May 20, 2013

International Bribery Scandal Invades The ECB

The bribery scandal came at the worst possible moment for the European Central Bank. Already it’s struggling on a daily basis with the ballooning debt crisis in the Eurozone. And it’s trying to defend its independence against an onslaught of demands to print unlimited amounts of euros and buy the crappy sovereign bonds of the Eurozone’s weaker members. But now, Ewald Nowotny, member of its Governing Council, is up to his neck in hot water. 

A spokesperson of the state prosecutor in Vienna, Austria, announced on Monday that the criminal investigation of an international bribery scandal that has been simmering for a while has been expanded to over 20 suspects. And it has now entangled six current directors of the Austrian National Bank (OeNB), including its Governor, Ewald Nowotny (Handelsblatt).

The scandal is centered on a division of the OeNB, the Oesterreichische Banknoten- und Sicherheitsdruck GmbH, (OeBS), which is in the lucrative business of printing money, literally. And it has been active in soliciting bank-note business from foreign governments since 2000. On its website, it claims that it “excels at combining innovative security features with modern designs.” Apparently, it also excels at bribery, kickbacks, and money laundering.

According to the prosecution, OeBS paid €17 million in bribes to Syrian officials to obtain orders from the Syrian government (Wiener Zeitung). Payments were routed to offshore outfits, such as the Panamanian mailbox company Venkoy, with representatives in Switzerland. The prosecutor is further investigating €1.7 million in kickbacks that made their way back to Austria (Die Presse). Similar arrangements with Azerbaijan are also being investigated. Two weeks ago, four people—the managing director and the head of marketing of OeBS and two lawyers—were arrested. Bits and pieces of the affair began to see the light of the day last June, when questions were raised by Austrian tax authorities about the deductibility of these payments.

The OeNB confirmed on Monday that a criminal prosecution has been initiated against six of its directors, including its Governor Ewald Nowotny, Vice Governor Wolfgang Duchatczek, and Director Peter Zöllner, who were accused of having known about the bribery of foreign public officials in connection with the acquisition of bank note printing orders. Of course, it defended its directors: the accusations were based on statements by fired employees, it said—implying that it’s nothing but a vendetta. Based on the information the directors had in front of them at the time, they’d assumed that the payments were for actual and legitimate services, and that the acquisition of orders complied with all applicable rules and laws, it said.

But on November 9, the Vienna-based daily paper Kurier created a stir when it said that it had obtained a copy of the minutes of the OeNB Board of Directors meetings. According to these minutes, the directors had known for years that millions of euros in bribes were being paid to acquire bank-note business from foreign governments.

For example, on March 24, 2010, the managing director of OeBS informed the OeNB board about a possible order from Azerbaijan for 150 million bank notes that carried a “commission” of 10%. And how did the board react? “Duchatczek asked the managing director to initiate the acquisition activities so that the years 2011 and 2012 would be at capacity.”

Over the years, the minutes show, Nowotny, Duchatczek, and their colleagues asked questions about various payments but then did nothing. For example, on December 15, 2008, Nowotny asked about the amount of a commission and the recipient in Azerbaijan. The managing director then “informed that there is a representative in Switzerland,” and that the commission would amount to 20% of the order. And that was that.

The OeNB had already tried to stamp out the brushfire and protect its directors by firing the managing director and the director of marketing at the OeBS. Stated reason? An internal audit revealed “unlawful actions and withholding of information from the Supervisory Board.” At the time, the bribery of Syrian officials had already surfaced, along with €600,000 in “unusual expenses.”

Maximum penalty for bribery is ten years in prison, according to the Handelsblatt. But given the impunity with which central bankers act, I doubt that Nowotny or the other central bankers will ever face any serious risk of ending up there. He might not even lose his jobs at the OeNB and at the ECB. And his future, well, given that he is a central banker, looks bright.

Proton Bank in Greece had siphoned off $1 billion in a scheme of fraud, embezzlement, money laundering, and offshore front companies. And got bailed out. But then a bomb exploded…. European Bailout Fund Pays For Greek Money Laundering And Fraud.

Source: http://www.testosteronepit.com/home/2011/11/28/international-bribery-scandal-invades-the-ecb.html#ixzz1g9faTgI8

A Story of Death Threats and Casual Insults: Racism in Germany

Germany was shocked to learn the extent of the crimes committed by a recently uncovered right-wing extremist group. But racism is hardly an anomaly in Germany. One family’s experience shows just how widespread prejudice and hate really is.

Four weeks. Even the timing itself seemed calculated for maximum intimidation. 

Four weeks are long enough to begin forgetting, to regain a certain amount of calm. To begin thinking that maybe it was just a bad joke. But four weeks is too short to completely overcome the fear.

Four weeks was the amount of time that passed between the two death threats the Krause family (eds. note: not their real name) found in their mailbox. The first letter came in August 2011. The sender had cut letters out of a newspaper to form a message warning that Mr. Krause and his family would be killed if they didn’t leave Germany.

Why? Because Mrs. Krause and the couple’s two children have dark skin. Because Mrs. Krause comes from East Africa.

The second letter came in September, and the sender spent far less time on it. He simply drew four crosses on a sheet of white paper — one for each member of the family. For the son, for the daughter, for Mr. Krause and for Mrs. Krause.

Mr. Krause, a middle-aged professor, had long promised himself not to take occasional incidents of hostility too seriously. He wanted to avoid overreacting, to prevent those who would sow fear from feeling the satisfaction of success.

The second threat letter, however, made stoicism impossible. And since news broke of the neo-Nazi group that apparently killed nine immigrants over the course of several years, his composure has completely evaporated. The perpetrators of the killing spree purposefully chose victims who did not originally come from Germany.

“I am afraid,” says Krause. “I feel the presence of an unpredictable threat.”

Concerned about Consequences

Krause is not the kind of person who would normally shy away from openly speaking out. He embraces his civic responsibility. “I won’t accept insults,” he says. But now, Krause is extremely wary of seeing his name in print — and doesn’t even want it known where he is from. He is afraid for the lives of his wife and children, and for his own.

German authorities asked him to keep his story as quiet as possible and to only share it with his closest friends. They were concerned, they said, about the consequences should news of the threats become widespread. The letters are now in the hands of law-enforcement officials.

They have, however, refused to actively pursue the case, says Krause. No guards or police have been posted in front of his house. Krause claims the authorities made it clear to him that he simply wasn’t prominent enough for such measures. Instead, he is to follow a few simple rules: Only go to places that are well-lighted and where there is plenty of human activity. And to always monitor his rear-view mirror when driving. They also assured him that threats such as the ones he received aren’t particularly rare and that it was probably just some crank.

But Anders Behring Breivik, the man who killed almost 80 people in Norway in July, was also a crank. “The fact that someone is crazy doesn’t exclude the possibility that they are violent,” says Krause. He doesn’t believe that the neo-Nazi terror cell from Zwickau is an isolated case. “And it is wrong to think that they are just idiots,” he says. “They may be immoral, but they are intelligent.”

Krause is an economist, and he lives with his wife and children in a house located in a well-off district of a large German city. His wife, a doctor from a country in East Africa, moved to Germany to join her husband. At the time, she was pregnant with their second child. Even Krause’s manner of explaining how he met his wife in 2004 makes it clear just how often he has been confronted with prejudice. No, she wasn’t a prostitute that he met in a hotel, nor was she seeking to marry a rich German. She herself comes from a prosperous family. In reality, he explains, he met her at the university on the way to class one day.

Insulted on Account of Her Skin Color

Krause was happy to be able to bring his wife to Germany. It is safer here, the job market is better, medical care is superior — and he likes his homeland. “Germany is a great country, and it offers the opportunity to live in peace and harmony,” he says. Still, he didn’t want to be naïve. He told his wife that she might be insulted in Germany on account of her skin color.

But the reality has turned out to be much worse than he had imagined. And the death threats are only the tip of the iceberg.

The Krause family has experienced things that white-skinned Germans could never imagine. But everyone in the country who looks “foreign” has plenty of stories to tell – about not being served at the deli counter, of parents at the playground telling their children not to play with the dark-skinned child, of the Israeli’s neighbor who calls over from the neighboring balcony: “You Jews always have money.” Or even stories about open attacks, like the Asian woman who was spat on while walking on the sidewalk.

Krause has kept careful notes on many of the incidents he and his family have experienced, and he has notified the authorities. “It’s the sum total of the relatively small things,” he says. “At some point, you ask yourself if you are being overly sensitive. But the opposite of sensitive is insensitive, and that’s not how I want to be.”

His daughter, the oldest child, goes to kindergarten. “They are all very nice there, the parents and the teachers,” Krause says. But once another child told his daughter, “you are black, dirty and bad.” Where does such a thing come from? “Such a thing doesn’t kill anybody, but it is an indication of an attitude that would seem to be widespread,” Krause says.

No Public Interest

In a department store, according to Krause, one of the saleswomen said “poor Germany” when she saw his dark-skinned wife.

In a pharmacy parking lot, a car refused to stop for Krause’s wife and child, coming dangerously close to them. When Krause rushed to stand between his family and the car, the driver stepped out and called the family “monkey asses.”

Authorities rejected Mrs. Krause’s official complaint. “The accused denies having called you and your husband ‘monkey asses’,” reads the official reply. “Independently of that, such an utterance would not fulfill the legal definition of incitement. The mere incident of someone insulting a person who belongs to a particular ethnic group is not enough if the insult has no connection to that ethnic group.”

The letter also said that there was no public interest to be served in prosecuting the accused for the alleged insult.

Kind Gesture

His wife also tells the story of seeing a neighbour — a former teacher who lost his job because of right-wing extremist statements — give the Hitler salute to an acquaintance. “But maybe my wife just misinterpreted it,” Krause says.

After all, he is concerned that he has become obsessed. And he also tries to emphasize the positive situations he has encountered — like the older woman in the supermarket who gave each of his children a stuffed animal. “She simply wanted to say that we are extra-welcome here,” he says, adding that the gesture of kindness almost made him cry.

And yet, he still can’t sleep anymore. Every night between two and three in the morning, he finds himself standing at the window. Once, he saw a police car parked in front of his house for half an hour. But he doesn’t know what that might mean.

Source: http://www.spiegel.de/international/germany/0,1518,799987,00.html

A Philosopher’s Mission to Save the EU

Jürgen Habermas is angry. He’s really angry. He is nothing short of furious — because he takes it all personally.

He leans forward. He leans backward. He arranges his fidgety hands to illustrate his tirades before allowing them to fall back to his lap. He bangs on the table and yells: “Enough already!” He simply has no desire to see Europe consigned to the dustbin of world history

“I’m speaking here as a citizen,” he says. “I would rather be sitting back home at my desk, believe me. But this is too important. Everyone has to understand that we have critical decisions facing us. That’s why I’m so involved in this debate. The European project can no longer continue in elite modus.”

Enough already! Europe is his project. It is the project of his generation.

Jürgen Habermas, 82, wants to get the word out. He’s sitting on stage at the Goethe Institute in Paris. Next to him sits a good-natured professor who asks six or seven questions in just under two hours — answers that take fewer than 15 minutes are not Habermas’ style.

Usually he says clever things like: “In this crisis, functional and systematic imperatives collide” — referring to sovereign debts and the pressure of the markets.

Sometimes he shakes his head in consternation and says: “It’s simply unacceptable, simply unacceptable” — referring to the EU diktat and Greece’s loss of national sovereignty.

‘No Convictions’

And then he’s really angry again: “I condemn the political parties. Our politicians have long been incapable of aspiring to anything whatsoever other than being re-elected. They have no political substance whatsoever, no convictions.”

It’s in the nature of this crisis that philosophy and bar-room politics occasionally find themselves on an equal footing.

It’s also in the nature of this crisis that too many people say too much, and we could definitely use someone who approaches the problems systematically, as Habermas has done in his just published book.

But above all, it is in the nature of this crisis that the longer it continues, the more confusing it gets. It becomes more difficult to follow its twists and turns and to see who is responsible for what. And the whole time, alternatives are disappearing before our very eyes.

That’s why Habermas is so angry: with the politicians, the “functional elite” and the media. “Are you from the press?” he asks a man in the audience who has posed a question. “No? Too bad.”

Habermas wants to get his message out. That’s why he’s sitting here. That’s why he recently wrote an article in the Frankfurter Allgemeine newspaper, in which he accused EU politicians of cynicism and “turning their backs on the European ideals.” That’s why he has just written a book — a “booklet,” as he calls it — which the respected German weekly Die Zeit promptly compared with Immanuel Kant’s 1795 essay “Perpetual Peace: A Philosophical Sketch.”

But does he have an answer to the question of which road democracy and capitalism should take?

A Quiet Coup d’État

“Zur Verfassung Europas” (“On Europe’s Constitution”) is the name of his new book, which is basically a long essay in which he describes how the essence of our democracy has changed under the pressure of the crisis and the frenzy of the markets. Habermas says that power has slipped from the hands of the people and shifted to bodies of questionable democratic legitimacy, such as the European Council. Basically, he suggests, the technocrats have long since staged a quiet coup d’état.

On July 22, 2011, (German Chancellor) Angela Merkel and (French President) Nicolas Sarkozy agreed to a vague compromise — which is certainly open to interpretation — between German economic liberalism and French etatism,” he writes. “All signs indicate that they would both like to transform the executive federalism enshrined in the Lisbon Treaty into an intergovernmental supremacy of the European Council that runs contrary to the spirit of the agreement.

Habermas refers to the system that Merkel and Sarkozy have established during the crisis as a “post-democracy.” The European Parliament barely has any influence. The European Commission has “an odd, suspended position,” without really being responsible for what it does. Most importantly, however, he points to the European Council, which was given a central role in the Lisbon Treaty — one that Habermas views as an “anomaly.” He sees the Council as a “governmental body that engages in politics without being authorized to do so.”

He sees a Europe in which states are driven by the markets, in which the EU exerts massive influence on the formation of new governments in Italy and Greece, and in which what he so passionately defends and loves about Europe has been simply turned on its head.

A Rare Phenomenon

At this point, it should be mentioned that Habermas is no malcontent, no pessimist, no prophet of doom — he’s a virtually unshakable optimist, and this is what makes him such a rare phenomenon in Germany.

His problem as a philosopher has always been that he appears a bit humdrum because, despite all the big words, he is basically rather intelligible. He took his cultivated rage from Marx, his keen view of modernity from Freud and his clarity from the American pragmatists. He has always been a friendly elucidator, a rationalist and an anti-romanticist.

Nevertheless, his previous books “Structural Transformation of the Public Sphere” and “Between Facts and Norms” were of course somewhat different than the merry post-modern shadow-boxing of French philosophers like Jacques Derrida and Jean Baudrillard. What’s more, another of Habermas’ publications, “Theory of Communicative Action,” certainly has its pitfalls when it comes to his theory of “coercion-free discourse” which, even before the invention of Facebook and Twitter, were fairly bold, if not perhaps naïve.

Habermas was never a knife thrower like the Slovenian thinker Slavoj Žižek, and he was no juggler like the German philosopher Peter Sloterdijk. He never put on a circus act, and he was always a leftist (although there are those who would disagree). He was on the side of the student movement until things got too hot for him. He took delight in the constitution and procedural matters. This also basically remains his position today.

Habermas truly believes in the rationality of the people. He truly believes in the old, ordered democracy. He truly believes in a public sphere that serves to make things better.

Part 2: A Vision of Europe at the Crossroads

This also explains why he gazed happily at the audience on this mid-November evening in Paris. Habermas is a fairly tall, lanky man. As he stepped onto the stage, his relaxed gait gave him a slightly casual air. With his legs stretched out under the table, he seemed at home. Whether he’s at a desk or not, this is his profession: communicating and exchanging ideas in public.

He was always there when it was a question of putting Germany back on course, in other words, on his course — toward the West, on the path of reason: during the vitriolic debate among German historians in 1986 that focused on the country’s approach to its World War II past; following German reunification in 1990; and during the Iraq War. It’s the same story today as he sits here, at a table, in a closed room in the basement of the Goethe Institute, and speaks to an audience of 200 to 250 concerned, well-educated citizens. He says that he, the theorist of the public sphere, doesn’t have a clue about Facebook and Twitter — a statement which, of course, seems somewhat antiquated, almost even absurd. Habermas believes in the power of words and the rationality of discourse. This is philosophy unplugged.

While the activists of the Occupy movement refuse to formulate even a single clear demand, Habermas spells out precisely why he sees Europe as a project for civilization that must not be allowed to fail, and why the “global community” is not only feasible, but also necessary to reconcile democracy with capitalism. Otherwise, as he puts it, we run the risk of a kind of permanent state of emergency — otherwise the countries will simply be driven by the markets. “Italy Races to Install Monti” was a headline in last week’s Financial Times Europe.

On the other hand, they are not so far apart after all, the live-stream revolutionaries from Occupy and the book-writing philosopher. It’s basically a division of labor — between analog and digital, between debate and action. It’s a playing field where everyone has his or her place, and it’s not always clear who are the good guys and who are the bad guys. We are currently watching the rules being rewritten and the roles being redefined.

A Dismantling of Democracy

“Sometime after 2008,” says Habermas over a glass of white wine after the debate, “I understood that the process of expansion, integration and democratization doesn’t automatically move forward of its own accord, that it’s reversible, that for the first time in the history of the EU, we are actually experiencing a dismantling of democracy. I didn’t think this was possible. We’ve reached a crossroads.”

It also has to be said: For being Germany’s most important philosopher, he is a mind-bogglingly patient man. He is initially delighted that he has managed at last to find a journalist whom he can tell just how much he abhors the way certain media ingratiate themselves with Merkel — how he detests this opportunist pact with power. But then he graciously praises the media for finally waking up last year and treating Europe in a manner that clearly demonstrates the extent of the problem.

“The political elite have actually no interest in explaining to the people that important decisions are made in Strasbourg; they are only afraid of losing their own power,” he says, before being accosted by a woman who is not entirely in possession of her faculties. But that’s how it is at such events — that’s how things go with coercion-free discourse. “I don’t fully understand the normative consequences of the question,” says Habermas. The response keeps the woman halfway at a distance.

He is, after all, a gentleman from an age when having an eloquent command of the language still meant something and men carried cloth handkerchiefs. He is a child of the war and perseveres, even when it seems like he’s about to keel over. This is important to understanding why he takes the topic of Europe so personally. It has to do with the evil Germany of yesteryear and the good Europe of tomorrow, with the transformation of past to future, with a continent that was once torn apart by guilt — and is now torn apart by debt.

Without Complaint

In the past, there were enemies; today, there are markets — that’s how the historical situation could be described that Habermas sees before him. He is standing in an overcrowded, overheated auditorium of the Université Paris Descartes, two days before the evening at the Goethe Institute, and he is speaking to students who look like they would rather establish capitalism in Brussels or Beijing than spend the night in an Occupy movement tent.

After Habermas enters the hall, he immediately rearranges the seating on the stage and the nametags on the tables. Then the microphone won’t work, which seems to be an element of communicative action in practice. Next, a professor gives a windy introduction, apparently part of the academic ritual in France.

Habermas accepts all this without complaint. He steps up to the lectern and explains the mistakes that were made in constructing the EU. He speaks of a lack of political union and of “embedded capitalism,” a term he uses to describe a market economy controlled by politics. He makes the amorphous entity Brussels tangible in its contradictions, and points to the fact that the decisions of the European Council, which permeate our everyday life, basically have no legal, legitimate basis. He also speaks, though, of the opportunity that lies in the Lisbon Treaty of creating a union that is more democratic and politically effective. This can also emerge from the crisis, says Habermas. He is, after all, an optimist.

Then he’s overwhelmed by the first wave of fatigue. He has to sit down. The air is stuffy, and it briefly seems as if he won’t be able to continue with his presentation. After a glass of water, he stands up again.

He rails against “political defeatism” and begins the process of building a positive vision for Europe from the rubble of his analysis. He sketches the nation-state as a place in which the rights of the citizens are best protected, and how this notion could be implemented on a European level.

Reduced to Spectators

He says that states have no rights, “only people have rights,” and then he takes the final step and brings the peoples of Europe and the citizens of Europe into position — they are the actual historical actors in his eyes, not the states, not the governments. It is the citizens who, in the current manner that politics are done, have been reduced to spectators.

His vision is as follows: “The citizens of each individual country, who until now have had to accept how responsibilities have been reassigned across sovereign borders, could as European citizens bring their democratic influence to bear on the governments that are currently acting within a constitutional gray area.”

This is Habermas’s main point and what has been missing from the vision of Europe: a formula for what is wrong with the current construction. He doesn’t see the EU as a commonwealth of states or as a federation but, rather, as something new. It is a legal construct that the peoples of Europe have agreed upon in concert with the citizens of Europe — we with ourselves, in other words — in a dual form and omitting each respective government. This naturally removes Merkel and Sarkozy’s power base, but that’s what he’s aiming for anyway.

Then he’s overwhelmed by a second wave of fatigue. He has to sit down again, and a professor brings him some orange juice. Habermas pulls out his handkerchief. Then he stands up and continues to speak about saving the “biotope of old Europe.”

There is an alternative, he says, there is another way aside from the creeping shift in power that we are currently witnessing. The media “must” help citizens understand the enormous extent to which the EU influences their lives. The politicians “would” certainly understand the enormous pressure that would fall upon them if Europe failed. The EU “should” be democratized.

His presentation is like his book. It is not an indictment, although it certainly does at times have an aggressive tone; it is an analysis of the failure of European politics. Habermas offers no way out, no concrete answer to the question of which road democracy and capitalism should take.

A Vague Future and a Warning from the Past

All he offers is the kind of vision that a constitutional theorist is capable of formulating: The “global community” will have to sort it out. In the midst of the crisis, he still sees “the example of the European Union’s elaborated concept of a constitutional cooperation between citizens and states” as the best way to build the “global community of citizens.”

Habermas is, after all, a pragmatic optimist. He does not say what steps will take us from worse off to better off.

What he ultimately lacks is a convincing narrative. This also ties Habermas once again to the Occupy movement. But without a narrative there is no concept of change.

He receives a standing ovation at the end of his presentation.

“If the European project fails,” he says, “then there is the question of how long it will take to reach the status quo again. Remember the German Revolution of 1848: When it failed, it took us 100 years to regain the same level of democracy as before.”

A vague future and a warning from the past — that’s what Habermas offers us. The present is, at least for the time being, unattainable.

Source: http://www.spiegel.de/international/europe/0,1518,799237,00.html