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I started working on this article during my last month at Mother Jones. Although it took longer than I had hoped to get it published–and required a revised lede–I’m happy this bit of reporting finally made it into the top story box. (Unlike, say, my body armor piece.) Clocking in at some 1300 words, this article is the longest piece I’ve had published anywhere. It also opened my eyes to the shadowy world of offshore tax evasion–an interesting beat that I hope to return to in another professional capacity.

UPDATE: My reporting was featured on BuzzFlash and in ProPublica’s daily round up of the top investigations elsewhere; re-posted on Corporate Crackdown, a blog by Citizens for Responsibility and Ethics in Washington; and linked to an article from FINS, a new financial careers site from Dow Jones. Rational Review, which is apparently “the premier libertarian web journal,” also disapprovingly cited my piece.

When President Barack Obama’s jobs bill passed the House in early March, it contained a little-noticed provision to recover part of its $35 billion price tag by cracking down on offshore tax evasion, which costs the US some $100 billion a year in lost revenue. The provision, which requires foreign financial institutions to report more data to the Internal Revenue Service, was likely prompted by a 2008 Senate investigation that revealed the systematic efforts made by Swiss bank UBS to help moneyed Americans hide massive sums from the IRS.

The insider information that formed the backbone of the investigation—insight that eventually helped the feds recover billions in unpaid taxes—was provided by a former midlevel executive at UBS, American-born Bradley Birkenfeld. Birkenfeld is the only international banker who has ever blown the whistle to the US government on Switzerland’s legendarily secretive banking practices. He is also the only person connected to UBS’ massive tax evasion scheme to have been sent to prison: Birkenfeld is currently serving a four-year sentence for fraud. Whistleblower advocacy groups warn that this punishment could have a “chilling effect,” discouraging other financial whistleblowers from coming forward. Did Obama’s Department of Justice (DOJ) exact retribution that could cost US taxpayers billions?

Click here to read or comment on the rest of this MotherJones.com top story.

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Below is my last MoJo blog post. I concluded my internship at the DC bureau of Mother Jones on Friday and had an editor publish the post for me at the beginning of this week. Next stop Reykjavík? (If you have any better ideas, leave me a comment.)

Could Iceland soon be to journalists what the Cayman Islands is to wealthy magnates? Supporters of the groundbreaking Icelandic Modern Media Initiative introduced a proposal today to establish the European island nation as the world’s first “offshore publishing center.” The proposal is based on the business model of offshore financial centers like Switzerland, which attracts foreign depositors with an enticing combination of low taxes and strict bank secrecy laws. The IMMI aims to do the same for investigative journalists by compelling Icelandic legislators to pass the strongest combination of source protection and freedom of speech laws in the world.

The IMMI was drafted with help from Julian Assange and Daniel Schmitt, two of the founders of Wikileaks, an otherwise anonymous whistleblower website dedicated to publishing leaks of sensitive governmental, corporate, organizational, or religious documents. Wikileaks, which is currently offline due to fundraising difficulties, has already experimented with ways of breaking stories on a particular country by publishing outside their legal jurisdiction. Last May, when the UK’s strict libel laws prevented the BBC from posting documents detailing the dumping of 400 tonnes of toxic waste in the Ivory Coast, the papers appeared on Wikileaks days later. At the end of the summer, an Icelandic broadcaster listed the URL for Wikileaks on TV to circumvent a ruling blocking it from revealing a list of the country’s creditors.

Johnathan Stray of the Neiman Journalism Lab asks, “Could global news organizations with a home office in Reykjavík soon be as common as Delaware corporations or Cayman Islands assets?” In the wake of an economic collapse that some legislators feel was brought on by a lack of transparency, the Guardian reports that the proposal “has widespread backing” among Iceland’s 51 members of parliament. “The main purpose is to prevent something like our financial crisis from taking place again,” MP Lilja Mósesdóttir told Stray, noting the country’s financiers had great influence over the Icelandic media. “They were manipulating the news.”

Most coverage of IMMI has focused on the increased accountability that could result from passage of the groundbreaking proposal. But serious questions remain about the viability of the initiative. For instance, every country has libel laws for a reason. How will the IMMI ensure that it becomes a hub for investigative journalists and not the tabloid capital of the world? And if Icelandic MPs intend to remedy the country’s financial woes via journalism, they are likely to be sorely disappointed. As Gawker helpfully warns, “if you’re trying to pull in money from investigative journalists, Iceland, that’s strike two for you.”

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Below is a quick Blue Marble blog post on swine flu that was assigned by the bureau chief. Click here to see the original or to make a comment.

One component of comprehensive health care reform that has been notably lacking from the drawn out legislative discussions is access to paid sick leave. In the US—the only industrial nation where workers are not guaranteed paid sick leave for short-term or long-term illnesses—39 percent of workers do not recieve paid sick days. A new briefing paper released today by the Institute for Women’s Policy Research (IWPR), which links the spread of the virulent H1N1 flu to a lack of paid sick days, makes a compelling case for why that should be changed.

“Employees who attended work while infected with H1N1 are estimated to have caused the infection of as many as 7 million coworkers,” said Pennsylvania State University Professor Robert Drago, one of the authors of Sick at Work: Infected Employees in the Workplace During the H1N1 Pandemic [PDF], in a statement accompanying its publication. Combing through data on rates of illness and work attendance from the US Centers for Disease Control and Prevention and the Bureau of Labor Statistics, Drago and his coauthor Kevin Miller found that, of the 26 million working Americans who may have been inflected with swine flu in 2009, nearly 8 million continued to work while they were infected. Although most government employees receive paid sick days, the majority of Americans work in the private sector where only three out of five workers have access to any paid time off when they are sick. “Workers without paid sick days must choose whether to go to work sick or lose pay, a choice that many can’t afford to make,” Miller noted.

Presenteeism, attending work while ill, is an especially troubling phenomena in a time when climate change is likely to increase global outbreaks of infectious diseases. While passing a comprehensive climate bill is still the most important step Congress can take to prepare the US for climate change’s effects, the IWPR report also makes clear the need to make paid sick leave universal. One bill to do just that—the Healthy Families Act—was introduced by the late Sen. Ted Kennedy (D-Mass.) last May. Like the prospect of universal health care, which Kennedy championed his entire career, the paid sick leave bill is also languishing in congressional limbo.

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On Friday, I explained why UBS was the only bank that offered to take a hit on its contracts with AIG during the government’s backdoor bailout of the ailing insurer. The reason? A looming US investigation of UBS that meant the Swiss banking behemoth was in no position to play hardball. In an interview this weekend, one of Switzerland’s justice ministers revealed the extent to which the fate of UBS—and the entire Swiss economy—is again in the hands of the American government.

As Mother Jones reported in November 2008, UBS helped wealthy Americans hide billions of dollars from the Internal Revenue Service (IRS) in violation of a 2001 agreement signed by the bank promising to identify and document customers with any US sources of income. The agreement was a major departure from historic Swiss banking secrecy laws—one which Swiss courts recently deemed to be illegal. The high court’s decision could also prevent UBS from fulfilling its plea deal with the US government, in which it promised to provide more names of US customers with illegal accounts. If UBS fails to live up to its side of the agreement, the bank could face the revocation of its license to operate in America. Now, Swiss Justice Minister Eveline Widmer-Schlumpf warns, “the Swiss economy and the job market would suffer on a major scale should UBS fail as a result of its license being revoked in the United States.”

If there ever was a bank that’s too big to fail, it’s UBS. It is the biggest bank in Switzerland and—before massive subprime mortgage write-downs and the attention of the IRS scared many of its wealthy customers away—it was the largest provider of high-net worth private banking services in the world. (In an ironic twist, Bank of America has since taken its wealth management crown.) UBS and its chief domestic competitor, Credit Suisse, are six times larger than Switzerland’s entire economy—an imbalance reminiscent of the failed banks that decimated the economy and currency of Iceland. Last year the $2 trillion balance sheet of UBS alone was roughly four times the size of the total Swiss output. As Investment International magazine observed at that time, “a UBS ‘blow up’ would be catastrophic to Switzerland’s financial stability.”

Click here to read about the US response or to make a comment on this MoJo blog post.

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A week of heat from the IRS was all it took for this corrupt GOP congressman to decided he wanted to spend more time with his family. And his lawyer, presumably.

Rep. Steve Buyer (R-Ind.), who has recently come under fire for his shady charity, won’t seek reelection in the fall. In a statement released this afternoon, the nine-term GOP congressmen attributed the abrupt annoucement “to the recent diagnosis of my wife” with an “‘incurable’ autoimmune disease.” No mention was made of allegations made surrounding the Frontier Foundation, a six-year-old educational nonprofit that has bankrolled golfing trips for the congressman instead of handing out scholarships. The Internal Revenue Service is still determining whether to investigate Frontier and Buyer, its “honorary chairman.”

While Buyer’s decision can be read as a victory for government accountability groups, it is less clear what effect it will have on voters in Indiana. A Democratic Congressional Campaign Committee spokesperson crowed to The Hill, “Instead of drinking Eric Cantor and the NRCC’s Kool-Aid, House Republicans continue to show a lack of confidence in their ability to take back the House as Republican retirements are mounting and their own members refuse to invest in the [National Republican Congressional Committee].” Questions about the foundation did little to damage Buyer’s lead in the opinion polls—Republicans maintain a 14-point edge in his district. With a less ethically challenged candidate, it now seems even more likely that the GOP will hold Buyer’s seat in the 2010 midterm elections.

Click here to see the MoJo post or to make a comment.

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I’m working on a larger piece on the UBS whistleblower, Bradley Birkenfeld, so I’ve been following news of the bank rather closely. One exchange from the Congressional hearings on AIG regarding UBS caught my eye so I decided to put the piles of research I’ve done on it to good use. My editor liked the blog post and promoted it to the Top Stories slider. (I led the site for about an hour—the bureau chief’s Twitter-heavy review of the Obama and GOP question session knocked me into the second slot.)

UPDATE: Like my previous post on waterboarding, this piece was the top story on a conspiracy theory website, New World Order Report–this time in the Economics section. Any traffic is good traffic?

UPDATE 2: My reporting was featured in a Media Consortium post about the implications of the Citizens United Supreme Court decision, which has allowed unlimited corporate cash in US elections. Their post was republished on the Huffington Post, AlterNet, FireDogLake, Daily Kos, Open Salon, MyDirectDemocracy, and the Canadian site Rabble.

At this week’s congressional hearings on the AIG bailout, Swiss bank UBS received some undeserved praise.

UBS was one of eight large investment banks that benefited from the now-infamous backdoor bailout of AIG—resulting in government cash infusions totaling $182.5 billion—in the dark days of September 2008. At the hearing, the Special Inspector General for the Troubled Asset Relief Program, Neil Barofsky, revealed to the House Oversight and Government Reform Committee that UBS was the only bank willing to settle its soured credit default swaps (CDS) contracts for less than their face value. Why did UBS play ball when all the other banks didn’t? As the Washington Independent reported, “Barofsky speculated that the firm probably simply recognized that the American taxpayers ‘had taken the global economy on its back.'”

The financial crisis has proved time and again, big banks don’t account for taxpayers—except when they need their help. And that’s the more likely explanation for UBS’ good behavior during the AIG rescue. Like the rest of the global financial industry, UBS was hurting from the subprime mortgage meltdown. (The bank’s colossally bad bet on the US housing market—it had already written down $38 billion in bad loans as of April 2008—earned UBS the nickname Used to Be Smart.) But unlike its intransigent peers on Wall Street, the Swiss banking giant also faced the mounting threat of a US federal investigation. It was in no position to play hardball.

Click here to read the rest of this MoJo Top Story and to make a comment.

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This MoJo blog post was assigned by the bureau chief. It’s both amazing and depressing that the full story hasn’t been more widely told.

UPDATE: The story got out: Kevin Drum, the most popular blogger on MotherJones.com, also featured the news on his blog after seeing it on Time magazine’s Swampland blog.

UPDATE 2: My post got picked up by the amusing conspiracy theory site Question Everything.

A prominent backer of waterboarding has quietly walked back his endorsement of the torture technique. In December 2007, recently retired CIA operative John Kiriakou told ABC News that 30 to 35 seconds of simulated drowning was all it took to make senior al Qaeda commander Abu Zubaydah sing like a bird. “From that day on, he answered every question,” Kiriakou said. “The threat information he provided disrupted a number of attacks, maybe dozens of attacks.”

Kiriakou’s stunning account—made in an exclusive interview with ABC’s Brian Ross—was seized upon by torture proponents as proof that they’d been right all along. But the New York Times discovered last April that Kiriakou “was not actually in the secret prison in Thailand where Mr. Zubaydah had been interrogated but in the CIA headquarters in Northern Virginia.” Now, Jeff Stein of Foreign Policy magazine has discovered Kiriakou himself retracting the waterboarding claims in his recently released memoir, The Reluctant Spy:

“What I told Brian Ross in late 2007 was wrong on a couple counts,” he writes. “I suggested that Abu Zubaydah had lasted only thirty or thirty-five seconds during his waterboarding before he begged his interrogators to stop; after that, I said he opened up and gave the agency actionable intelligence.”

But never mind, he says now.

“I wasn’t there when the interrogation took place; instead, I relied on what I’d heard and read inside the agency at the time.”

In a word, it was hearsay, water-cooler talk.

“Now we know,” Kiriakou goes on, “that Zubaydah was waterboarded eighty-three times in a single month, raising questions about how much useful information he actually supplied.”

Indeed. But after his one-paragraph confession, Kiriakou adds that he didn’t have any first hand knowledge of anything relating to CIA torture routines, and still doesn’t. And he claims that the disinformation he helped spread was a CIA dirty trick: “In retrospect, it was a valuable lesson in how the CIA uses the fine arts of deception even among its own.”

Two years after Kiriakou went public with his ill-considered support for waterboarding, public opinion has turned in favor of the formerly controversial tactic. In the wake of the attempted Christmas Day airplane bombing, Rassmussen polling found “58% of US voters say waterboarding and other aggressive interrogation techniques should be used to gain information” from the underwear bomber—who spoke readily to authorities without the threat of torture.

Stein goes on to get a priceless response from the CIA and lays into ABC’s shoddy investigative reporting. (In the transcript of the interview, Ross fails to ask Kiriakou if he actually witnessed the questioning of Zubaydah.) The whole piece is worth a read.

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