Jack Abramoff Explains The Return On Investment For Lobbying: 22,000% Is Surprisingly Low

from the the-money-game dept

We've talked a lot about the political process and how things work in DC to get things like SOPA pretty far along, even as the public seems to be almost universally against it. As you hopefully know by now, Larry Lessig has been focusing his attention on the issue of the deep-seeded corruption in the way our government works today, and his recent book, Republic, Lost focuses deeply on the issue. A few weeks back, Lessig did a fantastic interview on the subject with the Boston Review. In it, he describes how Congress picks up on unpopular legislation for the sake of scaring people (on all sides) into donating to their campaigns:

In the first quarter of this year, what was the number one issue that Congress addressed? In the middle of two wars, a huge unemployment problem, huge budget deficit problem, still issues about health care, still no addressing global warming—what’s the number one issue they addressed? The banks’ swipe-fee controversy. Why do you address the banks’ swipe-fee controversy? There is not one congressman who decided to run for Congress because he thought, "I'm going to deal with the problem of the banks' swipe fees." It's only because if you can dance as a congressman with a little bit of uncertainty of which side you're going to come down on in this controversy, millions of dollars gets showered down upon you because there's $19 billion on the table depending on how this issue is resolved. So there Congress is driving the agenda in part because of the fundraising opportunities the agenda produces.

Indeed, this is part of the reason that some have been suggesting that the supporters of SOPA in Congress really aren't that upset that it's been delayed. Because this just gives them another month to fundraise on the issue.

The really telling line, however, in Lessig's interview, is about how we've turned Congress into 535 "independent contractors," using legislation as a way to arbitrage fundraising, and how there aren't any debates in Congress itself anymore. It's just elected officials making veiled pleas to donors via C-SPAN:

Switch to C-SPAN covering the U.S. Congress and it's a completely different picture. You can't see it, because they don't allow the camera to pan around, but the hall is empty, people coming to speak just to C-SPAN--they're not speaking to each other--all of the activity of negotiation and deliberation is done outside the chamber; there's no deliberation, so you just have to ask, "Why did we create a Congress?" The framers didn't sit down and set up a Congress so they could imagine these 535 independent contractors all arbitraging fundraising opportunities. If that's what the institution is, then let's just shut it down.

And, of course, tied into all of this is the lobbying process. It turns out that the most famous name in lobbying, Jack Abramoff, is out of jail these days and happy to talk to the press. The folks at Planet Money recently talked to him about the ROI on lobbying efforts, and you begin to get a sense of the scale of things. A company has no problem dumping $100,000/month into a lobbying operation if the end result is changing a law that will save them $4 billion. The report talks about a study of a particular lobbying effort that had an ROI of 22,000%. Yeah. That's a big number. But Abramoff's first response when asked about that study was that he was "surprised it's so little." Obviously, that only happens if you win the lobbying fight. If you lose, it's purely a negative ROI. But that also explains why the fights over these bills can get to be so fierce.

Unfortunately, for the tech sector, this actually may mean things are going to get worse. While Congress is aware that the internet world woke up and spoke up over SOPA, they're also salivating over the possibility of turning that into campaign contributions. So expect plenty more legislation targeting the tech sector in the coming years. It's going to be too lucrative to not do that...

Filed Under: corruption, jack abramoff, larry lessig, lobbying, money, politics, roi

Mapping Out The Revolving Door Between Gov't And Big Business In Venn Diagrams

from the crony-capitalism-is-corruption dept

Via Larry Lessig we get series of Venn diagrams showing the revolving door between big business and government. When people talk about regulatory capture, this is what they mean. When people talk about corruption and crony capitalism, this is what they mean. If you want a quick visual idea of why so few people trust this government to do the right thing for the people, rather than the big companies, this is why:

Filed Under: corruption, politics, regulatory capture, revolving door

Lessig On The Daily Show: The Corruption And Extortion Of Congress

from the the-money-problem dept

Larry Lessig was on the Daily Show Tuesday night, talking about his book Republic, Lost, which is an in-depth look at the realities of Congress today: the fact that they spend 30 to 70% of their time raising money for the next campaign, and how they choose which legislation to pay attention to based on how it will drive campaign contributions. The key point is not -- as some assume -- that money buys results, but that money buys access and attention, and Congress knows this. So it chooses legislation to focus on based on how it will bring out those interested in contributing to campaigns -- not based on what's best for the public. I've got the videos of the interview emebedded below (though thanks to silly Viacom limitations, you can only watch them if you're in the US; if you want to watch them from elsewhere, hire a lobbyist in DC, I guess).

Filed Under: corruption, larry lessig

Shockingly Unshocking: Two Congressional Staffers Who Helped Write SOPA/PIPA Become Entertainment Industry Lobbyists

from the revolving-door dept

Two high level Congressional staffers who have been instrumental in creating or moving forward both PROTECT IP (PIPA) and SOPA have left their jobs on Capitol Hill and taken jobs with two of the biggest entertainment industry lobbyists, who are working very hard to convince Congress to pass the legislation they just helped write. And people wonder why the American public looks on DC as being corrupt.

Allison Halataei, former deputy chief of staff and parliamentarian to House Judiciary Chairman Lamar Smith (R-Texas), and Lauren Pastarnack, a Republican who has served as a senior aide on the Senate Judiciary Committee, worked on online piracy bills that would push Internet companies like Google, Yahoo and Facebook to shut down websites that offer illegal copies of blockbuster films and chart-topping songs.

Pastarnack went to the MPAA where she'll be "director of government relations" and Halataei to the NMPA (music publishers and songwriters) where she'll be "chief liaison to Capitol Hill." The Politico article linked above notes that this kind of "revolving door" is all too common. It may not be directly corrupt, but to the public it sure feels corrupt. It certainly gives off the appearance of "hey, write us the insane bill that we want, and then we'll reward you with a super cushy high paying job." At the very least, it should raise significant questions about whether or not these two bills were written with the public's interest in mind (I know, I know, don't laugh....) or their future employers'. Technically, neither of them can directly lobby the specific committees where they worked, but they can certainly assist in the process.

“They can provide invaluable insight to people on the outside — even in the consultation mode,” one tech industry lobbyist said, noting that Halataei had been Smith’s secondhand person and knows how the Texas Republican thinks and what would be an effective lobbying strategy.

Additionally, the Senate and House panels work closely together, and both Halataei and Pastarnack have ties to staffers in the chambers they didn’t serve in and aren’t banned from lobbying.

Also, as the Politico article notes, a year from now, you can bet there will still be fights about either this or similar legislation. American politics is a disaster.

Filed Under: allison halataei, congress, copyright, corruption, laren pastarnack, lobbyists, pipa, protect ip, revolving door, sopa
Companies: mpaa, nmpa

Anti-Piracy Group Caught Pirating Song For Anti-Piracy Ad... Corruption Scandal Erupts In Response

from the wow dept

The Dutch anti-piracy group BREIN is one of the most aggressive of the anti-piracy groups out there. So there's some amusement in watching as it gets caught up in a scandal that started when it pirated music for an anti-piracy campaign. BREIN had asked musician Melchoir Rietveldt to compose a song for a video that was only to be used at a local film festival. The terms of the deal were strict: the song was only for that one anti-piracy video at that one film festival. However, Rietveldt later discovered that the anti-piracy ad was being used all over the place -- a fact he discovered when he bought a Harry Potter DVD and noticed the video... with his music.

After determining that the music had been used tens of millions of times in such an unauthorized manner, he contacted the local music collection agency, Buma/Stemra, asking them to seek somewhere around $1.3 million owed from BREIN. Buma/Stemra ignored him. Eventually, however, apparently a Buma/Stemra board member, Jochem Gerrits, reached out, and said he could help Rietveldt get paid... but with some questionable conditions. According to TorrentFreak:

In order for the deal to work out the composer had to assign the track in question to the music publishing catalogue of the Gerrits, who owns High Fashion Music. In addition to this, the music boss demanded 33% of all the money set to be recouped as a result of his efforts.

The conversation between Gerrits and the composer’s financial advisor was recorded by Pownews, and during the conversation the financial advisor confronts Gerrits with his unconventional proposal.

“Why do you have to earn money?” he asks, as usually all of the money goes directly to the artists.

“It could be because a lot of people in the industry know that they are in trouble when I get involved,” Gerrits responds, adding that he can bring up the topic immediately in a board meeting next week.

Once again trying to find confirmation for the proposal, the composer’s advisor later asks if the music boss indeed wants one-third of the money.

“Yes, that’s the case, but then [the composer] would make 660,000 euros and now he has nothing,” Gerrits responds calmly.

This is apparently making news across the Netherlands, and Gerrits has resigned. As for BREIN, it's insisting that the whole thing is "a contractual issue" and that it is "not involved."

Filed Under: anti-piracy, copyright, corruption, netherlands
Companies: brein, buma/stemra

Tallahassee Mayor Accused Of Being On AT&T's Payroll While Allegedly Diverting Federal Funds To AT&T Lobbying Group

from the buying-government dept

There's been plenty of talk about AT&T's deep lobbying connections around government, and its ability to put the name of various front groups on letters and op-eds penned by AT&T lobbyists. Most of those are probably legal, if icky and manipulative. But, in some cases, it appears that things may have crossed the line. BroadbandReports has the details on how the Mayor of Tallahassee, John Marks, apparently has been on the AT&T payroll since 1990 as a "lawyer and consultant."

And it's paying off. Marks is now being accused of taking $1.6 million in federal funds, and diverting it to a group called "the Alliance for Digital Equality" (ADE), which claims that it's trying to help get internet access to poor people. Except.... the group is entirely funded by AT&T and: "uses its funds simply to lobby for AT&T, and did little to nothing to actually help the disadvantaged." Mayor Marks, beyond being paid by AT&T, is also a paid member of ADE's board of advisors -- something he apparently didn't think was necessary to disclose when he brought ADE to the City Commission in an effort to have that $1.6 million granted to the group. He also failed to disclose his relationship when he voted in favor of giving the money to ADE.

Both the Florida Commission on Ethics (who knew such a thing existed?!?) and the FBI are now investigating...

Filed Under: alliance for digital equality, corruption, lobbying, tallahassee
Companies: at&t

Canadian Telcos Appoint Ex-Cabinet Ministers To Their Boards

from the not-as-bad-as-it-seems dept

Two of Canada's big three telcos have recently appointed former cabinet ministers of the ruling party's government to their respective boards. A few weeks ago, Bell appointed Jim Prentice, who was responsible for telecom policy and regulating companies like Bell while serving as Minister of Industry in 2007-2008. Then, while former cabinet minister Stockwell Day's new "government relations" not-a-lobbying-firm has raised concerns about loopholes in lobbying laws, this past weekend Telus named Day to its board. (How long until Rogers aligns with industry standards and finds an ex-minister of their own?) OpenMedia.ca decried both appointments as examples of big telecom "cozying up to the government," but journalist Peter Nowak argues it's the system's fault: "Lobbying is so pervasive and deeply integrated" into the system that the only way to deal with it seems to be to "fight fire with fire," as even new wireless carriers have quickly learned -- i.e. don't hate the players, hate the game.

Neither Prentice nor Day will be lobbyists, but it seems obvious that their knowledge of government is being sought for the purposes of lobbying. In the broadband space, Bell has been butting heads with the government and regulators over issues like wholesale usage-based billing. In the wireless space, the next spectrum auction is approaching and incumbents want to avoid a repeat of the last auction, where 40% of the spectrum was reserved for new entrants and the government forced incumbents to offer roaming agreements -- rules ironically set by Bell's new board member, Jim Prentice.

Are these appointments examples of regulatory capture? It might appear that way. It's certainly a case of telcos gearing up for a heavy round of lobbying that's unlikely to favor consumers, but it's hardly a case of blatant revolving doors. Day was not actually responsible for telecom policy, and Prentice was behind rules that angered incumbents. If the government favors incumbents in the next spectrum auction or backs down on wholesale usage-based billing, that would be a different story, but Canadian incumbents are scrambling because they've lost some big battles. This isn't so much a cause for deep concern as it is a challenge to those who favor more competition in Canada to keep pressing the government to follow through on what it's started.

Filed Under: canada, corruption, lobbying, politics, telcos
Companies: bell, telus

The Story Of Patent Reform: How Lobbyists & Congress Works... And How The Public & Innovation Get Screwed

from the sad dept

We've noted how there's suddenly been a lot of mainstream interest in the massive problems of the patent system, thanks in part to mainstream media operations like This American Life doing stories that expose just how damaging the patent system is today. And yet, despite all of this, we've been pointing out for a while that the patent reform bill making its way through Congress is useless. It does nothing to address the problems of the system and has a few things that will make matters worse. And it bizarrely includes clear favors to Wall St., protecting them from a few bad patents, while leaving everyone else -- including Silicon Valley -- to fend for themselves.

So why isn't Congress actually fixing the patent system?

Zach Carter over at the Huffington Post has an absolutely fantastic detailed look at the politics and corruption behind the patent reform bill. It's long, but worth reading. However, the tl;dr version is: patent reform is entirely about lobbyists and special interests. No one -- and I do mean no one -- appears to have any concern whatsoever for the actual impact of the patent system or patent reform on actual innovation. The story is about as depressing as you would imagine, but is a great primer on the nature of regulatory capture and how certain industries influence regulations, while the actual public and the people most impacted by the legislation is left out. Here's just a snippet:

DataTreasury's lawsuits are handled by Texas trial-law kingpins Nix, Patterson & Roach. In the 2010 elections, the firm was the third-largest contributor to the Democratic National Committee, pouring in $179,000, behind only Google and the Law Offices of Peter G. Angelos, according to the Center for Responsive Politics. When Republican lawmakers bemoan "Democrats and trial lawyers," they're talking about Nix Patterson and a handful of other big law firms.

Nix Patterson brought in an even bigger fundraising champion to lobby Democrats for DataTreasury: Ben Barnes. He and his wife Melanie have dumped $379,000 of their own money into politics over the years, according to Center for Responsive Politics data, with every penny going to Democrats. Barnes is also one of the most influential fundraising bundlers in politics. In the first half of 2009 alone, he pulled together $630,450 for the Democratic Congressional Campaign Committee -- more than anyone else, according to the Sunlight Foundation.

Barnes is not a man congressional Democrats keep waiting. And he's previously worked directly with Pelosi, who attended a fundraiser at Barnes' Austin home in 2009. Pelosi's office did not respond to inquiries on her meetings with the fundraising giant, but when asked by HuffPost whether he had won over Pelosi on Section 18, Barnes said that he had.

"Oh, yeah," Barnes told HuffPost. "For some time I've worked with DataTreasury that has the patent all the banks are worked up about."

By revolting on the patent bill, Pelosi was throwing in her lot with Reps. Maxine Waters (D-Calif.), Dan Boren (D-Okla.), Aaron Schock (R-Ill.) and Jim Sensenbrenner (R-Wis.), who circulated a letter on June 15 urging their colleagues to oppose Section 18, saying the language "carves out a special niche" for Wall Street that would "stifle innovation."

This odd bipartisan coalition was going up against the entire New York delegation, led by Rep. Joseph Crowley (D-N.Y.), chairman of the corporate-friendly New Democrat caucus, who declined to comment for this story. As the behind-the-scenes struggle intensified, DataTreasury promoted the idea that Section 18 was a covert bailout for the banks. If courts ruled that the new law amounted to an unconstitutional taking of property -- a very big 'if' -- then taxpayers would ultimately have to pay back the bank winnings resulting from the bill.

Nobody comes out of this story looking good. Everyone comes out of it looking corrupt. And all of us suffer. Though a few lawyers are making out like bandits.

Filed Under: congress, corruption, lobbyists, patent reform, patents

More Details On Spanish Music Collection Society Corruption: Accused Of Stealing $550 Million From Artists

from the lovely-people dept

Late last week, we wrote about the corruption-driven raids on the Spanish music collection society SGAE, and the arrest of its boss, Teddy Bautista. Over the weekend, more details have come out. Jose Luis Campanello points us to the news that officials believe that SGAE execs may have diverted approximately $550 million (US) to their own (or others) profits, at the expense of the actual musicians who should have received that money (Google translation of the original Spanish).

TorrentFreak has additional details as well, about the scheme that seems extremely questionable. Basically, the accusations are that SGAE hired some "consultants" to set up a supposedly independent subsidiary. The thing is, some of those consultants were relatives of SGAE execs:

The complaint alleges that SGAE operatives set up companies and used revenue destined for artists to generate profit for themselves and their families, and that money bound for artists living abroad was diverted to personal Swiss bank accounts.

At the center of the storm is SDAE, the digital rights arm of SGAE. Although a notionally separate entity, SDAE is fully operated by SGAE. It appears that when SDAE was being set up, SGAE hired a for-profit company called Microgenesis as consultants.

Microgenesis describe themselves as “a team of specialists in engineering, consultancy and development, managed by individuals with established experience in the fields of intellectual property, as well as the culture and entertainment industries.”

Microgenesis operated a number of companies which provided various services for SGAE and SDAE, some of them suspiciously registered at SGAE/SDAE’s own office address. The problems only deepen when one learns who is behind Microgenesis.

Jose Luis Rodriguez Neri is Director General of SDAE and ex-director of SGAE. His wife, Maria Antonia Garcia Pombo, is the ex-president of Microgenesis. Partner-Chief Legal Officer of Microgenesis is Eva Garcia Pombo. She is Neri’s sister-in-law.

This all sheds additional light on SGAE's rather fanatical approach to increasing who it could collect the digital levy from. It sounds like they weren't necessarily looking for more money from artists, but potentially for themselves...

Filed Under: collection society, corruption, music, spain, teddy bautista
Companies: sgae

Head Of Spanish Music Collection Society Facing Corruption Charges

from the well-look-at-that dept

Spain is one of a few countries that actually has had pretty sane copyright laws lately. Unlike other places, it has generally felt that private, non-commercial copying of content is legal, and has also rejected the idea of placing liability on third parties. And, despite claims to the contrary from the legacy entertainment industry, there's still great content coming out of Spain (I keep getting great, new music from Spanish bands which, yes, I do pay for). However, it's been interesting to watch the big Spanish music collection agency SGAE, flail around in this environment. In its effort to go after some file sharing sites, it actually pretended two of its employees worked for the courts, and "raided" the homes of people who worked on file sharing programs. As you can imagine, that's a big no-no, and SGAE was fined. It also tried to take legal action against a competing upstart group, that was pushing for more open/copyleft/Creative Commons licensing of music.

And now comes the news that the head of SGAE, Teddy Bautista, is being sought on corruption charges (Google translation from the original Spanish), as a part of a massive investigation into corruption (original Spanish) in the very setup of SGAE.

Maybe, instead of trying to use questionable legal means to attack everyone else, SGAE should have been focusing on getting its own house in order.

Filed Under: collection society, corruption, music, spain, teddy bautista
Companies: sgae