SUMMARY: Secretary of the Interior Ryan Zinke has long been scrutinized for potentially mixing personal and official business; he is currently the subject of at least four different ethics investigations. In the latest, Zinke is coming under fire for allegedly securing free travel for his wife. Washington Post reporter Juliet Eilperin helped break the story and discusses the details with William Brangham.
How would you feel if you learned that your company was helping ICE make a database of immigrant children or building an autonomous killer drone for the Department of Defense? Because of their controversial relationships with the U.S. government, big tech companies such as Microsoft, Google and Amazon are in hot water, not only with consumers but with their own employees.
A blog post by Microsoft from January has become a hot topic of discussion this week. The post announces that Microsoft is "proud to support" work conducted by the Immigration and Customs Enforcement (ICE) after the government agency awarded Microsoft a contract for its Azure cloud computing services.
Meanwhile, Amazon is facing criticism for selling its Rekognition face recognition technology to law enforcement in Orlando, Florida and Oregon’s Washington County.
And in March, Google was outed for working with the Department of Defense (DoD) to create artificial intelligence (AI) that can analyze drone [eye in the sky] footage.
While companies and their employees usually celebrate big deals, both political tensions and a lack of transparency has led many workers at these tech giants to demand these contracts be thrown in the trash.
Outrage, Boycotts and Apologies
ICE has been drawing a lot of negative attention, due to its policy of separating undocumented or asylum-seeking families. This week, numerous Microsoft workers took to social media to share their discomfort with Microsoft working with ICE. And some people who work outside the company have gone as far as to say they will no longer do business with Microsoft.
As a result, the company was forced to release a statement on Monday stating that it’s not working with ICE or Border Patrol “on any projects related to separating children from their families at the border” and claimed it doesn’t know of Azure being used for such acts. It added that it’s “dismayed by the forcible separation of children from their families at the border”.
In Amazon’s case, the accuracy of facial recognition in general is creating concern. On Friday, 19 shareholders sent a letter to CEO Jeff Bezos. Backed by activist groups like the American Civil Liberties Union, the group claims such deals with the government will hurt Amazon stock and enable discrimination.
The group cites MIT research finding that “the darker the skin, the more errors arise – up to nearly 35 percent for images of darker skinned women.”
"We are concerned the technology would be used to unfairly and disproportionately target and surveil people of color, immigrants and civil society organizations. We are concerned sales may be expanded to foreign governments, including authoritarian regimes,” the letter says.
Andrew Guthrie Ferguson, University of District Columbia law professor and author of The Rise of Big Data Policing, told CNNMoney this week that there are currently no best practices for determining facial recognition’s accuracy.
"Accuracy is a hard issue to benchmark. As a society, are we okay with a 50 percent false positive rate, or a 20 percent false positive rate, when it comes to stops, arrests, or police investigation? The answer to the accuracy question will determine who gets handcuffed and who does not,” he said. Amazon has yet to respond publicly.
On Google’s end, news that the company had signed an AI deal with the DoD’s Project Maven hit employees hard after going out on an internal mailing list. DoD’s Project Maven, officially named the Algorithmic Warfare Cross-Functional team, aims to accelerate the DoD’s integration of big data and machine learning and “turn the enormous volume of data available to DoD into actionable intelligence and insights at speed,” the DoD says. Project Maven reports directly to the Deputy Secretary of Defense.
While Google at the time told Gizmodo that its technology was not being used for military combat, employees were still “concerned” and “outraged,” Gizmodo reported in April.
Come May, about 12 employees resigned from Google, and almost 4,000 signed a petition calling for the end of Project Maven and for Google and its contractors to never “build warfare technology.”
What’s the Point?
But can employees really affect tech companies’ interest in obtaining lucrative government contracts that provide both big bucks and the opportunity to lock down a new market?
Amazon has not commented on its situation and, though Microsoft has made a statement saying that it isn't helping to separate families, it has not terminated its deal with the feds.
Google, on the other hand, announced that it would not renew its contract with the government when it expires in 2019.
In an op-ed for Forbes, Enrique Dans, an innovation professor at Spain’s IE Business School, argues that employees should speak their minds if they feel their company’s practices contradict “basic ethics.” He states that is particularly doable in the tech field since the industry’s growing so rapidly and workers should be able to find employment elsewhere if needed. However, he also points out that in other industries, countries with higher unemployment rates, or countries where it’s more common for business and government to work together, challenging an employer’s ethics can be more difficult.
“Can we and should we put a price on our principles? Is having a conscience the unique preserve of the wealthy and highly skilled? Obviously not, and it is good news that some employees at U.S. companies are setting a precedent. If companies are not going to behave ethically of their own volition, at least we can count on their employees to embarrass them into doing so,” Dans wrote.
Indeed, employees can at least draw attention to practices they find unethical via social media and petitions, which are often picked up by the press and could put pressure on companies to reconsider. It’s reasonable that some tech firms would reconsider a deal if the bad publicity is that damaging, although as we’ve seen this is not always the case, at least not immediately.
At the end of the day, tech executives who are adamant about working for the government may just leave the tech industry and commit to the public sector wholeheartedly. For example, Eric Shmidt, former CEO and board of directors chairman for Google, and Matt Cutts, former head of Google’s search spam department, both work for the Pentagon now (although they left Google before the Project Maven controversy).
But, as information about how and with whom tech companies choose to work becomes more accessible and widespread, ethical discussions go nationwide thanks to the internet and the press and political landscapes continue to be controversial, it can become harder to wear that badge knowing what it represents.
If employees cannot truly get their company to reasonably align practices with beliefs they hold dear, it may be time to consider if the issue is important enough to warrant a new job search.
During his campaign, Donald Trump repeatedly welcomed the idea of banning lobbyists from his administration.
Fast forward eight months, and now-President Trump is welcoming them in.
Last June on CBS's “Face the Nation,” host John Dickerson asked Donald Trump: Given the candidate's drumbeat of criticism of the Washington lobbyist class, “Will you say 'No lobbyists will work for me and no big donors?'”
“I would have no problem with it, honestly,” Trump responded.
After the exchange, a “Face the Nation” producer followed up with campaign spokeswoman Hope Hicks, who confirmed that, yes, Trump was referring to banning lobbyists from his administration.
The sentiment is in line with what Trump told NBC's “Meet the Press” in another interview a year earlier, when he called banning lobbyists from working in his administration “a pretty good idea.”
As ProPublica detailed last week, a longtime construction industry lobbyist who previously worked against wage and workplace safety regulations is now in a key position at the Department of Labor. The lobbyist, Geoff Burr, is reportedly in line to be chief of staff if Andrew Puzder is confirmed as Labor secretary.
At the Food and Drug Administration, longtime pharmaceutical lobbyist Jack Kalavritinos has a senior role in the agency's early Trump team, according to Stat News.
Kalavritinos spent more than seven years as the chief lobbyist of the medical device and pharmaceutical firm Covidien. (Covidien was subsequently acquired by Medtronic) In that role, Kalavritinos lobbied the FDA and Congress on a host of issues related to medical device regulation, disclosure records show. Among the legislation he lobbied on was the Novel Device Regulatory Relief Act and the Food and Drug Administration Mission Reform Act.
Trump himself recently criticized the extensive influence of the pharmaceutical lobby. “Pharma has a lot of lobbies and a lot of lobbyists and a lot of power and there's very little bidding on drugs,” he said at a press conference last month.
K Street was a frequent punching bag for Trump on the campaign trail. He once tweeted:
It's difficult to know how many former lobbyists are now working in the Trump administration. Both Burr and Kalavritinos are members of Trump's so-called “beachhead teams,” which are made up of officials installed at federal agencies to lay the groundwork while the president's nominees make their way through the Senate confirmation process. The administration has said there are around 500 such staffers, but has not released a list of names.
Trump last month issued an executive order on ethics for appointees that weakened elements of the Obama-era policy on former lobbyists joining government.
Trump also hired a range of lobbyists into influential positions during the transition period, between Election Day and the inauguration on Jan 20. As The New York Times noted in November; telecom, energy, and agriculture industry consultants and lobbyists were all named to influential roles.
The White House did not respond to a request for comment.
SUMMARY: When Hulk Hogan won $140 million in court from millionaire Nick Denton's Gawker Media after it published video of him having sex, the verdict raised serious questions about journalistic ethics. Hogan's suit was funded by Peter Thiel, the billionaire founder of PayPal who Gawker outed as gay a decade earlier. Hari Sreenivasan talks to Wired's Jason Tanz for more on the case and its implications.
HARI SREENIVASAN (NewsHour): So, let's go over just basics of what happened in this case, because most people aren't following Hulk Hogan's sex tape saga too closely.
JASON TANZ, Editor-At-Large, WIRED: Sure.
So, a few years ago, Gawker published an article that included a video of a sex tape that Hulk Hogan had made, actually was made without his knowledge. They declared it was in the public interest because Hulk Hogan was a public figure and he had gone on record talking about how he had not had sex with this woman, and they had proof that he had. So they published it, somewhat gleefully, which has always been Gawker's kind of stock and trade.
They have been very forward in their — in what they declare to be in the public interest. And they thought this was. Hulk Hogan didn't see things that way. He brought a lawsuit against them. The jury found against Gawker to the tune of $140 million, which was a pretty shocking about.
Gawker has appealed the case and they're waiting to see how that plays out.
HARI SREENIVASAN: So, how does Peter Thiel get involved in this? He — there's no love lost between the founder of Gawker, Nick Denton, and Peter Thiel.
JASON TANZ: Nick Denton had suspected that there was actually somebody funding Hulk Hogan's lawsuit, because the way Hogan was prosecuting the suit, he was making decisions that, if he were interested in making money, game theory suggests that he would have done something differently.
He could have taken reportedly about a $10 million settlement. He also withdrew a part of the lawsuit that would have required a payout from Gawker's insurance. They actually just withdraw that, so that Gawker would be on the hook and not the insurance company.
So, that indicated maybe there was something else going on. In 2007, Gawker had — and, specifically, its site Valleywag had outed Peter Thiel as a gay man. Thiel at the time swore his revenge. And now, nine years later, he is getting it. He had a team of lawyers who were looking for various plaintiffs who could file suits that they could fund, and apparently they found more than one. Supposedly, there a couple of other suits out there that he's prepared to bring against Gawker as well.
Johannes Bohannon, Ph.D., made headlines earlier this year with a "study" showing that chocolate helps people lose weight. Then, last month, John Bohannon, Ph.D., made even bigger headlines when he revealed that Johannes and his Institute of Diet and Health were merely constructs of a sting operation to show how bad science enters the mainstream.
Today, he joins ProPublica Reporter Charles Ornstein to talk about his “study” and the journalists who fell for it.
Highlights include discussion of:
- How he put the study together and got coverage for it. (1:00)
- The ethical concerns some have voiced about Bohannon’s establishment of a fake name and institute: “I think those concerns are adorable,” Bohannon says. “I think when, you know, investigative journalists spend a lot of time doing something important and reveal something really bad, people want to take part in the conversation.” (3:18)
- P-hacking, or manipulating one’s study to make it seem statistically significant. “It makes you think you’ve got a cool result,” Bohannon says, “but if you were to repeat the experiment, I guarantee you would not get the same significant results. (3:47)
- The criticism of journalists who disagree with Bohannon’s methods, including investigative reporter Seth Mnookin. Bohannon says many people are upset because the study was called “clinical.” “It almost seems as if some different rules apply because the word clinical appeared in the story,” he says. “And they’re also just really embarrassed.” (7:54)
- His testing of open access journals in academic publishing, to see which were actually using peer review, as they claimed. (8:46)
Hear their conversation on iTunes, SoundCloud, and Stitcher; and read Bohannon’s story, “I Fooled Millions Into Thinking Chocolate Helps Weight Loss. Here's How,” on io9.
JUDY WOODRUFF (NewsHour): And now, a story on this Earth Day that seems lifted from science fiction.
Researchers and entrepreneurs, many in California, are trying to bring back extinct species. Some scientists believe it’s a way to correct past mistakes and even help endangered animals.
But just because scientists might be able to do this, are they crossing a line they shouldn’t?
Our colleagues at public TV station KQED in San Francisco explored that question in this story produced by Gabriela Quiros and narrated by Thuy Vu.
JULIANNE MOORE, Actress (Jurassic Park): I will be right back.
JEFF GOLDBLUM, Actor (Jurassic Park): Sarah, no, no.
THUY VU, KQED: The cloned dinosaurs of the “Jurassic Park” movies captured viewers’ imaginations. But 65 million years after their extinction, there’s no chance scientists can bring dinosaurs back, says University of California, Santa Cruz, biologist Beth Shapiro.
The “revolt of the Muppets” is heating up.
That’s how a Georgetown finance professor, James J. Angel, characterizes the combat by him and other investors over Goldman Sachs’ takeover of a hotel company a few years ago. (The phrase comes from a former Goldman employee, Greg Smith, who wrote that Goldman bankers referred to clients as the famous Henson puppets, a charge the bank disputed.)
The fight raises such a cornucopia of financial issues that it could shoulder an entire business school course. The holders of preferred stock in the company have taken to commenting to the Securities and Exchange Commission in outrage. Professor Angel accuses Goldman of multiple securities law violations. In essence, the question is: In these post-financial crisis days, what constitutes improper conflicts of interest?
First, some back story (and a friendly warning to readers: Goldman plays more roles in this than Joanne Woodward in “The Three Faces of Eve.”)
In 2007, a Goldman private equity fund called Whitehall took a company that runs franchised motels, like Residence Inn, private in a $2.2 billion transaction. It renamed the company W2007 Grace Acquisition. A Goldman entity, Goldman Sachs Mortgage Company, was the main lender for the leveraged buyout. Grace is run by current Goldman employees.
Goldman did not buy the publicly traded preferred shares, however. Instead, Grace went “dark,” as Floyd Norris explained last year. That meant it no longer filed financials with the Securities and Exchange Commission, a move allowed for companies with fewer than 300 shareholders. Grace delisted from the New York Stock Exchange and stopped paying dividends. It took other steps to make it difficult for anyone, including the preferred holders, to get any information about the company. Shareholders had to request the financials from the company and, at one point, had to pay 10 cents a page for the privilege of finding out how their investment was doing. They also had to sign a nondisclosure agreement.
All of this made it onerous for a shareholder to sell the stock to another investor. Not surprisingly, the preferred shares plummeted in value. They had a value of $25 a share, but sank to a low of 5 cents. (The real estate slump and the dividend cessation probably accelerated the drop, but the opacity surely hurt, too.)
In 2012 and 2013, a mysterious entity named PFD Holdings started buying those battered-down preferred shares. In 2012, PFD was paying $3 to a little more than $5 a share. Soon after, the preferred doubled in price, and now the shares trade at about $12. As of its last announcement, PFD owns 58 percent of the preferred shares. Nice trade!
So, what is PFD Holdings? Few outsiders really know because there’s little information out there about PFD. In Grace’s news releases, the company calls it a “sister company.” In other words, Goldman is ultimately behind PFD. I asked a former Goldman executive. He hadn’t heard of it but jokingly suggested the initials stood for Pretty Fishy and Dodgy. Well, in truth he used another “F” word, but you get the idea.
A Goldman spokeswoman wrote to me that “PFD acquired those shares in two privately negotiated transactions from two groups of shareholders who approached us to sell. Any assertion we acted inappropriately is unfounded.” She added, “The claims made by the preferred shareholders are without merit. They are a matter of ongoing litigation and we are defending ourselves vigorously. We have no further comment at this time.”
If all Goldman had done was take steps to suppress information about the shares to snap them up on the cheap, that might have been troubling enough. But just wait, there’s more.
For one, Grace has not filled spots for independent directors on its board. Grace has announced meetings to hold votes on those directors, but then said the meetings failed to reach quorums. In the latest attempt last August, Grace said it was delaying yet another special meeting to vote for seats. This time, the issue was that the mysterious PFD had told the company “of its intention to consider a tender offer“ for the remaining shares it did not own “later in 2013,” according to a Grace news release.
That was good timing because this one may just have reached a quorum, given all the angry preferred holders. And then, guess what? No tender offer materialized in 2013, and hasn’t yet.
Here’s another issue: In 2009, Goldman Sachs Mortgage forgave $545 million in Whitehall’s debt, receiving mainly an option to buy control of about 80 percent of most of Grace’s hotels. Grace was in trouble, and this may have saved the company.
In 2012, Goldman Sachs Mortgage sold that option back to Whitehall for $175 million. Were these deals, in which Goldman negotiated with Goldman, fair? There do not appear to have been any independent, third-party voices involved (Goldman had ceased to be the controlling lender in 2008 and says that Whitehall’s outside investors approved the 2009 transaction). The end result of these transactions is that Goldman’s Whitehall appears to have ended up recreating its ownership in most of the hotels at a cheap price. Also, some preferred holders fear their interest in the company has been subordinated to that of Goldman’s private equity fund.
So where does the Muppet Revolt stand? Grace may have to start making its financials public again, which could bring out more detail about Goldman’s various dealings with itself. An investment adviser from Wedbush Securities requested a shareholder list from the end of the year and tallied them up. In a letter he sent to the S.E.C., he says he has counted 418 shareholders of record. That would be enough to revive the requirement to file financials.
Now we are in what Professor Angel calls the “Florida vote-counting” stage, trying to determine who should count as a “shareholder,” with Goldman’s lawyers battling against the preferred holders.
Another issue — I warned you that I was packing an entire semester into one column — is how this all comports with the Volcker Rule. Under the rule, banks are not allowed to own more than 3 percent of a private equity firm. They are not allowed speculate in securities. But there is a merchant banking exemption that allows banks to take over companies directly on a temporary basis. Is PFD permitted by the Volcker Rule? It might be helpful if some regulator asked some pointed questions.
Speaking of which, where is the S.E.C. in all this? So far, the agency hasn’t been heard from on the question of how many shareholders there are or in response to any of the allegations from the preferred holders.
When deals like this go down, I feel like we are nation of Jake Gitteses, watching big bank deals with incomprehension. In “Chinatown,” the private detective asks the wealthy baron Noah Cross: “Why are you doing it? How much better can you eat? What could you buy that you can’t already afford?”
The scary thing about this Grace deal is that the money is so small (well, relative to Goldman, at least). The preferred shares amounted to about $146 million initially. It’s almost as if Goldman does it because it can.
Disappointment, anger, disgust.
Words like these are echoing throughout social media about a national icon: The Boy Scouts of America.
To put it mildly, Scouting is going through a rough patch.
In July, the BSA national headquarters clarified its ban on gays and lesbians -- leaving it in place and triggering a national movement by hundreds of former Eagle Scouts to renounce their rank and return their treasured medals.
And then this week, the so-called "perversion files" were publicly released, naming more than 1,000 suspected child sex abusers since the mid-1960s with links to Scouting.
All this has people asking questions: What's going on here? Is Scouting in trouble? Is it even relevant anymore?
Although membership has remained steady at 2.7 million youths, many parents are taking a hard look at the organization -- especially its ban on gays, lesbians, atheists and agnostics, says former Eagle Scout Burke Stansbury, an online activist.
"Some of the aspects of Scouting morality I find is sort of old school -- like they're stuck in the 1950s."
It's become more acceptable, he says, for people to be atheist and agnostic and still be considered moral in our society. Also, "attitudes around homosexuality have changed a lot in the last few decades, and the Boy Scouts' moral code hasn't kept up with those changes."
Here's how mainstream the idea of gay and lesbian Scouts has become: both President Obama and Mitt Romney support it. Obama, in fact, serves as honorary BSA president, a tradition held by every commander in chief since the group was founded.
Eventually, the Boy Scouts will have to change, Stansbury says, or else the organization will become socially irrelevant.
The group is standing at a key moment in its survival, says Stansbury. If it fails to "get with the modern times" within the next decade, "alternative youth organizations will appear that are more inclusive and based on equality."
The majority of Scouts agree with the policy, the BSA said in July. But "no single policy will accommodate the many diverse views among our membership or society."
Scouting offers to teach members skills in "character building" and making good "moral choices," says BSA spokesman Deron Smith. But he also says it's important to separate "the discussion of larger societal issues" from the operation of Scouting. "The state of Scouting is very strong."
'Living your values'
The idea is sometimes referred to as "living your values" -- in other words, interacting only with organizations and businesses that match your morals and ethics.
"People with young kids are trying to live their lives more in accordance with their beliefs and their values," says Stansbury. It's hard, he says, to participate in something like the Boy Scouts and everyday question your own integrity.
In protest, Stansbury sent his Eagle medal back to Scout headquarters a few months ago, along with hundreds of other ex-Scouts.
Boy Scout policies and procedures evolve over time, says Smith. For example, the child sex abuse concerns decades ago spurred the BSA to implement strict screening, education and prevention policies that continue today and represent a "gold standard" for protecting kids, Smith says.
Boy Scout Zach Plante of Menlo Park, California, doesn't like the ban on atheists or gays and lesbians. But he loves Scouting.
So the 16-year-old basically looks the other way, he says, along with the rest of Troop 222. "In my troop I don't know of any particular Scouts that are gay or atheist, but I know that our troop wouldn't necessarily kick a Scout out of the troop for being gay or atheist."
Zach's dad, psychology professor Tom Plante, doesn't see any conflict between his support for Scouting and his opposition to the bans. Plante says he does his best to live his values and to make changes where he can. "But at the end of the day we're not going to agree 100% with all the policies and procedures of every organization that we're a part of -- whether it's Scouts or the United States government or churches or companies."
Ryan Andreson's troop wasn't so understanding. When Andreson, who lives in Moraga, California, was denied his Eagle rank because he's gay, he mounted a campaign that gained national attention. Part of that campaign included collecting hundreds of thousands of signatures on a petition for local Scout officials. So far, Andreson is still waiting to get his Eagle.
What if Scouting disappeared? You'd likely see more than $206,000,000 worth of yearly services and charity fundraising provided by Scout groups disappear, according to BSA.
Religious ties
Many critics who accuse the Scouts of failing to change with the times blame BSA's deep connections to organized religion. Approximately 70% of Scout troops are affiliated with some kind of church or religious group, says Smith.
Among the biggest backers are the Catholic Church and The Church of Jesus Christ of Latter-day Saints, according to BSA. In 2011, Mormon-backed Cub Scout and Boy Scout units accounted for more than 420,000 of all Scouts nationwide, while more than 200,000 other scouts were members of units affiliated with the Catholic Church.
Links with religious groups are "definitely part of our longstanding tradition," says Smith. "Our policies and procedures and everything that we are is definitely reflected by our membership and our charter organization partners."
Those affiliations over the years have resulted in a complicated political maze that's difficult to navigate when it comes to change, Stansbury suggests. "Oh yeah -- the Catholic and Mormon churches have a lot of influence on the Boy Scouts, especially the leadership of the Boy Scouts," he says. "I certainly believe that's a big part of why the Boy Scouts have stubbornly held onto this policy.
"It would be a much better organization, not having those people involved. But it's not going to go away immediately."
There's also dissent among leaders inside Scouting -- although many keep a low profile. One Scout leader, who asked to remain anonymous because he fears losing his position, posted comments on a private online message board for Eagle alums.
If the U.S. military can accept openly gay and lesbian troops, he asked, why can't the Boy Scouts of America? "Every day I question my personal integrity for choosing to stay involved with a discriminatory organization."
So -- does America still need the Boy Scouts? Is it still culturally relevant as it enters its second century of service? Will the BSA make it to 200 years?
