Janine Wedel - Shadow Elite - How the World's New Power Brokers Undermine Democracy, Government, and the Free Market

The Rozen quote is from Laura Rozen, “Does Investigation of the Pentagon's Channel to an Iran Contra Arms Dealer Continue?” Mother Jones , June 20, 2008. See also Senate Select Committee on Intelligence, Report on Intelligence Activities Relating to Iraq Conducted by the Policy Counterterrorism Evaluation Group and the Office of Special Plans Within the Office of the Under Secretary of Defense for Policy, June 2008, http://intelligence.senate.gov/080605/phase2b.pdf.

117. See chapter 1 for discussion of how flex nets differ from the issue networks defined by Heclo.

118. Bradley Graham, “Levin Assails Officials’ Post-Resignation Roles,” Washington Post , April 20, 2005, p. A22. For Feith resigning for personal reasons, see Department of Defense, “DoD Announces Departure of Undersecretary Douglas Feith,” January 26, 2005, http://www.defenselink.mil/releases/release.aspx?releaseid=8160.

119. Libby was convicted of “four felony counts: obstruction of justice, giving false statements to the Federal Bureau of Investigation and committing perjury twice before the grand jury” (Neil A. Lewis, “Libby Guilty of Lying in CIA Leak Case,” New York Times , March 6, 2007). In July 2007 President Bush commuted his two-and-a-half-year prison sentence. In March 2008 Libby was barred from practicing law in Washington, D.C. (See, for example, Carol D. Leonnig, “Court Disbars Cheney Ex-Aide,” Washington Post , March 21, 2008.)

120. For a description of the letters sent on Libby’s behalf in hopes of securing him a reduction in prison time (from a Who’s Who of neoconservatives, as well as Cheney and Rumsfeld), see Sidney Blumenthal, “The Libby Lobby’s Pardon Campaign,” Salon.com, June 7, 2007, http://www.

salon.com/opinion/blumenthal/2007/06/07/scooter_libby/print.html.

121. Petraeus is cited in Nancy A. Youssef, “Chalabi Back in Action in Iraq,” McClatchy Newspapers, October 28, 2007. See also: http://www.guardian.co.uk/world/2004/may/26/usa.iraq3.

122. With regard to severing ties, see Nancy A. Youssef, “U.S. Once Again Cuts Off Ties to Chalabi, This Time Over Rivalry with Malaki,” McClatchy Newspapers, May 15, 2008.

123. See, for example, Richard Perle, “We Made Mistakes in Iraq, but I Still Believe the War Was Just,” Sunday Telegraph (London), March 16, 2008, posted on AEI Web site on March 17, 2008, http://www.aei.org/include/pub_print.asp?pubID=27655.

Notes to Chapter 7

1. Susan Strange, The Retreat of the State (Cambridge, UK: Cambridge University Press, 1996), p. 199.

2. With regard to flexlike structures at Enron: Andrew S. Fastow, for example, played dual roles as chief financial officer of Enron and as manager of the LJM partnerships that he had created. Using Enron stock as collateral, Fastow signed off on deals for both and hid Enron losses by putting them under the partnerships. According to a report issued by Enron’s board after the misdeeds were brought to light, the transactions were illusory since Enron was essentially on both sides of each deal (Kurt Eichenwald, “Talk of Crime Gets Big Push,” New York Times , February 4, 2002, p. A19). William C. Powers Jr., an Enron director who chaired the committee that wrote the report, said that Fastow was plagued by dual loyalties. “Fastow couldn’t mind the store,” Powers said, “because he was involved in the transactions” (Kurt Eichenwald, “Enron’s Many Strands: The Ex-Chairman; Questions Were Answered at Board’s Investigation,” New York Times , February 13, 2002, p. C9). Jordan Mintz, a lawyer with Fastow’s finance division, was troubled by this state of affairs: “Mr. Fastow was negotiating deals on behalf of the partnerships across the table from his own subordinates, who were representing Enron. Approval sheets for those deals had not been signed off by Mr. Skilling, the chief operating officer, even though they all had a line for his signature” (Kurt Eichenwald and Diana B. Henriques, “Web of Details Did Enron In as Warnings Went Unheeded,” New York Times , February 10, 2002, p. A27). Fastow’s dual roles (as CFO of Enron and manager of the partnerships), and the ambiguity as to which role he was playing during crucial transactions, facilitated his ability to hide the partnerships and his success in money making.

For details about the relationship between Enron and Arthur Andersen, see, for instance, Jane Mayer, “The Accountants’ War,” The New Yorker , April 22, 2002. The quote from Jack Blum is from my interview with Jack Blum, August 12, 2004.

Quote by John Cassidy is from John Cassidy, “The Greed Cycle,” The New Yorker , September 23, 2002, http://www.newyorker.com/archive/2002/09/23/020923fa_fact_cassidy. John Cassidy is from John Cassidy, “The Greed Cycle,” The New Yorker, September 23, 2002, http://www.newyorker.com/archive/2002/09/23/020923fa_fact_cassidy.

3. Lloyd J. Dumas has analyzed the behavior of Enron executives in light of a broader definition of corruption (see Lloyd J. Dumas, Janine R. Wedel, and Greg Callman, Confronting Corruption, Building Accountability: Lessons from the World of International Development Advising [New York: Palgrave, forthcoming, 2010]).

Sources on Enron include Andrew Hill and Stephen Fidler, “Enron Ties Itself Up In Knots, Then Falls Over,” Financial Times , January 29 2002, http://specials.ft.com/enron/FT3A5RP52XC.html; Sheila McNulty, “Enron: Big Bucks from a Company,” Financial Times , February 8, 2002, http://specials.ft.com/enron/FT3HR1OBGXC.html; Daniel Kadlec, “Enron: Who’s Accountable?” Time Magazine , January 13, 2002, http://www.time.com/time/business/article/0,8599,193520,00.html; Eichenwald, “Talk of Crime Gets Big Push,” p. A19; Eichenwald and Henriques, “Web of Details Did Enron In as Warnings Went Unheeded,” p. A27; and Eichenwald, “Enron’s Many Strands,” p. C9.

The quote from Dipak Gyawali is cited in Dumas, Wedel, and Callman, Confronting Corruption, Building Accountability .

4. For Power work, see Michael Power, The Audit Explosion (London: Demos, 1994) and The Audit Society: Rituals of Verification (New York: Oxford University Press, 1999).

In the UK, the migration of the audit from finance to other areas of life followed this course: After the election of Margaret Thatcher as prime minister in 1979, the government of Britain sought to revamp the public sector by introducing operating methods from the supposedly more efficient and dynamic private sector (Cris Shore, Susan Wright, and Martin Mills, “Audit Culture and Anthropology: Neo-liberalism in British Higher Education,” The Journal of the Royal Anthropological Institute 5, no. 4 [December 1999], p. 561).

The quote from the UK’s Audit Commission on audit functions is from the “Audit Commission for England and Wales: Report of Accounts for Year Ended 31 March 1984,” London HMSO, p. 3, quoted in Shore, Wright and Mills, “Audit Culture and Anthropology,” p. 562. Additional quotations in this paragraph appear on p. 562.

With respect to the introduction of cost-benefit analysis at the Department of Defense, see Tevfik F. Nas, Cost-Benefit Analysis: Theory and Application (Thousand Oaks, CA: Sage Publications, 1996). With regard to the introduction of audit in the United States in the 1980s, see Marilyn Strathern, Audit Cultures: Anthropological Studies in Accountability, Ethics, and the Academy (Oxford and New York: Routledge, 2000), especially, p. 60.

5. The Power quote is from Michael Power, The Audit Explosion , p. 19.

6. For information on Perle’s early role in the administration of George W. Bush, see Seymour M. Hersh, “Lunch with the Chairman,” The New Yorker , March 17, 2003, http://www.newyorker.com. For sources on Perle’s role in pushing information manufactured by Chalabi, see chapter 6. The Goldman Sachs information is from Ken Silverstein and Chuck Neubauer, “Consulting and Policy Overlap,” Los Angeles Times , May 7, 2003. Sources on Perle’s work with the American satellite manufacturer (Loral Space & Communications) and telecommunications company (Global Crossing Ltd.) here referenced are Stephen Labaton, “Pentagon Adviser Is Also Advising Global Crossing,” New York Times , March 21, 2003, www.nytimes.com/2003/03/21/business/21GLOB.html-44k; and Stephen Labaton, “Pentagon Adviser Is Stepping Down,” New York Times , March 28, 2003, http://www.nytimes.com/2003/03/28/business/28GLOB.html; and Jack Shafer, “Richard Perle Libel Watch, Week 4: He’s Just Too Busy Resigning to Sue This Week!” Slate.com, April 2, 2003, http://slate.msn.com/id/2081053/.