,” Hagel said.

In December, the Bipartisan Budget Act passed by Congress gave the department temporary relief from sequestration and a year of budget certainty, Hagel said, but it still imposes more than $75 billion in cuts over the next two years. Unless Congress changes the law, sequestration will cut another $50 billion from the budget beginning in fiscal 2016.

“Even though we are requesting spending levels above sequestration, we have maintained flexibility in our budget to respond immediately to the lower topline should sequestration be reimposed,” the secretary said, noting that this was done by reprogramming some of the sequestration-level force-structure reductions that take longer to plan and implement, such as the decommissioning of the aircraft carrier USS George Washington.

Hagel also issued formal guidance to the service leadership that these reductions will not be made if Congress indicates it will make future appropriations at topline levels in the five-year plan.

Addressing for the panel critical issues in the budget request, Hagel said that to meet national security needs under a constrained budget the department focused on the balance among readiness, capability and capacity.

“After more than a decade of large stability operations, we traded some capacity to protect the readiness and modernization capabilities as we shift the focus on future requirements. These are shaped by enduring and emerging threats. We have to be able to defeat terrorist threats and deter adversaries with increasingly modern weapons and technological capabilities,” he said.

“We must also assure that America’s economic interests are protected through open sea lanes, freedom of the skies and space, and deal with one of the most urgent and real threats facing all nations – cyberattacks,” the secretary added. “That’s why we protected funding for cyber and special operations forces.”
For the active-duty Army, the department proposed drawing down to 440,000 or 450,000 soldiers, less than 10 percent below its size before the attacks of 9/11. And the department will continue investing in high-end ground capabilities to keep its soldiers the most advanced on earth, Hagel said.

Army National Guard and Army Reserve units will draw down by 5 percent, and the Army’s helicopter force structure will be reduced by 8 percent. The active Army’s helicopter fleet will be cut by 25 percent while keeping the aircraft modernized as the fleet moves from seven models to four.

The decisions, including the department’s recommendation to trade out Apaches in the Army National Guard for Black Hawks were driven by strategic evaluations, Hagel added.

The Navy will take 11 ships out of its operational inventory, and these will be modernized and returned to service with greater capability and longer lifespans, he said.

The Marine Corps will continue its planned drawdown to 182,000, but will devote 900 more Marines to increased embassy security. Hagel said the Marine Corps will remain ready and postured for crisis response as it moves back to its expeditionary, amphibious roots.

The Air Force will retire the A-10, replacing it with more modern sophisticated multi-mission aircraft such as the joint strike fighter, he said.
On compensation reform, Hagel said, under a restricted budget the department needs modest adjustments to the growth in pay and benefits, and the savings will be reinvested in training and equipping the troops. There are no proposals to change military retirement in this budget, he added.

The department will continue to recommend pay increases, the secretary said, but they won’t be as substantial as in past years. The Defense Department will continue subsidizing off-base housing costs, he added, but at 95 percent rather than 100 percent, and the decrease will be phased in over the next several years.
The department will not close commissaries, Hagel said, but it recommends gradually phasing out some subsidies for domestic commissaries that are not in remote locations. And the department recommends simplifying and modernizing its three TRICARE health care plan systems. It will do this by merging them into one system, with modest increases in copays and deductibles that encourage using the most affordable means of care.

“Active duty personnel will still receive health care that is entirely free,” the secretary said. “This will be more effective and more efficient and will let us focus more on quality. Overall, everyone’s benefits will remain substantial, affordable and generous, as they should be.”

The fiscal 2015 proposed defense budget will allow the military to meet America’s future challenges and threats, he said, and it matches resources to strategy.

“As we end our second war of the last decade, our longest ever, this budget adapts and adjusts to new strategic realities and fiscal constraints while preparing for the future,” Hagel told the panel.

“This is not a business-as usual-presentation,” he added. “It is a budget that begins to make the hard choices that will have to be made. The longer we defer these difficult decisions, the more risk we will have down the road, and the next DOD leaders and Congress will have to face more complicated and difficult choices.”

OVER $458 MILLION FROZEN BY U.S. IN KLEPTOCRACY FORFEITURE ACTION AGAINST NIGERIAN DICTATOR

FROM:  U.S. JUSTICE DEPARTMENT 
Wednesday, March 5, 2014
U.S. Freezes More Than $458 Million Stolen by Former Nigerian Dictator in Largest Kleptocracy Forfeiture Action Ever Brought in the U.S.

The Department of Justice has frozen more than $458 million in corruption proceeds hidden in bank accounts around the world by former Nigerian dictator Sani Abacha and conspirators.  A civil forfeiture complaint unsealed today in the United States District Court in the District of Columbia seeks recovery of more than $550 million in connection with the largest kleptocracy forfeiture action brought in the department’s history.

The restraint of funds announced today includes approximately $313 million in two bank accounts in the Bailiwick of Jersey and $145 million in two bank accounts in France.   In addition, four investment portfolios and three bank accounts in the United Kingdom with an expected value of at least $100 million have also been restrained, but the exact amounts in the accounts will be determined at a later date.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office made the announcement.

“General Abacha was one of the most notorious kleptocrats in memory, who embezzled billions from the people of Nigeria while millions lived in poverty,” said Acting Assistant Attorney General Raman.  “This is the largest civil forfeiture action to recover the proceeds of foreign official corruption ever brought by the department.  Through our Kleptocracy Initiative, we are seizing the assets of foreign leaders who steal funds that properly belong to the citizens they serve.  Today’s action sends a clear message: we are determined and equipped to confiscate the ill-gotten riches of corrupt leaders who drain the resources of their countries.”

“We will not let the U.S. banking system be a tool for dictators to hide their criminal proceeds,” said Assistant Director in Charge Parlave.  “This action demonstrates the FBI’s ability to combat international corruption and money laundering by seizing the assets of those involved.   I want to thank the special agents, financial analysts and prosecutors whose hard work over the years resulted in today’s announcement.”

The over $458 million in frozen funds and the additional assets named in the complaint represent the proceeds of corruption during and after the military regime of General Abacha, who assumed the office of the president of the Federal Republic of Nigeria through a military coup on Nov. 17, 1993, and held that position until his death on June 8, 1998.   The complaint alleges that General Abacha, his son Mohammed Sani Abacha, their associate Abubakar Atiku Bagudu and others embezzled, misappropriated and extorted billions from the government of Nigeria and others, then laundered their criminal proceeds through the purchase of bonds backed by the United States using U.S. financial institutions.

As alleged in the complaint, General Abacha and others systematically embezzled billions of dollars in public funds from the Central Bank of Nigeria on the false pretense that the funds were necessary for national security.   The conspirators withdrew the funds in cash and then moved the money overseas through U.S. financial institutions.  General Abacha and his finance minister also allegedly caused the Government of Nigeria to purchase Nigerian government bonds at vastly inflated prices from a company controlled by Bagudu and Mohammed Abacha, generating an illegal windfall of more than $282 million.  In addition, General Abacha and his associates allegedly extorted more than $11 million from a French company and its Nigerian affiliate in connection with payments on government contracts.   Funds involved in each of these schemes were allegedly laundered through the United States.

The complaint seeks to forfeit bank accounts and investment portfolios with funds located in Bailiwick of Jersey, France and the United Kingdom.   On Feb. 25 and 26, 2014, U.S. arrest warrants for the assets were enforced in Jersey and France though mutual legal assistance requests and in the United Kingdom through litigation brought pursuant to the U.K. Civil Jurisdiction and Judgments Act.   The complaint also seeks to forfeit five corporate entities registered in the British Virgin Islands.

This case was brought under the Kleptocracy Asset Recovery Initiative by a team of dedicated prosecutors in the Criminal Division’s Asset Forfeiture and Money Laundering Section, working in partnership with federal law enforcement agencies to forfeit the proceeds of foreign official corruption and, where appropriate, return those proceeds to benefit the people harmed by these acts of corruption and abuse of office.   Individuals with information about possible proceeds of foreign corruption located in or laundered through the United States should contact federal law enforcement or send an email to kleptocracy@usdoj.gov.

The investigation was conducted by the FBI.   The case is being prosecuted by Trial Attorney Elizabeth Aloi and Assistant Deputy Chief Daniel Claman of the Criminal Division’s Asset Forfeiture and Money Laundering Section, with substantial support from the Criminal Division’s Office of International Affairs.   The department appreciates the extensive assistance provided by the Governments of Jersey, France and the United Kingdom in this investigation.

EUROPA AND THE SEARCH FOR WATER

FROM:  NASA 
This reprojection of the official USGS basemap of Jupiter's moon Europa is centered at the estimated source region for potential water vapor plumes that might have been detected using the Hubble Space Telescope. The view is centered at -65 degrees latitude, 183 degrees longitude. In addition to the plume source region, the image also shows the hemisphere of Europa that might be affected by plume deposits. This map is composed of images from NASA's Galileo and Voyager missions. The black region near the south pole results from gaps in imaging coverage. Image Credit: NASA/JPL-Caltech/SETI Institute.

READOUT: PRESIDENT OBAMA'S CALL WITH UNITED KINGDOM PRIME MINISTER CAMERON

FROM:  THE WHITE HOUSE 
Readout of the President’s Call with Prime Minister Cameron of the United Kingdom

As part of our continuing close consultations on shared security challenges, the President spoke to Prime Minister Cameron today regarding the events unfolding in Ukraine  The leaders expressed their grave concern over Russia’s clear violation of Ukrainian sovereignty and territorial integrity, and both noted that the current circumstances are unacceptable.  Russia has already started to pay a cost for its actions, such as reducing investor confidence in Russia. The two leaders welcomed the military observer mission being undertaken by Organization for Security and Cooperation in Europe at the request of the Government of Ukraine.   They also discussed support for the government of Ukraine as it works to stabilize its economy and makes preparations for elections in May.  The leaders agreed to stay in close contact in the days ahead.

U.S. DEFENSE DEPARTMENT CONTRACTS FOR MARCH 5, 2014

FROM:  U.S. DEFENSE DEPARTMENT
CONTRACTS

 MISSILE DEFENSE AGENCY

Raytheon Missile Systems Co., Tucson, Ariz., is being awarded a not-to-exceed $350,178,300 sole-source modification to the undefinitized contract action announced Jan. 9, 2014. The modification will increase the quantity of Standard Missile-3 Block IB missile material and all up round build up procured from eight to 44.  The work will be performed in Tucson, Ariz., with an estimated completion date of September 2016.  Fiscal 2014 Defense wide procurement funds will be used to fund this effort.  The Missile Defense Agency, Dahlgren, Va., is the contracting activity (HQ0276-13-C-0001).

ARMY

Loyal Source Government Services*, Orlando, Fla. (W91YTZ-14-D-0003); Aliron International, Inc.*, Bethesda, Md. (W91YTZ-14-D-0004); Magnificus Corp.*, Washington, D.C. (W91YTZ-14-D-0005); Arora Group Inc.*, Gaithersburg, Md. (W91YTZ-14-D-0006); The Royster Group, Inc.*, Atlanta, Ga. (W91YTZ-14-D-0007); Protege Health Services*, Newington, Va., (W91YTZ-14-D-0008); Franklin Government Services*, Austin, Texas (W91YTZ-14-D-0009), were awarded a $381,000,000 firm-fixed-price, multi-year contract for nursing services for the Northern Regional Medical Command.  Funding and work performance locations will be determined with each order.  Estimated completion date is March 4, 2019.  Bids were solicited via the Internet with 28 received.  Army Medical Command, Washington, D.C., is the contracting activity.

Colt Defense LLC, West Hartford, Conn. (W15QKN-14-D-0024), and Manroy USA, Spindale, N.C. (W15QKN-14-D-0025), were awarded a $54,491,305 firm-fixed-price contract for the M4 replacement barrel and front sight assembly (heavy variant) for the M4 Carbine Product Improvement Program.  The M4 replacement barrel will be combined with other weapon components to form a single modification work order kit to convert fielded M4 carbines to M4A1 carbines.  Funding and work location will be determined with each order.  Estimated completion date is Feb. 27, 2018.  Bids were solicited via the Internet with six received.  Army Contracting Command, Picatinny Arsenal, N.J., is the contracting activity.

BAE Systems Land and Armaments L.P., York, Pa., was awarded a $6,935,513 modification (P00006) to contract W56HZV-14-C-0002 for spare parts for self-propelled howitzers and eighteen ammunition carrier tracked vehicles.  Fiscal 2014 other procurement funds in the amount of $6,935,513 were obligated at the time of the award. Estimated completion date is Sept. 30, 2015.  Work will be performed in York, Pa.  Army Contracting Command, Warren, Mich. is the contracting activity.

DEFENSE LOGISTICS AGENCY

Tullahoma Industries, LLC.,** Tullahoma, Tenn., has been awarded a maximum $25,482,000  modification (P00103) exercising the first option year on a one-year base contract (SPM1C1-13-D-1033) with four one-year option periods for various permethrin army combat uniform trousers.  This is a firm-fixed-price, indefinite-delivery/indefinite-quantity contract.  Locations of performance are Tennessee, Alabama, and North Carolina with a March 12, 2015 performance completion date.  Using military service is Army.  Type of appropriation is fiscal year 2014 through fiscal year 2015 defense working capital funds.  The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pa.

U.S. SENDS BEST WISHES TO PEOPLE OF REPUBLIC OF GHANA ON THEIR NATIONAL DAY

FROM:  U.S. STATE DEPARTMENT 

On the Occasion of the Republic of Ghana's National Day

Press Statement

John Kerry
Secretary of State

Washington, DC

March 5, 2014

---

On behalf of President Obama and the people of the United States, I send best wishes to the people of Ghana as you celebrate 57 years of independence on March 6.

I saw the strength of our partnership firsthand when I met with President Mahama at the UN General Assembly last year. Our partnership is strong because we share a commitment to democratic values, the rule of law, and economic development.

Together, we are translating those shared values into action.  Through President Obama’s Young African Leaders, Power Africa, and Partnership for Growth initiatives, the United States is advancing Ghana’s millennium development goals.  We are improving global security through our support for peacekeeping operations.  We are also working together closely on human rights, trade and maritime security.  On this special anniversary, I wish all Ghanaians a healthy, joyful, and festive celebration. The United States looks forward to building on our strong partnership in the years to come.

REMARKS AT TOP OF TRIPARTITE AGREEMENT MINISTERIAL

FROM:  U.S. STATE DEPARTMENT 

Remarks With British Foreign Secretary William Hague, and Ukrainian Foreign Minister Andrii Deshchytsia at Top of Tripartite Agreement Ministerial

Remarks

John Kerry
Secretary of State

Chief of Mission Residence

Paris, DC, France

March 5, 2014

---

SECRETARY KERRY: Well, we’re glad to have our friends here from Ukraine and from Great Britain, partners in the Budapest Agreement of 1994, regrettably missing one member, but we will be meeting, hopefully this afternoon, with that additional member. So we look forward to our own discussion this morning. We appreciate you being here. Thank you.
William, do you want to say anything?

FOREIGN SECRETARY HAGUE: Well, it is absolutely right that we have met for consultations under the 1994 Budapest Memorandum. And that is provided for in Article 6 of the memorandum, and in such a crisis it’s absolutely right to meet. It is regrettable – exactly as you said, John – that Russia is not here with us. But we will make every diplomatic effort today to bring Russia and Ukraine into direct contact at ministerial level with the support of other nations. And this is one opportunity to do that; we will try to create other opportunities later today.

FOREIGN MINISTER DESHCHYTSIA: I’ll say a few words also?

SECRETARY KERRY: Of course, Andrii, absolutely.

FOREIGN MINISTER DESHCHYTSIA: As an equal partner in the Budapest Memorandum. (Laughter.)

SECRETARY KERRY: No, no, no.

FOREIGN MINISTER DESHCHYTSIA: And I’m very glad that we have these consultations here, and that during these days we’ve had so many consultations in Ukraine – your visit, and with Secretary Hague and with Secretary Kerry two days ago, yesterday, so now we have these consultations here. It’s very decisive and important moment, and we are looking very much forward that we will be also having consultations with Russia bilaterally and multilaterally.

SECRETARY KERRY: I’m just going to read two paragraphs from the Russian Federation Commission[i]: “The United States of America and the Russian Federation and the United Kingdom of Great Britain and Northern Ireland reaffirm their obligation to refrain from the threat or use of force against the territorial integrity or political independence of Ukraine, and none of their weapons will ever be used against Ukraine except in self-defense or otherwise in accordance with the Charter of the United Nations.”

It also says the same parties – the United States, the Russian Federation, et cetera – “In accordance with the principles of the CSCE Final Act” – that’s Helsinki – “to refrain from economic coercion designed to subordinate to their own interest the exercise by Ukraine of the rights inherent in its sovereignty.” So there are very clear legal obligations that are at risk in this, and we’re going to talk about those here this morning. So thank you all very much.

FOREIGN MINISTER DESHCHYTSIA: Thank you very much.

FOREIGN SECRETARY HAGUE: Thank you.

---

[i] 1994 Budapest Memorandum

CIA BACKGROUND ON UKRAINE

Ukraine Locator Map From CIA World Factbook

FROM:  CIA WORLD FACTBOOK
BACKGROUND:  UKRAINE
Ukraine was the center of the first eastern Slavic state, Kyivan Rus, which during the 10th and 11th centuries was the largest and most powerful state in Europe. Weakened by internecine quarrels and Mongol invasions, Kyivan Rus was incorporated into the Grand Duchy of Lithuania and eventually into the Polish-Lithuanian Commonwealth. The cultural and religious legacy of Kyivan Rus laid the foundation for Ukrainian nationalism through subsequent centuries. A new Ukrainian state, the Cossack Hetmanate, was established during the mid-17th century after an uprising against the Poles. Despite continuous Muscovite pressure, the Hetmanate managed to remain autonomous for well over 100 years. During the latter part of the 18th century, most Ukrainian ethnographic territory was absorbed by the Russian Empire.

Ukraine Map From CIA World Factbook

Following the collapse of czarist Russia in 1917, Ukraine was able to achieve a short-lived period of independence (1917-20), but was reconquered and forced to endure a brutal Soviet rule that engineered two forced famines (1921-22 and 1932-33) in which over 8 million died. In World War II, German and Soviet armies were responsible for some 7 to 8 million more deaths.

Although final independence for Ukraine was achieved in 1991 with the dissolution of the USSR, democracy and prosperity remained elusive as the legacy of state control and endemic corruption stalled efforts at economic reform, privatization, and civil liberties. A peaceful mass protest "Orange Revolution" in the closing months of 2004 forced the authorities to overturn a rigged presidential election and to allow a new internationally monitored vote that swept into power a reformist slate under Viktor YUSHCHENKO. Subsequent internal squabbles in the YUSHCHENKO camp allowed his rival Viktor YANUKOVYCH to stage a comeback in parliamentary elections and become prime minister in August of 2006. An early legislative election, brought on by a political crisis in the spring of 2007, saw Yuliya TYMOSHENKO, as head of an "Orange" coalition, installed as a new prime minister in December 2007. Viktor YANUKOVYCH was elected president in a February 2010 run-off election that observers assessed as meeting most international standards. The following month, Ukraine's parliament, the Rada, approved a vote of no-confidence prompting Yuliya TYMOSHENKO to resign from her post as prime minister.

In October 2012, Ukraine held Rada elections, widely criticized by Western observers as flawed due to use of government resources to favor ruling party candidates, interference with media access, and harassment of opposition candidates. President YANUKOVYCH's backtracking on a trade and cooperation agreement with the EU in November 2013 - in favor of closer economic ties with Russia - led to a three-month protest occupation of Kyiv's central square. The government's eventual use of force to break up the protest camp in February 2014 led to all out pitched battles, scores of deaths, international condemnation, and the president's abrupt ouster. An interim government under Acting President Oleksandr TURCHYNOV has called for new presidential elections on 25 May 2014.

BOGUS INVESTMENT OPPORTUNITY SCHEMER SETTLES WITH FTC

FROM:  FEDERAL TRADE COMMISSION 
FTC Settlement Bans Precious Metal Marketers from Selling Investment Opportunities
Court Orders Defendants to Pay $3.6 Million for Refunds to Consumers

The operator of a bogus precious metals investment scheme that bilked millions of dollars from investors, including many senior citizens, is permanently banned from selling any investment opportunities under a settlement with the Federal Trade Commission.

The settlement resolves FTC charges that Anthony J. Columbo and his companies, Premier Precious Metals Inc., Rushmore Consulting Group Inc., and PPM Credit Inc., conned consumers into buying precious metals on credit without clearly disclosing significant costs and risks, including the likelihood that consumers would subsequently have to pay more money or lose their investments.

In addition to banning the defendants from selling investment opportunities, the settlement order permanently prohibits them from misrepresenting material facts about any products and services, violating the FTC’s Telemarketing Sales Rule, failing to provide consumer information to the FTC so it can administer consumer redress, selling or otherwise benefiting from consumers’ personal information, and failing to properly dispose of customer information. The order also requires them to record all of their telemarketing calls for ten years.

The order imposes a judgment of more than $3.6 million against the defendants, which will be partially suspended after Columbo relinquishes to the FTC assets estimated to be worth about $3 million, including Florida real estate, personal property, and bank and investment accounts. The full judgment will become due immediately if the defendants are found to have misrepresented their financial condition.

For information about investing in precious metals, read the FTC’s Message sent, message received: Precious metal marketers agree to FTC settlement, Investing in Gold?, Investing in Bullion and Bullion Coins, and Investing in Collectible Coins.

The Commission vote authorizing the staff to file the proposed stipulated order was 4-0.  It was entered by the U.S. District Court for the Southern District of Florida on February 25, 2014.

NOTE: Stipulated orders have the force of law when approved and signed by the District Court judge.

FRUIT SMELLING BATS

FROM:  NATIONAL SCIENCE FOUNDATION 
By dark of night, how do bats smell their way to fruit?
Scientists find distinctive patterns of olfactory receptors in fruit-eating bats
March 3, 2014

How do we smell? The answer lies in the 1,000 or so genes that encode what's known as olfactory receptors inside our noses.

This gene superfamily constitutes 3 to 6 percent of a mammal's genes.

But scientists don't completely understand what odors bind to which receptors, and how this complex process translates into interpreting a particular smell.

In fact, little is known about how olfactory receptors function in mammals, or how this large gene family has evolved in response to different evolutionary challenges.

Specialized gene pattern in fruit-eating bats

Now scientists have identified a distinctive olfactory receptor gene pattern in fruit-eating bats, as well as the particular olfactory receptor gene families important to their fruit diets.

The findings offer new insights that link olfactory receptors with the odors they bind.

The research highlights the importance, the biologists say, of exploring diversity in nature to understand genome functions and evolutionary history in mammals.

Evolutionary biologists Liliana Davalos of Stony Brook University, Emma Teeling of University College Dublin and colleagues report their results in a paper published in this month's' issue of the journal Molecular Biology and Evolution.

"This study provides new insights into the mechanisms that have allowed bats to diversify their diets so extensively," says Simon Malcomber, a program director in the National Science Foundation's Division of Environmental Biology, which funded the research.

This research was also supported by the Science Foundation Ireland and the Irish Research Council.

"We knew that animals that live in various ecological environments--whales, bats, cows--have evolved different suites of olfactory receptors," says Davalos. "That suggests that the ability to smell different odors is important for survival."

Since these lifestyles evolved so long ago, she says, it's difficult to tell what forces have shaped the repertoire of olfactory receptors.

Bats hold key to evolution of smell receptors

Has the evolution of other sensory systems, changes in diet, or the random accumulation of changes through time driven the evolution of olfaction in mammals?

"Bats offer a prime opportunity to answer this question," says Davalos.

"They've evolved new sensory systems such as echolocation, and various bat species eat very different foods, including insects, nectar, fruit, frogs, lizards and even blood."

Two large groups of bats branched out since diverging about 64 million years ago. These groups separately evolved specialized echolocation and a diet based on fruit.

The patterns have arisen twice, once among New World leaf-nosed bats that feed primarily on figs and another among Old World fruit bats. The bats feed on variety of fruits, including figs, guavas, bananas, mangoes and other tropical fruits.

Could their evolutionary patterns help explain their olfactory receptors?

Finding fruit by dark of night

After sequencing thousands of olfactory receptors from dozens of bat species and analyzing an evolutionary tree including all the species, the researchers found distinctive patterns of olfactory receptors among bats that specialize in eating fruit.

Although the olfactory receptors are similar, the distinctive repertoires have arisen in different ways in New World and Old World bats.

That suggests, Davalos says, that independent mechanisms have shaped this part of the bat genome in response to the challenge of finding fruit by dark of night.

EPA SUPERFUND BID-RIGGER SENTENCED TO 14 YEARS IN PRISON

FROM:  U.S. JUSTICE DEPARTMENT 
Tuesday, March 4, 2014
Former Project Manager Sentenced to Serve Time in Prison for Role in Bid Rigging and Other Fraudulent Schemes Involving Two EPA Superfund Sites in New Jersey
Former Manager to Serve 14 Years in Prison

Gordon D. McDonald, a former project manager for a prime contractor at two U.S. Environmental Protection Agency (EPA) Superfund sites in New Jersey, was sentenced today to serve 14 years in prison for participating in multiple bid-rigging, fraud and kickback schemes, the Department of Justice announced.   The prison term, which takes into account the multiple crimes McDonald committed, represents the longest prison sentence ever imposed involving an antitrust crime.

In addition to the prison sentence, McDonald was sentenced in U.S. District Court for the District of New Jersey in Newark by Judge Susan D. Wigenton to pay a $50,000 fine.   The court will order restitution at a later date.

After a two week jury trial, ending on Sept. 30, 2013, McDonald was convicted of engaging in separate bid-rigging, kickback and fraud conspiracies with three subcontractors at two New Jersey Superfund sites - Federal Creosote in Manville, N.J., and Diamond Alkali in Newark, in return for kickbacks of more than $1.5 million. He was also convicted of engaging in an international money laundering scheme, major fraud against the United States, committing two tax violations and obstruction of justice. The various conspiracies took place at different time periods from approximately December 2000 until approximately April 2007. McDonald was initially charged in an indictment returned on Aug. 31, 2009.

“Today’s sentencing reflects the seriousness of the crimes committed,” said Bill Baer, Assistant Attorney General in charge of the Justice Department’s Antitrust Division. “The prison sentence imposed by the court shows that if you engage in bid-rigging, fraud and kickback schemes your illegal actions will result in a longer prison sentence.”

According to evidence presented at trial, McDonald accepted kickbacks from sub-contractors in exchange for the award of sub-contracts at Federal Creosote. McDonald provided co-conspirators at Bennett Environmental Inc., a Canadian-based company that treats and disposes of contaminated soil, with bid prices of their competitors, which allowed them to submit the highest possible bid prices and still be awarded the sub-contracts.

McDonald also accepted kickbacks in exchange for the award of sub-contracts at the Federal Creosote and Diamond Alkali sites from the owner of JMJ Environmental Inc., a wastewater treatment and chemical supply company, and the co-owner of National Industrial Supply LLC, an industrial pipe supplier. He also participated in a conspiracy with the owner of JMJ and co-conspirators to rig bids and allocate sub-contracts for wastewater treatment supplies and services at Federal Creosote.

Including McDonald, nine individuals and three companies have pleaded guilty or been convicted of charges arising out of this investigation. More than $6 million in criminal fines and restitution have been imposed and six of the individuals have been sentenced to serve prison sentences ranging from five to 168 months.   One individual was sentenced to six months home confinement and the remaining two were sentenced to pay criminal fines and restitution.   An additional individual, John A. Bennett, a Canadian citizen, was also charged on Aug. 31, 2009, and is facing extradition to the United States.

The cleanup at Federal Creosote is partly funded by the EPA. An interagency agreement between the EPA and the Army Corps of Engineers designated that the Army Corps hire the prime contractors at Federal Creosote. According to a settlement with the EPA and the New Jersey Department of Environmental Protection, Tierra Solutions was required to fund remedial action and maintenance of Diamond Alkali. Tierra Solutions hired the prime contractor for the remedial action and maintenance of Diamond Alkali.    

Today’s conviction is the result of an ongoing federal antitrust investigation being conducted by the Antitrust Division’s New York Office, the EPA Office of Inspector General and the Internal Revenue Service-Criminal Investigation.