Reuters Investigates
Insight and investigations from our expert reporters
from FaithWorld:
Gaddafi’s secret missionaries: Muslim preachers and Machiavellian politics
(Libyan leader Muammar Gaddafi reads during a mass prayer during a celebration to mark the birthday of Prophet Mohammed in Agadez March 30, 2007. REUTERS/Samuel De Jaegere)
On a tidy campus in his capital of Tripoli, dictator Muammar Gaddafi sponsored one of the world's leading Muslim missionary networks. It was the smiling face of his Libyan regime, and the world smiled back.
The World Islamic Call Society (WICS) sent staffers out to build mosques and provide humanitarian relief. It gave poor students a free university education, in religion, finance and computer science. Its missionaries traversed Africa preaching a moderate, Sufi-tinged version of Islam as an alternative to the strict Wahhabism that Saudi Arabia was spreading.
The Society won approval in high places. The Vatican counted it among its partners in Christian-Muslim dialogue and both Pope John Paul and Pope Benedict received its secretary general. Archbishop of Canterbury Rowan Williams, spiritual head of the world's Anglicans, visited the campus in 2009 to deliver a lecture. The following year, the U.S. State Department noted approvingly how the Society had helped Filipino Christian migrant workers start a church in Libya.
But the Society had a darker side that occasionally flashed into view. In Africa, rumors abounded for years of Society staffers paying off local politicians or supporting insurgent groups. In 2004, an American Muslim leader was convicted of a plot to assassinate the Saudi crown prince, financed in part by the Society. In 2011, Canada stripped the local Society office of its charity status after it found the director had diverted Society money to a radical group that had attempted a coup in Trinidad and Tobago in 1990 and was linked to a plot to bomb New York's Kennedy Airport in 2007.
Now, with the Gaddafi regime gone, it is possible to piece together a fuller picture of this two-faced group. Interviews with three dozen current and former Society staff and Libyan officials, religious leaders and exiles, as well as analysis of its relations with the West, show how this arm of the Gaddafi regime was able to sustain a decades-long double game.
Fridge Fires
Last Friday’s special report about faulty refrigerators started with a fire in a London tower block. After oil and gas correspondent Tom Bergin read about the fire he started to investigate the actions of Arcelik, a Turkish company that made the fridge the London Fire Brigade pointed to as a possible cause. There seemed to be inconsistencies in the company’s version of events.
“What I found interesting was uncovering who knew what, when. As soon as one constructed a timeline, it was evident that the EU guidelines had not been followed, even as those involved claimed to be guided entirely by these guidelines,” said Bergin. “That was probably the most interesting and rewarding because the rules were designed to protect people.”
As our story shows, Arcelik was informed by the London Fire Brigade some of its Beko fridges could pose a fire risk years before it informed its customers. When the company did take action, it decided to send out letters and did not follow EU suggestions to use the media to alert consumers to possible dangers.
The British press had not investigated whether Arcelik’s behavior constituted a breach of EU or UK regulations and Bergin believes Arcelik’s effective stonewalling, and newspapers’ disinterest in small stories like domestic fires, stopped the national press from digging deeper into the faulty fridges.
“It takes a great deal of time…Stonewalling often can be very effective, unfortunately, and we live in a country where the libel laws are so restrictive that even suggesting a company has behaved inappropriately poses big risks for news organizations,” he said.
Bergin was the invited to Arcelik’s British headquarters after the company realised Reuters was investigating the story – as far as we know the only British journalist to visit.
“A few weeks into it, it was quite clear to them that we were putting the time and effort into the story that meant we would quite likely come up with a compelling account of what happened and that we understood the rules, that we were making investigations in many different sources…Simply stonewalling wasn’t an option in the face of our persistence.”
from Global News Journal:
Tragedy or stagecraft: N. Korea’s food crisis
Tim Large, editor of Thomson Reuters Foundation’s AlertNet humanitarian news service, gives the back story to his special report Crisis grips North Korean rice bowl <http://www.reuters.com/article/2011/10/07/us-korea-north-food-idUSTRE7956DU20111007> . Any opinions expressed are his own.
Malnourished children presented at a clinic in North Korea during a guided tour of a disaster-hit province. (Reuters/Tim Large)
Could a malnourished eight-year-old really look like a three-year-old? Were the 28 orphans in the primary school clinic really so stunted by years of hunger that they had the bodies of toddlers, as the authorities claimed?
Or had they been assembled here for our benefit, infant imposters wheeled in to add poignancy to North Korea’s appeal for food aid?
Western nutrition experts who have worked in the country for years assured me that such extreme stunting was absolutely the norm.
Remember the Philly trader?
Back in May, Matthew Goldstein wrote about commodities trader and hip-hop promoter Tyrone Gilliams in the special report “A fame-seeking Philly trader’s rap falls flat.”
Today Gilliams was arrested on charges of running a $4 million investment scam.
Time to re-read the original story, which detailed allegations by Ohio businessman David Parlin that Gilliams used some of Parlin’s money to sponsor a glitzy black-tie charitable event in Philadelphia attended by rappers and local politicians.
Federal authorities began investigating Gilliams soon after the Reuters story was published, according to people familiar with the matter who declined to be identified.
Matt will be keeping track of the case as it plays out.
from Unstructured Finance:
Debts no honest man could pay
By Matthew Goldstein
For months now we've been hearing a lot about the $14 trillion in debt owed by the U.S. government. But there's been far too little talk about the almost equally high debt tab owed by U.S. consumers.
The Federal Reserve recently reported that total outstanding debt owed by U.S. consumers was $11.4 trillion, down from its third-quarter 2008 peak of $12.5 trillion. At that pace, it could take years for U.S. consumers to delever, or in plain English--reduce the debts they owe on their homes, credit cards, autos and student loans. But when it comes to the staggering sum of consumer debt in this country, it's pretty clear that time is not on our side.
In fact, the longer it takes for consumers to pay-down their debts, it simply means demand for homes, autos and other big ticket goods will remain lax. And that means the unemployment rate won't get much lower than its current 9 percent rate anytime soon. In fact, with all the signs pointing to a double-dip recession, unemployment could very well inch higher in the next few months.
In our Special Report, "A "great haircut" to kick-start growth, we take a look at one radical measure for speeding-up the process of consumer deleveraging, which involves some sharing of losses by banks, bond investors and borrowers. Jennifer Ablan and myself found a growing number of economists, analysts and even some institutional investors who are craving for a creative solution to the consumer debt woes plaguing the U.S. economy.
Our story doesn't discuss the mechanics for instituting a great haircut to jump start the economy. The specifics of just how to spread the losses around is a subject for a later day and is something that can be dealt with at the negotiating table. But hopefully our story, which you can read here, will get the discussion rolling.
Here is the PDF version of the story with interactive graphics.
I’m for a flat tax with no deductions. I think letting everyone see how much who pays would be great medicine for the system. We’d all pay more though. Right now we all get a shared benefit. I get my tax deductions as long as someone else gets theirs and no one pays what they should.
Shared sacrifice is something like what they did in WWII like a temporary task increase or something else. (Though temporary is a dangerous word with politicians)
Arguing that everyone paying more taxes is somehow only bad for the people with more money who’ve gained the most from the country, the government and its people is disingenuous at best. Show me one person that made that much money who’s company didn’t benefit from technology developed by NASA, during WWII, or used the roads, internet or all the other things the government created from everyone’s money then, I’ll consider you might have a point.
Flat tax is not wealth redistribution. Honestly taxes are what we pay to have roads, power, schools police etc.
Mortgage breaks, child credits, corporate credits etc are wealth redistribution. BTW more money gets redistributed to big corporations than people through the tax code. For all the screaming about how high corporate taxes are they work out to less than half the actual rate after all the tax breaks and credits the companies get.
The really sad thing is that most people with money can’t understand that low capital gains taxes reward people for doing nothing with their money. It’s pathetic that someone who drops their money in a big name corporate stock gets to keep more of what they make than someone who invests it in a small business and builds something from the ground up. Let’s fix that and I think everything else will follow just fine.
@popsiq….yes I know when we mention sharing in this age controlled by baby boomers they break out in hives and get violent because they are too special to actually have to share.
Behind the scenes at UBS
Emma Thomasson and Edward Taylor tell the inside story of UBS’s turbulent week in today’s second special report “How a rogue trader crashed UBS.”
UBS chief Oswald Gruebel’s decision to resign after the bank said a rogue trader lost as much as $2.3 billion was not just a response to the immediate crisis. It was also an admission that the bank’s latest scandal has effectively undone all his efforts over the past two years to lobby against tougher bank regulations.
The alleged rogue trades have killed any remaining ambitions UBS might have to compete with the titans of Wall Street. They also cast a huge shadow across the entire industry and make tough new regulations far more likely, as the 67-year-old hinted in a memo to staff after he quit. “That it was possible for one of our traders in London to inflict a multi-billion loss on our bank through unauthorised trading shocked me, as it did everyone else, deeply. This incident has worldwide repercussions, including political ones,” he wrote.
After a round of job cuts, the recent events sparked some gallows humor in the banking world. As one senior banker in Zurich put it:
“The joke going around is that Gruebel didn’t need to sack 3,500 people to save 2 billion. He could have just sacked ONE.”
UBS had only recently started to win back the trust of its wealthy private banking clients after risky bets on subprime mortgages came close to felling it in the financial crisis of 2008, as this graphic shows:
Nevada’s Big Bet
What happens in Nevada, stays in Nevada. Literally. Especially when it comes to Nevada shell companies.
That’s the gist of our latest special report in the SHELL GAMES series, “Nevada’s big bet on secrecy.”
The story takes a close look at how changes to Nevada’s incorporation laws a decade ago have made it a haven for U.S. shell companies, as well as a hub for current executives of mass-incorporators who previously went to prison, in large part for using Nevada shell companies for illegal activities.
The state’s liberal incorporation laws – which allow for nominee officers and directors and a higher degree of liability protection than any other state – are a magnet for questionable corporate behavior, it appears.
“Nevada’s Big Bet on Secrecy” had some immediate impact: Ross Miller, Nevada’s Secretary of State, said in August that he planned to introduce a bill which would bar former felons from running mass-incorporators. In September, his office announced a new Corporate Ownership Fraud Task Force, in collaboration with the Internal Revenue Service and the Nevada Attorney General’s office, based in part on data contained in questions posed by Reuters.
The data are sure to raise eye-brows. Reuters found four former felons who run or until recently ran three mass-incorporators in the state which have formed or represented more than 14,000 companies. Over 3,000 of those firms have been the subject of state and federal tax liens and civil judgements, or have been named in federal civil and criminal litigation.
Stress testing the UAW
Today’s special report from Detroit, “Crunch time for America’s richest union,” takes a close look at the finances of the historic United Auto Workers union.
Over its 76 years, the UAW has built up a more than $1 billion war chest that has proven to be its big stick at the negotiating table and on the political stage.
Most of the UAW’s wealth sits in its strike fund, which stood at $763 million at end 2010. That money can only be used to fund strikes unless UAW representatives approve a change to the constitution, a step possible every four years.
The sheer size of the strike fund hides the weakening of the UAW’s finances, particularly since 2007, a period when the U.S. auto industry nearly collapsed and membership fell by about a fifth.
At first glance, the UAW’s financial reports show that overall cash receipts and disbursements have fallen almost exactly in tandem. But a deeper look shows that since 2007, the UAW has relied more and more on selling its investments to offset the sharp drop in dues, its largest source of annual funding.
As shown in the graphic below, in 2007 dues represented more than half the UAW’s incoming revenue, while investment and assets sales were just over 6 percent, according to U.S. Labor Department filings. By 2010, dues composed 43 percent of the UAW’s income, while sales of investments and assets were 23 percent.
More bloodshed in Monterrey
After the latest news from Mexico where armed men torched a casino in Monterrey, killing at least 52 people, it’s a good time to re-read Robin Emmott’s special report “If Monterrey falls, Mexico falls.”
As the story says:
In just four years, Monterrey, a manufacturing city of 4 million people 140 miles from the Texan border, has gone from being a model for developing economies to a symbol of Mexico’s drug war chaos, sucked down into a dark spiral of gangland killings, violent crime and growing lawlessness.
Since President Felipe Calderon launched an army-led war on the cartels in late 2006, grenade attacks, beheadings, firefights and drive-by killings have surged.
That has shattered this city’s international image as a boomtown where captains of industry built steel, cement and beer giants in the desert in less than a century — Mexico’s version of Dallas or Houston.
By engulfing Monterrey, home to some of Latin America’s biggest companies and where annual income per capita is double the Mexican average at $17,000, the violence shows just how serious the security crisis has become in Mexico, the world’s seventh-largest oil exporter and a major U.S. trade partner.
Prohibition does nothing but bankroll dangerous criminals, corrupt whole law enforcement agencies and generously arm international terrorists. Alcohol prohibition (1919-1933) was a casebook example of such dangerous folly. Today, alcohol is taxed and regulated and the shoot-outs over turf and the killing of innocent bystanders are no longer a daily part of the alcohol trade. So how come so many of us lack the simple ability to learn from such an important historical lesson, and are instead intent on perpetuating the madness and misery that prohibition has always invariably engendered?
It is clearly our always-doomed-to-fail policy of prohibition that is causing this intense misery. We need to fix ourselves (start thinking clearly) and in doing so, we will not only help rid ourselves of this terrible self-inflicted curse but also help to heal the whole planet.
Are we really such an adolescent nation that we can expect neither maturity nor cognitive thought from either our leaders or our populace? This is not a war on drugs; it’s an outright war on sanity!
Colombia, Peru, Mexico or Afghanistan, with their coca leaves, marijuana buds or their poppy sap, are not igniting temptation in the minds of poor weak American citizens. These countries are merely responding to the enormous demand that comes from within our own borders. Invading or destroying those countries, creating more hate, violence, instability, injustice and corruption, will not fix this problem. We need to admit that It is ourselves who are sick. Prohibition is neither a sane nor a safe approach. Left unabated, it’s devouring inferno will surely engulf every last one of us!
Is it time for a stockation?
By Matt Goldstein
It’s too soon to say whether the recent madness on Wall Street will drive away ordinary investors from the stock market, but the trend lines certainly aren’t looking good.
In the past two weeks, retail investors pulled $17.4 billion out of U.S. equity mutual funds, according to the mutual fund information service Lipper. But the exodus from stock funds really began in late 2008 at the height of the financial crisis. And the move of retail money out of stock funds continued through 2009, even as the markets bottomed and rallied back.
To some degree, it’s perfectly rational for ordinary investors and flee the stock market and take a stockation, if you will. As we point out in today’s Special Report, The Madness of Wall Street, the terrain for investors has become increasingly hard to navigate with the rise of superfast computer trading and a large degree of group think by big institutional money managers. To some degree, trying to fight the bizarre and out of control forces that now rule Wall Street is pointless.
When it comes to things like liquidity black holes (see our story): Resistance is futile.
But at the same time, retails investors are notoriously bad market timers and often are pulling out of stock at just the wrong time and failing to get back in when they should. And right now the alternatives to stocks, other than gold, are not particularly appealing from a yield perspective.
