TRANSCRIPT: STATE DEPARTMENT BRIEFING FOR MARCH 10, 2014

FROM:  THE STATE DEPARTMENT 
Jen Psaki
Spokesperson
Daily Press Briefing
Washington, DC
March 10, 2014 
TRANSCRIPT:
1:23 p.m. EDT

MS. PSAKI: Hi, everyone. All right. I don’t have anything at the top, so Matt, let’s get to what’s on your mind.

QUESTION: You have nothing at the top?

MS. PSAKI: I don’t have anything at the top.

QUESTION: All right. Well, let’s start with --

MS. PSAKI: I’m sure you all saw, we just put out a statement, though --

QUESTION: Yes.

MS. PSAKI: -- which I’m happy to reiterate. But I just wanted to make sure you’d seen that as well.

QUESTION: Are there any plans – on Ukraine. Are there any plans for any kind of communication between the Secretary and Foreign Minister Lavrov, or anyone else for that matter, on Ukraine? And – well, I’ll let you answer that first before I ask the next one.

MS. PSAKI: Sure. Well, as you know, Secretary Kerry has been in close contact with Foreign Minister Lavrov over the course of the last couple of weeks. He spoke with them as recently as Saturday and he – we put out a readout of that. I don’t have any calls to predict, but I expect they will be in close contact in the coming 24 to 48 hours.

QUESTION: Okay. One of the things in this rather extraordinary transcript of a – of the meeting between President Putin and Foreign Minister Lavrov that has appeared on Russian – the Russian websites, it talks about how – that Lavrov invited the Secretary to visit Russia – I don’t know if it was Moscow or Sochi – today, or as early as today, and that the Secretary was kind of ambivalent, but then on Saturday called – in the call – Lavrov called and said he basically couldn’t make it today. Is that still a possibility?

MS. PSAKI: That we will go to Russia today? (Laughter.)

QUESTION: No. No, no. That there will be some kind of – that there will be a face-to-face meeting between the Secretary and Foreign Minister Lavrov before Sunday when the referendum is supposed to happen in Crimea.

MS. PSAKI: Well, there is always a possibility. We evaluate day to day. And this was in the statement but just let me reiterate because I know we just put it out. When Secretary Kerry spoke with Foreign Minister Lavrov this weekend, he made clear that he would welcome further discussions focused on how to de-escalate the crisis in Ukraine if and when we see concrete evidence that Russia is prepared to engage on these proposals.

You’ve traveled – all of you have traveled with the Secretary quite a bit. He never shies away from hopping on a plane or having an in-person meeting, but we want to ensure that that is undertaken with seriousness on the other end as well.

QUESTION: Fair enough. So your caveat there is if and when Russia is prepared to engage. Have you seen any willingness on the part of the Russians to engage on these ideas, either the initial ideas that were presented or any amended follow-up briefs?

MS. PSAKI: Well, there have been, as you know because there have been kind of a range of reports here – some from Foreign Minister Lavrov, some in the statement we put out – about there’s been an ongoing dialogue, whether that’s been on the phone or in person, through paper, not through paper, verbal ideas, about ideas. And they address all of the issues that we have been talking about, so: letting OSCE monitors in, international observers; the mechanism for a meeting through a contact group. So we’re having that discussion day by day. Obviously, the Russians continue to be engaged in that discussion, but we haven’t, of course, agreed on – we’re waiting for a response to the recent questions that we sent over.

QUESTION: Okay, so I’m going to take that as the answer to my question is no, you have not yet seen any movement from the Russians that they’re willing to engage on what – your proposals.

MS. PSAKI: Well, we’re engaging, but no, we have not decided – right.

QUESTION: Thank you.

QUESTION: Can I follow up with Ukraine?

MS. PSAKI: Let’s – Ukraine, okay. And then we’ll go to Michael, Said.

QUESTION: Yeah, on the Ukraine. You said you have international monitors. To monitor what? To do what?

MS. PSAKI: Well, there has been an ongoing focus – we’ve called for it many times, as have many of our international partners --

QUESTION: Right.

MS. PSAKI: -- to let OSCE monitors in – because the Russians have conveyed concerns about how minorities are treated. If they feel very – as strongly about that as they say they do, they should let these monitors in. The monitors have attempted many times and haven’t had the ability to get in.

QUESTION: Okay, so lest then be any confusion, the monitor is just to see how the minorities are faring – not, let’s say, some sort of an endorsement for the referendum in any way, to look at the referendum or the possible referendum next week. Is it?

MS. PSAKI: No, I think we’ve spoken to the referendum pretty extensively. The OSCE monitors is specifically for the reasons I laid out.

Michael.

QUESTION: Hi, Jen. The Russians announced today that Secretary Kerry had presented a one – a paper, a document of some kind, to their side last week in Europe. What are the main elements of the paper? Since they’ve deemed it to be insufficient, and they’ve said it’s not a basis for going forward, it’d be helpful to know what the main elements of your document are.

MS. PSAKI: Well, as I just mentioned, but let me --

QUESTION: Or just tell us what’s in the paper.

MS. PSAKI: Sure. Well, I’m not going to provide all the details of the paper, but you are also --

QUESTION: Did the --

QUESTION: What are the elements of the paper?

QUESTION: (Off-mike.)

MS. PSAKI: Let me – I’m just going to answer Michael’s question. Obviously, the discussion, whether that’s the paper or whether it’s verbal discussions, whether it’s meetings we’re having, is all about what the mechanism can be for the Russians and the Ukrainians to meet to engage person to person. There are other issues as well as letting monitors in, as well as mechanisms for the meeting that we’re discussing. But I think it’s important to note here there is paper exchanged all the time, as you all know, through diplomatic processes. It doesn’t mean – this is not a treaty document that was given.

QUESTION: Jen, I didn’t say it was a treaty document.

MS. PSAKI: I know that. But some people --

QUESTION: The Russians are --

MS. PSAKI: -- are over-emphasizing the importance of the paper.

QUESTION: Excuse me. I’m trying to --

MS. PSAKI: Go ahead.

QUESTION: I’m giving you an opportunity --

MS. PSAKI: Okay.

QUESTION: -- which you’re not taking --

MS. PSAKI: Okay.

QUESTION: -- to explain what your document is, which the Russians have announced they’ve received a document. They’ve commented on this document. They’ve put down this document. And I didn’t say it was a treaty. What I’m asking you is: What is the main elements of the document, and also what are the Saturday questions that you felt compelled to ask following – after giving them this document?

MS. PSAKI: I understand what you’re asking. What I’m conveying is that I’m not going to outline every specific of what’s being discussed through diplomatic channels. You know what the issues are. The issues are: How can we come up – come to agreement on a mechanism for the Ukrainians and the Russians to talk? What’s the format? Is it through an international contact group?

Obviously, the Russians haven’t agreed to that; otherwise, that would be happening now. So that’s the big focus of any of these ideas that are being tossed back and forth between our sides. But I’m not going to outline every element of the document.

QUESTION: Jen, Jen –

MS. PSAKI: I understand.

QUESTION: -- just to be fair --

MS. PSAKI: Okay.

QUESTION: -- I didn’t ask you to outline every element.

MS. PSAKI: Sure.

QUESTION: So it’s not really fair, I don’t think, to take my words and --

MS. PSAKI: That wasn’t my intention.

QUESTION: -- distort them.

MS. PSAKI: Wasn’t my intention.

QUESTION: I didn’t ask you for every element. What I asked you was if you could explain what the main elements or main thoughts in the paper and the questions were. You don’t want to do that. Okay, I accept that.

MS. PSAKI: Okay.

QUESTION: But I didn’t ask you – I didn’t say it was a treaty and I didn’t ask you to present every element.

MS. PSAKI: I understand. I did not mean to distort your words in any way. I would not do that. I know people are asking a range of questions about it.

QUESTION: Well --

MS. PSAKI: Go ahead, Elise.

QUESTION: I mean, it looks as if the Russians are putting the onus back on you. Instead of you kind of explaining what you’re trying to do with the Russians, the Russians are saying that Secretary Kerry is refusing to negotiate, they’re disparaging the proposal that you supposedly made to the Russians.

MS. PSAKI: Okay.

QUESTION: So I mean, they’re – basically, you’re allowing them to create the narrative by --

MS. PSAKI: I don’t think – I think – let me just state where we stand. We want to see a cessation of Russian military activities in Ukraine, including in Ukraine’s Crimean Peninsula. We want to see a halt in the drive for annexation of Crimea, an end of provocative steps to provide space, of course, as you all know. We’ve all been talking about – Secretary Kerry was there – many of you were with him – all of last week, talking about a mechanism and a format for bringing the Ukrainians and the Russians together to engage in a conversation. That’s a big – that is the focus of what we’re having discussions about, whether that was when he was talking to Foreign Minister Lavrov this weekend, if they engage in the next 24 to 48 hours. I don’t think there’s a secret about what we would like to see here, what we’re proposing --

QUESTION: So if there’s no secret, why can’t you tell us?

MS. PSAKI: I’m just telling you exactly what there’s a discussion about. And as I mentioned, obviously there have been a series of questions we have posed back addressing all of those issues. We’re waiting to hear a response back to those. But that’s exactly where we want to see things move.

QUESTION: What other questions could there be about these things – other will you do these things or not?

MS. PSAKI: Well, again --

QUESTION: I mean, what types of questions?

MS. PSAKI: Elise, I think a big part of the discussion is the mechanism for how we’re going to have a format for the two sides to get together. There’s a range of questions that can be posed about that, and also about the issue writ large. So that’s what we’re waiting to hear back on. The Secretary is always happy to have a diplomatic engagement, whether that’s in person or on the phone, and I expect he’ll be in touch in the coming 24 to 48 hours.

QUESTION: So can I just check --

QUESTION: Also on Ukraine --

MS. PSAKI: Let’s just do one at a time. Go ahead, Jo.

QUESTION: I think you addressed this as I was running from the bullpen to the --

MS. PSAKI: Sure.

QUESTION: -- to here. But so Foreign Minister Lavrov did invite the Secretary to come to Moscow today, correct?

MS. PSAKI: I think there was a discussion about when he might visit. But again, as I said, we have clear steps we think the Russians need to take in order for that to take place.

QUESTION: So in other words, the reason for not going today, or tomorrow, was that you don’t feel that the Russians have taken the steps needed?

MS. PSAKI: Well, as I – I think as I said earlier, we think there needs to be concrete evidence that Russia is prepared to engage on these proposals and in these discussions in a serious way.

QUESTION: And so what would constitute concrete evidence in your view?

MS. PSAKI: I don’t know if I can define that for you too easily. Obviously, a big --

QUESTION: Well, yeah, but you are defining it.

MS. PSAKI: Okay. Obviously, a big part of this is taking the process seriously in terms of a discussion about how the two sides can meet and about that diplomatic step, which I think the international community agrees is a really important part in terms of where we are in the process at this stage.

QUESTION: So are you saying that behind this there’s a problem with the contact group that you want to set up? Is that – when you say there’s a problem about how the two sides meet --

MS. PSAKI: There’s not --

QUESTION: -- you’re talking about Ukrainians and the Russians?

MS. PSAKI: -- a problem. There’s not a problem. But obviously, we need to determine when there is an appropriate seriousness on the Russian side about engaging on discussions about steps forward. That is not a scientifically easy thing to answer in terms of when we’ll know. We’ll know when we know that it’s the appropriate time to engage in person.

QUESTION: Sorry, just to close this out.

MS. PSAKI: Mm-hmm.

QUESTION: So you say the Russians are not prepared to meet with the Ukrainians?

MS. PSAKI: Right. The new government. Right.

QUESTION: Okay.

MS. PSAKI: Ukraine. Go ahead in the back.

QUESTION: It’s reported that Mr. Yarosh now has a position in this new government in a national security role. Is the United States concerned that the head of a fascist organization is representing in a government that we are supporting, in fact, that we have really kind of put together? Are there concerns about this and will this be taken up when President Yats comes here on Wednesday, meeting with the President?

MS. PSAKI: Well, I think the White House has pretty clearly outlined what the purpose of that meeting is. Obviously, it’s continued engagement, given the situation on the ground. The new government was – we certainly recognize the legitimacy of that, but it was put together with the support of the parliament on the ground. So I don’t think I have any further comment for you.

Go ahead, Elise.

QUESTION: Can I --

QUESTION: Can you say on Secretary Lavrov – Foreign Minister Lavrov put forward a proposal that he wants an OSCE investigation of the people behind the shootings in the Maidan. There were a lot of reports. We know about the phone call with the Estonian foreign minister, that there were reports that the people – the groups on the Maidan had put this thing together. There were reported military – security – private security companies which were on the ground in the Maidan, perhaps even Blackwater has been mooted. Isn’t this worth an investigation to find out one of the decisive elements of this so-called revolt that led to this new government? Is the U.S. not interested in --

MS. PSAKI: Again, I think the OSCE monitors are not even being let into Crimea right now, so perhaps that can be a first step.

Elise.

QUESTION: No, I just want to put a fine point on it.

MS. PSAKI: Sure. Go ahead.

QUESTION: When you talk about that one of the reasons that the Secretary didn’t go was because you didn’t sense an appropriate seriousness by the Russians in terms of engaging. So basically, the fact that they’re not prepared to meet with the new government is your indicator of whether they’re serious or not?

MS. PSAKI: Well, it’s about their willingness to engage and how to de-escalate the crisis in Ukraine. Obviously, they say that’s their focus. We want to see the evidence.

QUESTION: Have they given you any ideas on how they feel that you --

MS. PSAKI: There is an ongoing discussion about it, Elise. But we need – that is a key proponent. It’s not about requiring they meet with the – I’m not saying you’re saying this, but just to be clear – requiring they agree to meet with the new government. But it needs to be a discussion about the mechanisms for moving forward. It’s not that we are never going. We may go. It’s always possible. We evaluate day by day. But that is why we’re not there this moment.

QUESTION: Well, I mean, I understand that you don’t agree with the premise, but the Russian Government does not recognize this new government. So that’s why they don’t want to meet with them; isn’t that right?

MS. PSAKI: Well, the Ukraine parliament recognizes the new government. The international community recognizes the new government. So the issue here is: How do we move forward and engage the Russians with the new government that is broadly supported across the country?

QUESTION: Iraq?

MS. PSAKI: Ukraine? Any more on Ukraine? Okay, Iraq. Okay. Did you – are you – okay.

QUESTION: Until now I just --

MS. PSAKI: Go ahead, in the back. Go ahead.

QUESTION: Yes, yes, yes. I don’t understand yet what is your interpretation that the Secretary of State canceled his visit to Moscow regarding --

MS. PSAKI: There wasn’t a visit planned.

QUESTION: -- regarding --

MS. PSAKI: There wasn’t a visit planned, so nothing’s canceled. We travel all the time. Secretary Kerry saw Foreign Minister Lavrov just last week. We still keep the option open, of course, of traveling at any point in time.

QUESTION: To Moscow, not to the other places.

MS. PSAKI: It could be a range of locations. It hasn’t been determined because we don’t have a trip planned at this moment.

QUESTION: And what else you have in your diplomacy arsenal now to deal with the Ukraine crisis?

MS. PSAKI: What else do we have in our diplomat – what are the other options, or --

QUESTION: Yes, diplomacy options.

MS. PSAKI: Well, again, I think as I said in the beginning, that I expect the Secretary will be in touch with Foreign Minister Lavrov in the coming 24 to 48 hours. As you’ve seen over the weekend, President Obama has been closely engaged with a range of partners around the world from a broad list of countries. And so we continue to have discussions. Our focus is on coordinating with the international community about everything from sanctions and steps we will take to put the appropriate pressure on, while also leaving the off-ramp opportunity for the Russians and laying out clearly what they could do at this point. So those conversations are ongoing on a daily basis.

QUESTION: Iraq?

MS. PSAKI: Do we have any more on Ukraine? Okay.

QUESTION: Yeah, very quickly --

MS. PSAKI: On Ukraine. Go ahead.

QUESTION: A follow up on the phone call – I know President Obama spoke with the Chinese President Xi Jinping.

MS. PSAKI: Mm-hmm.

QUESTION: What’s your expectation from China on Ukraine? And given the close tie between China and Russia, are you concerned China may go further to support Russia?

MS. PSAKI: Well, our hope continues to be that many members of the international community, including China, are in coordination and cooperation about the illegal steps that Russia took in this case and the pressure that needs to be exerted from not just the United States, but countries around the world.

QUESTION: But where do you see China stands now?

MS. PSAKI: I think I just addressed it.

Said?

QUESTION: Does China – a follow up. Does China really accept that premise that this was an illegal operation, or is it simply concerned over the uncertainty that they would like to resolve that’s the basis of their cooperation? Have they really accepted the U.S. attitude towards --

MS. PSAKI: I will let China speak to that.

Said.

QUESTION: I wanted to ask very quickly on Iraq.

MS. PSAKI: Mm-hmm.

QUESTION: Prime Minister Nuri al-Maliki issued a statement bluntly accusing two of your allies, Saudi Arabia and Qatar, of being behind the sectarian war that is taking place in Iraq. I wonder if you have any comments on that.

MS. PSAKI: Mm-hmm. Well – sorry, Said. Can you repeat your question one more time just to make sure I’m addressing the right one here?

QUESTION: My question was that Prime Minister Nuri al-Maliki accused overtly both the countries of the Governments of Saudi Arabia and Qatar of being behind --

MS. PSAKI: Yes. Yes, yes, yes.

QUESTION: -- the escalation of the sectarian violence that is taking place.

MS. PSAKI: Well, Iraq has made significant progress in improving relations with some countries in the region, such as Kuwait and Jordan, but progress with others has been limited. We continue to encourage improved ties between Iraq and its Arab neighbors, particularly the GCC. The situation in Syria has certainly fueled tensions in the region and foreign fighters are making their way into Iraq from Syria. We are particularly concerned, of course, about this. We share Iraq’s concern over the levels of violence, and we are working with the Iraqis to implement a holistic strategy. I would, of course, refer you otherwise to the Government of Iraq.

QUESTION: Do you agree – or, I mean – does your intelligence – I don’t know if – what they see, or the Embassy in Baghdad, that is a very large Embassy. Do they also see or do they detect activities by the Saudis and the Qataris that are actually exacerbating the sectarian violence there?

MS. PSAKI: I’m not going to speak to that, Said. We, of course, broadly speaking – broadly speaking – we have been concerned, of course, about the influx of foreign fighters in Iraq in recent months. That has certainly exacerbated the security situation. That said, of course we continue to advise and assist Iraq in developing strategies with understanding – with the understanding of their own security operations and capabilities, and we’re in close touch with them about that.

QUESTION: Can we stay roughly in the region?

MS. PSAKI: Sure.

QUESTION: I know you were asked about this last week when it actually happened – this is the Israeli seizure of the Iranian weapons.

MS. PSAKI: Sure.

QUESTION: I just want to know if your position has evolved at all on the question of whether or not this is going to have any impact on the P5+1 talks with the Iranians on the nuclear issue, or if you see them as totally separate entities.

MS. PSAKI: Well, we do. As we’ve said in the past --

QUESTION: You do (inaudible)?

MS. PSAKI: -- we do see them separately. As we have said in the past, even while things were proceeding on the P5+1 negotiations we still have maintained our concerns about terrorist activities, about human rights violations. As you know, there are a range of UN Security Council resolutions – or – that remain in place. And so in this case, we of course strongly condemn the violation of UN Security Council Resolution 1929 even as we continue to resolve our efforts in this regard.

QUESTION: So, but Prime Minister Netanyahu does not seem to be too pleased with that position. He thinks that this is a – just another sign of the fact, he would say, that you can’t trust Iran, that they’re going to – so you disagree with him in – when he says – or you would disagree with him when he says that the negotiations clearly can’t achieve anything because the Iranians aren’t interested and the Iranians can’t be trusted?

MS. PSAKI: We would. We don’t think this about trust; same with the negotiations. We will continue to actively oppose and counter Iranian support of terrorism both in the region and internationally, as we will in this case. And obviously, there’s an entire process that will be underway in that regard that the Israelis will lead. We also retain the ability to target and sanction Iranian support for terrorism in the region, as we have many times before, and we’ve also expressly indicated this to Iranian officials. So in our view, we have – it’s in everyone’s interest to prevent Iran from acquiring a nuclear weapon. There are remaining concerns we have about their terrorist activities, about – or activities tied to terrorism, including the transfer, of course, of weapons, and as well as human rights abuses, and we’ll continue to hold them accountable.

QUESTION: But he --

QUESTION: Today published in Israel --

MS. PSAKI: Go ahead, Said.

QUESTION: The Secretary, in his speech, he said that, “We are working towards a zero option for Iran to have enriched uranium,” and so on. So is -- has that message conveyed to the Iranians? Is that what they are – what they believe in? Is that what they --

MS. PSAKI: In Netanyahu’s piece – speech?

QUESTION: Right – no, no, the Secretary’s speech before AIPAC. He said that, “We are working towards a goal where Iran would have zero ability to enrich uranium, not 20 percent, not 5 percent,” and so on, as if this position was clearly made to the Iranians. Do they also espouse the same thing, the Iranians?

MS. PSAKI: Well, Said, as you know, the comprehensive negotiations are going to kick off again next week. We’re not going to outline end state goals here as a matter of policy. Others may have their own thoughts and views and share those, and that certainly is their prerogative, but we’re not going to from here.

Go ahead – or, Elise, did you – we’ll go to you next.

QUESTION: Israel --

QUESTION: It’s about (inaudible).

MS. PSAKI: Okay. Go ahead in the back.

QUESTION: Excuse me. Today, published in Israel, there are the states going to supply and support Israel by another 12 Iron Dome systems. Do you really believe that by this step, you can facilitate the obstacles in the way to the peace process between the Israelis and the Palestinians?

MS. PSAKI: Well, there’s an ongoing effort that’s been underway for months led by General Allen to ensure that, when there is a final status agreement, that Israel is stronger than they are today. So I think – I’m not sure if that’s what you’re referring to, but that’s an important part of this effort and is an important part of the discussion. There are obviously several components of what will be discussed – continue to be discussed as a part of the negotiation.

Elise.

QUESTION: This is on the Malaysian Airlines.

MS. PSAKI: Sure.

QUESTION: There are some – it seems as if – about these stolen passports that two of the travelers were using, that an Iranian national had purchased these particular – both of these passports, and was just wondering if that raises your concern about any potential Iranian hand in what went on here, and just what your consultation is with other allies in terms of involved in this incident revolving – involving the stolen passport?

MS. PSAKI: Sure. Well, I don’t have any more information to offer on this. Obviously, as National Security – Deputy National Security Advisor Tony Blinken said yesterday, certainly these details – or the details of the fact the reports said there were two stolen passports raised concerns and questions, but I don’t have any other confirmation of what you just said from our end or any other details into the investigation. Obviously, it’s being looked into.

Any more on Malaysia?

QUESTION: Well, I just have one more on Malaysia.

MS. PSAKI: Sure. Go ahead, Elise.

QUESTION: Is it – does the United States use – check – it seems as – part of the problem was that these passports were not checked by Interpol.

MS. PSAKI: Mm-hmm.

QUESTION: And I’m wondering, like, what your arrangement is with other countries in terms of the use of Interpol. Do you check every passport through Interpol when you – when people are boarding U.S. flights?

MS. PSAKI: Well, here’s what I know, and I can venture to get you more details on that if we can answer it: We provide Interpol with electronic updates on lost and stolen U.S. passports. That information is posted as soon as we are aware of it. Obviously, it’s up to Interpol to access the information, but it’s accessible to member law enforcement authorities worldwide. We’re one of the top providers of lost and stolen information to Interpol, and we have provided passport records to Interpol’s stolen and lost documents database since 2004.

In terms of what we specifically do here, Elise, my bet is that is a DHS lead, but let me check on that and see. And is your question – just to clarify here, is your question what the United States airlines do or what we do at our airports, or --

QUESTION: Well, I was interested in your providing information to Interpol and --

MS. PSAKI: Sure.

QUESTION: -- the access procedures on that. And then I was also interested on what your procedures are.

MS. PSAKI: Sure. Let me check and see if that’s something we can provide, or I’ll get you the appropriate contact for that.

More on Malaysia?

QUESTION: Yes.

MS. PSAKI: Go ahead.

QUESTION: Have you been in contact with the family of the two American children that were on board? Is it clear that – were their parents passengers? Have you been able to reach any family member?

MS. PSAKI: Let me see here. There were, as you noted, three U.S. citizens. We can confirm those U.S. citizens. I think the information is out there, but let me do that for all of you. Philip Wood, Nicole Meng, and Leo Meng were on board. We don’t have any further information to share regarding these individuals at this point. Obviously, this sometimes can be ongoing in processes like these, so let me see where we are at the end of the day, and if there’s more we can detail for all of you.

More on Malaysia? Go ahead, in the back.

QUESTION: Oh, no, not Malaysia.

MS. PSAKI: Not Malaysia. Malaysia?

QUESTION: Yes.

MS. PSAKI: Okay.

QUESTION: Jen, could you give us the whole picture of what the role the U.S. is playing now? What assistance are you providing and are you going to provide?

MS. PSAKI: Sure. Well, two United States-based representatives of the NTSB, joined by two FAA representatives, arrived in Kuala Lumpur on March 10th, so that is today, of course. Our Kuala Lumpur-based law enforcement officials are also cooperating closely with their counterparts. In addition – and I think this came out from DOD, but just so you have all the information – we also provided – P-3 surveillance aircraft and two destroyers are also involved in the search efforts as well. So – and we’re, of course, closely in contact, but those are the specific materials we’ve provided, and individuals.

QUESTION: Are you going to share the spy satellite image with those countries? Because that may indicate explosion or something like that.

MS. PSAKI: I don’t have any more specifics for you on what information will be shared, but obviously, we’re doing everything we can to be helpful in this case.

New topic? Let’s go to the back, just because he hasn’t had any question, and then we’ll go to you next. Go ahead.

QUESTION: Okay. It’s about Japan’s comfort women. The Japanese Government is going to reexamine the process, how it was made by the previous government in early ’90s. It’s called about the Kono Statement on comfort women. And Japanese Government also said that it’s not going to change the statement per se.

MS. PSAKI: Mm-hmm.

QUESTION: So I was wondering if you have – can any comment or view on this process.

MS. PSAKI: Sure. Well, the apologies extended by previous Prime Minister Murayama and former Chief Cabinet Secretary Kono marked an important chapter in Japan improving relations with its neighbors. We note that Chief Cabinet Secretary Suga stated to the press on March 3rd – so last week – that the position of the Abe government is to uphold the Kono statement. We encourage Japan’s leadership to approach this and other issues arising from the past in a manner that is conducive to building stronger relations with its neighbors, so we felt that was a positive step.

Let’s just go around to – and make sure everybody – go ahead.

QUESTION: Staying in Japan, tomorrow, and actually today, in Japan marks the third – three years since the earthquake and tsunami hit Tohoku region, so I have a couple questions about that.

MS. PSAKI: Sure.

QUESTION: One, does the State Department have any – a couple comments on the three year anniversary?

MS. PSAKI: Mm-hmm.

QUESTION: Two would be, in what significant ways does the State Department continue to cooperate with Japan to help the residents of the region recover?

MS. PSAKI: Mm-hmm.

QUESTION: And lastly, does the State Department have any lingering concerns about the efforts to clean up the nuclear fallout from the Fukushima Daiichi plant?

MS. PSAKI: Sure. Well, let me see if I can address all of your questions here. One, we’ll – the anniversary, I believe, is tomorrow.

QUESTION: Yes.

MS. PSAKI: So we’ll have a statement out tomorrow, so look out for that. And we remain, of course, closely engaged with the Government of Japan regarding the situation at Fukushima nuclear power plant. Since the initial incident in 2011, we have had ongoing exchanges at various levels regarding the situation and remedial actions, reflecting our close alliance and relationship, and of course, shared expertise – and we’ve shared our expertise.

For example, the Department of State provides funding and other assistance to the implementation of the IAEA Action Plan on Nuclear Safety, developed in the wake of the Fukushima accident to strengthen nuclear security worldwide, including in Japan. We’ve also worked to assist the remediation and decommissioning effort in Japan, including helping to ensure that the experience and skill of U.S. firms can be available for that work.

Many other U.S. Government agencies and officials are also engaged on the issues related to Fukushima, and that has been ongoing over the course of the last couple of years, including the Nuclear Regulatory Commission, Department of Energy, the Environmental Protection Agency, and many others. So that is the broad range of our engagement, which I expect will continue.

QUESTION: Do you have anything specific for the residents there other than just – because I think mostly what you mentioned there was specific towards the nuclear disaster, but what about relief efforts for residents? Do you have programs to provide assistance?

MS. PSAKI: We have a range of programs. I’m sure we can get you a longer list of those, but it is interagency across many government agencies. So I just didn’t want to outline everything from here, but I’m sure we can get you more details if that’s helpful.

QUESTION: Thank you.

MS. PSAKI: Jo.

QUESTION: Can I go to Syria, please?

MS. PSAKI: Sure.

QUESTION: I don’t know if you saw the news today that the group of nuns that were kidnapped in December have been released today in a prisoner swap. I wondered if you had a reaction to that.

MS. PSAKI: Sure. Well, of course, we are relieved by the reports that the nuns have been released. We continued to call for the immediate and unconditional release of all those who remain unjustly detained in Syria. I know there have been a range of details out there. I’m not in a position to confirm any of those details. I know the Government of Lebanon has been a resource in terms of specifics, so I would point you to them.

QUESTION: Okay. Thank you.

QUESTION: On Syria?

MS. PSAKI: Sure.

QUESTION: Yeah. Mokhtar Lamani, who’s Lakhdar Brahimi top aide, resigned, like, last week.

MS. PSAKI: Mm-hmm.

QUESTION: There are talks or rumors that Brahimi himself is resigning. Update us, if you would, on what’s going on. He’s supposedly submitting a report before the Security Council this week sometime, on the 13th. What kind of diplomatic activity is ongoing under the leadership of Larry Silverman?

MS. PSAKI: Well, Said, I think, one, there are a range of officials who work on issues related to Syria throughout the building, whether that is people who work on refugee issues or assistance or chemical weapons issues. And so that – all of those activities and tracks are ongoing on a daily basis. Larry Silverman has been – let me see if I have an update on his activities. I think I had something I could have – I think I had something in there. Let me just – give me a moment.

He is, as we confirmed a couple of weeks ago, has been in that acting role. He’s planning to meet – he was planning to meet late last week with some members of the opposition, so let me see if we can get an update for you on the details of that meeting.

QUESTION: Okay. On the – during the meeting between the Secretary of State and the King of Jordan --

MS. PSAKI: Mm-hmm.

QUESTION: -- in the last couple days, there is talk about U.S. special forces who are training somebody – training Syrian opposition forces. Could you – I’m sure that topic may have come up during the discussion. Could you update us?

MS. PSAKI: I think you’re referring to the – and I think DOD confirmed this --

QUESTION: Right.

MS. PSAKI: -- but I’m happy to do that as well, that we recently sent a small contingent of Special Operations personnel to Jordan to participate in military-to-military training exchange – a military-to-military training exchange with Jordanian and Iraqi counterterrorism forces. The training will – was meant to – will – is meant to bolster skills in counterterrorism and special operations tactics, techniques, and procedures. But this is, again, a training exchange with Jordanian and Iraqi counterterrorism forces. So I would point you, though, to DOD for more specifics on that.

QUESTION: So is it --

QUESTION: Are there any Syrians involved?

QUESTION: Yeah.

MS. PSAKI: That – those are – that is what I have on this specific issue. This is a mil-to-mil on this specific case.

Iraq or a different – we can change topics. That’s fine.

QUESTION: Yeah, we can change topics.

MS. PSAKI: Okay.

QUESTION: I have on North Korea and one on Japan if that’s all right.

MS. PSAKI: Sure, okay.

QUESTION: One is, I was just wondering if you have any reaction to elections, using the term loosely, in North Korea, or the --

MS. PSAKI: I will simply say that is not a model for democracy around the world.

QUESTION: Okay.

MS. PSAKI: Japan?

QUESTION: And then – yeah --

QUESTION: Wait a second. Are you suggesting that it’s necessarily wrong for one candidate to get 100 percent of the vote? (Laughter.) What if that’s an – what if it was actually free and fair and that happened?

MS. PSAKI: It would be a historic outcome, Matt. (Laughter.)

QUESTION: What if he’s the only one that wanted to run, though?

MS. PSAKI: I don’t know that I have much more analysis for all of you, as fun as this is. (Laughter.)

Go ahead. Japan?

QUESTION: Yeah. There was a recent report – I think it was today that it was released by the Center for Public Integrity – on a new nuclear power plant that’s set to open in Japan, which will produce uranium and plutonium that could be weapons – used for weapons. Is the U.S. concerned at all that there are security issues or that the site might become a target for terrorists?

MS. PSAKI: I don’t have all the details on that. Let me talk to our team about it. You know how closely we coordinate and cooperate with Japan on a range of – on defense issues. We were just there last October for the 2+2 meeting, so let me check with our team and see if there’s concerns that we want to express on that front.

QUESTION: Yes, please. Just wondered if you have a chance to study or understand better the ongoing – I mean, the tension between GCC countries. I mean, or – because the last week you said you are following it, and I don’t know if you have a chance to – you have a point of view about it or you have something to say about it?

MS. PSAKI: I don’t have anything new to offer from last week.

QUESTION: I mean, you prefer not to say something, you mean?

MS. PSAKI: That’s right. I prefer not to add to what I already said last week.

QUESTION: Okay. There is another question. You released yesterday a press release about the illicitly shipment of oil from Libya.

MS. PSAKI: From Libya, mm-hmm.

QUESTION: Yeah, and was just wondering, what is the significance or the importance of this issue regarding foreign policy?

MS. PSAKI: Well, I think what the – oftentimes, we release statements for a range of issues, and we are asked to comment on a range of issues around the world. So that was an expression of what was happening here. And this is a violation, as we understand it, of Libyan law, given the circumstances on the ground.

QUESTION: Yes. I was trying to figure out if it’s something new or it’s an ongoing something that then you discovered it now.

MS. PSAKI: In terms of the specific event that took place?

QUESTION: I mean – now – no, in general, this illicitly – shipment of oil from Libya was – it’s a phenomenon now or it’s an incident?

MS. PSAKI: I think we were commenting on the specific incident, so that was the purpose of the statement we put out yesterday.

QUESTION: Can I go back to Iran just for one second?

MS. PSAKI: Sure.

QUESTION: This has to do with not Levinson, recognizing that there was a statement about him and the anniversary of his disappearance, but do you have anything new on the status of the other Americans who – recognizing that you’re not saying that – where Levinson actually is, but do you have anything new on the Americans who you know are being held in Iranian prisons now?

MS. PSAKI: I don’t have any new details. It’s an understandable question. I mean, what I could provide probably is an update on when our protecting power has most recently reached out, so let me do that. Beyond that, I don’t have additional updates.

QUESTION: Okay.

MS. PSAKI: Any more questions?

QUESTION: (Inaudible.)

QUESTION: No, I’ve got --

MS. PSAKI: Okay.

QUESTION: I got two real brief ones.

MS. PSAKI: Sure, go ahead.

QUESTION: There seems to be some confusion over some comments that you made on Friday about the whole recognition of Israel as a Jewish state.

MS. PSAKI: Mm-hmm.

QUESTION: I’m wondering if you can address those. Has the Administration changed its position on this?

MS. PSAKI: We have not. Our position has been for quite some time that Israel is a Jewish state.

QUESTION: Okay. And is it also your position that the Israeli demand for the Palestinians to recognize Israel as a Jewish state is something to be determined in the negotiations?

MS. PSAKI: Yes.

QUESTION: All right.

QUESTION: It’s not a precondition?

QUESTION: And that is not a precondition?

MS. PSAKI: We’re not going to negotiate, I’m not going to negotiate what should or should not be in a framework. Obviously, that’s going to happen between the parties. Our position has remained the same.

QUESTION: Okay. But your position that Israel is a Jewish state does not in any way preclude, let’s say, a different outcome by the two parties, correct?

MS. PSAKI: That is our position. I’m not going to comment further.

QUESTION: All right. My last one is just a housekeeping thing from a subject that I wish was – well, whatever. Have you – are you aware that – if the State Department or the Embassy in Cairo has lodged a formal complaint with the Egyptians over the treatment of Medea Benjamin when she was detained at the airport?

MS. PSAKI: They have not. Let me give you a little more information on just how this typically works. We do not – we would not inquire about a – about treatment unless that was a question posed by the individual asking us to do that. That has not happened in this case.

QUESTION: So --

MS. PSAKI: We have been in touch, as I said, about other issues, including our inability to reach her last week or the week before.

QUESTION: You’ve been in touch with her about that?

MS. PSAKI: We’ve reached out to Egyptian authorities about that, as I said on Friday.

QUESTION: You’ve reached out to Egyptian authorities as to why you were not able to see her before she was deported?

MS. PSAKI: Mm-hmm.

QUESTION: Okay. But she has not – and if I understand what you said correctly, she has not asked you to make a complaint to the Egyptians about her treatment. Is that correct?

MS. PSAKI: Correct. We have not received such a request from Ms. Benjamin at this time.

QUESTION: Is that a requirement for you to lodge a protest?

MS. PSAKI: It is standard practice for us to gain an individual’s permission before raising allegations of mistreatment, so that has not happened in this case.

QUESTION: Okay. But presumably, if the situation was dire enough, you don’t – I mean, it’s not a requirement for you to have permission or a request from the person who was allegedly mistreated, is it?

MS. PSAKI: Well --

QUESTION: You can do it without that?

MS. PSAKI: Not to get too technical here, but I’ll just go there. In the Foreign Affairs Manual --

QUESTION: Yes.

MS. PSAKI: -- it says that we must “gain the permission to protest the abuse or mistreatment.” So that is outlined in the Foreign Affairs Manual in that capacity.

QUESTION: And absent that, you are not allowed to protest?

MS. PSAKI: I will have to check with more specific details about what we are and aren’t allowed to do, but that is standard operating procedure, so that’s why we’ve proceeded in this manner.

QUESTION: Okay.

MS. PSAKI: Thanks, everyone.

QUESTION: Thank you.

HERBEVORES AND FERTILIZER CAN INCREASE PLANT BIODIVERSITY

FROM:  NATIONAL SCIENCE FOUNDATION 
Herbivores + light = more plant biodiversity in fertilized grasslands
Research on six continents shows that it all comes down to the light
It all comes down to the light. At least in plant species diversity in fertilized grasslands.

Fertilizing by humans and plant-eating by herbivores can combine to benefit plant biodiversity--if enough light still reaches the ground, according to results of a study by ecologists Elizabeth Borer and Eric Seabloom of the University of Minnesota and colleagues.

The findings, published this week in the online edition of the journal Nature, are important in a world where humans are changing both where herbivores are found and the supply of plant nutrients such as nitrogen, phosphorus and potassium.

Enter the Nutrient Network

To conduct the study, Borer and Seabloom enlisted the help of the Nutrient Network, or NutNet, an experiment they and other researchers began as a way to understand how grasslands around the world respond to changing environments.

NutNet scientists at 40 sites set up plots with and without added fertilizer and with and without fences to keep out local herbivores such as deer, kangaroos, sheep or zebras.

The research took place in the United States, Canada, China, Australia, Switzerland, United Kingdom, South Africa, Tanzania, Germany and Argentina.

The scientists' hypothesis was that grassland plant species losses caused by eutrophication (overfertilization) could be offset by the increased light availability that results when taller plants are munched down by herbivores like deer and sheep.

This "trimming" by herbivores ultimately lets in more light, fueling increased plant growth.

The experiment, replicated in 40 grasslands on six continents, demonstrated that the researchers had it right.

New explanation for grassland plant biodiversity

"Global patterns of biodiversity have largely defied explanation due to many interacting, local driving forces," says Henry Gholz, a program director in the National Science Foundation's (NSF) Division of Environmental Biology, which funded coordination of the research, along with the many institutions involved.

"These results show that grassland biodiversity is likely largely determined by the offsetting influences of nutrition and grazing on light capture by plants," Gholz says.

In the study, the ecologists measured the amount of plant material, the light reaching the ground and the number of species of plants in the plots.

When the scientists compared results across the sites, they found that fertilizer both reduced the number of plant species in the plots and favored those that were faster-growing. Species less able to tolerate a lack of light in shady conditions were literally overshadowed by their faster-growing neighbors.

So there were fewer kinds of plants, but taller-growing ones.

An herbivore is an herbivore is an herbivore?

In both fertilized and unfertilized plots, removal of vegetation by herbivores increased the amount of light reaching the ground. The taller plants were eaten by the herbivores. Then plant species diversity increased.

The results were the case whether the grassland was in Minnesota, the United Kingdom or Tanzania, and whether the herbivores were rabbits, sheep or elephants.

"This suggests that these effects dovetail with changes in light availability at the ground level," says Borer. "That appears to be a big factor in maintaining or losing biodiversity in grasslands."

Light a key piece of the puzzle

In short, Borer says, "where we see a change in light, we see a change in biodiversity" for the better.

The findings offer important insights into how humans are affecting prairies, savannas, alpine meadows and other grasslands by adding fertilizers.

In showing how fertilization, grazing, light availability and biodiversity are linked, scientists are closer to understanding grassland ecosystems in a changing world.

-- Cheryl Dybas
Investigators
Elizabeth Borer
Related Institutions/Organizations
University of Minnesota-Twin Cities

RHEA BY DAY

Image Credit: NASA/JPL-Caltech/Space Science Institute.

FROM:  NASA 
Rhea's Day in the Sun

A nearly full Rhea shines in the sunlight in this recent Cassini image. Rhea (949 miles, or 1,527 kilometers across) is Saturn's second largest moon.

Lit terrain seen here is on the Saturn-facing hemisphere of Rhea. North on Rhea is up and rotated 43 degrees to the left. The image was taken in visible light with the Cassini spacecraft narrow-angle camera on Sept. 10, 2013.

The view was obtained at a distance of approximately 990,000 miles (1.6 million kilometers) from Rhea. Image scale is 6 miles (9 kilometers) per pixel.
The Cassini-Huygens mission is a cooperative project of NASA, the European Space Agency and the Italian Space Agency. The Jet Propulsion Laboratory, a division of the California Institute of Technology in Pasadena, manages the mission for NASA's Science Mission Directorate, Washington, D.C. The Cassini orbiter and its two onboard cameras were designed, developed and assembled at JPL. The imaging operations center is based at the Space Science Institute in Boulder, Colo.

U.S. NAVY AIDS SEARCH FOR MALAYSIAN AIRLINER

U.S. Navy photo by Senior Chief Petty Officer Chris D. Boardman

FROM:  U.S. NAVY 
U.S. Aids Search for Missing Malaysian Airliner 

A U.S. Navy MH-60R Seahawk helicopter lands aboard the guided-missile destroyer USS Pinckney during a crew swap before returning to search for the missing Malaysian Airlines flight in the Gulf of Thailand, March 9, 2014. The flight, which dropped off the radar of Subang, Indonesia, traffic controllers early Saturday morning while over the South China Sea, had 227 passengers from 14 nations and 12 crew members. The Seahawk is from the Helicopter Maritime Strike Squadron 78.


The USS Pinckney and USS Kidd are conducting search-and-rescue operations in the Gulf of Thailand to support the Malaysian government, a Pentagon spokesman said, March 10. 2014. A P-3 Orion from Kadena Air Base, Japan, and the USNS John Ericsson also are assisting in the search for Malaysia Airlines Flight 370, which disappeared March 8 during a flight from Kuala Lumpur to Beijing.

U.S. DEFENSE DEPARTMENT CONTRACTS FOR MARCH 10, 2014

FROM:  U.S. DEFENSE DEPARTMENT 
CONTRACTS
 NAVY

Lockheed Martin Corp., Baltimore, Md., is being provided funding in the amount of $698,911,656 under previously awarded contract (N00024-11-C-2300) for construction of two fiscal 2014 littoral combat ships.  The three contract line items being funded for each ship are for the basic seaframe construction, selected ship systems integration and test, and selected ship systems equipment.  Work will be performed in Marinette, Wis. (56 percent), Walpole, Mass. (14 percent), Washington, D.C. (12 percent), Oldsmar, Fla. (4 percent), Beloit, Wis. (3 percent), Moorestown, N.J. (2 percent), Minneapolis, Minn. (2 percent), and various locations of less than 1 percent each totaling 7 percent, and is expected to be complete by August 2018.  Fiscal 2014 shipbuilding and conversion, Navy contract funds in the amount of $698,911,656 will be obligated at time of award and will not expire at the end of the current fiscal year.  The Naval Sea Systems Command, Washington, D.C., is the contracting activity.

Austal USA, Mobile, Ala., is being provided funding in the amount of $683,716,119 under previously awarded contract (N00024-11-C-2301) for construction of two fiscal 2014 littoral combat ships.  The three contract line items being funded for each ship are for the basic seaframe construction, selected ship systems integration and test, and selected ship systems equipment.  Work will be performed in Mobile, Ala. (51 percent), Pittsfield, Mass. (13 percent), Cincinnati, Ohio (4 percent), Baltimore, Md. (2 percent), Burlington, Vt. (2 percent), New Orleans, La. (2 percent), and various locations of less than two percent each totaling 26 percent, and is expected to be complete by June 2018.  Fiscal 2014 shipbuilding and conversion, Navy contract funds in the amount of $683,716,119 will be obligated at time of award and will not expire at the end of the current fiscal year.  The Naval Sea Systems Command, Washington, D.C., is the contracting activity.

Communications & Power Industries, Beverly, Mass. (N00164-14-D-GR39), and L-3 Communications, Williamsport Pa. (N00164-14-D-GR65), are each being awarded firm-fixed-price, five-year, indefinite-delivery/indefinite-quantity, multiple-award contract with a cumulative value of $67,715,539 for the evaluation, rebuild and new production of double-duty cross field amplifiers utilized in the AN/SPY-1D(V) Radar System.  Double-duty cross field amplifiers are used on Navy destroyers and Aegis Ashore systems, and by foreign militaries for radar power amplification.  Initial delivery orders in the amount of $184,985 for Communications & Power Industries and $168,000 for L-3 will be awarded as the minimum ordering amount at time of award; subsequent orders will be competed between the two awardees.  This contract combines purchases for the U.S. Navy (95 percent) and the governments of Australia (2 percent), Spain (1 percent), Japan (1 percent) and South Korea (1 percent) under the Foreign Military Sales Program.  Work will be performed in Beverly Mass. (50 percent), and Williamsport Pa. (50 percent), and is expected to be completed by March 2019.  Fiscal 2014 shipbuilding and conversion, Navy funding in the amount of $352,985 will be obligated at the time of the award and will not expire at the end of the current fiscal year.  These contracts were not competitively procured in accordance with 10 U.S.C. 2304(c)(1). The Naval Surface Warfare Center, Crane, Ind., is the contracting activity.

Electric Boat Corp., Groton, Conn., is being awarded a $57,167,957 cost-plus-fixed-fee modification to the previously awarded contract (N00024-03-C-2101) for the planning and execution of the USS Minnesota (SSN 783) post shakedown availability (PSA).  Electric Boat will also procure long lead time material in preparation to accomplish the maintenance, repair, alterations, testing, and other work on the USS Minnesota during its scheduled PSA.  Work will be performed in Groton, Conn. (99 percent) and Quonset Point, R.I. (1 percent), and is expected to be completed by February 2015.  Fiscal 2008, 2013 and 2014 shipbuilding and conversion, Navy funding in the amount of $37,575,000 will be obligated at time of the award.  Contract funds will not expire at the end of the current fiscal year.  The Supervisor of Shipbuilding Conversion and Repair, Groton, Conn., is the contracting activity.

Sierra Nevada Corp., Sparks, Nev., is being awarded a $43,488,133 modification to a previously awarded contract (N00174-09-D-0003) for the procurement and support of the transmitting set, countermeasures AN/PLT-5 to support explosive ordnance disposal (EOD) personnel.  Joint service EOD forces have a requirement for man-portable equipment and support for the EOD Counter Radio Controlled Improvised Explosive Device Electronic Warfare (CREW) program.  The EOD CREW program provides all military EOD services with an electronic warfare capability to counter the threat from improvised explosive devices.  Work will be performed in Sparks, Nev., and is expected to be completed by March 2015.  No funds will be obligated at the time of award and contract funds will not expire at the end of the current fiscal year.  The Naval Surface Warfare Center, Indian Head Explosive Ordnance Disposal Technology Division, Indian Head, Md., is the contracting activity.

Northrop Grumman Laser Systems Inc., Apoka, Fla., is being awarded a $12,400,000 firm-fixed-price, indefinite-delivery/indefinite-quantity contract for special operating force laser aiming marker (SOFLAM), ground laser target designator (GLTD), provision item order spares and repairs.  The SOFLAM/GLTD is a lightweight, integrated, highly specialized, laser target designator viewing device that provides the operator with a ruggedized system utilizing technology designed for terminal guidance of precision munitions.  The SOFLAM/GLTD provides the specialized capability of combining two distinct guidance choices; hand-off to aircraft or standalone terminal guidance.  This requirement not only supports the U.S. but also includes foreign military sales (FMS) to Romania (71.4 percent) and Lithuania (28.6 percent) though the support of Building Partnership Capacity programs.  Work will be performed in Apopka, Fla., and is expected to be completed by March 2018.  FMS contract funds in the amount of $2,366,000 will be obligated at time of award and will not expire at the end of the current fiscal year.  This contract was not competitively procured in accordance with the statutory authority of 10 U.S.C. 2304(c)(1) as implemented by FAR 6.302-1 - only one responsible source and no other supplies or services will satisfy agency requirements.  The Naval Surface Warfare Center, Crane, Ind., is the contracting activity (N00164-14-D-JQ16).

Correction:  The Seaport-e rolling admission contract originally announced on Nov. 19, 2013 inadvertently left off seven winning companies.  Included in this announcement should have been ASG Solutions Corp., doing business as American Systems Group San Diego, Calif.; ANSOL Inc., San Diego, Calif.; BlueWater Federal Solutions Inc., Chantilly, Va.; CTI Resource Management Services Inc., Jacksonville, Fla.; GBL Systems Corp., Camarillo, Calif.; Roccomar Inc., Falls Church, Va.; and Hodges Transportation Inc., doing business as Nevada Automotive Test Center, Silver Springs, Nev.

DEFENSE LOGISTICS AGENCY

CTS Cement Manufacturing Corp.*, Cypress, Calif., has been awarded a maximum $13,701,394 modification (P00007) exercising the third option period on a two-year base contract (SPM8EG-10-D-0001) with three one-year option periods for rigid concrete repair.  This is a fixed-price with economic-price-adjustment, indefinite-quantity contract.  Location of performance is California with a March 10, 2015 performance completion date.  Using military services are Army, Navy, Air Force, and Marine Corps.  Type of appropriation is fiscal 2014 through fiscal 2015 defense working capital funds.  The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pa.

ARMY

Defense Engineering Inc., Alexandria, Va., was awarded a $12,313,615 firm-fixed-price, multi-year contract for enterprise data storage services for the U.S. Information Technology Agency, Storage Services Branch.  Fiscal 2014 operations and maintenance, Army funds in the amount of $10,813,615 were obligated at the time of the award.  Estimated completion date is Feb. 28, 2019.  Twelve bids were solicited with five received.  Work will be performed in Washington, D.C.  Army Contracting Command, Rock Island Arsenal, Ill., is the contracting activity (W52P1J-14-F-3003).

IBM Corp. Bethesda, Md. was awarded an $8,465,976 modification (2A0328) to contract W91QUZ-06-D-0010 to exercise option year three of the Army Learning Management System which delivers training around the clock training for soldiers and Army civilians.  Fiscal 2014 operations and maintenance, Army funds in the amount of $4,121,993 were obligated at the time of the award.  Estimated completion date is March 20, 2015.  Work will be performed at Fort Eustis, Va.  Army Contracting Command, Fort Eustis, Va., is the contracting activity.

*Small Business

U.S. INCREASES AIR OPERATIONS IN POLAND

FROM:  U.S. DEFENSE DEPARTMENT
U.S. Will Beef Up Air Operations in Poland
By Jim Garamone
American Forces Press Service

WASHINGTON, Mar. 10, 2014 – More U.S. F-16 Fighting Falcons will deploy to Poland in the coming days and weeks, a Pentagon official said here today.
Defense Secretary Chuck Hagel and Polish Defense Minister Tomasz Siemoniak spoke yesterday, and Siemoiniak thanked the secretary for looking at options for basing, said Army Col. Steve Warren, a Pentagon spokesman.

“No decision [have been made] on numbers yet,” he added. “That decision has not been finalized.”

U.S. European Command would provide the aircraft once a decision is made, the colonel told reporters.

The decision has been made to increase the size of the U.S. aviation detachment in Poland, Warren said. Ten U.S. Air Force personnel are stationed at Lask Air Base in Poland, “but there is no permanent jet presence there,” he added.

The airmen support quarterly rotations of U.S. F-16s and C-130s for joint training with the Polish air force. They are part of the 52nd Fighter Wing based in Spangdahlem, Germany.

Typically, there are four annual aircraft rotations to the air base, with at least two weeks of flying per rotation.

“What we are doing is reassuring our allies that we are there for them,” Warren said. “This is an important time for us to make it crystal clear to all our allies and partners in the region that the United States of America stands by them.”
This is just one of the visible actions the United States has taken since the Russian incursion into Ukraine. The United States sent six more F-15C Eagle aircraft to beef up the air policing mission in the Baltics. In addition, the USS Truxton has been deployed to the Black Sea.

These are examples, Warren said, of U.S. commitments to allies and partners in the region.

READOUT: PRESIDENT OBAMA'S CALL WITH CHINESE PRESIDENT XI

FROM:  THE WHITE HOUSE 
Readout of the President’s Call with President Xi of China

The President spoke to Chinese President Xi Jinping on the evening of March 9 regarding the situation in Ukraine.  The two leaders agreed on the fundamental importance of focusing on common interests and deepening practical cooperation to address regional and global challenges for the development of bilateral relations. In that context, they affirmed their shared interest in reducing tensions and identifying a peaceful resolution to the dispute between Russia and Ukraine.  The two leaders agreed on the importance of upholding principles of sovereignty and territorial integrity, both in the context of Ukraine and also for the broader functioning of the international system.  The President noted his overriding objective of restoring Ukraine’s sovereignty and territorial integrity and ensuring the Ukrainian people are able to determine their own future without foreign interference.  The two leaders committed to stay in touch as events unfold.

WHITE HOUSE FACT SHEET: U.S. AND CHILE

FROM:  THE WHITE HOUSE 
FACT SHEET: The United States and Chile

Today, Vice President Joe Biden is in Chile to attend the inauguration of President-Elect Michelle Bachelet. The Vice President’s visit will underscore the long-standing close ties between the United States and Chile, and highlight our cooperation in the following areas:

Free Trade Agreement: The U.S.-Chile Free Trade Agreement continues to benefit both nations.  Bilateral trade in goods grew to $28 billion in 2013, which makes Chile our 29th largest goods trading partner overall and our fourth largest export partner in the Americas.  U.S. goods exports to Chile totaled $17.6 billion last year, representing an increase of 548 percent since the Agreement was signed in 2004.

Trans-Pacific Partnership: The United States and Chile are two of the twelve participants negotiating the Trans-Pacific Partnership (TPP), which will be a comprehensive, high-standard, next-generation trade agreement.  Once concluded, the TPP will cover roughly 40 percent of global gross domestic product (GDP).  All of the participants stand to benefit from a successful and speedy conclusion of TPP negotiations.

Multilateral Issues: The United States looks forward to consulting closely with Chile as a non-permanent member of the UN Security Council and member of the UN Human Rights Council.  President Obama and President-Elect Bachelet launched our Trilateral Development Cooperation initiative in 2009, and we’ve worked together in countries as diverse as El Salvador, Guatemala and the Dominican Republic on matters as diverse as agriculture, assisting at-risk youth, and security cooperation.

Visa Waiver Program: On February 28th, Chile was designated the 38th country to participate in the U.S. Visa Waiver Program. Chile’s designation is a testament to our strong relations and its participation will have a tremendous impact in creating even stronger people-to-people ties between our countries.  It should also facilitate other potential initiatives to expedite trade and travel.  During his visit, the Vice President announced the implementation would be moved up from May 1st to March 31st.

100,000 Strong in the Americas: During his March 2011 visit to Chile, President Obama launched the “100,000 Strong in the Americas” initiative to increase educational exchange across the Americas.  Chile has already created three partnerships between U.S. and Chilean universities to increase student exchange. There are currently more than 3,000 U.S. students studying in Chile and more than 2,000 Chileans at American universities.  In January, the Vice President launched the initiative’s #InvestintheFuture campaign to start an online conversation between students, governments, and business about international education.

REMARKS: VP BIDEN WITH CHILEAN PRESIDENT PINERA IN SANTIAGO, CHILE

FROM:  THE WHITE HOUSE 
Remarks by Vice President Joe Biden at a Bilateral Meeting with Chilean President Sebastián Piñera
Palacio de la Moneda
Santiago, Chile

PRESIDENT PIÑERA:  Good morning.  I would like to give the most warm in the world’s welcome to the Vice President of the United States, Mr. Joe Biden.

You know that he was elected senator when he was only 29 years of age (inaudible) the youngest senator in the history of the United States.  He performed as a U.S. senator for more than 36 years, and now he’s the Vice President of the United States.

Welcome to Chile.

THE VICE PRESIDENT:  Thank you.

PRESIDENT PIÑERA:  We consider yourself and the country a very good and loyal friend of my country.  So -- and I know that you have a very important voice to give and we are very pleased to have you here.  Welcome to Chile once again, and I give you --

THE VICE PRESIDENT:  Well, thank you, Mr. President.  I -- despite some of the crises that are going on around the world, the President and I agreed that it was important that I be here in Chile because this -- our commitment to this relationship is real.  It’s deep, and you’ve deepened in your term, Mr. President.

I had a great meeting with President-elect Bachelet this morning, and I’m looking forward to meeting with you after this brief comments to the press here.  And I also look forward to meeting the other leaders in the region from Colombia, Peru, Mexico and elsewhere.  So it’s an opportunity for me meet others as well.

The President and I believe that the hemisphere, the Western Hemisphere, and particularly the Southern Hemisphere has -- offers enormous, enormous potential.  It’s the destination of 40 percent of all of America’s exports.  It’s home to a growing middle class, and it’s quickly becoming (inaudible) quickly becoming a world energy center.

And we, for the first time, Mr. President, at least in my career, talk about how to achieve a hemisphere that is secure, middle-class and free.  We’ve never been able to look at it that way before.  From Canada through -- down through Chile and everywhere in between, And nowhere in the region is that more -- potentially more apparent than in Chile.  (Inaudible) the United States you mentioned historic close ties.  And that's why -- it’s why I’m here.  That's why my delegation is here.

Mr. President, our two countries have worked well together.  We’ve made significant progress through your leadership in the TPP, Trans-Pacific Partnership negotiation.  During your term, Mr. President, our two countries also strengthened our people-to-people ties through the Visa Waiver Program.  I remember first meeting you, talking about that.  Chile is the only Latin America country in the program that allows visa-free travel between Chile and the United States.

And as far as my visit, I’m happy to say that we’re not going to wait until May the 1st.  We want to move that program up to begin on March the 31st.  Again, thank you for your -- all your efforts.

The United States, Mr. President, looks forward to working with your successor, President Bachelet, on these and many more issues.  I personally look forward to tomorrow’s inauguration.  I’ve heard it described as the perfect example of democratic transfer of power.  Chile’s economic, democratic tradition teaches us all that pragmatism, not ideology, is the secret to success.  It’s no coincidence that Chile has used democracy and the open market to create new opportunities for her citizens.  And we continue to look forward to working with the government of Chile, and I continue to look forward to seeing you as well in person.

Thank you for you hospitality.

END

SPRING AT THE MARTIAN DUNES

FROM:  NASA 

Mars’ northern-most sand dunes are beginning to emerge from their winter cover of seasonal carbon dioxide (dry) ice. Dark, bare south-facing slopes are soaking up the warmth of the sun. The steep lee sides of the dunes are also ice-free along the crest, allowing sand to slide down the dune. Dark splotches are places where ice cracked earlier in spring, releasing sand. Soon the dunes will be completely bare and all signs of spring activity will be gone. This image was acquired by the HiRISE camera aboard NASA's Mars Reconnaissance Orbiter on Jan. 16, 2014. The University of Arizona, Tucson, operates the HiRISE camera, which was built by Ball Aerospace & Technologies Corp., Boulder, Colo. NASA's Jet Propulsion Laboratory, a division of the California Institute of Technology in Pasadena, manages the Mars Reconnaissance Orbiter Project for the NASA Science Mission Directorate, Washington. > More information and image products Image Credit: NASA/JPL-Caltech/Univ. of Arizona Caption: Candy Hansen.

SEC OBTAINS $7.2 SANCTION FOR SHORT SELLING EQUITY DURING RESTRICTED PERIOD

FROM:  SECURITIES AND EXCHANGE COMMISSION 

The Securities and Exchange Commission today announced the largest-ever monetary sanction for Rule 105 short selling violations as a Long Island-based proprietary trading firm and its owner agreed to pay $7.2 million to settle charges.

Rule 105 prohibits short selling of an equity security during a restricted period – generally five business days before a public offering – and the subsequent purchase of that same security through the offering.  The rule applies regardless of the trader’s intent, and promotes offering prices that are set by natural forces of supply and demand rather than manipulative activity.  The rule therefore prevents short selling from interfering with offering prices.

According to the SEC’s order instituting settled administrative proceedings, Jeffery W. Lynn created Worldwide Capital for the purpose of investing and trading his own money.  Lynn’s principal investment strategy focused primarily on new shares of public issuers coming to market through secondary and follow-on public offerings.  Through traders he engaged to trade on his behalf, Lynn sought allocations of additional shares soon to be publicly offered, usually at a discount to the market price of the company’s already publicly trading shares.  He and his traders would then sell those shares short in advance of the offerings.  Lynn and Worldwide Capital improperly profited from the difference between the price paid to acquire the offered shares and the market price on the date of the offering.

“Rule 105 is an important safeguard designed to protect the market against manipulative trading, and we will continue to aggressively pursue violators,” said Andrew M. Calamari, director of the SEC’s New York Regional Office.

According to the SEC’s order Lynn participated in 60 public stock offerings covered by Rule 105 after selling short those same securities during the pre-offering restricted period.  The violations occurred from October 2007 to February 2012.  Worldwide Capital traders purchased the offering shares through numerous accounts at multiple broker-dealers involved in the offering, and sold the stock through an account in Worldwide Capital’s name at other broker-dealers.  All of the trades – the purchases of offering shares and short sales – cleared and settled in a Worldwide Capital master account at the firm’s prime broker.

“The trading conducted by Lynn and Worldwide Capital disregarded the markets’ independent pricing mechanisms,” said Amelia A. Cottrell, associate director of the SEC’s New York Regional Office.  “Their use of multiple accounts in obtaining offering shares and short selling did not satisfy the separate accounts exception to Rule 105.”      

To settle the SEC’s charges, Worldwide Capital and Lynn agreed to jointly pay disgorgement of $4,212,797, prejudgment interest of $526,358, and a penalty of $2,514,571.  Lynn and his firm agreed to cease and desist from violating Rule 105 without admitting or denying the findings in the SEC’s order.

The SEC’s investigation, which is continuing, has been conducted by Leslie Kazon, Joseph P. Ceglio, Karen M. Lee, Richard G. Primoff, Elzbieta Wraga, and Elizabeth Baier of the New York Regional Office.  The SEC appreciates the assistance of the Financial Industry Regulatory Authority and the New York Stock Exchange.

TESTIMONY OF CFTC ACTING CHAIRMAN WETJEN REGARDING BUDGET AND OVERSIGHT

FROM:  COMMODITY FUTURES TRADING COMMISSION 
Testimony of Acting Chairman Mark P. Wetjen Before the U.S. House Appropriations Subcommittee on Agriculture, Rural Development, Food And Drug Administration, and Related Agencies

March 6, 2014

Good morning, Chairman Aderholt, Ranking Member Farr and members of the Subcommittee. Thank you for inviting me to today’s hearing on the FY 2015 President’s Budget request for the Commodity Futures Trading Commission (“Commission” or “CFTC”).

Under the Commodity Exchange Act, the Commission has oversight responsibilities for the derivatives markets. These markets, which have been in existence for centuries, have taken on particular importance to the U.S. economy in recent decades and as a consequence have become enormously vast, measuring hundreds of trillions of dollars in notional value. They are critical to the effective functioning of the U.S. and global economies.

At their core, the derivatives markets exist to help farmers, producers, small businesses, manufacturers and lenders focus on what they do best: providing goods and services and allocating capital to reduce risk and meet main street demand. Well-regulated derivatives markets facilitate job creation and the growth of the economy by providing a means for managing and assuming prices risks and broadly disseminating, and discovering, pricing information.

Stated more simply, through the derivatives marketplace, a farmer can lock in a price for his crop; a small business can lock in an interest rate that would otherwise fluctuate, perhaps raising its costs; a global manufacturer can lock in a currency value, allowing it to better plan and grow its global business; and a lender can manage its assets and balance sheet to ensure it can continue lending, fueling the economy in the process.

Essentially, these complex markets facilitate the assumption and distribution of risk throughout the financial system, and for that reason alone, it is critical that these markets are subject to appropriate governmental oversight.

Mr. Chairman, Ranking Member, and Committee members, I do not intend the testimony that follows to sound alarmist, or to overstate the case for additional resources, but I do want to be sure that Congress, and this committee in particular, have a clear picture of the potential risks posed by the continued state of funding for the agency. When not overseen properly, irregularities in these markets, or failures of firms intermediating in them, can severely and negatively impact the economy as a whole and cause dramatic losses for individual participants. The stakes, therefore, are high.

The CFTC’s Responsibilities have Grown Substantially in Recent Years

The unfortunate reality is that, at current funding levels, the Commission is unable to adequately fulfill the mission given to it by Congress: to prevent disruptions to market integrity, protect customer assets, monitor and reduce the build-up of systemic risk, and ensure to the greatest extent possible that the derivatives markets are free of fraud and manipulation.

Recent increases in the agency’s funding have been essential and appreciated. They have not, however, kept pace with the growth of the Commission’s responsibilities, including those given to it under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”).

Various statistics have been used to measure this increase in responsibilities. One often-cited measure is the increase in the gross notional size of the marketplace now under the Commission’s oversight. Other measures, though, are equally and perhaps more illustrative.

For instance, the trading volume of CFTC-regulated futures and options contracts was 3,060 million contracts in 2010 and rose to 3,477 million in 2013. Similarly, the volume of interest rate swap trading activity by the 15 largest dealers averaged 249,564 swap events each in 2010, and by 2012, averaged 332,484 each (according to International Swaps and Derivatives Association (“ISDA”) data). Those transactions, moreover, can be executed in significantly more trading venues, and types of trading venues, both here and abroad. In addition, the complexity of the markets, its products and sophistication of the market tools, such as high frequency trading techniques, has increased greatly over the years.

The notional value of derivatives centrally cleared by clearinghouses was $124 trillion in 2010 (according to ISDA data), and is now approximately $223 trillion (according to CFTC data from swap data repositories (“SDRs”)). That is nearly a 100 percent increase. The expanded use of clearinghouses is significant in this context because, among other things, it means that the Commission must ensure through appropriate oversight that these entities continue to properly manage the various types of risks that are incident to a market structure dependent on central clearing. A clearinghouse’s failure to follow international guidelines and the Commission’s regulations, now more than ever, could have significant economic consequences.

The amount of customer funds held by clearinghouses and futures commission merchants (“FCMs”) was $177 billion in 2010 and is now over $225 billion, another substantial increase. These are customer funds in the form of cash and securities deposited at firms to be used for margin payments made by the end-users of the markets, like farmers, to support their trading activities. Again, Commission rules are designed to ensure customer funds are safely kept by these market intermediaries, and a failure to provide the proper level of oversight increases the risk of certain practices by firms, including perhaps operational risks or fraud. In fact, recent events in the FCM community have led to the temporary or permanent loss of more than a billion dollars of customer funds.

The total number of registrants and registered entities overseen directly by the Commission, depending on the measure, has increased by at least 40 percent in the last four years. This includes 99 swap dealers, two major swap participants (“MSPs”), FCMs, clearinghouses, trading venues and SDRs.

In addition, the CFTC oversees more than 4,000 advisers and operators of managed funds, some of which have significant outward exposures in and across financial markets. It is conceivable that the failure of some of these funds could have spill-over effects on the financial system. In all cases, investors in these funds are entitled to know their money is being appropriately held and invested.

The Commission also directly or indirectly supervises another approximately 64,000 registrants, mostly associated persons that solicit or accept customer orders or participate in certain managed funds, or that invest customer funds through discretionary accounts. Although it leverages the resources of the self-regulatory organizations (“SROs”), the Commission itself must oversee these registrants in certain areas and provide guidance and interpretations to the SROs with a total staff of only 644 employees currently onboard, less than 10 percent of the number of registrants under its purview.

By almost any measure, in fact, the portfolio of entities that the Commission is charged with overseeing has expanded in size and risk dramatically over the last half decade. The intermediaries in the derivatives markets are by and large well-run firms that perform important services in the markets and for their customers. But as a collective whole, these firms can potentially pose risks, even significant risks, to the financial system and the individuals operating within it. Those relying upon these firms deserve assurances that such firms are supervised by an agency capable of meaningful oversight.

The FY15 Request Prioritizes Examinations, Technology and Market Integrity, and Enforcement

The FY 2014 appropriation of $215 million was a modest budgetary increase for the Commission, lifting the agency’s appropriations above the sequestration level of $195 million that has posed significant challenges for the agency’s orderly operation. As directed by Congress, the agency has submitted to Congress a FY 2014 Spend Plan outlining the agency’s allocation of current resources, which reflects an increased emphasis on examinations and technology-related staff.

The President’s FY 2015 budget request also reflects these priorities and highlights both the importance of the Commission’s mission and the potential effects of continuing to operate under difficult budgetary constraints.

The request is a significant step towards the longer-term funding level that is necessary to fully and responsibly fulfill the agency’s core mission: protecting the safety and integrity of the derivatives markets. It recognizes the immediate need for an appropriation of $280 million and approximately 920 staff years (“FTEs”) for the agency, an increase of $65 million and 253 FTEs over the FY 2014 levels, heavily weighted towards examinations, surveillance, and technology functions.

In this regard, the request balances the need for more technological tools to monitor the markets, detect fraud and manipulation, and identify risk and compliance issues, with the need for staff with the requisite expertise to analyze the data collected through technology and determine how to use the results of that analysis to fulfill the Commission’s mission as the regulator of the derivatives markets. Both are essential to carrying out the agency’s mandate. Technology, after all, is an important means for the agency to effectively carry out critical oversight work; it is not an end in itself.

In light of technological developments in the markets today, the agency has committed to an increased focus on technology and is requesting a 17 percent increase in technology funding, or approximately $7 million, over FY 2014 solely for IT investments. The Commission’s FY 2014 Congressional Spending Plan already reflects that priority. The agency, in fact, reprogrammed $7.9 million from salaries and expenses to enhance technology investments.

In my remaining testimony, I will review three of the primary mission priorities for FY 2015.

Examinations

The President’s request would provide $38 million and 158 FTEs for examinations, which also covers the compliance activities of the Commission. As compared to FY 2014, this request is an increase of $15 million and 63 FTEs.

I noted earlier that the Commission has seen substantial growth in, among other things, trading volumes, customer monies held by intermediaries in the derivatives markets, and margin and risk held by clearinghouses. Examinations and legal compliance oversight are perhaps the best deterrents to fraud and improper or insufficient risk management and, as such, remain essential to compliance with the Commission’s customer protection and risk management rules.

The Commission has a direct examinations program for clearinghouses and designated contract markets, and it will soon directly examine swap execution facilities (“SEFs”) and SDRs. However, the agency does not at this time have the resources to place full-time staff on site at these registered entities, even systemically-important clearing organizations, unlike a number of other financial regulators that have on-the-ground staff at the significant firms they oversee. The Divisions of Market Oversight and Clearing and Risk collectively have 47 total examinations positions in FY 2014 to monitor, review, and report on some of the most complex financial markets and operations in the world.

The Commission today also performs only high-level, limited-scope reviews of the nearly 100 FCMs and 99 swap dealers holding over $225 billion in customer funds. In fact, the Commission has a staff of only 35 examiners to review these firms and analyze, among other things, over 1,200 financial filings each year. This staff level is less than the number the Commission had in 2010, yet the number of firms requiring its attention has almost doubled. Additionally, although it has begun legal compliance oversight of swap dealers and MSPs, the Commission has been able to allocate only 14 FTEs for this purpose. This number is insufficient to perform the necessary level of oversight of the newly registered swap dealer entities.

In FY2014, the Commission overall will have a mere 103 staff positions dedicated to examinations of the thousands of different registrants that should be subject to thorough oversight and examinations. The reality is that the agency has fallen far short of performance goals for its examinations activities, and it will continue to do so in the absence of additional funding from Congress. For example, as detailed in the Annual Performance Review for FY 2013, the Commission failed to meet performance targets for system safeguard examinations and for conducting direct examinations of FCM and non-FCM intermediaries. The President’s budget request appropriately calls on Congress to bolster the examinations function at the agency, and it would protect the public, and money deposited by customers, by enhancing the examinations program staff by more than 66 percent in FY 2015.

Moreover, if Congress fully funds the President’s request, the Commission can move toward annual reviews of all significant clearinghouses and trading platforms and perform more effective monitoring of market participants and intermediaries. Partially funding the request will mean accepting a certain amount of operational risk in the derivatives markets as the Commission is forced to forego more in-depth financial, operational and risk reviews of the firms within its jurisdiction and as such be reactive and not proactive to firm or industry risk issues.

Technology and Market Integrity

The FY 2015 request also supports a substantial increase in technology investments relative to FY 2014, roughly a 17 percent increase to supplement the more than 62 percent overall increase in data acquisition, analytics, and surveillance staff to make use of these investments. The $50 million investment in technology will provide millions of dollars of new and sophisticated analytical systems that will assist the Commission in its efforts to ensure market integrity.

The President’s FY 2015 budget request supports, in addition, 103 data-analytics and surveillance-related positions in the Division of Market Oversight alone, an increase of more than 98 percent over the FY 2014 staffing levels. Market surveillance is a core Commission mission, and it is an area that depends heavily on technology. As trading across the world has moved almost entirely to electronic systems, the Commission must make the technology investments required to collect and make sense of market data and handle the unprecedented volumes of transaction-level data provided by financial markets.

Effective market surveillance, though, equally depends on the Commission’s ability to hire and retain experienced market professionals who can analyze extremely complex and voluminous data from multiple trading markets and develop sophisticated analytics and models to respond to and identify trading activity that warrants investigation. The FY 2015 investment in high-performance hardware and software therefore must be paired with investments in personnel that can employ technology investments effectively.

In addition to the agency’s direct oversight responsibilities, the CFTC continues to prioritize the data and technology infrastructure needs across the Commission. The President’s FY 2015 Budget requests significant increases in both dollars and staff dedicated to these needs. Data, and the ability to analyze and report data, are more important than ever in the derivatives markets, and in the CFTC’s ability to oversee these markets. The CFTC must aggregate various types of data from multiple industry sources and across the futures and swaps markets. The increasing complexity and volume of this incoming data, moreover, requires significantly more powerful hardware, such as massively parallel processing systems to support analytics. Moving forward, the Commission will continue to improve information technology and management capabilities in the areas of data management to support analytics, statistical processing, and market research.

Enforcement

The President’s FY 2015 request would provide $62 million and 200 FTEs for enforcement, an increase of $16 million and 51 FTEs over FY 2014.

In its role as a law enforcement agency, the Commission’s enforcement arm protects market participants and other members of the public from fraud, manipulation and other abusive practices in the futures, options, cash and swaps markets, and prosecutes those who engage in such conduct. In FY 2013, the Commission filed 82 enforcement actions, bringing the total over the past three fiscal years to 283, and obtained orders in FY 2013 imposing more than $1.7 billion in sanctions.

The cases the agency pursues range from sophisticated manipulative and disruptive trading schemes in markets the Commission regulates, including financial instruments, oil, gas, precious metals and agricultural products, to quick strike actions against Ponzi schemes that victimize investors. The agency also is engaged in complex litigations related to issues of financial market integrity and customer protection. By way of example, in FY 2013, the CFTC filed and settled charges against three financial institutions for engaging in manipulation, attempted manipulation and false reporting of LIBOR and other benchmark interest rates.

Such investigations continue to be a significant and important part of the Division of Enforcement’s docket. Preventing manipulation is critical to the Commission’s mission to help protect taxpayers and the markets, but manipulation investigations, in particular, strain resources and time. And once a case is filed, the priority must shift to the litigation. In addition to drawing time and resources at the Commission, litigation requires additional resources, such as the retention of costly expert witnesses.

In 2002, when the Commission was responsible for the futures and options markets alone, the Division of Enforcement had approximately 154 people. Today, the CFTC also has anti-fraud and anti-manipulation authority over the vast swaps market, and it oversees a host of new market participants. In addition, the agency is also now responsible for pursuing cases under our enhanced Dodd-Frank authority that prohibits the reckless use of manipulative or deceptive schemes. Notwithstanding these additional responsibilities, there are currently only 149 members of the enforcement staff. The President’s budget request brings this number to 200, and more cops on the beat means the public is better assured that the rules of the road are being followed.

In addition to the need for additional enforcement staff and resources, the CFTC also believes technology investments will make our enforcement staff more efficient. For instance, the FY 2015 request would support developing and enhancing forensic analysis capabilities to assist in the development of analytical evidence for enforcement cases.

A full increase for enforcement means that the agency can pursue more investigations and better protect the public and the markets. A less than full increase means that the CFTC will continue to face difficult choices. It is not clear that we could maintain the current volume and types of cases, as well as ensure timely responses to market events.

Other FY 2015 Priorities: International Policy Coordination & Economic and Legal Analysis

The President’s FY 2015 request would provide $4.2 million and 15 FTEs that would be dedicated to international policy, a decrease of $41,000 and no increase in FTE over FY 2014. This allocation should not be misconstrued to mean that international coordination is not a priority for the Commission.

The global nature of the swaps and futures markets makes it imperative that the United States consult and coordinate with international authorities. For example, the Commission recently announced significant progress towards harmonizing a regulatory framework for CFTC-regulated SEFs and EU-regulated multilateral trading facilities (“MTFs”). The Commission is working internationally to promote robust and consistent standards, to avoid or minimize potentially conflicting or duplicative requirements, and to engage in cooperative supervision, wherever possible.

Over the past two years, the CFTC, Securities and Exchange Commission, European Commission, European Securities and Markets Authority, and market regulators from around the globe have been meeting regularly to discuss and resolve issues with the goal of harmonizing financial reform. The Commission also participates in numerous international working groups regarding derivatives. The Commission’s international efforts directly support global consistency in the oversight of the derivatives markets. In addition, the Commission anticipates a significant need for ongoing international policy coordination related to both market participants and infrastructure in the swaps markets. The Commission also anticipates a need for ongoing international work and coordination in the development of data and reporting standards under Dodd-Frank rules. Dodd-Frank further provided a framework for foreign trading platforms to seek registration as a foreign board of trade, and 24 applications have been submitted.

A full increase for international policy means the Commission will be able to increase our coordination efforts with financial regulators and market participants from around the globe. A less than full increase means we will be less able to engage in cooperative work with our international counterparts, respond to requests, and provide staffing for various standard-setting projects.

In addition, for FY 2015, the President’s budget would support $24 million and 92 FTEs to invest in robust economic analysis teams and Commission-wide legal analysis. Compared to the FY 2014 Spending Plan, this request is an increase of $4 million and 18 FTEs. Both of these teams support all of the Commission’s divisions.

The CFTC’s economists analyze innovations in trading technology, developments in trading instruments and market structure, and interactions among various market participants in the futures and swaps markets. Economics staff with particular expertise and experience provides leverage to dedicated staff in other divisions to anticipate and address significant regulatory, surveillance, clearing, and enforcement challenges. Economic analysis plays an integral role in the development, implementation, and review of financial regulations to ensure that the regulations are economically sound and subjected to a careful consideration of potential costs and benefits. Economic analysis also is critical to the public transparency initiatives of the Commission, such as the Weekly Swaps Report. Moving into FY 2015, the CFTC’s economists will be working to integrate large quantities of swaps market data with data from designated contract markets and SEFs and large swaps and futures position data held by the Commission to provide a more comprehensive view of the derivatives markets.

The legal analysis team provides interpretations of Commission statutory and regulatory authority and, where appropriate, provides exemptive, interpretive, and no-action letters to CFTC registrants and market participants. In FY 2013, the Commission experienced a significant increase in the number and complexity of requests from market participants for written interpretations and no-action letters, and this trend is expected to increase into FY 2015.

A full increase for the economics and legal analysis mission means the Commission will be able to support each of the CFTC’s divisions with economic and legal analysis. Funding short of this full increase or flat funding means an increasingly strained ability to integrate and analyze vast amounts of data the Commission is receiving on the derivatives markets, thus impacting our ability to detect problems that could be detrimental to the economy. Flat funding also means the Commission’s legal analysis team will continue to be constrained in supporting front-line examinations, adding to the delays in responding to market participants and processing applications, and hampering the team’s ability to support enforcement efforts.

Conclusion

Effective oversight of the futures and swaps markets requires additional resources for the Commission. This means investing in both personnel and information technology. We need staff to analyze the vast amounts of data we are receiving on the swaps and futures markets. We need staff to regularly examine firms, clearinghouses and trading platforms. We need staff to bring enforcement actions against perpetrators of fraud and manipulation. The agency’s ability to appropriately oversee the marketplace hinges on securing additional resources.

Thank you again for inviting me today, and I look forward to your questions.

STATE DEPT. OFFICIAL'S REMARKS T PARLIAMENTARIANS FOR NUCLEAR NONPROLIFERATION AND DISARMAMENT

FROM:  U.S. STATE DEPARTMENT 
Parliamentarians for Nuclear Nonproliferation and Disarmament
Remarks
Anita Friedt, Principal Deputy Assistant Secretary for Nuclear and Strategic Policy
Washington, DC
February 26, 2014

Thank you, Daryl, for that kind introduction. I would like to thank the Parliamentarians for Nuclear Nonproliferation and Disarmament for organizing this event and for your ongoing engagement on this important set of issues. As the panel is titled, “Steps and Measures by Nuclear-Armed States,” I would like to provide an update on our work implementing the agenda laid out nearly five years ago by President Obama in Prague, when he committed the United States to seek the peace and security of a world without nuclear weapons, a goal that he reaffirmed in his speech in Berlin this past June.

As President Obama noted in Prague and repeated in Berlin, this will not be easy. It will require persistence and patience, and may not happen in his lifetime. Still, over the last four years we have succeeded in moving closer to this goal.

In 2010, the Administration concluded a Nuclear Posture Review, or NPR, which outlines the President’s agenda for reducing nuclear dangers, as well as advancing the broader security interests of the United States and its allies. As the NPR states, the international security environment has changed dramatically since the end of the Cold War: the threat of global nuclear war has become remote, but the risk of nuclear attack has increased. Concerted action by all states to uphold their NPT obligations – including those related to disarmament – is important for building a sense of common purpose that helps maintain support from partners around the world to uphold and strengthen the nuclear nonproliferation regime.

Russia has been a key partner in our efforts to secure or eliminate these materials. For instance, the downblending of highly enriched uranium (HEU) to low enriched uranium (LEU) by Russia under the 1993 U.S.-Russia HEU Purchase Agreement has now been completed. The final delivery of the resultant LEU to the United States took place in December. Under this agreement, 500 metric tons of HEU from dismantled Russian weapons has been converted into LEU and delivered to the United States to fuel U.S. commercial nuclear power plants. The HEU that was converted by downblending was equivalent to approximately 20,000 nuclear warheads – instead, it has provided nuclear power plant fuel that has been used to generate nearly 10 percent of all U.S. electricity for the past 15 years.

In the United States, an additional 374 metric tons of U.S. HEU has been declared excess to nuclear weapons needs; most of which will be downblended or used as fuel in naval or research reactors. In 2011, the United States and Russia brought into force the Plutonium Management and Disposition Agreement and its 2006 and 2010 protocols, which require each side to dispose of 34 metric tons of weapons-grade plutonium – enough in total for about 17,000 nuclear weapons – and thus permanently remove this material from military programs. Russia has also been an essential partner in the U.S. Global Threat Reduction Initiative efforts to convert research reactors worldwide from HEU to LEU and repatriate those reactors’ HEU to the country of origin. These efforts have now converted or verified the shutdown of over 88 research and test reactors and isotope production facilities, and removed over 5,017 kg of HEU for secure storage, downblending and disposition.

In addition to reducing excess stocks of fissile material, we have taken steps to reduce the role of nuclear weapons in U.S. national security strategy. We are not developing new nuclear weapons or pursuing new nuclear missions; we have committed not to use or threaten to use nuclear weapons against nonnuclear weapon states that are party to the NPT and in compliance with their nuclear nonproliferation obligations; and mindful of the devastating humanitarian consequences of nuclear war, we have clearly stated that it is in the U.S. interest and that of all other nations that the nearly 70-year record of nonuse of nuclear weapons be extended forever.

In June of 2013, in conjunction with his Berlin speech, President Obama issued new guidance that aligns U.S. nuclear policies to the 21st century security environment. This was the latest concrete step the President has taken to advance his Prague agenda and the long-term goal of achieving the peace and security of a world without nuclear weapons. After a comprehensive review, the President determined that we can ensure the security of the United States and our allies and maintain a strong and credible strategic deterrent while safely pursuing up to a one-third reduction in deployed strategic nuclear weapons below the limits established in the New START Treaty.

Let me now address what we believe our next steps should be.

The United States and Russia still possess the vast majority of nuclear weapons in the world, and we have a shared responsibility to continue the process of reducing our nuclear arms. The New START Treaty was the first step in that process. The implementation of New START, now in its fourth year, is going well. When New START is fully implemented, the United States and the Russian Federation will each have no more than 1,550 deployed strategic nuclear warheads – the lowest levels since the 1950s. Our overall nuclear stockpile is 85% below the peak level during the Cold War.

Going forward, the United States has made it clear that we are committed to continuing a step-by-step process to further reduce nuclear arsenals.

To this end, we are engaged in a bilateral dialogue with Russia to promote strategic stability and increase transparency on a reciprocal basis. We are hopeful our dialogue will lead to greater reciprocal transparency and negotiation of even further nuclear weapons reductions.

In addition to bilateral engagement with Russia, We will also be working to expand our public outreach on the Comprehensive Nuclear Test-Ban Treaty. As stated in the April 2010 U.S. Nuclear Posture Review: “Ratification of the CTBT is central to leading other nuclear weapons states toward a world of diminished reliance on nuclear weapons, reduced nuclear competition, and eventual nuclear disarmament.”

I want to be clear - we have no desire to rush up here for a vote. It’s been 15 years since the CTBT was on the front pages of newspapers and whether we are talking to a Senator or a staffer, a schoolteacher or a student– we know that it is our job to make the case for this Treaty. Together, we can work through questions and concerns about the Treaty and explosive nuclear testing. In particular, the dangerous health effects of nuclear testing is a specific topic that can and should be addressed both here at home and abroad. Once we’ve brought the Treaty back to people’s attention, we can move on to discussion and debate – just like we did with the New START Treaty. We will not be setting timeframes for moving forward. We are going to be patient, but we will also be persistent. Above all, the CTBT is good for American national security and that is why we will continue educating the country on the treaty’s merits.

There are still further initiatives that are part of this Administration’s nuclear agenda. In Berlin, President Obama called on all nations to begin negotiations on a treaty that ends the production of fissile materials for use in nuclear weapons. A Fissile Material Cutoff Treaty or FMCT would codify an end to the production of weapons-grade fissile material needed to create nuclear weapons, cap stockpiles of fissile material worldwide, place sensitive nuclear facilities around the world under international verification, and provide the basis for further, deeper, reductions in nuclear arsenals.

Beginning multilateral negotiations on the FMCT is a priority objective for the United States and for the vast majority of states, and we have been working to initiate such negotiations at the Conference on Disarmament in Geneva. An overwhelming majority of nations support the immediate commencement of FMCT negotiations. The United States is consulting with China, France, Russia, and the United Kingdom, as well as others, including India and Pakistan, to find a way to commence negotiations of an FMCT. And we will, of course, participate in the upcoming Group of Government Experts, which will begin its work this Spring.

In 2009, the five nuclear-weapon states, or “P5,” began to meet regularly for discussions on issues of transparency, mutual confidence, and verification. Since the 2010 NPT Review Conference, these discussions have expanded to address P5 implementation of our commitments under the NPT and the Action Plan adopted at the 2010 Review Conference. Russia hosted the most recent P5 conference in Geneva, Switzerland in April 2013, where the P5 reviewed progress towards fulfilling the commitments made at the 2010 NPT Review Conference, and continued discussions on issues related to all three pillars of the NPT: nonproliferation, disarmament, and the peaceful uses of nuclear energy, including confidence-building, transparency, and verification experiences. We are looking forward to continued discussions at a fifth P5 conference in April in Beijing. In addition to providing a senior level policy forum for discussion and coordination among the P5, this process has spawned a series of discussions among policymakers and government experts on a variety of issues. China is leading a P5 working group on nuclear definitions and terminology. The P5 have agreed to a common format for NPT reporting, and we are also beginning to engage at expert levels on some important verification and transparency issues. As we proceed, we would like the P5 conferences and intersessional meetings of experts to develop further practical transparency measures that build confidence and predictability.

None of this will be easy, but the policies the Administration is pursuing are suited for our security needs and tailored for the global security threats of the 21st century. By maintaining and supporting a safe, secure and effective stockpile — sufficient to deter any adversary and guarantee the defense of our allies — at the same time that we pursue responsible verifiable reductions through arms control, we will make this world a safer place.

Thank you and I look forward to your questions.

NSA ADVISOR RICE IN UAE AND DJIBOUTI

FROM:  THE WHITE HOUSE 
Readout of National Security Advisor Susan E. Rice’s Travel to the United Arab Emirates and Djibouti

National Security Advisor Susan E. Rice traveled to the United Arab Emirates and Djibouti from March 6-8.  In the UAE, she held highly productive bilateral discussions with Abu Dhabi Crown Prince Mohamed bin Zayed and other senior Emirati officials, including the Foreign Minister and Deputy Chief of National Security.  They exchanged views on a wide range of regional issues, including Iran, Syria, Egypt, Libya, Yemen and Middle East Peace, as well as U.S. partnership with the Gulf Cooperation Council countries.  Ambassador Rice visited the new campus of NYU Abu Dhabi, one of the three major U.S.-UAE long-term legacy partnership projects.  She met with a diverse and talented group of American, Emirati and international students from NYU Abu Dhabi and the Sheikh Mohamed bin Zayed Scholarship Program and expressed support for the major investments the UAE has made in world class liberal arts and STEM higher education programs.

In Djibouti, Ambassador Rice met with senior leaders and U.S. troops from the Combined Joint Task Force – Horn of Africa (CJTF-HOA) at Camp Lemonnier to discuss CJTF operations in the region.  She thanked the troops for their extraordinary work to build counterpart capacity in the region, conduct crisis response, and execute vital counter-terror operations that help keep the American people safe.  Ambassador Rice met with Djiboutian President Guelleh to renew our robust strategic partnership with the government and people of Djibouti.  She thanked him for Djiboutian leadership on a range of issues, including countering terrorism and piracy, and responding to humanitarian emergencies.  In her meeting with President Guelleh and with Foreign Minister Youssouf and a delegation of senior Djiboutian ministers and officials, she discussed ways to deepen and enhance our bilateral cooperation, including in ways that will tangibly benefit the economic well-being of the Djiboutian people and address shared security challenges.  They discussed ways that Camp Lemonnier and the U.S. military presence in Djibouti can have a more direct and positive impact on the local economy, and ways that American assistance can lead to further sustainable development and improved regional security.

SECRETARY KERRY'S STATEMENT ON ANNIVERSARY OF DISAPPEARANCE OF ROBERT LEVINSON

Seventh Anniversary of the Disappearance of Robert Levinson

Press Statement

John Kerry
Secretary of State

Washington, DC

March 9, 2014

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Robert Levinson disappeared seven years ago from Kish Island, Iran, during a business trip. He is one of the longest held American citizens in history.

Nothing can bring those lost years – more than 2,500 days in all – back to all those who love him. Mr. Levinson’s disappearance has been heart-wrenching for his wife and children, who feel his absence especially deeply at the many family milestones missed these past seven years.

The United States remains committed to the safe return of Mr. Levinson to his family. We appreciate the support and assistance from our international partners as we work to end this awful separation. Given Mr. Levinson’s health, age, and length of time in captivity, we mark this anniversary with a special sense of urgency.

We respectfully ask the Government of Iran to work cooperatively with us on the investigation into his disappearance so we can ensure his safe return.

The FBI has announced a $1 million reward for any information that could lead to his safe return. We call on anyone with information about this case to contact the FBI.
This is the seventh year that Mr. Levinson has spent without his family. We remain committed to the hard work ahead to ensure that it’s his last.

SECRETARY KERRY'S OP-ED TITLED "WOMEN KEY TO PEACE AND SECURITY"

Women Key to Peace and Security

Op-Ed

John Kerry
Secretary of State

DipNote Blog

Washington, DC

March 6, 2014

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International Women's Day is more than a moment marked on a calendar. It is a day not just to renew our determination to make the world a more peaceful and prosperous place -- but to recognize that a world where opportunities for women grow, is a world where the possibilities for peace, prosperity, and stability grow even more.

I see it every single day as Secretary of State. Even as the Assad regime's barrel-bombing of Aleppo continues, showing the world a brutal regime's true colors, with every act of courage and perseverance, Syria’s women show the world their true colors, as well. We heard from some of these remarkable women in Montreux just last month.

Their stories spoke to the bravery of countless other Syrian women. One woman from Idlib worked with the Free Syrian Army to ensure that the people of her village could remain in their homes and till their own land. Another woman from Aleppo got restrictions on humanitarian access lifted by offering food to regime soldiers at the checkpoints. If that isn’t courage under fire, I don’t know what is.

It's not just in Syria that women offer us hope for resolution to conflict. Women are vital to our shared goals of prosperity, stability and peace. That’s as true when it comes to ending our battles as it is jumpstarting our economies. The fact is that women bear the greatest burden in war. But their voices are too rarely heard in negotiating peace.
That has to change.

Countries that value and empower women to participate fully in decision-making are more stable, prosperous, and secure. The opposite is also true. When women are excluded from negotiations, the peace that follows is more tenuous. Trust is eroded, and human rights and accountability are often ignored.

In too many countries, treaties are designed by combatants for combatants. It should come as no surprise, then, that more than half of all peace agreements fail within the first 10 years of signature. The inclusion of women in peace building and conflict prevention can reverse that trend.

So how do we get there?
Evidence from around the world has shown that deadly conflicts are more likely to be prevented, and peace best forged and protected, when women are included as equal partners.
That’s why we are working to support women in conflict and post-conflict areas around the world.

In Afghanistan, we are advocating for the inclusion and election of women at all levels of governance. Afghan women today are marching forward in ways unimaginable just 10 years ago. They’re starting companies. They’re serving as members of parliament. They’re teaching in schools and working as doctors and nurses. They are the foundation upon which Afghanistan's future is being built.

As the people of Burma work to resolve the conflict that has plagued their nation for decades, the United States is supporting the meaningful participation of women in the peace process and inter-communal peace initiatives.

We know that the security of women is essential to their participation in peace building. That’s why we are working to ensure women get equal access to humanitarian assistance and relief, wherever we work.

The United States is also leading by example. My sister has worked for many years at the United Nations, following in the State Department footsteps of our father many years before I did myself. She's a trailblazer. But she's not alone. It’s no coincidence that some of our top diplomats and peace negotiators are women -- from National Security Advisor Susan Rice, to U.S. Ambassador to the United Nations Samantha Power, to Deputy Secretary of State Heather Higginbottom, to Undersecretary of State for Political Affairs Wendy Sherman. Today, all but one of the State Department's Regional Assistant Secretaries are women.
We celebrate their accomplishments not just because they are women, but because their work around the world will make all people -- men and women, boys and girls –- more secure.
Peace is not the absence of conflict. It is the presence of every member of society working together to promote stability and prosperity.

No country can succeed unless every citizen is empowered to contribute to its future. And no peace can endure if women are not afforded a central role. So today, we mark the miles women have traveled around the world -- but more importantly we commit to the next miles of the journey.

U.S. EXPORTED OVER $192 BILLION IN JANUARY 2014

FROM:  U.S. EXPORT-IMPORT BANK 
U.S. Exports Reach $192.5 Billion in January
 Ex-Im Bank Continues to Support U.S. Jobs by Financing U.S. Exports

Washington, D.C. – The United States exported $192.5 billion of goods and services in January 2014, according to data released today by the Bureau of Economic Analysis (BEA) of the U.S. Commerce Department.

“U.S. exports are off to a great start for 2014.” said Export-Import Bank Chairman and President Fred P. Hochberg. “Sending our exports abroad is critical to creating jobs here at home. And the Export-Import Bank is a critical link in that chain, connecting America’s small businesses to the 95% of the world’s customers that live outside our borders. As today’s encouraging numbers show, the Ex-Im Bank will continue to explore new opportunities to boost U.S. exports and support American jobs.”

January’s total is smaller than November’s $194.7 billion figure, which was revised slightly downward for the second straight month, but remains the record high. A review was conducted of the 2013 trade data and the figures for each month were revised.

Exports of goods and services over the last twelve months totaled $2.3 trillion, which is 44.3 percent above the level of exports in 2009, and have been growing at an annualized rate of 9.4 percent when compared to 2009.

During the same time period among the major export markets (i.e., markets with at least $6 billion in annual imports of U.S. goods), the countries with the largest annualized increase in U.S. goods purchases, when compared to 2009, were Panama (24.5 percent), Russia (20.2 percent), Hong Kong (19.6 percent), Peru (19.3 percent), Colombia (18.4 percent), United Arab Emirates (18.1 percent), Ecuador (17.2 percent), Chile (17.0 percent), Argentina (16.3 percent), and Indonesia (15.2 percent).

HOME SECURITY COMPANY SETTLES DECEPTIVE ENDORSEMENTS CASE WITH FTC

FROM:  FEDERAL TRADE COMMISSION 
Home Security Company ADT Settles FTC Charges that Endorsements Deceived Consumers
Company’s Paid Spokespersons Failed to Disclose Their Connection to ADT

As part of its ongoing crackdown on misleading endorsements in advertising, the Federal Trade Commission has charged the home security company ADT LLC with misrepresenting that paid endorsements from safety and technology experts were independent reviews. Under an agreed-upon settlement, ADT is prohibited from misrepresenting paid endorsements as independent reviews in the future.

Boca Raton, Florida-based ADT manufactures and markets the ADT Pulse home security and monitoring system and various other security products and services.  The FTC’s administrative complaint alleges that ADT paid spokespeople to demonstrate and review the ADT Pulse on NBC’s Today Show, as well as other television and radio news programs and talk shows across the country, and in blogs and other online material.  ADT, the FTC alleges, misrepresented that the reviews were independent, and failed to disclose that the experts were being paid by ADT to promote the Pulse system.

 “It’s hard for consumers to make good buying decisions when they think they’re getting independent expert advice as part of an impartial news segment and have no way of knowing they are actually watching a sales pitch,” said Jessica Rich, Director of the Federal Trade Commission’s Bureau of Consumer Protection.  “When a paid endorser appears in a news or talk show segment with the host of that program, the relationship with the advertiser must be clearly disclosed.”

ADT paid three spokespersons, including a child safety expert, a home security expert, and a technology expert, more than $300,000 to promote the ADT Pulse, with one spokesperson receiving more than $200,000.  Two of those spokespersons also received a free ADT Pulse security system, valued at approximately $4,000, and free monthly monitoring service, according to the complaint.  In exchange, the spokespersons appeared on more than 40 different television and radio programs nationwide and posted blogs and other material online.

ADT set up media interviews for the endorsers through its public relations firms and booking agents – often providing reporters and news anchors with suggested interview questions, and background video, also known as b-roll, according to the complaint.  The paid ADT endorsers were introduced by program hosts as experts in child safety, home security, or technology, usually with no mention of any connection to ADT.  The endorsers sometimes demonstrated child safety, home security, or technology products other than the ADT Pulse, adding to the impression that they were providing an impartial, expert review of the products.

The proposed order:

prohibits ADT from misrepresenting that any discussion or demonstration of a security or monitoring product or service is an independent review provided by an impartial expert;
requires ADT to clearly and prominently disclose, in connection with the advertising of a home security or monitoring product or service, a material connection, if one exists, between an endorser and the company; and
requires the company to promptly remove reviews and endorsements that have been misrepresented as independently provided by an impartial expert or that fail to disclose a material connection between ADT and an endorser.
The Commission vote to issue the administrative complaint and to accept the agreement containing the proposed consent order for public comment was 4-0.  The FTC will publish a description of the complaint and consent agreement  in the Federal Register shortly.  The agreement will be subject to public comment for 30 days, beginning today and continuing through April 7, 2014, after which the Commission will decide whether to make the proposed consent order final.  Interested parties can submit written comments electronically or in paper form by following the instructions in the “Invitation To Comment” part of the “Supplementary Information” section.  Comments in electronic form should be submitted using the following Web link: https://ftcpublic.commentworks.com/ftc/adtconsent and following the instructions on the web-based form.  Comments in paper form should be mailed or delivered to:  Federal Trade Commission, Office of the Secretary, Room H-113 (Annex D), 600 Pennsylvania Avenue, N.W., Washington, DC 20580.  The FTC is requesting that any comment filed in paper form near the end of the public comment period be sent by courier or overnight service, if possible, because U.S. postal mail in the Washington area and at the Commission is subject to delay due to heightened security precautions.

NOTE: When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $16,000.

SEC CHARGES EXECUTIVES, FINANCE PROFESSIONALS FOR ROLES IN $150 MILLION FRAUD SCHEME

FROM:  SECURITIES AND EXCHANGE COMMISSION 

The Securities and Exchange Commission today charged five executives and finance professionals with facilitating a $150 million fraudulent bond offering by Dewey & LeBoeuf, the international law firm where they worked.

The SEC alleges that the five turned to accounting fraud when the firm needed money to weather the economic recession and steep costs from a merger.  Fearful that declining revenue might cause its bank lenders to cut off access to the firm’s credit lines, Dewey & LeBoeuf’s leading financial professionals combed through its financial statements line by line and devised ways to artificially inflate income and distort financial performance.  Dewey & LeBoeuf then resorted to the bond markets to raise significant amounts of cash through a private offering that seized on the phony financial numbers.

“Investors were led to believe they were purchasing bonds issued by a prestigious law firm that had weathered the financial crisis and was poised for growth,” said Andrew J. Ceresney, director of the SEC’s Division of Enforcement.  “Dewey & LeBoeuf’s senior-most finance personnel used a grab bag of accounting gimmicks to create that illusion, and top executives green-lighted the decision to sell $150 million in bonds to investors as a desperate grasp for cash on the basis of blatantly falsified financial results.”

The SEC’s complaint filed in federal court in Manhattan charges the following executives at Dewey & LeBoeuf, which is no longer in business: chairman Steven Davis, executive director Stephen DiCarmine, chief financial officer Joel Sanders, finance director Frank Canellas, and controller Tom Mullikin.

In a parallel action, the Manhattan District Attorney’s Office today announced criminal charges against Davis, DiCarmine, and Sanders.

According to the SEC’s complaint, the roots of the fraud date back to late 2008 when senior financial officers began to conjure up fake revenue by manipulating various entries in Dewey & LeBoeuf’s internal accounting system.  The firm’s profitability was inflated by approximately $36 million (15 percent) in its 2008 financial results through this use of accounting tricks.  For example, compensation for certain personnel was falsely reclassified as an equity distribution in the amount of $13.8 million when they in fact those personnel had no equity in the firm.  The improper accounting also reversed millions of dollars of uncollectible disbursements, mischaracterized millions of dollars of credit card debt owed by the firm as bogus disbursements owed by clients, and inaccurately accounted for significant lease obligations held by the firm.

The SEC alleges that   Dewey & LeBoeuf finance executives continued using these and other fraudulent techniques to prepare its 2009 financial statements, which were misstated by $23 million.  The culture of accounting fraud was so prevalent at the firm that Canellas sent Sanders an e-mail with a schedule containing a list of suggested cost savings to the budget.  Among them was a $7.5 million line item reduction entitled “Accounting Tricks.”

According to the SEC’s complaint, Sanders acknowledged in separate e-mail communications, “I don’t want to cook the books anymore. We need to stop doing that.”  But he and other finance personnel continued to banter about ways to create fake income.  For example, in the midst of a mad scramble at year-end 2008 to meet obligations to bank lenders, Sanders boasted to DiCarmine in an e-mail, “We came up with a big one: Reclass the disbursements.”  DiCarmine responded, “You always do in the last hours. That’s why we get the extra 10 or 20% bonus. Tell [Sanders’ wife], stick with me! We’ll buy a ski house next.”  DiCarmine later e-mailed Sanders, “You certainly cheered the Chairman up. I could use a dose.”  Sanders answered, “I think we made the covenants and I’m shooting for 60%.”  He cryptically added, “Don’t even ask – you don’t want to know.”

The SEC alleges that Dewey & LeBoeuf didn’t want investors in the bond offering to know either.  The firm continued using and concealing improper accounting practices well after the offering closed in April 2010.  The note purchase agreement governing the bond offering required Dewey & LeBoeuf to provide investors and lenders with quarterly certifications.  The quarterly certifications made by the firm were all fraudulent.

“As Dewey & LeBoeuf’s revenue was falling and the firm was struggling to meet commitments, its top executives and finance professionals brazenly looked for ways to create fake income and retain their lucrative salaries and bonuses,” said Andrew M. Calamari, director of the SEC’s New York Regional Office.

The SEC’s complaint alleges that Davis violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5.  The complaint alleges that DiCarmine, Sanders, Canellas, and Mullikin violated Section 17(a) of the Securities Act and aided and abetted Dewey LeBoeuf’s and Davis’ violations of Section 10(b) of the Exchange Act and Rule 10b-5(b) pursuant to Section 20(e) of the Exchange Act.  The SEC is seeking disgorgement and financial penalties as well as permanent injunctions against all five defendants, and officer and director bars against Davis, DiCarmine, and Sanders.  The SEC also will separately seek to prohibit Davis and DiCarmine from practicing as lawyers on behalf of any publicly traded company or other entity regulated by the SEC.

The SEC's investigation, which is continuing, has been conducted by William Finkel, Joseph Ceglio, Christopher Mele, and Michael Osnato.  The case has been supervised by Sanjay Wadhwa.  The litigation will be led by Howard Fischer.  The SEC appreciates the assistance of the Manhattan District Attorney’s Office and the Federal Bureau of Investigation.

GRAND JURY INDICTS CEO IN STOCK SCAM CASE

FROM:  SECURITIES AND EXCHANGE COMMISSION 
Federal Grand Jury Indicts CEO of Chicago-Area Company Accused of Defrauding Investors in Multi-Million Dollar Stock Scam

On February 28, 2014, the United States Attorney’s Office for the Northern District of Illinois announced that a federal grand jury returned an 11-count indictment against Gregory Webb, the CEO and President of InfrAegis, Inc., a Chicago-area company that claimed to make products for the homeland security market.  According to the indictment, between 2007 and October 2013, Webb and InfrAegis obtained more than $9 million from investors through the offer and sale of InfrAegis stock by making false representations about the solvency and financial condition of InfrAegis, about contracts that the company allegedly expected to be awarded or had been awarded, and about the expected and actual return on investment investors would get from the company.  For example, Webb falsely represented that the City of Chicago had agreed to install InfrAegis’ iaMedium ― a kiosk that purportedly could detect the presence of nuclear or biological weapons ― throughout the city and that the agreement would result in profits of more than $80 million a year. While InfrAegis engaged in some discussions with the city about the installation of the iaMedium kiosks, there was never any agreement or contract to install the system in Chicago.  In another example, Webb falsely represented that the company had a contract with the Washington Metropolitan Area Transit Authority (WMATA) to install iaMedium kiosks throughout the Washington, D.C., Metro train system. Again, there was never any agreement or contract beyond initial negotiations.

In October 2011, the SEC filed a civil enforcement action in U.S. District Court in Chicago against Webb and InfrAegis based, in part, on the conduct alleged in the criminal indictment.  The SEC alleged that, from January 2005 through June 2010, Webb and InfrAegis orchestrated a fraudulent, unregistered offering of stock that raised more than $20 million from hundreds of investors across the country.  The SEC claimed that, among other things, Webb and InfrAegis made false and misleading claims about the company’s commercial success and the existence of contracts for the installation of InfrAegis’ products, including the City of Chicago and WMATA contracts described in the criminal indictment.  Based on their conduct, the SEC charged Webb and InfrAegis 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 thereunder. [SEC v. Gregory E. Webb and InfrAegis, Inc., 1:11-cv-07152 (N.D. Ill.)] (LR-22122)

Webb, who currently lives in Dallas, Texas, will be arraigned in U.S. District Court in Chicago on a date to be determined.  Webb faces eight counts of mail fraud and three counts of wire fraud, each of which carries a maximum penalty of 20 years in prison and a $250,000 fine. Restitution is mandatory.