He runs the department that protects all of us. Isn't that swell?

September 25, 2004 9:16 AM

Tom Ridge's war profiteering. Homeland Security Director Tom Ridge has been reported to hold investments in at least seven different companies directly benefiting from new Homeland Security projects. "In response to a late afternoon telephone inquiry, DHS spokesman Brian Roehrkasse first said the department did not have enough time to answer questions ... Pressed further, he shouted an expletive to a reporter and hung up. "
posted by XQUZYPHYR (26 comments total)

Ridge has long been rumored to have "money problems" because the job "only" pays $175K/year. He is supposedly planning to quit the job after the election, because he can't afford to put his kids through college on that kind of money.
posted by jpoulos at 9:31 AM on September 25, 2004

Conflicts of interest are great! My personal favorite, the specifics of which escape me at the moment, is the congressman/representative who just happened to be CEO, or on the board of directors, of the electronic voting company that tabulated the votes in the race he was running. Of course it didn't come out until after the election, but hey...

I belive I heard about this in the Robert Greenwald film Unprecedented: The 2000 Presidential Election
posted by SweetJesus at 9:36 AM on September 25, 2004

But have you looked at the companies?

Microsoft, Unisys, Raytheon, Sprint...

Sounds like he's got a pretty good portfolio these aren't homeland security specific.
posted by bitdamaged at 9:37 AM on September 25, 2004

The companies are Microsoft, Unisys, GE, Sprint, Raytheon, and three pharmas. I dunno about Unisys and Raytheon, and I'm no investor, but on the whole those seem to be pretty sensible picks for anyone. I guess this would all seem more damning to me if he happened to be investing in a few no-name firms that happened to get great big contracts from the TSA. Am I missing something?
posted by tss at 9:40 AM on September 25, 2004

Common wisdom used to hold that the appearance of a conflict of interest was almost as a bad as an actual conflict of interest, and was to be avoided at all cost. But clearly this administration could give a shit about that. This is hardly a scandal when practically no one in the media put up serious protestations about Cheney's deferred income from Halliburton while awarding them no-bid contracts.
posted by psmealey at 9:43 AM on September 25, 2004

One other thing. It seems like big companies would be foolish not to try going after lucrative homeland security dollars. How many Fortune 500 companies, say, have some connection?
posted by tss at 9:53 AM on September 25, 2004

While I agree that the size of the companies listed lessen the likelihood of self-dealing by Ridge, there needs to be a more significant dialogue about financial conflicts of interest. Consider the parallel of federal judges. The United States Code provides that a federal judge "shall also disqualify himself" where "[h]e knows that he, individually or as a fiduciary, or his spouse or minor child residing in his household, has a financial interest in the subject matter in controversy or in a party to the proceeding, or any other interest that could be substantially affected by the outcome of the proceeding." 28 U.S.C. § 455(b)(4). Canon 5 of the Judicial Code of Conduct suggests that:

A judge should manage investments and other financial interests to minimize the number of cases in which the judge is disqualified. As soon as the judge can do so without serious financial detriment, the judge should divest himself or herself of investments and other financial interests that might require frequent disqualification."

In other words, not only must federal judges disqualify themselves when they own securities in a company or concern before the court either as a direct party or likely to be affected by the proceeding, they are also strongly encouraged to divest themselves of securities which would otherwise be likely to disqualify themselves from future cases.

One solution to this problem is the so-called "blind trust," which allows judges to hold securities in a fund managed by a fiduciary. This device shields the judge from knowledge of the contents of the fund, and prevents the kind of potential conflicts discussed in this Washinton Post article. The use of the blind trust is actually contemplated by the Ethics in Government Act of 1978, 5 U.S.C. app § 101, et seq. (The statute is included in the Compilation of Federal Ethics Laws, published by the Office for Government Ethics). However, it seems like many officials in the Executive Branch, including Ridge, don't take advantage of the device.
posted by monju_bosatsu at 10:09 AM on September 25, 2004

Who doesn't have stock in Microsoft, Unisysd, GE, Sprint, Raytheon and Baxter/Merk/Pfizer? I'm not saying it's right, but it's like bitdamaged said, it's a good portfolio.
posted by tomplus2 at 10:24 AM on September 25, 2004

Hmm, I only see one of the Big Three. Ridge really needs to expand his portfolio.
posted by homunculus at 10:48 AM on September 25, 2004

My personal favorite, the specifics of which escape me at the moment, is the congressman/representative who just happened to be CEO, or on the board of directors, of the electronic voting company that tabulated the votes in the race he was running.

Ah yes. You are referring to our beloved Republican Senator Chuck Hagel, of Nebraska.
posted by Civil_Disobedient at 10:53 AM on September 25, 2004

monju: thanks for the interesting links. I don't get how a blind trust device should actually prevent a judge from knowing where his/her interest are, given that communications between the judge and the qualified blind trust representatives may be restricted in quality and quantity, but mere restriction-by-law doesn't make the communication factually impossible or useless.

I also guess some officials didn't agree to use the blind trust device because they can't really direct the investment toward what they believe is a profiteable investment ..and they apparently only receive a report of net income/loss only every each quarter ; to keep it short..they simply don't trust the trustee to constantly and/or diligently do what's better for the investor and they don't want to pay for the results of trustee incompetence.
posted by elpapacito at 11:08 AM on September 25, 2004

The financial holdings and sources of income for most applicants under serious consideration must be disclosed for review for possible conflicts of interest, and any conflicts must be remedied by divestiture, the creation of special trusts, etc.--from the White House's page on appointments.
posted by amberglow at 11:23 AM on September 25, 2004

Homeland Security: What We Don’t Know Can Hurt Us
posted by homunculus at 12:12 PM on September 25, 2004

This isn't that surprising, really. If there were a cabinet level position focused on high-tech, wouldn't you expect it to be someone who owned some Google stock? It's similarly unsurprising that the head of HS has stock in a bunch of related companies. He's supposed to be an expert in the field or whatever.

The real issue is why the government is made up of such rich fuck moguls. I wouldn't begrude some Sili Valley guru his few hundred shares of Google stock. But these jokers in Washington have to make decisions that will affect some real money for them. And I love how their solution is for us to pay them more to do their jobs, counterbalancing the conflict of interest. Ha!
posted by scarabic at 1:07 PM on September 25, 2004

homunculus: interesting article ; there are some points in which I think I see the notion of socialization of costs/risks and privatization of profit slowly but steadly resurfacing.

Let's take the air-cargo industry example ; there are probably a few simple but powerful issues behind their alleged resistance to complete cargo screening

1. it slows down operations , as no matter how fast one can scan a cargo it still requires a finite amount of time
2. it makes shipping more expensive, because not matter how low there's still some cost in scanning equipment/personnel
3. it introduces a new point of failure and delay
4. introduces new regulations and therefore parameters that must be checked before the cargo is launched on route

These are all additional expenses that any cargo company want the customer to pay (which makes sense) while still maintaining the same margin of profit per unit or mile shipped.

But I don't see any new revenue coming from the cargo scanning process, it's an additional procedure that doesn't, by itself, generate any revenue and is probably despised.

After all, why spend all this time and money ..if a plane crashes and kills another thousand people, you can always blame the terrorist and say their evil genius mastermind was brilliant and surpassed all security measures ..but that is a rare event when compared to the thousand of daily cargo flights.

Therefore, the cost of insecurity is primarly paid by whoever lost the job because of the crash or lost life and property because of the crash..while the alleged source of cost, the terrorist, is forever unreachable and unaccountable..as much as the cargo company would like to be.
posted by elpapacito at 1:38 PM on September 25, 2004

If there were a cabinet level position focused on high-tech, wouldn't you expect it to be someone who owned some Google stock?

If it were that person's governmental tasks had the potential of impacting the stock price of Google, then it would be criminally irresponsible for that person to have both the power to influence the stock and the ability to buy/sell that stock at will. By the nature of his duties that person would have both a)insider information about the future value of the stock, and b)the ability to influence the price of the stock.

Not that this is a problem with an Administration whose second executive is still drawing pay from private industry though.
posted by clevershark at 2:19 PM on September 25, 2004

rich fuck moguls

Two points spring to mind, here.

First, Ridge probably isn't all that rich, by the standards of real moguls. Shit, by their standards, he's probably middle class. (Which, if true, could explain a lot...still, if he can't send his kids to college on $175K/yr plus expense account, there's a problem.)

Second, what's interesting to me is not that these guys aren't rich, but that they're not richer. GWB is bona-fide wealthy, sure; but by comparison with some big-shot CEO, he's not that big. To do something like, say, run for President, he needs other people's money. And the people supporting him like it that way.

This is actually nothing sinister, in and of itself. It's the way of the world: Reciprocal obligations define the structure of society, to a certain extent. Where it starts to get sinister is when you realize that most of these particular guys (and AFAICS they are, mostly, guys) really would love to see American society shift to some kind of peerage system, with admission by what amounts to money.
posted by lodurr at 2:37 PM on September 25, 2004

Which, if true, could explain a lot...still, if he can't send his kids to college on $175K/yr plus expense account, there's a problem.

I am really hoping this is just a rumor. Allegedly, the head of the Department of Homeland Security is one of the most important jobs in the country right now. Ridge was identified by the current administration as the best man for the job.

It doesn't say positive things about his views about service to the nation if he quits this very important job so that he can move to a better paying job. Surely service to the nation is more important to him than making more money?

In addition, this alleged need for more than $175K/yr reflects the fact that he feels he needs to make an enormous donation to whatever college his kids are hoping to attend. Otherwise, that would nicely cover most tuitions without any need for loans.

Anyhow, as I wrote, I hope this isn't true.
posted by Joey Michaels at 3:16 PM on September 25, 2004

I asee no problem Since the guy has enough faith to buy their stock why not select them to work for the govt? Good team work.
posted by Postroad at 3:42 PM on September 25, 2004

Since the guy has enough faith to buy their stock why not select them to work for the govt?

Then again one could cynically think that his decisions at the DHS are unduly influenced by how much money he stands to gain by going with one option instead of another.
posted by clevershark at 4:29 PM on September 25, 2004

Hm. Could this be the beginning of the rumored Giuliani-for-Ridge October surprise?
posted by aaronetc at 5:27 PM on September 25, 2004

psmealey: Common wisdom used to hold that the appearance of a conflict of interest was almost as a bad as an actual conflict of interest, and was to be avoided at all cost.
Seems this administration believes the importance of a conflict of interest lies not in its appearance, not in its actuality, but in its acknowledgement - in their minds as long as they, no matter what, refuse to admit to any wrongdoing, then no wrongdoing has been done.

The only way to undo a corrupt official is through the courts. Has Ridge broken any criminal laws by his actions? Has he caused any financial or other damage to a person or company (eg, a competing company which he hadn't awarded a contract to) to whom he has a duty (and by virtue of his position he has a wide range of duties to all US citizens), and therefore, can he be civilly sued?

Joey Michaels It doesn't say positive things about his views about service to the nation if he quits this very important job so that he can move to a better paying job. Surely service to the nation is more important to him than making more money?
If he believed that anything short of Jesus or family was more important than him personally making more money, then his fellow Republicans would notice, and exclude him. His willingness to bend and stretch for money is a major part of his claim to the job. An official dedicated to the security of the US homeland above all else would want to take actions that go against Republican policy.
posted by aeschenkarnos at 5:54 PM on September 25, 2004

aeschenkarnos: while your point on using courts as redress is nominally valid, it's hard not to think that the DHS would invoke "national security" as a means of having any such lawsuit thrown out very early in the game... so there is no realistic means of redress here.
posted by clevershark at 6:03 PM on September 25, 2004

By the nature of his duties that person would have both a)insider information about the future value of the stock, and b)the ability to influence the price of the stock.

Good point, but I think that any stockholder is subject to the laws that restrict insider trading, right? If it could be shown that someone - anyone - acted on inside information, he could be Martha-ed. For all intents and purposes, aren't CEOs (and folk in Ridge's position) sort of hand-tied as regards their stock?

This doesn't mean that Ridge can't act to benefit companies whose stock he hold, it just means he might be restricted in terms of short-term, well-timed trading.
posted by scarabic at 8:48 PM on September 25, 2004

".....he could be Martha-ed. For all intents and purposes, aren't CEOs (and folk in Ridge's position) sort of hand-tied as regards their stock?" - Yes, this is true - in theory.
posted by troutfishing at 7:13 PM on September 26, 2004

It doesn't say positive things about his views about service to the nation if he quits this very important job so that he can move to a better paying job. Surely service to the nation is more important to him than making more money?

Ridge is a decorated veteran who suffers a permanent hearing loss and tinnitus as a result of injuries sustained in combat. He has been in the public sector since the late 70s, as a prosecutor, member of the HoR, governor of PA, now SoHS. He's done more in terms of public service than the vast majority of citizens. Are you suggesting that because he took on the job of SoHS he is obligated to remain in that job, and that he is not entitled to prioritize the needs of his family over it?
posted by Dreama at 9:58 PM on September 26, 2004