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Saturday, June 29, 2013

“Believe It or Not!” +13 Mindblowing Facts About America’s Tax-Dodging Corporations

Published on Saturday, June 29, 2013 by Campaign for America's Future

A judicious writer avoids adjectives like “mindblowing,” especially when covering political or economic issues. But no other word seems to describe the stunning reality of corporate taxation in modern America, which cries out for the italics-heavy, exclamation-point-driven format made famous by Ripley’s Believe It or Not


(Photo: Denise/cc/flickr)

Stylistic overkill? Read these thirteen facts and you may change your mind.
1. We’re told we can’t “afford” full Social Security benefits, even though closing corporate tax-haven loopholes would pay for Obama’s “chained CPI” benefit cut more than ten times over!
Abusive offshore tax havens cost the US $150 billion in lost tax revenue every year (via FACT Coalition). That’s $1.5 trillion over the next ten years.

The “chained CPI” cut, proposed by President Obama and supported by Republicans, is projected to “save” a total of $122 billion to $130 billion over the same time period by denying benefits to seniors and disabled people.

It’s true. “Serious” politicians and pundits are demanding that ordinary people sacrifice earned benefits, while at the same time allowing corporations to avoid more than ten times as much in taxes.

2. Corporate tax rates are near their 60-year low, even though profits are at a 60-year high!
Need we say more?

(Source: Americans for Tax Fairness.)

3. Wells Fargo got $8 billion in tax breaks, even as executives at its subsidiary Wachovia avoided indictment for laundering money for the Mexican drug cartels!
That’s right. Wells Fargo paid a negative tax rate of -1.4 percent between 2008 and 2010 while Wachovia, a Wells Fargo subsidiary, admitted to laundering more than $378 billion for Mexican drug gangs.

We’re talking about crazed killers like “El Loco” and gangs like “Los Zetas” – gangs who cut people’s heads off and toss them out onto disco dance floors or display them in the town square.
Wachovia bankers ignored repeated warnings from law enforcement officials, and continued to launder money for cartels that have murdered tens of thousands.

And yet no criminal indictments were handed down because, as a Senate investigator told Bloomberg News, “”There’s no capacity to regulate or punish them because they’re too big to be threatened with failure.”

4. Some other huge corporations paid less than nothing, too.
Pepco Holdings (-57.6% tax rate)
General Electric (-45.3%)
DuPont (-3.4%)
Verizon (-2.9%)
Boeing (-1.8%)
Honeywell (-0.7%)
(Source: Citizens for Tax Justice)

5. The amount of money US corporations are holding offshore is an estimated one trillion dollars!
Rather than tax these profits the way other countries do, corporate politicians are promoting a tax “repatriation” break that would let corporations “bring this money home” while paying even less than their currently low rates.

They tried that in 2004 and it didn’t create any jobs. In fact, corporations took the tax break and then fired thousands of people. What “repatriation” did do is line a lot of wealthy investors’ pockets.
So, naturally, they want to do it again.

6. One building in the Cayman Islands is the official location of 18,857 corporations!
According to the Government Accountability Office, a five-story building called “Ugland House” is home to nearly twenty thousand corporations. That’s impressive, especially for such a small edifice. (Perhaps it has supernatural half-floors and space-time defying “mind tunnels” like the office in Being John Malkovich.)

While impressive, Ugland House’s distinction pales next to that of 1209 North Orange Street in Wilmington, Delaware. According to one investigation, that address is home to 217,000 corporations.

That’s because Delaware has very generous tax rules – and, as a result, is home to more than half of all the corporate subsidiaries in the United States.That’s startling, since only 1/342th of the nation’s population lives in that state (917,092 residents, out of a national total of 313,914,040, according to the latest census results).

7. Conservatives complain about the “official” corporate tax rate in this country, but corporations actually pay roughly one-third of the official rate in actual taxes.
The official, or “statutory,” corporate tax rate is 35 percent. But the actual rate paid by American corporations is only 12 percent, less than that paid by many middle-class Americans.
(Source: The FACT Coalition.)

In fact, US Corporations pay less tax as a percentage of the GDP than corporations in Canada. Or Japan …

… or South Korea. Or Norway. Or Luxembourg, New Zealand, Israel, the Czech Republic, Sweden, Belgium, Switzerland, the United Kingdom, Denmark, Finland, and Italy.
(Source: OECD StatsExtract interactive database.)

8. Corporations used to pay 30 percent of Federal taxes, and now they pay less than 7 percent!
That’s because the corporate tax rate has plunged since Dwight D. Eisenhower was President and is now the lowest it’s been in modern history.
(Source: FACT Coalition.)

9. Big corporations paid $216 million to Congress and got $223 billion in tax breaks!
As Citizens for Tax Justice and USPIRG reported, 280 large and profitable corporations contributed $216 million to Congressional campaigns over four election cycles and got nearly a quarter of a trillion dollars in tax breaks.
That’s a terrific investment for them – a return of more than a thousand to one – but it’s a bad deal for the American people.

10. We don’t even know who owns some corporations, even though that makes it easier to evade taxes, dodge creditors, avoid paying alimony or child support, and even fund terrorism!
Here are some examples of investments that might represent a terror threat. Corporate interests are blocking disclosure rules that would help protect our national security.

11. Bank of America committed foreclosure fraud, was bailed out by the government, and then paid no taxes on $4.4 billion in profit!
That’s right. In 2010, while BofA was negotiating a sweet settlement deal for its foreclosure fraud, it paid nothing in taxes. (Source: FACT Coalition.) Zero, on $17.2 billion in offshore earnings. (Source: Americans for Tax Fairness.)

Its $4.1 billion tax break came on the heels of the bank’s taxpayer-funded bailout, immunity from prosecution for its criminal employees, and a cushy government settlement for its foreclosure fraud.
Now David Dayen reports that the bank has apparently continued to defraud customers in violation of its government settlement. Whistleblowers have stated in affidavits that they were “told to lie” to customers, continued to deceive homeowners before foreclosing on them, and flipped customers to new servicing companies to invalidate previous homeowner agreements.

12. What they call “tax reform” would actually prevent our elected representatives from giving businesses financial incentives to improve our lives!
The word “reform” is an honorable one that’s been put to some dishonorable uses lately. “Entitlement reform,” for example, is merely a euphemism for gutting Social Security and Medicare.
Similarly, corporate-backed politicians are pushing a formula for permanent corporate tax breaks and calling it “tax reform.” They insist their “reform” be “revenue neutral” and say it will “broaden the base while lowering the rate.”

Here’s an English translation: The current, unsustainably low rates for corporations would be made permanent, while eliminating many tax deductions in the name of “simplification.”
Here’s what that really means: The domestic tax credit for creating jobs? Gone. Tax breaks for protecting the environment with clean energy, rather than harming other people’s health and leaving a mess for the rest of us to clean up? Gone.

All in all we’d lose dozens of important policies that make our lives better, while permanently fixing corporate taxes at today’s cushy giveaway rates.

“Reform”? Ripoff is more like it.

13. Despite their greed, mismanagement, and freeloading, tax-dodging corporations are using shell organizations like “Fix the Debt” and “the Committee for a Responsible Federal Budget” to tell ordinary Americans they have to sacrifice even more to preserve corporate wealth!
These organizations are using the heads of failed banks – people like Chase’s Jamie Dimon and Lloyd Blankfein of Goldman Sachs – to dispense “advice on the economy.” That’s like getting navigation tips from the captain of the Exxon Valdez.

(Tax breaks for Exxon Mobil: $4.1 billion between 2008 and 2010. The company paid no taxes at all in 2009.)

These executives and their paid spokespeople tell the rest of us we need to “sacrifice” and “tighten our belts” so that their party can go on forever. And too often they’re treated as credible sources, rather than as corrupting influences on our public life.

It’s all true – and there are many more astonishing facts to be found in the world of corporate taxation. To fix the economy more people will need to learn about them – and demand that they be changed.

The writer and analyst in me wants to apologize for all the italicizing and all those exclamation points. But the American citizen in me wants to shout the truth out for all the world to hear – believe it or not!

Universities Selling Out Important Research to Corporate Overseers



Universities Selling Out Important Research to Corporate Overseers

UC Regents recently approved a new corporate entity that will likely give a group of well-connected businesspeople control over how academic research is used.


Photo Credit: Shutterstock.com/ isak55

In a unanimous vote last month, the Regents of the University of California created a corporate entity that, if spread to all UC campuses as some regents envision, promises to further privatize scientific research produced by taxpayer-funded laboratories. The entity, named Newco for the time being, also would block a substantial amount of UC research from being accessible to the public, and could reap big profits for corporations and investors that have ties to the well-connected businesspeople who will manage it.

Despite the sweeping changes the program portends for UC, the regents' vote received virtually no press coverage. UC plans to first implement Newco at UCLA and its medical centers, but some regents, along with influential business leaders across the state, want similar entities installed at Berkeley, Davis, Santa Cruz, and other campuses. UC Regents Chairwoman Sherry Lansing called Newco at UCLA a "pilot program" for the entire UC system.

The purpose of Newco is to completely revamp how scientific discoveries made in UC laboratories — from new treatments for cancer to apps for smartphones — come to be used by the public. Traditionally, UC campuses have used their own technology transfer offices to make these decisions. But under Newco, decisions about the fate of academic research will be taken away from university employees and faculty, and put in the hands of a powerful board of businesspeople who will be separate from the university. This nonprofit board will decide which UC inventions to patent and how to structure licensing deals with private industry. It also will have control over how to spend public funds on these activities.

Newco's proponents contend that the 501(c) 3 entity will bring much-needed private-sector experience to the task of commercializing university inventions. Ultimately, it will generate more patents, and thus bigger revenues for UC through licensing deals and equity stakes in startups, they claim. UC administrators also say they have established sufficient safeguards for Newco and that UCLA's chancellor and the regents will have oversight over the entity.

But if last month's regents meeting in Sacramento is any indication, UC oversight of Newco may be less than robust. Several regents, in fact, objected to creating an oversight committee that would keep tabs on the new entity. The debate over the issue concluded after Regent Norman Pattiz suggested that "it shouldn't be called the Regents Oversight Committee. It should be called the Regents'-Encouragement-and-Finding-You-the-Dough Committee."

Critics of Newco say the scheme won't work, and that it will lessen transparency in UC research while undermining the public mission of the university. Putting a board of businesspeople in charge of the university's tech transfer operation also will create conditions ripe for cronyism, they fear.
In fact, that may already be the case. Records show that wealthy investors and influential businessmen with close ties to UCLA and one of the UC Regents — Alan C. Mendelson — are financially invested in companies that currently license university-owned patents under exclusive financial arrangements. Mendelson, who also is a trustee for the UC Berkeley Foundation and has investments of his own in businesses that profit from university-produced research, was one of the main backers of the Newco proposal and cast a vote in favor of it.

The Newco program also could benefit companies like the ones Mendelson and his network of friends and investors own and work for. Many of the UC Regents are also close friends of investors who want greater access to university inventions under more favorable terms, and who want the university to subsidize early-stage business expenses and take financial risks by investing in technology startups.

And under Newco, they may be able to get exactly what they want.

It appears that the university is turning research policy over to a private group of businesspeople, and they'll control the decisions of campus officials who are required to work for the public interest," said Christopher Newfield, a professor at UC Santa Barbara who conducted campus-sponsored studies of a range of tech transfer policies at UCSB early last decade, and has sat on several technology transfer policy committees. Newco is the latest expression of a belief that the university's research policy should be evaluated by measuring patents and revenues, said Newfield. He believes that basic research is central to the university's public purposes, and that changes toward a more proprietary and privatized model will harm both science and society.

"After WWII, policymakers assumed that government-funded research did not need to depend primarily on for-profit commercialization in order to get out to the public; there wasn't the sense that patenting inventions and getting revenue streams off them was the main goal of the university-society interface," Newfield noted. "A famous example was Jonas Salk's polio vaccine, which he did not patent: 100 million doses were administered in the US in the two years following the successful clinical trial."

University policies changed in the 1970s as several universities patented lucrative inventions and earned millions in revenue. Even though these paydays were rare and only occurred at a handful of elite research institutions that got lucky from a tiny fraction of the total inventions their faculty were producing, many schools wanted to duplicate this luck. When Congress enacted the Bayh-Dole Act in 1980, which concerned patent and trademark law, university administrators quickly interpreted it as giving schools ownership of the federally funded research conducted on their campuses. The race was off.

Hundreds of schools set up tech transfer offices in an attempt to profit from inventions. Universities instituted policies claiming institutional ownership of all inventions created by faculty and graduate students, and many tech transfer offices began to choke back the supply of knowledge flowing from the university into society — all in hopes that the university could claim ownership of one of the rare "home run" inventions, as many in the tech transfer field call them, that generate millions in revenue.
Gerald Barnett, who ran tech transfer operations at the University of Washington and at UC Santa Cruz, and today is the director of the Research Technology Enterprise Initiative, an independent organization that consults with research institutions, said Newco represents a way for private business interests to try to game the university. "If you're working for the public good you don't have to take ownership of everything," he said of the research discoveries made at university campuses. "You don't have to have a large number of employees [at tech transfer offices], and you only have to do few transactions a year [licensing to private companies].

"At the University of Washington, when I was there, we had five employees in my licensing unit, and we brought in three to six million a year across a range of projects," Barnett added. He said that University of Washington administrators, however, created an independent organization with a similar focus as Newco to manage the university's inventions under the watch of business interests. "UW has put $100 million over five years into their 'Center for Commercialization' with great ballyhoo about how industry and businesspeople would cut through all the red tape and delays," he said. "Turns out that those industry people are doing a lot worse than the program they dismantled."
Barnett predicts the same for UC's Newco. "The problem is that you're taking out of circulation a vast amount of public domain knowledge and other stuff, and holding it hostage, making it less likely that any of these inventions will make money because you're focusing on exclusive licenses," he said.
What's better for the public and the broader economy, said Barnett, is a system in which most university inventions and knowledge quickly flows into the public domain, or is swiftly made available through non-commercial means. A relatively small number of university inventions that benefit from patent positions might be licensed out, Barnett said. But he's skeptical of the obsession with exclusive patent agreements with corporations.

The idea of putting university technology transfer under the control of a board of business leaders grows out of recent experiences at a handful of elite universities in which just a dozen or so technologies created in publicly funded labs have blossomed into multimillion-dollar properties. Many university administrators, nonetheless, have come to see these relatively rare successes as potentially lucrative revenue streams to replace increasingly scarce public funding. And now many businesspeople and private investors see the university as a vast social factory from which they can extract valuable property — especially if the university is pliant and agrees to exclusive deals. UCLA offers a prime example.

In the early 1990s, federally funded experimental cancer treatments devised by doctors at the UCLA David Geffen School of Medicine were yielding promising results. Using genetically altered mice with cancerous human tumors grafted into them, scientists were developing research they hoped would eventually treat cancers using specially designed protein antibodies. In 1996, several UCLA doctors took the research private in order to quickly commercialize the treatments. They founded Urogensys, which was later renamed Agensys. Agensys struck a deal with UCLA to exclusively license some of the school's patented technologies on which the cancer therapies were based. Over the next decade and a half, Agensys filed for 156 patents on these cancer treatments, all based on fundamental research done at UCLA with federal research grants.

In 2007, the Japanese pharmaceutical giant Astellas bought Agensys for $537 million, making it one of the most valuable university spin-off companies in history. Agensys' deal with UCLA was unique in that the school reportedly had some equity stake in the company. The university has never disclosed the financial terms of the deal, however, so just what benefit there was to UCLA isn't clear. Some say the university benefited greatly, while others claim it was actually short-changed and that Agensys' private investors were given a favorable deal because they were big donors to UC.

What is clear is that the biggest moneymaker in the Agensys deal was a small network of investors who earned millions. These investors included UCLA professor Arie Belldegrun, a doctor who has created and advised numerous biotechnology companies over his career. Roy Doumani, a wealthy Los Angeles banking and real estate investor, and friend of Belldegrun, was also part of Agensys. Doumani has been a major UCLA donor for several decades. In 1989, he gave UCLA a $7 million oceanfront house in Venice Beach. One of his more recent gifts to the school was an endowed chair in urologic oncology. This prestigious faculty post is currently occupied by Belldegrun. Although he has no scientific background, Doumani recently became a UCLA faculty member by joining the Department of Molecular and Medical Pharmacology to teach the "business of science."
Advising Agensys in its dealings with the university was Alan C. Mendelson, a veteran biotechnology lawyer who works in the Menlo Park offices of the Latham Watkins law firm. Mendelson is also a wealthy donor to UC; he became a UC Regent in July of 2012 after a two-year stint as president of the Cal Alumni Association and a one-year term as treasurer of the UC Alumni Association.

Belldegrun, Doumani, and Mendelson are members of a tight-knit network of investors who have made millions by forming startup biotech companies, licensing university-developed technologies, and then selling the companies to bigger corporations for enormous profits.

Newco would effectively impose the model this group of investors has established over the past decade on all of UCLA's tech transfer activities, and Mendelson has pointed to Agensys as Exhibit A as to why this will benefit the university.

In 1980, Alan Mendelson, then a junior lawyer at the Silicon Valley office of Cooley Godward, was assigned an otherwise obscure and small corporate client: Applied Molecular Genetics. That company later became the $76 billion biotech giant known today as Amgen. Mendelson's role as Amgen's legal counsel put him at the center of California's booming biotechnology industry, connecting him to hundreds of venture capitalists and university scientists. Throughout the 1990s and 2000s, Mendelson represented and served on the boards of numerous small and large companies developing medical technologies. Many of these companies were started and funded by the same entrepreneurs and investors. Along the way, Mendelson also invested in many of these companies, becoming wealthy in the process.

Most of the corporations Mendelson worked with relied on technology licensed from universities. This placed Mendelson firmly on the side of private businesses in their often-contentious negotiations with university tech transfer offices over patent rights, royalties, milestone payments, and equity stakes. Private companies often seek exclusive rights and to lower royalty payments to the university. Sometimes investors want universities to take equity stakes because these are, in effect, public subsidies to highly speculative companies at their seed stage, when no private investor is willing to invest.

In 2005, one of Mendelson's clients, Kythera Biopharmaceuticals, entered into an exclusive licensing agreement with UCLA and a UCLA Medical Center-affiliated foundation called LA Biomed to exploit patents related to a drug developed by the school. (UCLA has kept the terms of that agreement confidential.)

In addition to working as Kythera's lawyer, Mendelson was an investor in the company. According to records filed with the US Securities and Exchange Commission on May 17, 2012, Mendelson advised Kythera in a public stock offering that netted about $86 million. The disclosure filing noted that Mendelson owned 13,000 shares of Kythera at the time. Mendelson's investments were through a family trust, and through VP Company Investments 2008, LLC, a Delaware-registered corporation that partners of the Latham Watkins law firm use as a co-investment vehicle. Mendelson was still a stockowner in Kythera when he became a UC Regent in July of last year.

Mendelson also represents and owns stock in Singulex, Inc., another corporation that licenses technology from UC. Singulex's offices and labs are in Alameda. In a filing with the SEC last year, Singulex's executives wrote, "our business is dependent on our exclusive license from the Regents of the University of California," and warned prospective investors that "termination of this license could negatively impact our market position." As of September 2012, Mendelson owned 34,004 shares of Singulex through his family's trust. He also owned a portion of another 34,004 shares, along with partners of the Latham Watkins law firm, held by VP Company Investments 2008, LLC.

As a regent-designate since 2011, and as a full voting member of the UC Regents since July 2012, Mendelson participated in the regents' special Working Group on Technology Transfer, an ad hoc committee of the board that was tasked with studying system-wide tech transfer policies. One of this working group's recommendations was "establishing separate institutional structures with funding and mandate to invest in UC start-ups." The regents' Working Group on Technology Transfer also took the lead in advocating for the establishment of Newco.

At last month's regents meeting, during the discussion preceding the vote to establish Newco, Mendelson recounted his version of the Agensys story. "As some of you may have heard, a mutual friend of chairman Lansing and mine, Dr. Arie Belldegrun at UCLA, he and a number of faculty members started a company. It was called Agensys. It was sold ultimately for $500 million dollars and the university benefitted greatly."

But according to Mendelson's version of events, UC didn't benefit much from the terms of the licensing agreement, but instead from the "largesse" of the university's private investors. Mendelson said UC was rewarded "not so much by the royalty revenues, because I don't think even now they have products approved, but it was in terms of some of the investors who are UCLA donors giving back. Once they got the largesse, if you will, from the sale of the company, they gave back significant amounts of money to UCLA."

It's unclear whether Mendelson has economic stakes in other companies — besides Kythera and Singulex — that license UC technology or otherwise use university resources. Mendelson did not respond to a request for comment for this story, and when I asked the University of California Office of the President for a copy of Mendelson's Form 700 (a detailed disclosure of personal economic interest required of the UC Regents and many UC administrators), a representative from UCOP responded that Mendelson did not have one on file, and that his annual report was late. I obtained a copy of Mendelson's Form 700 that he filed in August of 2012 with the California Fair Political Practice Commission. The FPPC also confirmed that Mendelson's annual filing, which was due April 2, is late.

Mendelson's August 2012 disclosure showed that he had direct investments in nine biotechnology companies, including Kythera and Singulex, as well as stock in eighteen different venture capital funds with a total value hovering somewhere between $1 and $10 million (the disclosure forms do not require him to be more specific). In addition, most of his investment funds are focused in biotech companies, giving him indirect financial stakes in perhaps dozens of biotechnology corporations.
The most vocal advocate for Newco at UCLA has been James Economou, the campus vice chancellor of research and a doctor at UCLA Medical Center who holds a faculty appointment in UCLA's Department of Molecular and Medical Pharmacology. In several presentations to the regents, Economou has stressed that a Newco-type entity would patent greater numbers of faculty inventions and create more financial deals with the private sector, and that the university would benefit from the revenues and wealth this generates.

"The process of patenting inventions involves hard-nosed business decisions. The university needs businesspeople with many years of experience to make decisions on what are risky investments," Economou told the UC regents at a meeting last year concerning tech transfer, according to the official minutes of the meeting. "The board must be an independent board of directors, reputable individuals with experience in the business of science who would serve the university without pay."
"The business of science" is the same phrase used by Doumani — the wealthy banking and real estate investor — to describe what he teaches as a faculty member of UCLA's Department of Molecular and Medical Pharmacology as well. Doumani, in fact, runs an entire center now on UCLA's campus called the "Business of Science Center," and the center is sponsored by the Astellas USA Foundation, a grant-making organization set up by the Japanese pharmaceutical giant that bought Agensys in 2007.

"There's a sense that we have outdated models of entrepreneurship," Economou told the regents last month. "We lack real-world-business experience and should empower business professionals in the decision-making process."

Several years ago, Economou asked William Ouchi, a professor at the UCLA Anderson School of Business who specializes in "corporate renewal," to study the school's tech transfer policies. In one of his more famous consulting gigs earlier in his career, Ouchi agreed to help Mendelson's client Amgen reform the company's drug development process, according to a 1994 Los Angeles Times report. For UCLA, Ouchi eventually produced a series of reports titled, "Ecosystem for Entrepreneurs." Ouchi's reports criticized UCLA's tech transfer record as generating a "low financial yield," well below UC Berkeley's, Stanford's, and MIT's. Ouchi endorsed the Newco idea to fix this perceived problem. He recommended that a Newco-type entity be capable of raising external funds in the range of $50 million to $100 million in order to invest in patents of university inventions; partner with and possibly invest in companies, many of them owned and led by faculty; and to cover patent prosecutions. The biggest expense in patenting inventions under a model like Newco involves monitoring intellectual property holdings and hiring lawyers to aggressively go after any company or other party that violates a patent by using the invention without a license or other agreement. Legal expenses can typically run into the millions of dollars.

I asked professor Ouchi who he consulted with at UCLA to produce his reports, including the recommendation to establish a Newco-type entity that would raise private funds. "I prefer not to draw attention to it at this point, because it has just been approved by The Regents and is not actually in operation yet," Ouchi replied in an email. "Lots of people at UCLA and at UC participated in the design of Newco — it was definitely the product of a very large team."

Whether Newco will use university funds or external funds to fund private corporations and defend patents licensed by private companies remains unclear. The resolution passed by the regents to create the entity allows it to raise private money, but these funds must be held in UCLA accounts, one of the safeguards built into the Newco structure.

UCLA Vice Chancellor Economou declined an interview request for this article, referring questions to Brenden Rauw, UCLA's recently hired associate vice chancellor and executive director of entrepreneurship. Rauw was recruited from Columbia University last year specifically to oversee UCLA's transition into a more proprietary model of tech transfer under Newco. Rauw passed my inquiries to a media relations person who did not provide answers to basic questions about Newco before press time. Belldegrun and Doumani also did not respond to interview requests for this story.
Like Mendelson, Belldegrun, Doumani, and other proponents of the Newco model, Economou is linked to private companies that are already commercializing UCLA technologies. Economou is listed as a scientific advisor to Kite Pharma, a small biotech company. It's not clear if Kite pays Economou. Kite Pharma's board of directors also includes Belldegrun and Doumani, who are also investors in the company.

"We tell our faculty that we want them to have as many potential conflicts of interest as possible," Economou told the regents last month. "We have a process for helping to identify them, and to manage them, and to create transparency, and give them guidelines, so instead of telling our faculty 'you can't do this, and you can't do that,' we encourage them to create startups, we encourage them to file patent disclosures."

Kite Pharma is just one of several biotechnology companies controlled by Belldegrun and other UCLA-connected investors. For example, also on the board of Kite Pharma is Steven Ruchefsky, a New York hedge fund manager. Ruchefsky is also an investor in Arno Therapeutics, a biotech company located in New Jersey that develops drugs based on exclusive licensing agreements with Ohio State University and the University of Pittsburgh. Mendelson also is an investor in Arno Therapeutics, as is Belldegrun. Belldegrun was, in fact, one of the largest shareholders in Arno Therapeutics as of December 2012, holding 1.3 million shares, according to a registration statement filed with the SEC. Much of Belldegrun's stock in Arno was held in an offshore trust administered by the Leumi Overseas Trust Corporation on the Island of Jersey, a jurisdiction off the northern coast of France that the Organization for Economic Cooperation and Development has described as a tax haven.

Another investor in Arno is David Tanen, a venture capitalist who runs Two River, a merchant bank that focuses on life sciences companies. Belldegrun is the chairman and a partner of the bank.
CTI Molecular Imaging, another company with roots in UCLA's Medical School and Department of Molecular and Medical Pharmacology, was provided research services by UCLA professors Michael Phelps and James Heath. As part of three separate agreements in 1994, 2000, and 2001, UCLA granted CTI exclusive rights to any inventions generated by university staff and gave the company an interest in any revenues generated from technologies that might be licensed to third parties. Phelps and Heath also were directors of CTI. Doumani was an investor in the company. The Siemens corporation bought CTI for $1 billion in 2005.

Today, professors Phelps and Heath, who both hold appointments in UCLA's Department of Molecular and Medical Pharmacology, run a private business advisory group called Momentum Biosciences. Doumani is on the board of directors of Momentum, as is Michael Shockro, a lawyer and colleague of Mendelson at the Latham Watkins law firm. Like Doumani, Shockro also holds a faculty appointment in UCLA's Department of Pharmacology to teach courses in the "business of science."

The web of companies and investors linking Belldegrun, Mendelson, Doumani and other proponents of the Newco model of tech transfer is complex, but it all swirls around biotech products being developed from inventions licensed largely from universities. Belldegrun's role in numerous biotech companies with links to UCLA and beyond is perhaps why his name was mentioned numerous times, in tones of admiration and awe, by several of the regents during their May meeting as they excitedly discussed Newco.
Some of the regents would like to institute a powerful business entity like Newco at UC Berkeley. Regent Richard Blum, the husband of US Senator Dianne Feinstein, called Berkeley's tech transfer office "an absolute disaster" at the last regents meeting. To back this up, Blum related a story about an invention developed by a faculty member affiliated with the Blum Center for Developing Economies, an institute he created through a large private gift to the university.

"We went to the center [Berkeley's tech transfer office] to license this thing, and they said, 'Well we don't want to license it, we don't want to put the money up to get the patents, and we don't think it's worth it.' I said, 'Okay, that's fine, I'll put up the money, and not for me personally, I'll put up the money for the [Blum] center to get it.'"

According to Blum, Berkeley's tech transfer office staff bungled the invention's transfer to private industry and the faculty inventor was excluded from further participation. "Next thing I know is this group takes this project, doesn't tell us what they're doing with it, licenses this to somebody, and won't even tell us who they licensed to develop the product."

A basic web search shows, however, that Blum got much of this story wrong. The invention in question, a hardware and app combination that turns a smartphone into a mobile microscope called the Cellscope, has, in fact, been commercialized, and the inventor, Daniel Fletcher, a professor of bioengineering at UC Berkeley and a faculty scientist at Lawrence Berkeley National Laboratory, is still very involved in the project.

Berkeley, furthermore, consistently ranks among the top universities in terms of the number of inventions it generates. Many of those inventions generate no revenue for the campus, but they are used by industry, governments, and nonprofits to solve problems and develop new products, and a small number of inventions earn millions each year, qualifying the campus' tech transfer activities as the opposite of a disaster.

Tech transfer offices at the different UC campuses are currently able to do all the things that Newco will be able do at UCLA, from inking complex licensing agreements and industry research partnerships to investing equity in startups. The only difference is they aren't taking orders directly from a board of businesspeople and investors.

For example, according to Berkeley's Office of Intellectual Property and Industry Research Alliances, the school can take equity stakes of up to 10 percent in a company licensing its inventions. Berkeley has created about 150 companies specifically to commercialize technologies developed on the campus, and the school has equity stakes in roughly 30 of these. Berkeley has also created the largest industry research alliances in the nation, including the much-criticized deal with BP that many say was a corporate raid on the school's intellectual property. But even staffers at Berkeley are wary of the degree of privatization and industry dominance that Newco seems to represent.

I asked Graham Fleming, Berkeley's vice chancellor for research, if the school had plans to institute a Newco-type entity to control tech transfer. "We are not currently considering a similar set-up to manage our technology transfer," he said. "We are very interested in exploring new and innovative ways to facilitate the translation of our research breakthroughs into goods and services that benefit the public. At the same time we are also well aware that we need to do that in a manner consistent with our values and public character."

Newfield of UC Santa Barbara said that Berkeley and UCLA currently have "different visions" when it comes to tech transfer. "The contrast is between a narrow revenue goal for commercializing science and a public interest goal for getting science into the world," he said. The irony of something like Newco, he continued, is that managing university research to maximize patenting and corporate startups doesn't even appear to increase revenues for the university. "If UCLA doesn't seem successful enough right now as a science business, it's not because they don't think about business enough or have shut out entrepreneurs. They've been focused on the business side for at least twenty years."

Carol Mimura, UC Berkeley's assistant vice chancellor in charge of tech transfer, is a well-known champion of making technologies more widely available through a public-interest model and has published numerous papers on the subject. Berkeley's tech transfer office is known for inserting "humanitarian use terms" in licensing agreements with companies. In April of this year, Berkeley won the US Patent Office's prestigious Patents for Humanity Award for developing and licensing an anti-malarial drug at low cost so that it can be distributed in regions of the world that are most afflicted by the disease, but are least able to afford pharmaceuticals.

Barnett, the former head of the University of Washington and UC Santa Cruz tech transfer offices, believes the whole model of a university holding a maximum number of patents with the intention of exclusively licensing them in hopes of a big payout is flawed. Barnett instead recommends that universities include in their innovation practice something more like a technological commons.
"Universities have an important role, and that is to manage IP [intellectual property] to develop commons and standards and platforms — to coordinate research and to ensure broad access," he said. "They should hold most of their patents for non-exclusive licensing."

Barnett added that some of the most lucrative patents have been biotech tools that were licensed non-exclusively, like the Cohen Boyer patents. Applied for in 1974 by Stanford University, and granted by the US Patent Office in 1980, the Cohen Boyer patents covered one of the most fundamental methods used across the entire biotechnology industry today: gene cloning. Stanford purposefully licensed the patents non-exclusively to 468 companies. These companies went on to create more than 2,400 products and billions in sales. The non-exclusive license upset powerful Silicon Valley biotech companies — including Genentech — that wanted to monopolize the method through exclusive licenses for greater profits. Cohen Boyer also reserved the rights of other universities to practice the patented methods without charge. The main reason Cohen Boyer was set up this way, said Barnett, is because faculty and the university, not businesspeople, were driving the process and making the decisions.

Mendelson, Belldegrun, and Doumani did not respond to requests for interviews for this story, and Shockro of Mendelson's law firm and several other members of the UC Board of Regents did not respond to inquiries about their current and past links to various companies that license UC technology and their participation in the creation of Newco.
A UC spokesperson, who appears to have been forwarded emails from me to Mendelson via his law firm, responded: "As an alumni regent, Alan Mendelson is about to complete a two-year term that included one year as a voting member of the Board of Regents. As is the case for all Regents, his biography is publicly available online. Regarding companies in which Regents have a material interest, the rules only prohibit them from decision-making about those companies, not investing in them. There is nothing wrong with Regent Mendelson, or any other Regent, having an interest in companies that license UC technology, so long as this prohibition is followed."
According to legal counsel within the University of California Office of the President, as a fourth branch of California's government, the Regents of the University of California are not bound by the Political Reform Act of 1974. Instead, the regents chose to voluntarily follow the act by devising their own ethics policies for the university. According to UCOP, the regents carry out oversight of the university and do not make decisions that materially benefit specific companies, therefore they rarely run into conflict-of-interest problems requiring them to recuse themselves from voting on matters like Newco.

Thursday, June 20, 2013

The Real Terrorists are the Corporate Execs Who’ve Bought the Regulators

The Real Terrorists are the Corporate Execs Who’ve Bought the Regulators

Dave Lindorff
Published: Saturday 20 April 2013 

The bulk of the American people are focusing their fears on terrorists from abroad, or in some cases here at home, not on the corporate suites where the real evil and the real danger lies. 


The way I see it, we had two acts of terrorism in the US this week. The first took place at the end of the historic Boston Marathon, when two bombs went off near the finish line, killing three and seriously injuring dozens of runners and spectators. The second happened a couple days later in the town of West, Texas, where a fertilizer plant blew up, incinerating or otherwise killing at least 15, and injuring at least 150 people, and probably more as the search for the dead and the injured continues.

It’s pretty clear that the Boston Marathon bombing was an act of terrorism, with police making arrests and having killed one of the two suspects who had earlier been captured on film and video at the scene of the bombings.
The villains in the West Fertilizer Co. explosion can be much more easily identified: the managers and owners of the plant.

West Fertilizer was built starting back in 1962 in the middle of the small town of West, TX, a community founded in the 19th century and named after the first local postmaster, T.M. West. It makes no sense, of course, to locate such a facility that uses highly toxic anhydrous ammonia as a primary feed stock (a compound that burns the lungs and kills on contact, and that, because it must be stored under pressure, is highly prone to leaks and explosive releases), and one that makes as its main product ammonium nitrate fertilizer, around lots of people. Ammonium nitrate, recall, is the highly explosive compound favored by truck bombers like the Oklahoma City bomber Timothy McVeigh. It was the fertilizer, vast quantities of which were stored at the West Fertilizer plant site, which caused the colossal explosion that leveled much of the town of West.

Building such a dangerous facility in the midst of a residential and business area, and allowing homes, nursing homes, hospitals, schools and playgrounds to be built alongside it, is the result of a corrupt process that is commonplace in towns and cities across America, where business leaders routinely have their way with local planning and zoning commissions, safety inspectors and city councils. Businesses small and large also have their way with state and federal safety and health inspectors too.

We know that the EPA, back in 2006, cited West Fertilizer for not having an emergency risk management plan. That is, a dangerous and explosion-prone plant that was using a hazardous chemical in large quantities, and that was storing highly explosive material also in large quantities, had made little or no effort to assess the risks of what it was doing. Indeed, it has been reported that the company had assured the EPA, in response to the complaint, that there was “no risk” of an explosion at the plant! An AP article reports that the company, five years after being cited for lacking a risk plan, did file one with the EPA, but that the report claimed the company “...was not handling flammable materials and did not have sprinklers, water-deluge systems, blast walls, fire walls or other safety mechanisms in place at the plant.”

Yet the AP article goes on to say that “State officials require all facilities that handle anhydrous ammonia to have sprinklers and other safety measures because it is a flammable substance, according to Mike Wilson, head of air permitting for the Texas Commission on Environmental Quality.” The article says:

Article image
“Records reviewed by The Associated Press show the U.S. Pipeline and Hazardous Materials Safety Administration fined West Fertilizer $10,000 last summer for safety violations that included planning to transport anhydrous ammonia without a security plan. An inspector also found the plant's ammonia tanks weren't properly labeled.”
Then the article gets to the crux of the problem, saying:

“The government accepted $5,250 after the company took what it described as corrective actions, the records show. It is not unusual for companies to negotiate lower fines with regulators.”

Aside from the ridiculousness of West Fertilizer management’s reported assertion that the plant wasn’t handling flammable materials (a claim that the current deadly catastrophe has demonstrably proved was false), consider the incredible response of the EPA to this incredible assertion: The agency, emasculated by the Bush administration, and still a joke under the Obama administration, levied a pathetically small fine, but did nothing to shut the operation down until it put in place critical safety measures.

The other agency that could have acted, the Occupational Safety and Health Administration (OSHA), is even more of a paper tiger than the EPA. Despite their inherent risks and hazards, it is reported that OSHA has made only six investigations of fertilizer plant operators in Texas in the last six years. West Fertilizer was not one of them. In six years, it has not been visited by OSHA inspectors!

How can this be so? Because the entire health and safety regulatory apparatus of the US, from the federal level to the states and right down to local government, has been effectively neutered by corporate interests, who have used everything from threats of relocating to campaign contributions and outright bribes of officials and elected representatives to buy or win the right to basically operate as unsafely as they like, free of supervision.

As a result, regulation of dangerous plants and factories in the US these days is essentially nonexistent.

That, to me, is a kind of terrorism, and it is far more dangerous to the health and safety of the American people than any foreign or domestic terrorist or terrorist organization.

Yet the bulk of the American people are focusing their fears on terrorists from abroad, or in some cases here at home, not on the corporate suites where the real evil and the real danger lies.

Until we Americans wake up and insist that our elected officials and the regulatory bureaucrats they appoint, actually act in the public interest and not in the interest of the moneyed corporate elite (booting out those that betray us), we will increasingly all pay the price as plants blow up or leak toxic gas, as oil and gas companies wantonly pollute our water tables with carcinogenic toxins, and as nuclear power plants dump isotopes into our environment, all in the interest of profits.

The real terrorists in our midst are not men with knapsacks and white baseball caps who plant homemade bombs. They are not swarthy terrorists from the Middle East. Rather, they are the mostly white men (and women) in business suits on Wall Street and Main Street who callously use their wealth to subvert the political system to their short-term advantage, causing common-sense safety and health precautions to be ignored, or getting those laws watered down or outright cancelled.

Of course, a classic terrorist is trying to kill while the corporate executive is often “just” putting concerns about profits ahead of concerns about the safety or workers and people who live nearby, but in the final analysis, the victim of an exploded fertilizer plant is just as dead or as maimed as the victim of a terrorist’s bomb. The difference is that we won’t see the FBI or the local police tracking down and arresting the killers and maimers in the case of a fertilizer plant explosion. The people responsible for that type of outrage typically just hide behind the immunity of their company's corporate "personhood," collect their insurance payments (maybe paying some token fine), rebuild, and go on making their dangerous product as before -- usually in the same location.

ABOUT Dave Lindorff
Dave Lindorff is an investigative reporter, a columnist for CounterPunch, and a contributor to Businessweek, The Nation, Extra! and Salon.com. He received a Project Censored award in 2004. Dave is also a founding member of the online newspaper ThisCantBeHappening! at www.thiscantbehappening.net

Clear Evidence That Corporate America Wants the Govt. to Treat Protesters as 'Terrorists'

  Corporate Accountability and WorkPlace  


Major company behind the Keystone XL pipeline wants American police to treat people sitting in trees like Mohammad Atta. 



Corporations are trying to use the PATRIOT Act in ways that have nothing to do with Osama Bin Laden because the PATRIOT Act gives transnational corporations the power to snuff out the activism of all those who oppose them.

Terrorism, as it is commonly considered, is the use of violence against civilians to achieve any number of political ends: the destruction of the federal government, the overturning of Roe V. Wade, the restoration of a Caliphate. If you try to kill people – or succeed in killing people for a political purpose - you’re a terrorist. If you blow up the Alfred P. Murrow Federal Building and kill 168 civilians, like Timothy McVeigh, you’ve committed an act of terrorism.

Seems pretty self-explanatory – right? Not according to TransCanada Corp., the Canadian owned energy conglomerate that is the backer of the Keystone XL pipeline extension. A new set of documents obtained by the group Bold Nebraska shows that this foreign corporation is encouraging American law enforcement agencies to treat anti-pipeline protestors like terrorists. Yes, terrorists.

The documents, which Bold Nebraska got a hold of through a FOIA request, were part of a briefing given to Nebraska law enforcement agents about the “emerging threat” of groups like Tar Sands Blockade and Rainforest Action.

And what are the “terrorist” activities that TransCanada is so concerned about? They include things like monkey-wrenching, tree-sitting, and tying yourself to a construction vehicle with a device called a “dragon-lock.”

If this seems familiar, it should, because what groups like Tar Sands Blockade are engaging in is classic civil disobedience. This is not terrorism, but this foreign corporation TransCanada wants American law enforcement agents to start looking at it like it is. By far the most damning document obtained by Bold Nebraska urges Nebraska authorities to consider using “State or Federal Anti-Terrorism laws prohibiting sabotage or terroristic acts against critical infrastructures.” In other words, TransCanada thinks American police should treat the blocking of construction vehicles just like the blowing up of a bus in downtown Washington, D.C.

If a group of Tar Sands Blockade activists were, in fact, planning to bomb TransCanada’s Calgary, Alberta headquarters or to assassinate its CEO, then they would absolutely be terrorists. But right now, they’re just protestors or vandals and should not be treated as terrorists.

So what makes TransCanada think it can get the American police to treat people sitting in trees like Mohammad Atta? The PATRIOT Act. The U.S. Legal Code definition of terrorism was expanded to include a new meaning of “domestic terrorism” by Congress in 2001. This new definition considers domestic terrorism as:

“…activities that involve acts dangerous to human life that are a violation of the criminal laws of the United States or of any State; appear to be intended to intimidate or coerce a civilian population; to influence the policy of a government by intimidation or coercion; or to affect the conduct of a government by mass destruction, assassination, or kidnapping; and occur primarily within the territorial jurisdiction of the United States"

According to the ACLU, “this definition is broad enough to encompass the activities of…prominent activists, campaigns and organizations.” Given the right lawyer, TransCanada could convince a federal judge that monkey-wrenching and tying oneself to a construction vehicle is “dangerous to human life” or intended to “intimidate a civilian population.”

We already know, thanks to Edward Snowden, that our government has used the broad powers of the PATRIOT Act to amass a large collection of American citizens’ telephone records, something even one of its authors, Republican Congressman Jim Sensenbrenner, has said goes beyond what he thinks was its original intent .

Do we really want to give corporations this sort of power to misuse our criminal justice system? Our Founders envisioned a society in which all were held accountable to and by the law, not a society in which vague and overly broad statutes empowered foreign private corporations to persecute activists. Let’s repeal the PATRIOT Act not only to preserve our civil liberties, but to protect our democratic republic from the predations of transnational corporations.

Thom Hartmann is an author and nationally syndicated daily talk show host. His newest book is The Thom Hartmann Reader.