Posts Tagged ‘Audit’
June 7th, 2016 at 6:10 pm
Who Authored Puerto Rico’s Self-Serving Audit Report?
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Last week, ahead of this week’s vote on the PROMESA bailout legislation for Puerto Rico in the U.S. House of Representatives, a commission appointed by Puerto Rico’s government released a preliminary report charging that the Commonwealth violated its Constitution in issuing billions of dollars of its $72 billion debt.  If the bonds were in fact sold illegally, the report insinuates, then the government shouldn’t have to pay them back.

In other words, they would punish lenders for the Puerto Rican government’s own mistakes.

So not only would Puerto Rico’s government get a free pass from its obligations after illegally issuing some of its debt, it would effectively be allowed to stiff good faith bondholders.

It’s worth emphasizing that the legislative body that created this commission, whose membership includes Puerto Rico legislators with obvious conflicts of interest, authorized the very same bond sales that it now seeks to repudiate.

That is morally and logically backward, and sounds like a plot characteristic of a lawless dictatorship.  And for very good reason:  Shenanigans like this are a tried and true tactic of leftist Latin American countries, rooted in the rhetoric of Cuban Dictator Fidel Castro from 30 years ago.  It has been attempted with varying degrees of success by governments or factions in Brazil, Argentina and Ecuador.  More recently over in Europe, a similar government-appointed commission made nearly identical claims in Greece.

Conspicuously, Puerto Rico’s government has not directed any funding toward this commission that it created a year ago.  So that raises an obvious question:  Who is behind this report?

Well, we already know that SEIU was heavily involved in the drafting process, and was one of a number of “stakeholders” to provide “in-kind labor contributions.”  The SEIU, of course, has a vested interest in ensuring that its members receive preferential treatment over good faith bondholders in Puerto Rico, even if Congress has to rewrite the rules to make that possible.

It also has been reported that SEIU has deep ties to consulting firms retained by the Garcia Padilla Administration.  It also is tied directly to the Administration through former president Dennis Rivera, who came under fire earlier this year for running a questionable non-profit in Puerto Rico whose only paid employee is the governor’s brother.

What about those “other stakeholders” who contributed?

We can’t know for sure, but there are commonalties between Puerto Rico and other governments that have attempted similar tactics.  For example, they all had a common ally in Jubilee, the leftist religious organization that has fought to wipe out bondholders in debt disputes across the world, and which has been a staunch advocate before Congress of doing the same to the American savers who lent money to Puerto Rico.

Ecuador, Argentina and Greece also all at one point retained the same counsel as Puerto Rico, which has built a reputation helping leftist governments to avoid repaying the money that they’ve borrowed.

One thing is clear:  The Commission’s report amounts to a political and negotiating ploy.  It’s designed to give Puerto Rico enormous leverage over the innocent people from whom it borrowed, threatening them with the prospect of the all-powerful PROMESA control board invalidating 100% of their debt.

Members of Congress should, at the very least, understand the lengths to which Puerto Rico’s government is going to escape its obligations.

May 17th, 2013 at 4:08 pm
The Left’s Two Canards About the IRS Scandal

A friend who wishes to remain nameless, somebody without known connection to the stories herein, first  identified the two “canards” I discuss below.

The background is this: In addition to deliberately targeting conservative groups to keep them from receiving tax-exempt status, the IRS also — according to an increasing number of reports — was also increasingly harassing existing conservative groups with invasive, expensive audits, no matter how thin (or non-existent) the reasons for suddenly claiming an audit was appropriate. It turns out that the good folks at the venerable Leadership Institute were among those targeted for such an audit, as LI reports here.

What the IRS asked the Leadership Institute

Copies of applications for internships and summer programs; to include: lists of those selected for internships and students in 2008.
— In regards to such internships, please provide information regarding where the interns physically worked and how the placement was arranged.
— After completing internships and courses, where were the students and interns employed?……

This is just one of the examples LI gives in its report of the obnoxious and irrelevant data demanded by the IRS. It’s also chilling: What was the IRS planning to do with its list of names?

Quote from LI founder and president Morton Blackwell: ”

“The IRS’ indefensible behavior is worse than we first thought, as it targeted both new and existing conservative groups in politically motivated attacks,” said Morton Blackwell, president of the Leadership Institute. “Fortunately my Leadership Institute had the resources to stand up to the government’s bullying and intimidation. Other groups, including grassroots and tea party groups we’ve helped train, did not.  Defending ourselves from the harassing audit cost my organization more than $50,000 in legal fees alone.”

This is inexcusable. Anybody who has ever dealt with Morton Blackwell knows just how fastidiously he has observed all relevant regulations for the more than three decades LI has been in operation. He will not discuss partisan political organizing on his LI email. As the longtime Republican National Committeeman from Virginia, Blackwell is well known for leaving LI’s offices to go use a phone elsewhere in order to avoid using LI phone lines when on RNC calls. Again and again and again, Blackwell has made clear to everybody at LI, and all those who deal with him while he is in LI offices, that certain rules prohibit LI from direct partisan or overtly political activity. After thirty years of this, surely the IRS should have known this about the IRS.

Nonetheless, the audit came. And it was unlawfully invasive. Indeed, so obsessed was the IRS with LI that it even demanded the following from The Hawaii Tea Party in a January 26, 2012 letter: “Provide details regarding your relationship with the Leadership Institute. Provide copies of their training material.”

Huh? Why is a Hawaii Tea Party being asked about connections with LI, as if LI is some nefarious organization? This is sickening.

NOW, HERE’S THE RUB: There have been two excuses offered by hardened lefties for why (they say) the IRS scandal isn’t really much of a scandal at all. First is the idea that the poor overworked IRS employees were just trying to figure how to deal with such a huge surge in 501(c)(4) applications and that it was all these new requests that caused the problem. But… the audits of LI and others (granted, the audits came from a different division, but that means there should be ANOTHER investigation, of those) had nothing to do with new applications. And, as this story shows, even the new applications weren’t rising. So this whole excuse completely falls apart.

Secondly, to quote my aforementioned friend: “LI is a 501c3. The other lefty narrative has been that this is about 501c4s, these legal structures that have a new life since Citizens United. Lefty legal people say ‘501c3 law is SO WELL UNDERSTOOD and NO ONE UNDERSTANDS 501c4 law.’ So the Citizens United thing is a canard. This is just about using the IRS to intimidate enemies.”

I hope that makes sense. In other words, the argument that the IRS officials were confused because they were dealing with different regs (the c4 ones) than they were accustomed to (the c3 ones) is absurd, at least as far as the audits of LI and others were concerned — because LI was a c3!

Finally, it’s worth noting that the 501(c)(4) spending was not, despite Obama’s and others’ complaints, driven by the famous Citizens United case that Obama loves to castigate; instead, even according to the left’sown favorite election-related lawyer, Rick Hasen, that spending rose as a result of the Wisconsin Right to Life case from two years earlier.

In all, there remains no excuse for the targeting of Tea Parties, of other conservative organizations, or the auditing of conservative organizations and individuals. All the excuses offered so far are as thin as gossamer, and not even as strong.

February 10th, 2011 at 2:07 pm
Is This the Bureaucracy You Want In Change of Your Health Care?

Earlier this week, reported:

Republican aides on Capitol Hill are circulating sections of an independent audit that found significant shortcomings in HHS’ financial management — including noncompliance with federal laws and a $3 billion difference between the department’s own balance sheet and records maintained by the Treasury Department. HHS acknowledged “material weaknesses” in its financial management systems and said some of those issues will be worked out as the department implements a new reporting system this year.

Below are some of the specifics, care of Senator Tom Coburn:

  • HHS Is Not In Compliance With Federal Financial Management Law. According to the HHS Inspector General’s review of Ernst & Young’s financial audit of HHS, “HHS’s financial management systems are not compliant with the Federal Financial Management Improvement Act of 1996.”
  • Nearly $2 Billion Taxpayer Dollars Are Stuck in Limbo. “As of September 30, 2010, the audit identified approximately 102,500 transactions totaling an approximate $1.8 billion that were more than 2 year s old without activity.”
  • Nearly $800 Million Dollars “Could Not Be Explained” Differing Between HHS’ Records and Treasury Department Records. “Based on our review and discussions with management, we noted differences of $794 million that could not be explained.”
  • Some Processes and Procedural Manuals Have Not Been Updated Since the 1980s. “HHS’s formalized policies and procedures are out of date and may be inconsistent with actual processes taking place….For example, we noted that certain policies and procedures, including certain accrual processes, had not been updated since the mid-1980s.”
  • Current HHS Personnel Need Training To “Complete Their Day-to-Day Responsibilities.” “Further, we noted additional training on the financial systems was needed to enable HHS personnel in their ability to access needed information from the system to complete their day-to-day responsibilities – including the preparation of reconciliations, research of differences noted, and the ability to identify and clear older “stale” transactions dating back several years.”

America, meet the federal department charged with implementing and managing the most significant provisions of the monstrosity known as ObamaCare.