AMP may face criminal charges by Christmas
Michael RoddanSenior companies reporter
Aug 5, 2020 – 4.32pm
Wealth management group AMP may face criminal lawsuits by the end of the year, according to the Australian Securities and Investments Commission, which has “more than five” current probes into the company.
ASIC deputy chair Daniel Crennan: “There’s a significant number of matters.” James Alcock
ASIC deputy chair Daniel Crennan, SC, told a parliamentary hearing on Wednesday that the regulator had “a number of investigations that are ongoing internally” along with “a number of investigations that have been briefed with the CDPP [Commonwealth Director of Public Prosecutions]” in relation to AMP.
Under questioning from Labor MP Andrew Leigh, who asked if any matters would likely be filed in court by the end of the year, Mr Crennan said: “Yes, I would think so.”
“Can you go to the question of the number of matters that are being handled?” Mr Leigh asked.
“There’s a significant number of matters,” Mr Crennan said, which was “more than five, less than 50 – significantly less than 50".
1.91 at 6/1/20
Sep 19Dec 19Mar 20Jun 201.101.501.90
Updated: Aug 5, 2020 – 5.10pm. Data is 20 mins delayed.
View AMP related articles
“It wouldn’t be within our practice to identify with any precision how many investigations we have ongoing into any particular entity,” Mr Crennan said.
An AMP spokesman said the company would "respond diligently" to any of ASIC's concerns. ASIC handles its own civil cases, but refers cases to the CDPP when an investigation involves potential criminal matters.
The new court matters will compound the problems facing AMP, which had two separate class action lawsuits filed against it last week, the first by aggrieved former financial advisers claiming the company dishonoured longstanding contract terms, and the other seeking damages for "unethical" life insurance advice.
AMP is due on Thursday next week to unveil its half-year results, in which new AMP Capital boss Boe Pahari is expected to outline a new strategy for the key asset management arm of the group.
The group is also expected to flag its plans for about $1 billion in capital it has freed through the sale of its life insurance division, although analysts are split on whether it will have leftover cash to spend after its efficiency drive.
AMP Capital boss Boe Pahari is expected to unveil a new strategy for his division at the company's upcoming results in August. Reuters
AMP shares have fallen 25 per cent since the start of July, in a rout that was exacerbated late last week when the wealth giant blamed the coronavirus pandemic for an expected 50 per cent decline in underlying profit for the half-year.
The 170-year-old company has faced a shareholder and public backlash over the appointment of Mr Pahari as AMP Capital chief executive on July 1 despite him receiving a $500,000 penalty after AMP settled a sexual harassment claim against him by a female subordinate in 2017.
AMP was a frequent flyer during Kenneth Hayne’s royal commission into financial services, and was heavily damaged by accusations it misled the corporate regulator when dealing with its fees-for-no-service issue.
The imbroglio triggered the resignation of AMP chairman Catherine Brenner, the early departure of chief executive Craig Meller, a string of other top executives and all three of the company’s female board directors at the time.
In February, ASIC revealed that of the 13 referrals made by the year-long banking misconduct inquiry, one case was now being considered by the Commonwealth Director of Public Prosecutions for potential criminal action.
In a note sent to clients on Wednesday, Macquarie Wealth Management said AMP was “caught between a rock and a hard place”.
AMP Capital boss Boe Pahari is expected to unveil a new strategy for his division at the company's upcoming results in August.
Lazard no longer a substantial AMP shareholder
While the company’s earnings missed consensus by about 20 per cent, the wealth management arm of AMP still had not yet migrated customers from “high-earning products” to more modern products, which foreshadowed even deeper earnings pressure ahead, Macquarie said.
“In our view, once this migration occurs, Australian Wealth Management will not make any operating earnings unless material cost-out is delivered,” the note said.
“This announcement [of the profit warning] reinforces the ongoing downside earnings risk across all of AMP’s divisions over the medium term.”
AMP CEO Francesco De Ferrari.
'Sticker shock' as AMP flags 50pc profit hit
Following widespread outrage about the appointment of Mr Pahari, in which employees voiced their anger and concerns about the direction of the company directly to the group’s eight-member executive team, chief executive Francesco De Ferrari pledged to establish a group-wide integrity office, a new “cultural taskforce” to boost female employees in leadership positions and the appointment of consultants to help them achieve the goal.
The ructions have also led to major investment consultant JANA suspending its ratings for AMP Capital, warning major superannuation fund clients against placing money with the company because it “seriously misjudged the expectations of staff, clients and the broader market” in promoting Mr Pahari.
Crown Resorts opened accounts with the Commonwealth Bank using "misleading" names that masked their use for gambling and accepted high-risk cash deposits, despite ANZ shutting down similar accounts over money laundering concerns, an inquiry has heard.
Crown's chief legal and regulatory compliance officer Joshua Preston told the NSW government probity inquiry into the James Packer-backed casino group on Friday he could not recall why CBA then also shut down the accounts in late 2019, but it "would not surprise" him if it was also due to fears about dirty cash.
Crown set up two companies to give its patrons 'privacy'.
Crown set up two companies to give its patrons 'privacy'.Credit:Getty Images
The NSW Independent Liquor and Gaming Authority's inquiry is investigating revelations by The Age, Sydney Morning Herald and 60 Minutes that Crown went into business with "junket" tour operators linked to organised crime and was used to launder suspected drug money.
The inquiry heard Crown used two holdings companies with Crown executives as directors called Southbank Investments and Riverbank Investments, linked to Crown's Melbourne and Perth casinos respectively, which opened banks accounts for patrons to deposit money into. Once credited to a patron's Crown account, they could withdraw it as cash, a cheque or as gambling chips.
Former Crown Resorts employee Jenny Jiang
Gangsters, gamblers and Crown casino: How it all went wrong
Mr Preston said the purpose of the holding companies was to give patrons "privacy", but under questioning by counsel assisting the inquiry, Scott Aspinall, about their "misleading" names, he agreed that hiding the fact money was being transferred to a casino created a "vulnerability" for them to be used for money laundering or theft.
The inquiry heard that in January 2014 ANZ Bank contacted Crown to raise the alarm about a string of large cash deposits made to the Riverbank account at different bank branches across Perth, which Mr Aspinall said was a clear red flag for money laundering.
Mr Preston was the head of anti-money laundering at Crown Perth at the time but said he could not recall if he was alerted to the incident or attended a meeting with ANZ about their concerns.
When ANZ cancelled the account, Crown opened a new account with CBA which - despite its experience with ANZ - also accepted anonymous cash deposits. Mr Aspinall took the inquiry through a series of suspect cash deposits of up to $50,000 made to the new CBA account over three months that totalled $5 million.
Crown then transferred the $5 million from the Riverbank account to one of its main bank accounts, which Mr Aspinall said showed Crown had failed to identify what was obviously money laundering.
Gaming & wagering
Crown Resorts sees high-roller turnover dive in 'junket' fallout
Mr Preston said Crown could only lodge reports with the regulator AUSTRAC when it suspects money laundering but "don’t have the ability to determine whether it was or was not [laundering]".
"This has the indicators of money laundering which would have been reviewed by our transaction monitoring program and appropriate reports… would be made," he said.
New Zealand's ASB Bank shut down another account linked to the Southbank company in 2018 after it asked Crown to "urgently answer" a list of questions about how Crown monitored suspect activity on the account and did not receive a reply until three months later.
Mr Preston rejected Mr Aspinall's suggestion that the fact Crown kept opening new accounts with the same functions as ones shut down over money launder concerns was "indicative of the fact that Crown facilitated or turning a blind eye to money laundering".
Pushed by Commissioner Patricia Bergin, Mr Preston accepted "there are weaknesses that have been observed" in how the accounts were handled. However, he said there was a regulatory framework sitting around the accounts that Crown did comply with.
Mr Preston said that the anti-money laundering watchdog, AUSTRAC, had asked Crown why Riverbank and Southbank accounts were not registered as entities that would have had reporting obligations. He said Crown resisted this on legal advice that it was not necessary because there were not engaged in gambling activities. The inquiry will continue on Monday.
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Workers compensation is supposed to be a safety net designed to return injured employees to the workplace and provide assistance to those so badly hurt that they can no longer hold down a job.
Australian workers are guaranteed these protections by law, but there is disturbing evidence the system is failing badly.
Reporter Adele Ferguson reveals the scandalous state of workers compensation schemes in Australia, in a joint Four Corners, The Age and Sydney Morning Herald investigation.
Mon 27 Jul 2020, 9:15pm
By Catherine Bembrick and Liana Witt - Jul 01, 2020 8:45 am AEST
At least one contested criminal cartel prosecution is expected to be heard in the Federal Court in the near future.
If convicted, the Court will need to consider the sentencing of individuals for criminal cartel conduct for the first time.
The sentencing of corporations, considered recently in the NYK and K-Line decisions, provides some guidance on how the Court will approach these questions.
Since criminal cartel offences were introduced in the Competition and Consumer Act 2010 (Cth) (‘CCA’) in July 2009, only two matters have been prosecuted in the Federal Court, each relating to the conduct of a corporation. In both matters, the accused entered an early guilty plea, negating the need for a contested hearing on liability. The Court’s recent decision in Commonwealth Director of Public Prosecutions v Kawasaki Kisen Kaisha Ltd  FCA 1170 (‘K-Line’), gives an indication of how corporations and individuals in criminal cartel proceedings will be sentenced if convicted.
These issues are of current interest given that at least one contested criminal cartel matter, Country Care, is expected to be heard in the Federal Court in the next 12 months. The Country Care matter is not only the first criminal cartel prosecution of an Australian company, but also the first prosecution of individuals. The jury trial that was scheduled for April 2020 has been delayed due to COVID-19 and a new trial date is yet to be fixed. Three other contested criminal cartel matters involving corporations and individuals are currently at the committal stage: ANZ, Citigroup and Deutsche Bank; Vino Money; and the CFMEU.
If any individuals in these matters are convicted, the Federal Court will need to consider the sentencing of individuals for criminal cartel conduct for the first time, including whether custodial sentences should be ordered.
Criminal cartels and sentencing legislation
A corporation commits an offence if it makes, or gives effect to, a contract or arrangement, or arrives at an understanding (‘CAU’), and that CAU contains a cartel provision (CCA, ss 45AD, 45AF, 45AG). The requisite fault element for the criminal offence is ‘knowledge or belief’, that is, if the corporation knows or believes that it is entering into a CAU that contains a cartel provision (CCA, ss 45AF, 45AG; Criminal Code cl 5.3).
Individuals who attempt to contravene, aid, abet, counsel, procure or induce a corporation to contravene a cartel offence provision, conspire with others to do so, or are knowingly concerned in a contravention, are taken to have also contravened the cartel prohibition (CCA, s 79(1)).
For corporations, criminal cartel conduct is punishable by a maximum fine per offence not exceeding $10,000,000; or three times the total value of the obtained benefits reasonably attributable to the offence; or, if the benefit cannot be determined, 10 per cent of the turnover of the corporate group for the 12-month period preceding the offence, whichever is the greater. Individuals can be sentenced to up to ten years gaol and/or ordered to pay a fine not exceeding 2,000 penalty units (currently $420,000) (CCA, s 79(1); see also s 4B(2) Crimes Act 1914 (Cth) (‘Crimes Act’).
Section 16A of the Crimes Act sets out the matters to which a court must have regard in sentencing a federal offender. The overarching principle is that a court must impose a sentence of a ‘severity appropriate in all the circumstances of the offence’ (s 16A(1)). The court may have regard to other relevant matters, but must take into account those in s 16A(2), including: the nature and circumstances of the offence; the degree of contrition shown by the defendant; whether the defendant has pleaded guilty or cooperated in the investigation of the offence; the deterrent effect of any penalty; the need to ensure the defendant is adequately punished; and the character and background of the defendant.
Only two criminal cartel matters have reached the sentencing stage in the Federal Court: K-Line and Commonwealth Director of Public Prosecutions v Nippon Yusen Kabushiki Kaisha (2017) 254 FCR 235;  FCA 876 (‘NYK’). Both proceedings arose out of a global cartel in the supply of ocean shipping services for roll-on, roll-off cargo. Each of NYK and K-Line pleaded guilty to one rolled-up charge of giving effect to an arrangement or understanding for the fixing of freight rates in respect of shipping services on routes to Australia. Another proceeding related to this cartel, Wallenius Wilhelmsen Ocean, has been adjourned for sentencing after a guilty plea was entered on 18 June 2020. When sentencing K-Line, Wigney J considered the application of s 16A of the Crimes Act to a corporate defendant. His Honour pointed to factors including the following as weighing in favour of a higher sentence:
the maximum penalty for K-Line was $100 million, providing a ‘guidepost’ bearing on the ultimate discretionary determination of the sentence;
the offence committed was very serious in all the circumstances, cartels comprising the most egregious form of anticompetitive behaviour, involving conduct likely to harm consumers, businesses and the economy;
the conduct occurred over a lengthy period of time, more than three years;
the conduct was covert, systematic and involved planning and deliberation;
the conduct was engaged in by senior managers and sanctioned or known by some senior executives; and
while the benefits obtained could not be determined, K-Line would have profited from the conduct.
Other factors suggested that a lesser sentence should be imposed on K-Line, including its early guilty plea; demonstrated contrition and remorse (including by way of its early plea); demonstrated rehabilitation and that K-Line had no prior record of criminal conduct in Australia.
A key question considered by the Court was the extent of any discount for K-Line’s guilty plea. Relevantly, K-Line contested the charges during committal, including by applying for leave to cross-examine a number of prosecution witnesses. K-Line pleaded guilty only after it was committed for trial in the Federal Court and the indictment filed. Justice Wigney noted that the timing of the guilty plea was a relevant and potentially significant factor in determining the extent of any discount or reduction in sentence that would otherwise have been imposed. Ultimately, weighing all factors, his Honour determined that a discount of just over 28 per cent was appropriate.
Another central issue considered was the importance of setting a fine at an appropriate level for general deterrence. This required the Court to have regard to the principle of parity given that NYK, a co-accused, had already been sentenced. His Honour noted that sentences for cartel offences should be set so that others who may engage in such conduct will not come to regard any penalty as simply an acceptable cost of doing business.
K-Line was fined $34.5 million, the largest criminal fine imposed under the CCA. But for the discount, the fine would have been $48 million.
The factors discussed above will apply to the sentencing of individuals. However, it is inevitable that where the conduct of individuals is concerned, questions of subjective circumstances relevant to that individual will be significant.
In sentencing an individual, a key focus is likely to be on intention, the (relative) extent of the knowledge and involvement in the conduct, the degree of wilfulness or carelessness, and the extent to which the conduct was covert and deliberate. The individual’s level of seniority, authority and experience will also be relevant factors, particularly in applying the parity principle where there are multiple individual accused. Evidence that an individual sought to cover up the conduct or take steps to prevent the conduct being detected will be considered an aggravating factor.
Matters to be raised by any individual as mitigating factors are likely to include unblemished character and reputation, prospects of rehabilitation, contrition and any cooperation provided to the ACCC. Some guidance on how the Court may approach the issue of character and reputation is provided in the observations of Finkelstein J in Australian Competition and Consumer Commission v ABB Transmission and Distribution Limited (No 2) (2002) 190 ALR 169;  FCA 559 at . Justice Finkelstein noted that in antitrust cases there is a danger of having too great an emphasis put on the ‘respectability’ of the offender, who is often a ‘top executive’. His Honour was of the view that there are limits on how far one can take the ‘good citizen’ plea in mitigation, particularly where an individual has a choice of whether to engage in the conduct. His Honour noted the importance of general deterrence in sentencing and the need to avoid the erosion of public confidence in the administration of justice that would occur if it is perceived that the law will be applied discriminatorily as regards white collar and blue collar offenders. These observations were referred to by Wigney J in K-Line, stating that prior good character is not generally given significant weight in sentencing for offences where general deterrence is a significant consideration (K-Line at ).
Related to this, s 19B of the Crimes Act provides that charges may be dismissed, or a defendant discharged without a conviction, where the court is satisfied that the charge is proved but is of the opinion that it is inexpedient to inflict any punishment, having regard to factors such as the character, health or mental condition of the accused. Section 85 of the CCA may also be relevant to these considerations, although the application of this section to criminal cartel offences is yet to be considered.
Given the primary objective for the criminalisation of cartels in Australia was to strengthen deterrence, the CDPP will likely press for the imposition of custodial sentences against individuals. However, it remains to be seen whether any gaol terms ordered will reflect the maximum available.
In the US, despite having a 10-year potential custodial sentence in place since 2004, gaol terms imposed on individuals between 2010 and 2019 averaged only 18 months (United States Department of Justice Criminal Enforcement Trends Chart, 6 May 2020). This suggests a reluctance, at least on the part of US courts, to impose maximum custodial sentences on individuals convicted of criminal cartel conduct, particularly where fines may otherwise be available. The US experience suggests that if the Federal Court does impose gaol sentences, they are likely to be significantly less than the maximum term.
* Liana Witt acted for K-Line. The views expressed in thise article are the authors’ own.
Catherine Bembrick is a barrister in 5 Wentworth Chambers and Liana Witt is a special counsel at Gilbert+Tobin.
The tax office, ‘hired assassins’ and how to gag dissent
The nation's tax office has been accused of hiring psychiatrists to diagnose and even coerce complainants during legal disputes. Crikey's freedom of information requests and interviews reveal a worrying culture.
Feb 05, 2013
The Australian Taxation Office has been accused of sending employees to “hired assassin” psychiatrists to silence dissent, discredit whistleblowers and terminate their employment. Taxation professionals say the ATO has not only ignored calls for tighter regulation of these powers but appears to have intensified its use of psychiatry to label taxpayers they are in legal dispute with as “high conflict people”.
Crikey has obtained information under freedom of information about psychiatric seminars rolled out last month to ATO legal and HR managers by psychiatrist Dr Kipling Walker from the National Health Group. An email exchange between Dom Sheil — a senior principal lawyer in the ATO, who oversees compensation for taxpayers — and Dr Walker reveals the arrangement. Sheil writes:
Here is a link to the website I mentioned on dealing with personality disorders in legal disputes — the High Conflict Institute
I have five of their books on high conflict people (HCPs for those of us in the know). I reckon the best is It’s All Your Fault! 12 Tips for Managing People Who Blame Others for Everything.
I think you would like the first part of the book that identifies the 4 personality disorders at issue:
Get Crikey FREE to your inbox every weekday morning with the Crikey Worm.
Somewhere in the material they also talk about the corpus callosum, amygdala and motor neurons of HCP’s. That’s very cerebral stuff (pardon the pun) might be of interest to you as a brain specialist!
Tony Greco, the senior tax advisor for the Institute of Public Accountants, tells Crikey it’s wrong to label taxpayers who challenge ATO decisions. “Under the self-assessment system the ATO have rights to challenge an assessment but so do taxpayers. The tax office doesn’t like losing but they should not label taxpayers who are merely exercising their rights under the law,” he said.
Steve Davies, the founder of OZloop who is active in the open government sphere, says the actions of the ATO lawyer mirror the adversarial nature of the legal profession. “[It] provides a mechanism to label employees who object to the bullying as ‘high conflict people’ with personality disorders,” he told Crikey.
“The perspective being advocated medicalises conflict and in doing so provides a mechanism for ATO lawyers and HR staff to mandate psychiatric intervention where they lack the medical qualifications to make such judgments. This gives rise to a direct conflict of interest.”
In November 2012 the House Standing Committee on Education and Employment tabled a report into bullying, finding the reports of public sector cases “particularly concerning”. The committee accepted submissions from aggrieved public servants that the fitness for duty test or the mental health referral powers that enable the Commonwealth and its agencies to compel/direct employees to attend a medical examination with a psychiatrist is being used “against workers who are allegedly not performing their duties” and to “intimidate or further bully workers who made complaints about workplace bullying or other working conditions”.
The Committee was not persuaded by the claims of Annwyn Godwin, the Public Service Commission’s merit protection commissioner, that the review powers available to public servants provide “sufficient safeguards” and that the referral powers have been “exercised responsibly” or “in good faith”. And the committee was not convinced by the justifications of Stephen Sedgwick, the Australian Public Service commissioner, that the “referral powers provide agencies with a flexible tool that allows them to manage genuine cases of illness, including mental illness”.
Law and public policy expert JA James from APSbullying.com was the first to publicly articulate the Commonwealth’s use of compulsory psychiatric referrals against employees in 2011. She examined the literature behind “pathologising” determined litigants in the paper The Commonwealth’s Cry of ‘Vexatious Litigant’.
“There is a trend in the Commonwealth in misusing labels such as ‘vexatious’ or ‘querulous paranoia’ against genuine litigants and complainants to devalue and dismiss their claims with the intent of preventing the legitimate exercise of their legal and policy rights,” she told Crikey. “In some cases, such pathologising by Commonwealth lawyers is based on discredited literature from the late 1800s.”
Stephen Strelecky is a former Jewish ATO officer who won a very public compensation case last year against the ATO over anti-Semitic remarks made by a colleague in the ATO’s Box Hill branch. He complained to management about the abuse and requested a transfer out but managers refused. One day Strelecky told his manager the abuse was continuing and he was feeling stressed because they would not transfer him or the offender out of the area. The ATO responded by referring Strelecky to eight psychiatric assessments over a two-year period.
Strelecky’s case also draws parallels with the Serene Teffaha case, the whistleblower that blew the lid off the ATO’s “tick and flick” culture of determining taxpayer objections. Teffaha, a senior lawyer engaged as a tax technical specialist, was also not granted a transfer out of her work area where she was being bullied. ATO officers referred her to a psychiatrist – as revealed by documents obtained by Crikey – within two weeks of lodging her complaint, without her knowledge. Both Strelecky and Teffaha complained to Assistant Treasurer David Bradbury, who has parliamentary responsibility for ATO administrative matters. Bradbury has never responded to them.
Strelecky would not respond to Crikey questions due to a confidentiality clause in his settlement agreement with the ATO. But a source who witnessed the ATO abuse of Strelecky told Crikey: “He was referred to five different psychiatrists who were nothing more than hired assassins.
“The system could work properly if the referral is done in good faith and a plan to get the employee back to work is negotiated successfully. But it doesn’t work like this and in reality there is collusion between the psychiatrist and the ATO. One of his original psychiatric assessments recommended he return to work. It was subsequently altered to suit the ATO view that he not return to work. This could only have been done after verbal communication between the parties.”Last year Strelecky finally received an apology from Shane Reardon, first assistant ATO commissioner. The letter obtained by Crikey states:
“Personally, I am very sorry that your employment with us got to this point. Let me be very clear in saying that anti-Semitism is never acceptable and I understand you as a Jewish person would be particularly sensitive to such behaviour.”
In a bizarre twist, the worker that abused Strelecky was provided with a generous taxpayer-funded redundancy package to exit his employment.
Three other senior ATO staff have spoken with Crikey but only on the condition of anonymity. Two of them described an experience of being referred to an ATO psychiatrist where they were verballed to make “confessions” that they are adulterous when, in fact, both are happily married. And despite not giving their informed consent, the psychiatrist still went ahead and did the intrusive assessment. One other is refusing to attend a psychiatric assessment and will be taking legal action against the ATO.
Teffaha is now using her legal skills to help others in her predicament. “A number of public servants have reached out for my help,” she said. “The mental health referral powers are being used against professionals such as auditors, economists and IT specialists to distort their reactions and drive them out of the organisation. Taxpayers would not be reassured to know the ATO is being run like a mental health facility, with its lawyers as its resident doctors and its employees as its admitted patients.”
Dr William Wilkie, a prominent psychiatrist and author, believes there are corrupt psychiatrists plying their trade with government agencies. “Enforced referral to a psychiatrist or psychologist may be used to intimidate and discredit whistleblowers by assigning negative diagnostic labels,” he said in a statement.
“A whistleblower may be wrongly described as someone with a personality disorder whose unwillingness to tolerate corruption originates in an intolerance for ambiguity. Or perhaps a whistleblower is said to have a form of paranoia. I advise whistleblowers wrongly labeled as paranoid not to tolerate this. Paranoia cannot be diagnosed unless delusions have been demonstrated.”
Dr Wilkie’s assessment is supported by Susie Rotch, a psychologist and psychotherapist with extensive experience in clinical practice and research. She told Crikey: “Whistleblowers are placed in a pernicious double bind. If they attend the psychiatric appointment they are likely to be diagnosed as mad; if they don’t attend then they are non-compliant and may be disciplined for being bad.
“The person who does have genuine psychological problems will often welcome a referral (through appropriate channels) to a helping professional. Of course the whilstleblower will not. The whistleblower knows that a referral under these circumstances to a psychiatrist is a double bind and a gross abuse of organisational and medical power.”
Garth Eaton, chairman of the Australian Justice Tribunal, says as long as the practice of paying expert witnesses for reports remains in force, government agencies like the ATO “will continue to foster miscarriages of justice that destroy innocent lives”. The AJT wants to incorporate a “public fund” to engage consultants to furnish genuinely independent expert reports which “would counter the reports emanating from highly paid government appointees”.
Steve Davies added: “The misuse of psychiatry and the willing participation of these ‘experts’ in the abuse reveals severe cultural and systemic issues not just within the Australian Public Service but in the bodies that regulate the conduct of medical practitioners and the silence of the Australian Human Right Commission on this issue. These practices strike at the heart of open government and decency in public administration.”
JA James has argued the mental health referral powers are incompatible with the common law requirement of ‘informed consent’, human rights standards and numerous legislative and regulatory requirements, including the Fair Work framework, whistleblower protections under the Public Service Act and privacy and administrative law benchmarks.
Comment was sought from the ATO on all aspects of this story. They declined the offer.
About the Author
Chris Seage —
Friday 17 July 2020
20-163MR Clive Palmer charged over breaches of directors’ duties and fraud
Following an ASIC investigation, Mr Clive Frederick Palmer, 66 of Broadbeach Waters in Queensland, has been charged with two counts of contravening section 184(2)(a) of the Corporations Act 2001 (Act) - dishonest use of position as a director and two counts of contravening section 408C(1)(d) of the Criminal Code Act 1899 (Qld) – fraud by dishonestly gaining a benefit or advantage.
ASIC alleges that between 5 August 2013 and 5 September 2013, Mr Palmer dishonestly obtained a benefit or advantage for Cosmo Developments Pty Ltd and/or the Palmer United Party (PUP) and others by authorising the transfer of $10,000,000 contrary to the purpose for which the funds were being held. It is alleged that he dishonestly used his position as a director of Mineralogy Pty Ltd (Mineralogy), a mining company owned by him, in obtaining that advantage.
ASIC also alleges that, between 31 August 2013 and 3 September 2013, Mr Palmer dishonestly obtained a benefit or advantage for Media Circus Network Pty Ltd and/or PUP by authorising the transfer of $2,167,065.60 contrary to the purpose for which the funds were being held. It is alleged that Mr Palmer dishonestly used his position as a director of Mineralogy in obtaining that advantage.
The maximum penalty for an offence under section 184(2) of the Act is $340,000 or imprisonment for five years, or both.
The maximum penalty for an offence under section 408C of the Code is five years’ imprisonment. However, if circumstances of aggravation are established the maximum penalty at the time the offences are alleged to have occurred is increased to 12 years’ imprisonment.
The matter was first mentioned in the Brisbane Magistrates Court on 20 March 2020, at which time the matter was adjourned for further mention on 17 July 2020. On 17 July 2020 the matter was adjourned until 28 August 2020.
The matter is being prosecuted by the Commonwealth Director of Public Prosecutions.
HIS HONOUR: "I’ve sat and listened to what’s said to be an explanation of some powers of a group said to be called the International Treasury Control organisation. I’ve received documents from someone, purporting to be a representative of that organisation. The submissions that have been made are replete with complex legal language and complex legal ideas. However, they make no real sense to anybody who has studied or practised the law. They proceed on some common themes that we see employed by confidence tricksters. They rely upon the ideas that this is secret and high level, thus explaining why ordinary lawyers, even those quite learned in the law, know nothing of it and fail to grasp what it is said to mean, or fail to understand it as a plausible or rational legal argument. It plays upon the idea that the Castles have become a part of an elite group within society filled with special powers and privileges. It proceeds upon a common trick of shifting the obligation for establishing any rights or entitlements into an obligation upon others to disprove bizarre claims, constantly phrased by way of an obligation upon others to verify these bizarre claims that are made about the Castles, and, as occurs in this case, by way of quite impractical means, for example, requiring or demanding of others to verify the Castles’ claims with Her Majesty Queen Elizabeth. It also proceeds upon threats that rejection is an affront to a powerful and elite group, in order to attempt to dissuade those who would reject these bizarre claims from doing so, for fear that they themselves may be at risk from some secret and powerful elite within society.
I find it very sad that the Castles have been taken in by these confidence tricksters, and have been taken in to such an extent that it presents now almost as some form of psychosis – a bizarre belief that is unshakeable, even by the obvious difficulties that the arguments present. I do not accept the arguments. I reject them entirely, and I see no purpose to be served by hearing evidence from somebody to further put forward such bizarre and obviously unsustainable claims."
Deutsche Bank Settles Over Ignored Red Flags on Jeffrey Epstein
The German lender repeatedly overlooked suspicious transactions, including payments to people a New York regulator described as his co-conspirators.
The settlement is the latest punishment that Deutsche Bank, with headquarters in Frankfurt, has faced for violating anti-money-laundering laws and rules.
The settlement is the latest punishment that Deutsche Bank, with headquarters in Frankfurt, has faced for violating anti-money-laundering laws and rules.Credit...Felix Schmitt for The New York Times
By Matthew Goldstein
July 7, 2020
Updated 4:48 p.m. ET
Payments to his alleged co-conspirators. Money wired to Russian models. A cash withdrawal of $100,000 for “tips and household expenses.”
When Jeffrey Epstein moved his money, Deutsche Bank didn’t ask many questions.
In a $150 million settlement announced on Tuesday, the New York Department of Financial Services said Mr. Epstein, a convicted sex offender, had engaged in suspicious transactions for years, even though Deutsche Bank deemed him a “high risk” client from the moment he became a customer in summer 2013.
“Despite knowing Mr. Epstein’s terrible criminal history, the bank inexcusably failed to detect or prevent millions of dollars of suspicious transactions,” Linda A. Lacewell, the department’s superintendent, said in a statement.
A year and a day after Mr. Epstein was arrested on federal sex-trafficking charges, the settlement described how bank employees had relied on informal meetings and institutional momentum to allow suspicious activity to proceed largely unchecked. Instead of performing appropriate due diligence on Mr. Epstein and the activity in his accounts, regulators wrote, the bank was focused on his potential to “generate millions of dollars of revenue as well as leads for other lucrative clients.”
Continue reading the main story
Deutsche Bank acknowledged that it had erred in taking Mr. Epstein on as a client and that its processes had been weak. “Our reputation is our most valuable asset and we deeply regret our association with Epstein,” a bank spokesman, Daniel Hunter, said in a statement.
In a message to employees on Tuesday, the bank’s chief executive, Christian Sewing, said taking Mr. Epstein on was a “critical mistake and should never have happened.” He urged them to read the settlement document and “learn the appropriate lessons” from the bank’s past conduct.
“We all have to help ensure that this kind of thing does not happen again,” Mr. Sewing wrote.
The settlement — the first regulatory action taken against a financial institution in connection with Mr. Epstein — provides a glimpse into the mysterious finances of the self-described tax guru and financial adviser.
According to regulators, Mr. Epstein, who killed himself in a jail cell in New York last year while awaiting trial, sent $2.65 million in 120 wire transfers through accounts established in the name of an entity called the Butterfly Trust. Some of those payments — as well as money from other accounts — went to three people who had been named as co-conspirators in suits by Mr. Epstein’s accusers that were related to his 2008 guilty plea to prostitution charges in Florida.
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Regulators did not name the co-conspirators in the settlement document. The settlement, citing published reports over those suits, describes the first two as having invoked their Fifth Amendment rights and the third as having been accused of recruiting girls for Mr. Epstein.
Four women were named as potential co-conspirators in the nonprosecution agreement Mr. Epstein reached with federal prosecutors that led to his plea to state charges in 2008. Another woman — Ghislaine Maxwell, a longtime confidante and business associate of Mr. Epstein — was charged last week by federal prosecutors in Manhattan with helping him recruit and groom teenage girls he abused at his lavish residences in New York, Florida and New Mexico.
Upon his death, Mr. Epstein left behind an estate valued at more than $600 million that is the subject of litigation by the attorney general of the United States Virgin Islands, where Mr. Epstein had lived and worked for nearly two decades. The attorney general, Denise George, has sued the estate, alleging that a company Mr. Epstein established there, Southern Trust, was a sham operation that he used to mislead the territory and receive a lucrative tax break.
It was Southern Trust — and a similarly named subsidiary, Southern Financial — that opened the first of Mr. Epstein’s accounts with Deutsche Bank in 2013. Over the next five years, Mr. Epstein, his related entities and his associates opened more than 40 accounts with the bank, the settlement said.
ImageGeoffrey Berman, then the U.S. attorney for the Southern District of New York, announcing charges against Jeffery Epstein last year.
Geoffrey Berman, then the U.S. attorney for the Southern District of New York, announcing charges against Jeffery Epstein last year.Credit...Stephanie Keith/Getty Images
Over the years, activities in those accounts were repeatedly questioned by Deutsche Bank employees, who were ignored by their superiors.
According to the settlement, an unnamed executive emailed the manager in charge of the relationship with Mr. Epstein in 2013, before any accounts were opened. The executive said that he had spoken to two other top bank officials and that neither had suggested that a relationship with Mr. Epstein required a risk review.
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Bank officials frequently pointed to that email as a reason to keep him as a client or accommodate his wishes, the settlement said. That included setting up the Butterfly Trust accounts for him in 2014, even though, the settlement said, the accounts’ connection to the alleged co-conspirators created a “very real risk” that payments could be used to further or cover up criminal activity.
In 2015, after a specialist in the anti-money-laundering department raised concerns about the bank’s continued relationship with Mr. Epstein, a department manager and the executive who wrote the email two years earlier met with Mr. Epstein at his Manhattan townhouse to discuss new allegations of abuse contained in civil suits. The settlement said that bank officials had “appeared to be satisfied by Mr. Epstein’s response” and that the relationship had continued.
When the bank later set conditions for monitoring Mr. Epstein’s activity, the settlement said, they were poorly communicated, creating confusion. Anti-money-laundering specialists interpreted the guidance to mean that unusual activity should be flagged only if it was unusual for Mr. Epstein — which led to an alert about payments to a Russian model and a Russian publicity agent being dismissed because the transactions were “normal for this client,” according to an email cited in the settlement.
At the end of 2018 — after The Miami Herald published details of Mr. Epstein’s nonprosecution agreement with federal prosecutors from a decade earlier — the bank decided it could no longer keep Mr. Epstein as a client. But an unnamed bank employee who managed the institution’s relationship with him still drafted reference letters to send to other banks, on Deutsche Bank letterhead, according to the settlement.
“Banks are the first line of defense with respect to preventing the facilitation of crime through the financial system, and it is fundamental that banks tailor the monitoring of their customers’ activity based upon the types of risk that are posed by a particular customer,” said Ms. Lacewell, the regulator’s superintendent.
The settlement on Tuesday also covered compliance failures unrelated to Mr. Epstein. The department found that Deutsche Bank had not properly monitored transactions with Danske Bank Estonia and FBME Bank, a Tanzanian institution. As part of the agreement, Deutsche Bank promised to continue its work with an independent monitor — in place since 2017 — to improve its compliance systems.
While the settlement described a long list of missteps by Deutsche Bank, it praised the bank for its “exemplary cooperation.” It also said the bank had cut ties with other high-risk clients.
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In a statement, the bank said it had invested nearly $1 billion in training and oversight, and had beefed up its anti-financial-crime division.
“It is our duty and our social responsibility to ensure that our banking services are used only for legitimate purposes,” Mr. Sewing said in his message to employees. “That’s exactly why we should always examine things critically, ask questions and speak up.”
The settlement is just the latest black eye for Deutsche Bank over legal and regulatory mistakes. Those include punishments by federal and state regulators, as well as the British authorities, for failing to stop Russian money laundering. And in 2015, Deutsche Bank agreed to pay $2.5 billion in penalties to settle accusations that it had manipulated the London interbank offered rate, or LIBOR.
Deutsche Bank has also attracted scrutiny for its relationship with President Trump and his family. It has been the long-running lender for Mr. Trump and has been the target of subpoenas from congressional investigators and state prosecutors.
Some of the payments Mr. Epstein made from his Deutsche Bank accounts were “inherently suspicious,” regulators wrote. Those included multiple settlement payments totaling more than $7 million and payments totaling more than $6 million for what regulators said appeared to be legal expenses for himself and for people the settlement identified as co-conspirators.
Other transactions — even if harmless — should have raised alarms, regulators wrote.
One of Mr. Epstein’s personal lawyers made $800,000 in withdrawals for Mr. Epstein over a four-year period. Regulators said the bank never got a good explanation for those withdrawals, except that Mr. Epstein needed the money for travel, expenses and paying tips.
According to the settlement, the unnamed lawyer twice asked bank officials how much money could be withdrawn without triggering some kind of alert. Suspicious that he was trying to circumvent federal regulations that require cash transactions of $10,000 or more to be reported to the government, bank employees spoke to the lawyer.
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The settlement said the lawyer denied trying to avoid such a report, and bank officials allowed him to continue making withdrawals on Mr. Epstein’s behalf — including taking out $100,000 at a branch on Park Avenue, not far from Mr. Epstein’s townhouse.
GRAHAM: OK. You were -- where were you on September the 11th, 2001?
KAVANAUGH: I was in -- initially I was in my then office in the EOB, and then after the first -- as I recall, for the first building was hit, I was in the counsel's Office in the second floor of the West Wing for the next few minutes.
Then we were all told to go down to the bottom of the West Wing, and then we were all evacuated and I think -- I think the thought was Flight 93 might be headed for the White House, it might've been heading here. And Secret Service, we were being hustled out and then -- then kind of panic, started screaming at us.
Sprint run, and we sprinted out. My wife was a few steps ahead of me, she was President Bush's personal aide at the time, and we sprinted out. She was wearing a black and white checked shirt, I remember, and she -- we sprinted out the front gate kind of into Lafayette Park and no -- no iPhones or anything like that, Blackberries at that point in time.
We didn't have that, and our cellphones didn't work so we were all just kind of out there. I remember somehow ending up seeing on TV down more on Connecticut Avenue, there were TV's out -- Mayflower Hotel, I remember I was with Sara Taylor who worked at the White House and we watched -- we were watching as the -- standing with her when the two -- when the two buildings -- when the buildings fell. GRAHAM: So when somebody says post-9/11 that we've been at war and it's called the War on Terrorism, do you generally agree with that concept?
KAVANAUGH: I do Senator because Congress passed the Authorization for Use of Military Force, which is still in effect and that was passed of course on September 14th, 2001, three days later.
GRAHAM: Let's talk about the law in war. Is there a body of law called the law of armed conflict?
KAVANAUGH: There is -- there is such a body, Senator.
GRAHAM: Is there a body of law that's called the basic criminal law?
KAVANAUGH: Yes, Senator.
GRAHAM: Are there differences between those two bodies of law?
KAVANAUGH: Yes, Senator.
GRAHAM: From an American citizen's point of view, do your constitutional rights follow you? If you're in Paris, does the Fourth Amendment protect you as an American from your own government?
KAVANAUGH: From your own government, yes.
GRAHAM: OK. So if you're in Afghanistan, do your constitutional rights protect you against your own government?
KAVANAUGH: If you're an American if Afghanistan, you have constitutional rights against the U.S. government.
GRAHAM: Is there a long-standing...
KAVANAUGH: That's -- that's long-settled law.
GRAHAM: Isn't there also a long-settled law that -- it goes back to Eisentrager case, I can't remember the name of it.
KAVANAUGH: Yes, Johnson vs. Eisentrager.
GRAHAM: Right -- that American citizens who collaborate with the enemy have considered enemy combatants?
KAVANAUGH: They can be.
GRAHAM: Can be.
KAVANAUGH: They can be. They're often -- some -- they're sometimes criminally prosecuted, sometimes treated in the military sense.
GRAHAM: Well let's talk about can be. I think the ...
KAVANAUGH: Under a Supreme Court precedent ...
KAVANAUGH: Just want to make -- yeah.
GRAHAM: There's a Supreme Court decision that said that American citizens who collaborated with Nazi saboteurs were tried by the military. Is that correct?
KAVANAUGH: That is correct.
GRAHAM: I think a couple of them were executed.
GRAHAM: So if anybody doubts there's a long-standing history in this country that your constitutional rights follow you wherever you go, but you don't have a constitutional right to turn on your own government and collaborate with the enemy of the nation.
You'll be treated differently. What's the name of the case, if you can recall, that reaffirmed the concept that you could hold one of our own as an enemy combatant if they were engaged in terrorist activities in Afghanistan? Are you familiar with that case?
KAVANAUGH: Yeah, Hamdi.
GRAHAM: OK. So the bottom line is on every American citizen, though you have constitutional rights but you do not have a constitutional right to collaborate with the enemy. There's a body of law well developed long before 9/11 that understood the difference between basic criminal law and the law of armed conflict.
Do you understand those differences?
KAVANAUGH: I do -- I do understand the -- there are different bodies of law, of course, Senator.
GRAHAM: OK. If you're confirmed, and I believe you will be, what is your hope when all of this is said and done and your time is up, how would you like to be remembered?
KAVANAUGH: A good Dad, a good Judge...
FEINSTEIN: A good husband.
GRAHAM: I think he's getting there.
KAVANAUGH: Good husband.
GRAHAM: Thanks Dianne, you helped him a lot.
(LAUGHTER) Going to be better for you tonight.
KAVANAUGH: Good -- I owe you -- I owe you.
Good son, I'll quickly add.
A good friend. I think -- I think about the pillar -- the pillars of my life are being a Judge of course, being a teacher -- I've done that and I'm -- either way this ends up I'm going to continue teaching. Coaching, as I mentioned, is a huge part of my life, try to continue that.
Senator Kennedy advised me when we met to make sure you keep coaching, even if you get -- I'm going to follow that. Volunteering and being a Dad and a son and a husband and being a friend. You know, I talked about my friends yesterday, I didn't really expect -- I got a little choked up talking about my friends, but ...
GRAHAM: That was well said, you got to tighten it up cause I just ran out of time.
Thank you, Senator. I can go on, as you know, but I'll stop there.
Colonel Shane Cohen, the third military judge to preside over the 9/11 military commission at Guantanamo, left the bench on April 24, but not before compounding the tribunal’s erroneous approach to whether and when violence between the United States and al Qaeda rose to the level of an armed conflict. This “hostilities question” is the lynchpin of the military commission’s personal and subject-matter jurisdiction, and it forms an element of each offense triable by military commission. Simply put, without a determination that the United States and al Qaeda engaged in an armed conflict on or before September 11, 2001, the military commission could neither try nor convict the defendants in the United States v. Mohammad et. al. case.
Shortly before leaving the bench, Colonel Cohen completed a three-year evolution, involving both of his predecessors, resolving that the hostilities question is simultaneously a non-justiciable political question for pre-trial purposes and a mixed question of fact and law, subject to the Tadić standard, to be determined at trial.
The military commission’s dichotomous approach to the hostilities has the benefit of being jurisdiction preserving. It defers the fact-intensive inquiry into whether and at what point the armed violence between the United States and al Qaeda was sufficiently intense, and al Qaeda sufficiently organized, to constitute a non-international armed conflict. But the military commission’s approach is also fundamentally incoherent and incorrect in law. And, in preserving its own jurisdiction, the tribunal has elected to pick-and-choose among political acts, ignoring contrary political acts that cut against its jurisdiction, and worryingly settling on one so late in time—so divorced from contemporaneous legal consequences that give acts jure belli significance in the first place—that it smacks of revisionism and injustice.
Who Cares about Armed Conflicts?
It is easy to lose sight of the fact that the military commissions at Guantanamo Bay are war-time tribunals, established to adjudicate violations of the laws of war. The military commissions’ personal and subject-matter jurisdiction—and the culpability of the defendants—all turn on the question of whether and when “hostilities” existed between the United States and al Qaeda. The 2009 Military Commissions Act (MCA) defines “hostilities” as “any conflict subject to the laws of war.” In other words, “hostilities” under the 2009 MCA and “armed conflict” are identical terms. In the 9/11 case, the defendants are alleged to be members of al Qaeda, a non-state armed group; so, for purposes of that case, “armed conflict” necessarily means “non-international armed conflict.”
So, the question of whether or when the United States and al Qaeda engaged in a non-international armed conflict is of at least threshold importance to all the Guantanamo military commission cases. In the 9/11 case, as in the U.S.S. Cole case, the hostilities question takes on especial significance because the defendants’ alleged conduct took place before the United States invaded Afghanistan on October 7, 2001 and before the terrorist acts of September 11, 2001. Thus, to convict the defendants at trial, the prosecution must prove beyond a reasonable doubt both that the United States and al Qaeda were engaged in a non-international armed conflict and that the defendants’ conduct took place in “the context of and associated with” that armed conflict. Consequently, the prosecution has implausibly argued that the U.S.-al Qaeda armed conflict began with bin Laden’s “declaration of war” on August 23, 1996 or no later than when the United States briefly bombarded supposedly al-Qaeda-associated targets on August 20, 1998.
Through a series of decisions on personal jurisdiction beginning in 2017 and culminating in the AE502UUUU Ruling on March 25 of this year, the 9/11 military commission has resolved that the hostilities question is both (1) a non-justiciable political question for purposes of personal jurisdiction; and (2) a question of fact to be resolved by the panel (a sort of jury) at trial under the Tadić standard in light of evidence adduced at trial for purposes of subject-matter jurisdiction and culpability. The Tadić standard, developed by the International Criminal Tribunal for the former Yugoslavia, established a fact-intensive, two-pronged analysis of (a) the intensity of a conflict and (b) the organization of the parties to determine whether there existed protracted, organized armed violence sufficient to constitute a non-international armed conflict (see para. 70, here). The military commission’s inconsistent position relies on a misperception, at odds with law of armed conflict jurisprudence, that courts are incompetent to assess the existence or not of an armed conflict.
How the 9/11 Military Commission Got into this Mess
The 9/11 military commission’s decision in AE502UUUU that the existence of an armed conflict, for purposes of personal jurisdiction, is a non-justiciable political question represents the last stop of a confusing, three-year journey. In 2017, defendants Mustafa al Hawsawi and Ammar al Baluchi both challenged the military commission’s personal jurisdiction, arguing that the United States and al Qaeda were not engaged in an armed conflict prior to 9/11. In the wake of the Court of Military Commission Review’s interlocutory appellate decision in the Nashiri case, the military commission determined that the hostilities-based personal jurisdiction challenge must be resolved before trial and ordered an evidentiary hearing to do so. (See Marty Lederman and Steve Vladeck’s Just Security article for a discussion of the history of the Nashiri decision and its treatment of subject-matter jurisdiction.)
Despite the similarity of their ultimate arguments, Mr. Hawsawi and Mr. al Baluchi took very different approaches. Whereas Mr. Hawsawi argued, essentially, the absence of an armed conflict as a matter of law, Mr. al Baluchi intended to take a fact-based approach to demonstrating the absence of an armed conflict prior to the United States’ invasion of Afghanistan on 7 October 2001. Based on the difference in their approaches, Mr. Hawsawi and Mr. al Baluchi produced markedly different witness lists—Mr. Hawsawi sought examination of a single expert witness; Mr. al Baluchi sought examination of more than 100 fact witnesses. As a result, the military commission bifurcated the evidentiary hearing, taking testimony with respect to Mr. Hawsawi in December 2017 but reserving proceedings with respect to Mr. al Baluchi. For its part, the prosecution put on two FBI agent witnesses in an effort to satisfy a fact-based, Tadić-like standard for the existence of hostilities based on the panel instructions from the 2008 Hamdan military commission.
In April 2018, the military commission (Military Judge Pohl, presiding) denied Mr. Hawsawi’s motion. In its ruling, the tribunal determined Congress’ use of the term “laws of war” in the 2009 Military Commissions Act to be ambiguous. Based on that supposed ambiguity, the military commission resorted to the Act’s legislative history and found that, because Congress intended that the 9/11 defendants be tried by military commission, the military commission must have personal jurisdiction over the defendants. Thus, whatever the meaning of “hostilities,” it could not preclude the existence of an armed conflict between the United States and al Qaeda prior to September 11. Moreover, the military commission determined that it owes “great deference” to the political branches’ repeated determinations that an armed conflict between the United States and al Qaeda exists presently.
In March 2019, as a result of a series of motions-to-compel hostilities-related discovery, the military commission (Military Judge Parrella, presiding) ordered briefing on whether the existence of hostilities, as a requisite common element of each crime under the Military Commissions Act, is a non-justiciable political question. All parties agreed that the existence of hostilities, as a common element of each crime under the Military Commissions Act, is not a non-justiciable political question. The military commission also adopted the Tadić test as the standard by which to determine the existence of hostilities in the course of the 9/11 trial and it suggested that the panel instructions from the Hamdan and Bahlul military commissions are faithful interpretations thereof. (It is worth noting that, at this juncture—and contrary to its previous ruling—the military commission found no ambiguity in the meaning of the “laws of war” as used in the Military Commissions Act.)
In April 2019, the military commission extended its personal jurisdiction determination respecting Mr. Hawsawi to the other four defendants. At that time, the military commission held that the 2009 Military Commissions Act itself represents a determination by the political branches that an armed conflict existed between the United States and al Qaeda “for some time before” 9/11, and that the tribunal owes “great deference” to the political branches’ in their foreign policy and national security decision making.
Mr. al Baluchi, who was never allowed to present his fact-based case demonstrating the absence of pre-9/11 hostilities, moved for reconsideration. But, in AE502UUUU, the military commission denied his request and ruled that, rather than merely owing great deference to political branch determinations, the military commission lacks competence to resolve the question of hostilities because—for personal jurisdiction purposes alone—it is a non-justiciable political question.
What’s Wrong with Deference?
The military commission’s deference to the political branches as to the existence of an armed conflict between the United States and al Qaeda is incoherent, incorrect in law, and unsupported by the history of American political acts vis-à-vis al Qaeda.
First, there is an inherent tension in the military commission’s position that the existence-of-hostilities question is a political question for personal-jurisdiction purposes but a question of fact for merits purposes. The discordance in these two approaches to the same question, within the same trial, is underscored by the military commission’s repeated adoption of the Tadić test for determining the existence of hostilities and its elaboration of that test in the form of panel instructions. Not only has the military commission repeatedly identified a judicially cognizable standard for determining whether and when hostilities between the United States and al Qaeda existed, it has done so within the very same decisions in which it decided that, for personal jurisdiction alone, the question is judicially unresolvable.
Second, American law does not require courts to defer to political branch determinations as to the existence of an armed conflict.
As an initial matter, the Constitution assigns to the political branches the responsibility of waging war and deciding whether the United States should go to or end a war by treaty, as a policy matter. The Constitution does not assign to the political branches the exclusive responsibility of determining whether or when a war or armed conflict exists. In one way or another, throughout American history, courts have been called on to assess the existence or not of an armed conflict and U.S. courts have not shrunk from this responsibility. In making those determinations, courts have looked to political acts as evidence of the existence of an armed conflict just as they have looked to tangible or objective indicia of war. In some circumstances, contemporaneous political acts, supported by tangible facts, have provided conclusive evidence of the existence of a war. But it has not been the practice of American courts to accept belated political acts as the definitive answer on the earlier existence of a war or armed conflict.
Of course, U.S. courts accord the political branches wide deference in their conduct of foreign relations but, as Justice Brennan observed, writing for the majority in Baker v. Carr, “it is error to suppose that every case or controversy which touches foreign relations lies beyond judicial cognizance.” In Baker, the Supreme Court’s seminal political question doctrine case, the Court, quoting from Coleman v. Miller, explained that “‘In determining whether a question falls within [the political question] category, the appropriateness under our system of government of attributing finality to the action of the political departments and also the lack of satisfactory criteria for a judicial determination are dominant considerations.’” The Baker Court specifically identified the “date or duration of hostilities” as a category of question that does not necessarily escape judicial review.
In reviewing earlier episodes in which it avoided making determinations as to the date or duration of hostilities, the Court in Baker identified “isolable reasons for the presence of political questions, underlying this Court’s refusal to review the political departments’ determination of when or whether a war has ended. Dominant is the need for finality in the political determination, for emergency’s nature demands ‘[a] prompt and unhesitating obedience.’” But the Court warned that “deference rests on reason, not habit.” And, more importantly, the Court determined that “clearly definable criteria for decision may be available. In such case the political question barrier falls away: ‘[A] Court is not at liberty to shut its eyes to an obvious mistake, when the validity of the law depends upon the truth of what is declared. … [It can] inquire whether the exigency still existed upon which the continued operation of the law depended.’”
In the context of the 9/11 military commission, the question is not whether or when a war ended but whether or when an armed conflict existed. Indeed, the question for the military commission is whether from August 23, 1996 to October 7, 2001, a period in which the United States failed to use force against al Qaeda on 99.95% of days, the United States and al Qaeda were engaged in an armed conflict. The judicial policy impetus for deference to the political branches—that the need for war powers may persist after the end of active hostilities (see Baker)—simply is not present when the government seeks to retroactively identify an armed conflict in a period in which it used none of its war powers.
More to the point, the military commission itself has not only already identified “clearly definable criteria for deci[ding]” whether an armed conflict existed between the United States and al Qaeda prior to September 11, 2001—the Tadić standard—the military commission has applied those criteria in rendering decisions (here and AE642N Order, issued in February but not yet available on the military commission’s website) on the discoverability of evidence in the government’s possession.
Moreover, the case law that purportedly supports the position that the existence of a war or armed conflict is a political question simply does not do so. Historically, U.S. courts have engaged with the question of whether an armed conflict or war existed across a diverse range of legal disciplines. Indeed, neither of the two cases—Johnson v. Eisentrager and The Prize Cases—cited for the proposition that the existence of war is a non-justiciable political question come close to that holding.
The Johnson Court did not consider—or, more to the point, did not refuse to consider—whether the United States was at war during World War II, nor did it express any opinion about its authority to entertain that question. The war’s existence was simply not at issue in that case. Instead, the passage of the Johnson opinion cited for the non-justiciability of determinations of the existence of an armed conflict addresses only whether “the presence of the military forces of the United States in China at the times in question was unconstitutional or, if lawfully there, that they had no right under the Constitution to set up a Military Commission on Chinese territory.” The Court answered that it is not the role of the judiciary to examine “the legality, the wisdom, or the propriety of the Commander-in-Chief in sending our armed forces abroad or to any particular region.”
The Prize Cases is more instructive. In that case, the Court was actually called to consider the existence of a war or armed conflict in order to determine the lawfulness of President Lincoln’s blockade. The Court explained that “[t]o legitimate the capture of a neutral vessel or property on the high seas, a war must exist de facto.” And, rather than describing the question as non-justiciable, the Court determined to “enquire whether, at the time this blockade was instituted, a state of war existed which would justify a resort to these means of subduing the hostile force.” The Court even defined war.
As was the case in Johnson, it was not determining the existence of a war that was beyond The Prize Cases Court’s consideration, but the propriety of policy choices concerning the armed conflict, including whether to recognize the belligerency of rebels or insurrectionists. Instead, the Court accepted its responsibility to determine the existence in fact of a war between the United States and the rebels. Indeed, Justice Grier posed the existence of a war as a threshold question to the lawfulness of the blockade: “Let us enquire whether, at the time this blockade was instituted, a state of war existed which would justify a resort to these means of subduing the hostile force.” After defining war as the “state in which a nation prosecutes its right by force,” he foreshadowed modern analysis of non-international armed conflict by explaining that:
A civil war is never solemnly declared; it becomes such by its accidents — the number, power, and organization of the persons who originate and carry it on. When the party in rebellion occupy and hold in a hostile manner a certain portion of territory; have declared their independence; have cast off their allegiance; have organized armies; have commenced hostilities against their former sovereign, the world acknowledges them as belligerents, and the contest a war.
… As a civil war is never publicly proclaimed, eo nomine against insurgents, its actual existence is a fact in our domestic history which the Court is bound to notice and to know.
The true test of its existence, as found in the writing of the sages of the common law, may be thus summarily stated: ‘When the regular course of justice is interrupted by revolt, rebellion, or insurrection, so that the Courts of Justice cannot be kept open, civil war exists and hostilities may be prosecuted on the same footing as if those opposing the Government were foreign enemies invading the land.’
In that light, Justice Grier took foreign declarations of neutrality to be ipso facto evidence of a war between the United States and the rebels. And, Grier held that “Whether the President in fulfilling his duties, as Commander in-chief, in suppressing an insurrection, has met with such armed hostile resistance, and a civil war of such alarming proportions as will compel him to accord to them the character of belligerents, is a question to be decided by him … ‘He must determine what degree of force the crisis demands.’” Thus, “the proclamation of blockade is itself official and conclusive evidence to the Court that a state of war existed which demanded and authorized a recourse to such a measure, under the circumstances peculiar to the case.”
Significantly, Grier reasoned that Lincoln’s imposition of a blockade was both justified by the existence of war, as demonstrated by tangible facts, and conclusive evidence of that war. The President could not enforce a blockade—could not use the rights of a belligerent—against an American state if that state were not engaged in insurrection so intense it rose to the level of war. Nor would the President seek to use belligerent rights against an American state unless such a war existed.
Moreover, the United States’ recourse to belligerent rights vis-à-vis the states in rebel carried with it the legal effects of recognizing their belligerent status and conferring upon them the rights of belligerency, as well.
But examples of the competence of U.S. courts to resolve questions of armed conflict and peace are not limited to a handful of dusty if significant cases. Much like it did in the Military Commissions Acts, Congress directed courts to determine the existence or not of armed conflicts by including an act-of-war exception in the Anti-Terrorism Act. This exception limits compensation under the Act to terroristic acts occurring outside of an armed conflict and, thereby, requires courts to determine the existence or not of an armed conflict (see e.g. Kaplan v. Cent. Bank of the Islamic Republic of Iran). The same is true of courts martial and certain provisions of the Uniform Code of Military Justice that are subject to enhanced penalties during wartime.
Third, the 9/11 military commission’s decisions turn on deference to select political acts, unsupported by the broader history of American political decisions vis-à-vis al Qaeda. Throughout the rulings discussed here, the military commission defers to the 2009 and 2006 Military Commissions Acts (MCAs) as the relevant determination by the political branches than an armed conflict between the United States and al Qaeda predated the 9/11 attacks. But, in contrast to the blockade at issue in the Prize Cases, for example, the 2009 and 2006 MCAs are not contemporaneous policy choices made to address an extant emergency carrying contemporaneous legal effects. Instead, the 2009 and 2006 MCAs are ex post policy choices intended to bring about a particular end, which requires, rather than reflects certain legal circumstances.
In contrast to the situation before the 9/11 military commissions, the Prize Cases Court pointed to Lincoln’s blockade proclamation as evidence that the United States had employed its belligerent rights vis-à-vis the Confederacy by implementing the blockade and, therefore, an armed conflict existed as of the proclamation’s issuance. In this case, the military commission points to the October 2006 Military Commissions Act for the proposition that an armed conflict between the United States and al Qaeda preceded either the U.S. invasion of Afghanistan on October 7, 2001 or the terrorist acts of September 11, 2001. Of course, the 2006 Military Commission Act was enacted specifically to enable the prosecution by military commission of the five men on trial before the 9/11 military commission for that day’s terrorist acts. Thus, the military commission’s deference is simply the last segment in a tautology.
Moreover, in contrast to the Prize Cases, to the extent that the 2006 Military Commission Act expresses the political branches’ determination that an armed conflict between the United States and al Qaeda began prior to 9/11, it does so despite—not because of—contemporaneous facts. Prior to September 11, 2001, al Qaeda had attacked the United States twice, once in August 1998 and once in October 2000. The United States responded militarily to the August 1998 East Africa embassy bombings through a circumscribed expression of its inherent right to self-defense, but refused to use military force in response to the October 2000 U.S.S. Cole bombing.
Further—and as just one example of contrary political acts not acknowledged or discussed by the military commission—in the immediate aftermath of the U.S.S. Cole bombing, in reference to that terrorist attack, President Clinton expressly proclaimed the United States to be a nation at peace, which is to say, a nation not engaged in an armed conflict.
So, whereas the Court in the Prize Cases and even Johnson v. Eisentrager, referred to contemporaneous objective indicia of war that at least accorded with the political branches’ view, the military commission in the 9/11 case ignores contemporaneous objective facts as well as contemporaneous political acts. Thus, under the guise of deference, the military commission is anything but deferential—in order to preserve its own jurisdiction, it ignores the judgment of the President at the time in favor of that of his successors.
Worse, the D.C. Circuit already rejected the military commission’s specific view that the existence of hostilities between the United States and al Qaeda is a settled political question in In re Nashiri. In 2016, based on the debate within the Supreme Court’s Hamdan decision, the Court of Appeals for the D.C. Circuit found that “whether hostilities against al Qaeda existed at the time of Al-Nashiri’s alleged [pre-September 11, 2001] offenses, and whether Al-Nashiri’s conduct in Yemen took place in the context of those hostilities, are open questions.”
Conclusion: Rewriting History
In an apparent effort to preserve its own jurisdiction while proceeding towards trial, the 9/11 military commission has made a hash of its armed conflict jurisprudence. It has invested itself with incoherence, treating the existence of hostilities as simultaneously beyond its competence and subject to a well-developed, fact-based standard. Worryingly, it has preserved its own jurisdiction by cherry picking helpful ex post political acts unmoored from facts while ignoring contrary contemporaneous ones—and ignoring a superior court’s contrary determination. But most concerningly, in twisting its armed-conflict jurisprudence up, the military commission has lent its imprimatur to efforts to rewrite history and create, retroactively, armed conflict where there plainly was none. What confidence can future lawyers and courts have in the decisions of such a tribunal?
Editor’s Note: Benjamin R. Farley is a trial attorney and law-of-war counsel at the U.S. Department of Defense, Military Commissions Defense Organization and is assigned to the team representing Ammar al-Baluchi. The views expressed do not reflect the views of the Department of Defense, the United States Government, or any agency or instrumentality thereof.
Image – A sign reading, “Office of Military Commissions Expeditionary Legal Complex Guantanamo Bay, Cuba” stands close to where pre-trial hearings are being held for the detainees at the military prison on June 25, 2013 in Guantanamo Bay, Cuba. (EDITORS NOTE: Image has been reviewed by the U.S. Military prior to transmission.)
This was a Continuing Education course offered by Nationally recognized - West LegalEdcenter, entitled - "After the Bubble Bursts" which taught Lawyers with Lender clients how to defend the legal wave of mortgage and securities fraud lawsuits. The Content Partner for the course - The Boston BAR Association. The GUEST SPEAKERS brought in to help TEACH the course included - (1) THE US ATTORNEY'S OFFICE (MA); (2) THE MASSACHUSETTS OFFICE OF THE ATTORNEY GENERAL; and (3) NELSON MULLINS RILEY & SCARBOROUGH PARTNER - JEFFREY S. PATTERSON, Esq., who was former CO-COUNSEL with current Counsel - DAVID E. FIALKOW, Esq.,
Honourable Judge Goldstone & Honourable Judge Wolf, I have recently been acknowledged by the International Criminal Court #ICC for such a case against 7 “natural persons” (for now) for #warcrimes & #crimesagainsthumanity in #Australia.
I now await the #ICC further instruction.
There is NO AVENUE TO REMEDY IN AUSTRALIA!
The two judges explained that the lack of laws does not necessarily cause grand corruption, as there are “187 nations party to the United Nations Convention Against Corruption.”
“Almost all of them have laws prohibiting extortion, bribery, #moneylaundering, and #misappropriation of national resources.
They also have an #international #obligation to #enforce those laws against their #corrupt #leaders,” judges Goldstone and Wolf wrote.
The problem is, however, that “kleptocrats enjoy impunity in their own countries because they control the administration of justice,” and will not permit the prosecution and punishment of their collaborators and themselves.
“#Imprisonment of #corrupt #leaders will create opportunities for them to be #replaced by #honest #officials who are #dedicated to #serving #their #citizens.
It will also deter other kleptocrats tempted by ...
Whistle Blower of McCarthy & Holthus, “My job is to Create Title Where None Exists To Foreclose On Homes.”POWERS V. THE BANK OF NEW YORK MELLON ETAL·FRIDAY, APRIL 26, 2019117 ReadsWalk participants are approached and confronted by McCarthy & Holthus employees. Participants attempt to get the employees of the law firm to identify themselves, answer to the questions regarding false documents and the loss of so many homes, the employees declined to answer anything, even declining handshakes and peaceful introductions. The alleged attorney would not even give his name.“It is my belief that McCarthy & Holthus is creating documents to steal homes and unjustly enrich themselves!”, Whistle Blower continues to tell Powers and William Wagener.Powers was contacted privately with a message, “i think i can help your case.” and help this Whistle Blower has. This whistle blower helps all of us! Have you had McCarthy & Holthus/Quality Loan Service Corp. on your paperwork? Did they “create” documents to steal your home too?
Yesterday survivors of Financial Crimes gathered for a walk that started at The Can of Worms aka McCarthy & Holthus Lawfirmat 411 Ivy Street in San Diego California. Interesting fact, the building was once the county morgue! And their mail division is now in the basement where all the dead bodies were kept on ice. The building was also one that housed “First American Title Company” back in the day and our Charles Koppa told of having worked with the firm back then.William Wagener and Matt from the 28er’s filmed the walkand it was also covered by Rose Davis who writes for Indian Voices paper. Participants were treated very poorly by the law firm employees who confronted them. The employees were aggressive in behavior and the participants were not provoking them at all, employees who have no dress code other than not to dress like they work at a law firm. Powers was approached, while waiting for other walk participants to arrive, aggressively by a young woman with long brown hair, no make up and looking as if she were out running errands rather than working at a law firm. This young lady rudely insisted Powers give hername, though refused her name or title as an employee of the firm, and demanded Powers tell her what the people were all doing. Powers sees the women coming out of the back of the building heading their way in this photo.
Powers backed off surprised at the aggressive behavior stating she had no reason to have to answer to the young woman, but gave her name and said they were all taking a walk together. The young girl and 3 other women walked back into the building as if they had just met their opponents in agame, the employees created a hostile environment that could have been very peaceful on both sides if the employees had acted peacefully themselves.Powers asks, "so, you create documents to record here and those documents take thehomes?, employee says he did not say that, but he did not deny that is what is happening either. He did say, "we file documents here"...he is on video.As the group walked the direction of West Ivy 2 men and the same young woman who confronted Powers moments before came out. One of the men had a badge and it said Dave Owen(s) (on the left in the green shirt), he would not introduce himself but his badge identified him. He claimed to be in charge but would not answer further. As he was asked to please allow Powers to introduce herself both he and the second man refused.The second man (black shirt and jeans in above photo) who claimed to be an attorney for the law firm would not identify himself either, but did say that they
record documents from that location and wenton to give false claims of William not being able to film him in the public. (he ridiculously jumped onto the grass at the building to say he was standing on private property so he could not be filmed). William asked if they’d invite the participants in for coffee and to talk but that was declined. The group then began chanting slogans such as “Please quit stealing homes”. The group continued their walk and stopped at the back parking area (on the public sidewalk) of the building to discuss the remedy forthe crimes and the cases of Brashears v United States and Powers v BONYM et al. The two cases are for all people, including the hundreds of interested parties who have come forward. The information given is hard facts of the Financial Crimes and how the two cases are the First Impression cases that bring every case in America together. (there is a letter writing campaign that includes sending in a Form 95 for damages into these cases. www.facebook.com/events/630040930783307/Send in your letters and claim for damages and have your evidence seen and heard! Judge Carter will not be able to destroy any this time. )Homeowners and survivors of Financial Crimes are well aware of the fraudulent documents stealing our lands, estates, homes and lives. Well aware of identity theft, RoboSigning, cut and paste, back dating, MERS fraud and more. Homeowners are also aware that someone is paid to do these jobs and yesterday one paid to “create” a file to foreclose on homes, maybe even yours, came forward to tell all.Meeting and sharing with other survivors of the Financial Crimes is very healing for survivors.
We have a short segment to release and it is shocking truth. Will Foreclosure Mills survive the Whistle Blowers now coming forward apologizing and realizing their work led to the theft of homes? This information is going to Congresswoman Maxine Waters and the DOJ directly, stay tuned folks as the truth this Whistle Blower is sharingis enough to shut down the Mills and even the judges who know they are ruling “under the color of law with fraud upon the court presented”.Keep the Faith!(video of whistle blower and the walk will be uploaded and added soon!)www.disleague.com www.abolishthebankers.comWilliam Wagener YouTube: California 18 by Wagener: www.youtube.com/results?search_query=cal...+william+wagenerMore from Wagener: www.youtube.com/channel/UCxl2DRyoAJdd0kFz2z_E5dQThe 28er’s are working to end Bankers hold on America and you! 28ers.org/Photos Courtesy of Rose Davis/ www.indianvoices.net/