Category Archives: Industry Jobs Oil Economics

Putin’s Plan for a Military Artic Region

Posted on by

Despite sanctions against Russia, the Artic is still at risk. The recent G-7 meeting brought more solidarity agreement of sanctions on Russia but only due to Putin’s hostilities against Ukraine and in violation on the Minsk Agreement. The full text of the agreement is here in English. No conversations have taken place with regard to Putin’s operations in the Artic.

Going back to 2103, Putin not only announced his aggressions for the Artic region, he is intensifying operations while there is no mission to stop his objectives. Two years later, he is succeeding.

Russia has been building new ships and preparing to deploy troops along its northern border as melting Arctic ice will make it possible for more commercial traffic to transit the so called Northern Sea route. There is also the potential for large mineral deposits in the region.

“There are plans to create a group of troops and forces to ensure military security and protection of the Russian Federation’s national interests in the Arctic in 2014,” Defense Minister Sergey Shoigu said at the same meeting.

Putin’s declaration highlights several military moves the Russians have made in relation to the Arctic in the last few years.

Nikolai Patrushev, the head of Russia’s Security Council, announced in mid-2012 it would create ten naval bases along its northern coast. In May, Russia announced it would be constructing up to four new ships for duty in the Arctic.

Putin’s remarks follow Canada’s plan to claim Arctic territories — including the North Pole — as sovereign Canadian territory, the country’s foreign minister announced on Monday.

“We are determined to ensure that all Canadians benefit from the tremendous resources that are to be found in Canada’s far north,” John Baird said, according to an Associated Press report.

Last week, Canada made preliminary claims to some Arctic regions and plans to make more.

Russia, of all the eight members of the Arctic Council, has the most naval assets to patrol the surface of the Arctic.

Russia has more than 37 government icebreakers compared to Canada’s six and America’s five, according to a July review from the U.S. Coast Guard.

However Canada is currently constructing a new surface naval force, complete with a collection of ships that would be designed to operate in cold climates.

Under the sea, the U.S. nuclear submarine force remains as the dominant power in the region.

Russia is interested in the Arctic for a number of reasons, though natural resources and pure geopolitical imperatives are the major driving forces behind Moscow’s thinking. The Arctic contains an estimated 30 percent of the world’s undiscovered natural gas and 13 percent of its undiscovered oil reserves, regarded by Moscow as important sources of foreign investment that are critical to the country’s economic development. The Northern Sea Route from East Asia to Europe via the Arctic Ocean provides another economic opportunity for developing infrastructure in northern Russia.

Militarizing the Arctic will be a key imperative for the Russian military throughout 2015 and beyond — alongside modernization in general and bolstering forces in Crimea and the Kaliningrad exclave. According to the Russian Ministry of Defense, Soviet-era bases in the Arctic are being reactivated in response to NATO’s renewed interest in the region.

The airstrip on the archipelago of Novaya Zemlya is being renovated to accommodate modern and next generation fighter aircraft in addition to advanced S400 air defense systems. Part of the Northern Fleet will also be based on the island chain, which is ideally positioned for operations in the Arctic region. The Northern Fleet represents two-thirds of the entire Russian Navy, which is the only navy in the world to operate nuclear-powered icebreaker ships. Great detail can be read here.

ISIS Tactics Include Taxes and Treasures

Posted on by

With a multi-country coalition, air strikes, ground intelligence gathering, surveillance drones and up to 1000 more troops being deployed to Iraq, the White House has no strategy and blames the Pentagon.

The Pentagon has a division that is assigned to war-gaming and planning in all conditions across the globe that is based on human intelligence, information gathered from diplomatic staff in all embassies, use of software, estimations, locations of military assets, threats from the enemy, money, transportation, secret deals, ordnance positioning and more. The Pentagon always has several strategies that are current and nimble that require dynamic alterations as even minor conditions change. For Obama to blame the Pentagon is childish and misguided.

Despite nine months and $2.44 billion in U.S. airstrikes against the fighters and their oil facilities and smuggling networks, the self-proclaimed Islamic State has proven to be as resilient financially as it’s been militarily.

The group that President Barack Obama dismissed in January 2014 as a junior varsity team last year seized an estimated $675 million from banks, plus $145 million in oil sales and ransom payments and tens of millions more from other commercial enterprises, looting and extortion, according to U.S. Treasury and United Nations figures.

“This isn’t your average terrorist group operating from your average safe haven,” said Juan Zarate, a former assistant secretary of Treasury for terrorist financing and financial crimes who spent years targeting al-Qaeda funding. “They have access to oil in Iraq and Syria; access to major population centers; access to banks, antiquities and smuggling groups — all of that allows them to be more agile and have access to more capital and resources than your average terrorist group.”

“The truth is nobody really knows how much they’re making now,” said Daveed Gartenstein-Ross, a senior fellow at the Foundation for Defense of Democracies. “The U.S. government is getting closer to pegging the group’s finances because of things like last month’s raid in eastern Syria. But no one knows how much they’re getting versus their spending.”

Islamic State “is in some ways a proto-state, in some ways a terrorist organization, in some ways an insurgency and in some ways a transnational criminal group,” he said. Like drug cartels in Colombia and Mexico and al-Qaeda offshoots in Somalia, northern Mali and Yemen, the group is extorting taxes, plundering local resources and taking a cut of commercial enterprises, he said. Read much more detail here.

ISIS has published their objectives on the internet for the world to see and yet operates with unhindered. ISIS is fully functional in an estimated 12 countries while the Obama administration is in neutral to lead the coalition in both offensive and defensive measures. The impact of the coalition is inert.

Egypt, a country working to recover from a power revolution is at particular risk.

From Oren Kessler in part: Egypt’s once-foundering economy is slowly rising from the abyss. President Abdel-Fattah al-Sisi has cut costly fuel and food subsidies, cut red tape on investments, instructed the Central Bank to tackle the black market in foreign currencies and vowed to bring unemployment under 10 percent.

His efforts are beginning to bear fruit. In May, the ratings agency Standard & Poor’s revised Egypt’s country outlook from stable to positive, predicting real GDP growth over the next three years of 4.3 percent – double the average of the four years since the revolution. Meanwhile, the government’s suspension of the capital gains tax sent stocks soaring 6.5 percent in a single day.

Still, no economic turnaround will be complete without a recovery in tourism. The U.S. State Department currently urges citizens to exercise caution in traveling to the country, and advises against any non-essential travel in Sinai, where an insurgency by Islamic State-linked militants has raged since the military ouster of Muslim Brotherhood president Mohamed Morsi in July 2013. At the same time, shadowy pro-Brotherhood groups calling themselves Ajnad Misr (“Soldiers of Egypt”) and the “Popular Resistance Movement” are increasingly targeting the populous mainland, including Cairo, Alexandria and the cities of the Nile Delta. The government accuses the now-banned Brotherhood of responsibility for virtually every attack, but the extent to which the group is actually orchestrating the violence remains unclear.

What is clear is that continued terrorism, particularly against tourists, has the capacity to set back the fragile gains Cairo has made in restoring stability and reviving its economy. For Egypt, persuading visitors to come soak up the country’s sights and sun will require convincing them beyond a reasonable doubt that traveling to the land of the Pharaohs will not be a one-way ticket. More detail here.

Meet Bernard Aronson and Venezuela Blackouts

Posted on by

Bernard Aronson, a Goldman Sachs insider with assignments in Latin America. It is especially cool that Barack Obama calls on Aronson to end the rebel fighting in Latin America. Or how about using Bernard to normalize Cuba with Hillary Clinton’s approval? John Kerry uses Aronson to handle matters with Columbia.

The intrigue begins. This is rather convoluted, so be patient as you read on.

Aronson has deep ties to Thomas Pritzker of Hyatt hotels fame same as Penny Pritzker who is Barack Obama’s Secretary of Commerce.

The Pritzker dynasty looks like this:

Family tree: Pritzker is the son of Jay Pritzker, founder of Hyatt Hotels Corporation.
Areas of interest:
nonprofits

College: Pritzker received a B.A. from Claremont Men’s College, and an MBA and J.D. from the University of Chicago.

Report: billionaires collect farm subsidies
Fifty billionaires were direct or indirect recipients of farm subsidies, according to a report by the nonprofit Environmental Working Group.
November 7, 2013
The Pritzker fortune and the Obama campaign
Tonight, President Obama will speak at a ceremony honoring this year’s winner of the Pritzker Architecture Prize, named for the family that built a fortune with the Hyatt Hotels chain.
Back to the intrigue and Bernard Aronson….

Bernard W. Aronson past relationships:

Jimmy Carter – speechwriter
Freedom House – trustee
Global Hyatt Corporation – director
Goldman Sachs Group Inc. – international adviser
Hyatt Hotels Corporation – director
Mariner Energy Inc. – director
Walter F. Mondale – speechwriter
U.S. Department of State – assistant secretary
Now Venezuela:
There were power black-outs in Venezuela? But why? Answer here.
Derwick Associates:
Defendants are U.S. residents who have amassed enormous fortunes through an illicit scheme to secure energy-industry contracts in Venezuela for their various U.S.-based companies, Derwick Associates USA LLC and Derwick Associates Corporation (together with these

companies’  predecessors, successors, assigns and affiliates, “Derwick  
Associates” ). Known in the press as the “ChavezKids, ” “BoliBoys,”
 and “the  mafiosi of the Fifth Republic ,”  Defendants Leopoldo Alejandro Betancourt Lopez (“Betancourt”),  Pedro Jose Trebbau Lopez (“Trebbau”),  and Francisco D’Agostino  Casado (“D’Agostino)
 have profited wildly from their ongoing illegal bribery scheme designed to exploit for their personal financial gain the corrupt and anti-democratic Chavez regime.
+++ 
By: Dan Rosenau
Venezuela/U.S. energy sector scandal involving J.P. Morgan, ProEnergy Services (partially-owned by Obama appointee), Derwick AssociatesThe U.S. Department of the Treasury’s FINCEN recently announced that Banco Privada d’Andorra was favored by criminal enterprises from Russia, China, and Venezuela. In the case of Venezuela, government officials reportedly deposited more than $4Bn into personal accounts—most of it siphoned off from PDVSA, the state-owned oil company of Venezuela.

I’m painfully aware of the embezzlement and overbilling involving Venezuela’s energy sector given that, until recently, I was employed at Sedalia, Missouri-based ProEnergy Services. ProEnergy was the contractor responsible for the construction of one dozen power plants in deals involving gross overbilling, multiple offshore transactions, and a murky association with Derwick Associates, a Venezuelan start-up with zero experience in power plant construction. I’m making available here more than 10GB of material directly from the company hard drive. The metadata on each document can be traced directly to Pro-Energy’s computers. My hope is that “crowdsourcing” the enclosed data will allow interested parties to assist in exposing a multi-billion dollar fraud.

From 2009-2012 ProEnergy billed to the tune of $2Bn almost all of it flowing from a single client: Derwick Associates. Our company sold more than $1Bn in turbines (most of them used or refurbished–but sold as new) to Derwick which then resold them hours later at a significant mark-up to the government of Venezuela through entities such as their electricity ministry, their Guyanese state enterprise CVG, their state-owned oil company PDVSA, and the SIDOR iron-ore producer.  In addition to turbine sales to Derwick, ProEnergy built the power plants that Derwick marketed as their own and for which both companies overbilled the Venezuelan government in the hundreds of millions of dollars.  According to the Wall Street Journal, Derwick is now under criminal investigation by federal authorities and by local authorities in New York. (This prompted Derwick to immediately hire Adam Kauffmann, former head of the Manhattan DA investigation division. Kauffmann is already representing several Venezuelan government officials who embezzled hundreds of millions).

Working in ProEnergy’s sales department, I learned our company had hit paydirt when a group of connected Venezuelans chose to ignore Original Equipment Manufacturers (OEMs) such as Rolls Royce, Pratt & Whitney, and General Electric and instead used ProEnergy as a middleman. In other words, a middleman used a middleman.

Inexplicably, the IT department at ProEnergy had blocked access to internet sites when I googled  “Derwick” and “corruption.” This stirred my curiosity and so I explored the company’s shared computer drive for the term “Derwick.”  What I found there shocked me: dozens of proposals to Derwick for generators, for power plants, for upgrades to those power plants. It was odd given that ProEnergy has never built a power plant in the United States (ProEnergy fails to meet American standards and so has offices in places like Angola, Argentina, Pakistan, and Venezuela).  Shockingly, ProEnergy’s proposals reflected a mark-up ranging from 20-74%.  In my industry, profit margin usually hovers between 2 and 5%. At these prices someone was being ripped off.  ProEnergy was overbilling Derwick.

My sense of disbelief only grew the more I read. I discovered document drafts on Derwick letterhead. ProEnergy was writing the proposals and preparing the invoices that Derwick sent Venezuelan clients for the exact same equipment described in the proposals to Derwick from ProEnergy. This included actual invoices from Derwick to Venezuela’s state-owned enterprises like PDVSA. These invoices, the Microsoft Word documents indicated, were created on ProEnergy computers in Sedalia. On some of the Derwick invoices, the bank wiring instructions went to bank accounts belonging to ProEnergy. Some to offshore bank Davos International and others to JP Morgan in New York.

When I learned that the owners of Derwick were barely out of college and friendly with the son of the Electricity Minister of Venezuela I realized why ProEnergy had prepared the Derwick invoices: because our 20-something Venezuelan clients lacked the technical know-how. After all, how does a person draft an invoice for a product with no knowledge about the item in question?

Remarkably, these invoices prepared by ProEnergy and purportedly from Derwick also revealed mammoth markups over and above the prices that ProEnergy charged Derwick.  So, an item like a set of three FT8 Swift Pac turbines bought by ProEnergy from Pratt and Whitney for $67.5M were sold one day later for $78M to Derwick who then sold it two days after that to Venezuela for $97.5 million.  And so in four days an item with a retail cost of $67.5M had $30M added by ProEnergy and by Derwick Associates. In another instance three Rolls Royce Trent 60 turbines originally sourced for $66M from Rolls Royce were sold to Derwick for $79.3M, which in turn resold them hours later for $97.5M, adding another $31M profit to the bottom line of both Derwick and ProEnergy. Like these transactions there are scores of instances on every item imaginable—from spare parts to construction costs, from turbines to generators, from transformers to transportation costs and employee training.  I stopped counting the total on the invoices after two billion dollars.

One colleague told me that the FBI had visited ProEnergy on several occasions. I was tortured, week after week, knowing that ProEnergy was robbing a nation where poverty and crime are rampant.  I spent sleepless nights agonizing about what to do.  Company-wide layoffs solved my immediate dilemma. The truth is that with no more Venezuelan cash flow, ProEnergy suffered a long-standing cash crunch. So much so that Washington, D.C.’s Acon Investments, made a capital injection into ProEnergy.  Acon is run by Obama appointee to Latin America Bernard Aronson.

Months went by and I could not shake the disgust of what transpired.  I blew the whistle by sharing the information with celebrated Venezuelan investigative reporter Cesar Batiz who verified the material and allowed a blogger to post some of it on Scribd.

The sensational revelations about money-laundering activities of Venezuelan energy officials at the Andorran bank would explain why Venezuelan state officials agreed to overpay Derwick and ProEnergy. The men addressed in the letters (written by ProEnergy and) and sent by Derwick are accountholders exposed to criminal charges in Spain for amassing illegal fortunes in “consulting fees.”

It is disheartening that American energy executives would display such appalling greed and be so quick to partake in the looting of Venezuela.  My hope is that by going public with the 10GB of information more of my former colleagues will come forward and blow the whistle on one of the most troubling international scandals in Venezuelan (and Missouri) history. I’ve learned that Derwick Associates has persecuted numerous bloggers in Venezuela and abroad as well as mainstream journalists including having stories about their misdeeds “spiked” at the Wall Street Journal, Forbes, the Economist, Huffington Post, and the Miami Herald.

Then there is Davos and JP Morgan. Sheesh…ties that bind in covert actions.

NY Judge Rules Racism in Teacher Test

Posted on by

Teachers get a real pass from a New York judge. They have a website too that offers them huge assistance to pass certifications.  There is even a test framework and sample questions. So WHERE IS THE RACISM?

A federal judge in New York has struck down a test used by New York City to vet potential teachers, finding the test of knowledge illegally discriminated against racial minorities due to their lower scores.

At first glance, the city’s second Liberal Arts and Science Test (LAST-2) seems fairly innocuous. Unlike the unfair literacy tests of Jim Crow, LAST-2 (which was discontinued in 2012) was given to every teaching candidate in New York, and was simply a means to ensuring that ever teacher has a basic high school-level understanding of both the liberal arts and the sciences.

One sample question from the test asked prospective educators to identify the mathematical principle of a linear relationship when given four examples. Another asked them to read four passages from the Constitution and identify which illustrates the notion of checks and balances. In addition to factual recall, the test also checked basic academic skills, such as reading comprehension and the ability to read basic charts and graphs.

Nevertheless, this apparently neutral subject matter contained an insidious kernel of racism, because Hispanic and black applicants had a rate of passing that was respectively 54% and 75% the success rate of white candidates.

Once their higher failure rate was established, the burden shifted to New York to prove that LAST-2 measured skills that were essential for teachers and therefore was justified in having a racially unequal outcome. While it might seem obvious that possessing basic subject knowledge is a key skill for a teacher, District Judge Kimba Wood said the state hadn’t met that burden.

“Instead of beginning with ascertaining the job tasks of New York teachers, the two LAST examinations began with the premise that all New York teachers should be required to demonstrate an understanding of the liberal arts,” Wood wrote in her opinion, according to The New York Times.

Although LAST-2 hasn’t been used in New York in three years, the ruling will still have repercussions. Minorities who failed the exam (who number in the thousands) may be owed years of back pay totaling millions of dollars, and those who were relegated to substitute teaching jobs could be promoted to their own classrooms. In addition, while Wood’s ruling applies only to New York City, the test was used statewide, and it could serve as a precedent for further lawsuits.

The ruling could also pave the way for another ruling finding New York’s current teacher test, the Academic Literacy Skills Test (ALST), to be discriminatory as well. That test is even harder than LAST-2, with a strong focus on literacy skills such as writing and reading comprehension, and like LAST-2 shows a very large gap in scores between whites and minorities. A lawsuit, once again being heard by Wood, is already pending, with the plaintiffs arguing that there is no clear evidence strong literacy skills are essential for a teacher.

This teacher problem is not exclusive to New York, one cannot forget the scandal in Georgia. Over 3 dozen teachers were indicted in a cheating network.

Maybe parents need to re-think public education. The time is now.

Welfare Funding Jihad Terror

Posted on by

Countries that are too generous with welfare and social programs dole out millions of dollars to people that filed fraudulent applications all without so much as any investigation or concern by agencies. Does anyone care outside of the taxpayers themselves? Where is the outrage?

Thousands of Brits have traveled to Iraq and Syria to join ISIS. Money for travel and weapons for the jihadis comes from tax dollars. Australia, a country that has the most fighters in ISIS has the same issue and has worked to stop some welfare payments.

On the American home front, it is no different. Islamic Relief Worldwide, the same charity connected to the mayor of Baltimore, continues to fund terrorism, so why would they be able to keep their IRS tax-exempt status?

Yet when it comes to entitlement programs in the United States funding jihad, the cases number in the thousands. A sting operation in Alabama called Operation T-bone found 17 suspects using EBT cards to send money to Yemen, where the Houthis, an Iranian militia has taken control of the country. In Minnesota, two Somalia men used their college grant money to travel to the Middle East to join militant groups.

One of the more well known terrorists, the Tsarnaev brothers, otherwise known as the Boston bombers did the same thing.

‘The family of Dzhokhar and Tamerlan Tsarnaev, the two brothers accused in the Boston Marathon bomb attacks, received food stamps and welfare when the brothers were growing up, according to a letter from the state Department of Transitional Assistance that was obtained by the Globe.

In the letter, sent Thursday to the chairman of the House Post Audit and Oversight Committee, the department outlined the benefits that the brothers had received through their parents, Anzor and Zubeidat, as well as benefits Tamerlan Tsarnaev later received as a member of his wife’s household.

Anzor and Zubeidat received Supplemental Nutrition Assistance Program benefits, commonly known as food stamps, from October 2002 to November 2004, when Dzhokhar would have been about 8 to 10 years old and Tamerlan 15 to 17. The family also received them from August 2009 to December 2011, according to the letter.

Anzor was also a Transitional Aid to Families with Dependent Children grantee from January 2003 to March 2003, and again from August 2009 to June 2010.’

In 2014, there was yet another case of EBT fraud and synthetic marijuana in Davie, Florida where citizens themselves were the whistleblowers as the investigations found the money was going overseas to fund terrorism.

In Baltimore, 9 separate retailers and $7 million in food-stamp network has done the same thing.

The indictments allege that the defendants exchanged EBT benefits for cash, in violation of the food stamp program rules. The indictments allege that the defendants typically paid half the value of the EBT benefits in cash. To avoid detection, the defendants often debited the funds from the card in multiple transactions over a period of hours or days. As a result of unlawful cash transactions, the defendants obtained more than $6,898,000 in EBT deposits for transactions in which the stores did not provide food.

According to the indictments, the defendants listed below owned and/or operated stores in Baltimore that were authorized to accept SNAP. The defendants received instruction regarding the requirements and regulations of the food stamp program, including that only eligible food items could be exchanged for EBT benefits and that a retailer may never exchange EBT benefits for cash or non-food items.

Abdullah Aljaradi, age 51, of Baltimore: Second Obama Express and D&M Deli and Grocery, 901 Harlem Avenue, Suite A and B, respectively. From October 2010 through July 2013, Aljaradi allegedly obtained more than $2 million in payments for food sales that never occurred.
Dae Cho, age 66, and Hyung Cho, age 40, both of Catonsville: K&S Food Market, 3910 W. Belvedere Avenue. From November 2010 through July 2013, Dae Cho and her son Hyung Cho allegedly obtained more than $1.4 million in in payments for food sales that never occurred.
Abdo Mohamed Nagi, age 54, of Baltimore: New York Deli and Grocery 1207 West Baltimore Street. From February 2011 through May 2013, Nagi allegedly obtained more than $1.2 million in payments for food sales that never occurred.

None of this is new, cases were common going back to 2004, yet with ten years hence, why have this continued? The FBI and government agencies have the tools to track the fraud, money laundering and terror support structures. Where is the outrage?