The US Securities and Exchange Commission on 16 April 2010, filed a complaint in the Southern District of New York, a US district court against Goldman Sachs &Co, and Fabrice Tourree, currently working for Goldman in London. The complaint charges civil claims of fraud. This claim was brought by the newly established enforcement division of the SEC that focuses on structured and new products. This specialised Unit within the SEC Enforcement division focuses on complex derivatives and financial products, which include credit default swaps. Collateralised debt obligations and securitised products. This claim is an amazing development in securities regulation enforcement as it targets a leader in Wall Street and a firm that prides itself on disclosure and legal compliance. It is my opinion that this action is the SEC’s shot across the bow for firms that underestimated the political fallout from the Global Financial Crisis. Also, this cause of action is an opportunity for the SEC to re-establish itself as a cop on the beat rather than a tool of Wall Street.
The complaint by the SEC describes an arrangement facilitated by Goldman that misled investors to believe they were investing in quality debt obligations while another Goldman client participated in the set-up and then sold short. A simplistic explanation follows but first let me quote the SEC . “The product was new and complex but the deception and conflicts are old and simple,” SEC Enforcement Director Robert Khuzami said. “Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party.” (see citations below)
The players
Goldman, and employee Fabrice Touree
John Paulson, and the Hedge Fund, Paulson & Co.
The played
ACA Capital Holdings
IKB Deutsche Industriebank AG
maybe you and me
Very, very simplistically, Goldman asked a well respected bond insurer, ACA Capital Holdings, to assist in creating a portfolio of mortgage backed debt. ACA had expertise in residential –mortgage backed securities so they would select the assets in the portfolio. Included in the meetings where assets were selected was Paulson & Co. Allegedly, ACA was informed by Goldman that Paulson was an equity investor in the deal. (see SEC Complaint section E, para’s 25-35) In reality, according to the complaint, Paulson & Co from the beginning believed that the residential mortgage market was about to have a ‘credit event’ and tank. Paulson & Co intended to short the deal.
Once the portfolio had been selected by ACA and Paulson, Goldman marketed it to clients. IKB Deutsche Industriebank AG bought in to the deal because ACA, a reputable bond insurer, had chosen the debt vehicles. There is some evidence to show that during negotiations in the early stages, Paulson & Co did not approve of some Wells Fargo debt that would be better performing. ACA questioned this. (see SEC Complaint section E, para 24)
Regardless of any doubts, the deal was concluded and IKB invested in the portfolio. Paulson & Co shorted it and 2 months later all of the assets were worthless. ACA went bankrupt and IKB is now majority owned by the Royal Bank of Scotland.
In many of the stories regarding this complaint the name of Warren Buffett comes up. Buffett invested in Goldman in 2008 when there were questions about Goldman’s integrity. Buffett staked his reputation on Goldman. Uh, well, how is that workin’ for you Warren???
Money does funny things to people. I learned this when I worked on an equity trading desk in the late 80’s. We need cops like the SEC to get everyone’s head out of the sand particularly given the devastating effect of he Global financial crisis here and abroad. I hope the SEC shows some leadership.
As always we wait with interest to read Goldman’s well crafted and expertly written response to this complaint. We all know this is the tip of the iceberg. Let’s see if the SEC, and Goldman for that matter, has what it takes to see this through.
http://www.businessweek.com/news/2010-04-17/goldman-sachs-clients-first-pledge-undercut-by-sec-update1-.html
http://bx.businessweek.com/financial-regulation/view?url=http%3A%2F%2Fwww.bloomberg.com%2Fapps%2Fnews%3Fpid%3D20601087%26sid%3DaMVnYAF6bYCw
http://www.sec.gov/news/press/2010/2010-59.htm
Saturday, April 17, 2010
Monday, April 12, 2010
Civil Procedure in Action: more drama surrounding the 2008 SADC Tribunal ruling!
A house owned by the Zimbabwe government and located in the Cape Town suburb of Kenilworth was attached in early April pursuant to a court order from the High Court of South Africa. See Muzungu on Africa, 10 Feb 2010. The court order registered the SADC tribunal ruling of 2008 as well as a late order granting damages to white farmers whose land was seized in Zimbabwe under the government’s land reform programme.
I teach Civil Litigation, and have done for many years, through the University of California, at Irvine, Paralegal Extension Program. Procedural matters are thrilling. It is in the process of satisfying judgments that you begin to emerge from the smoke (and mirrors) of the dispute and reach a state of clarity. You have a judgment and it will be satisfied. The dispute is over so there is no more emotional turmoil only satisfaction of the judgment. I like that imagined space.
The Zim government originally claimed that the property had diplomatic immunity so it could not be attached. News reports stated that this was not the case and the property was in fact attached in order to satisfy the court judgment. (see endnote citation)
However, in a fascinating twist the South African Government said it would oppose the attachment of property. I wait with interest for any news regarding the grounds of this opposition. The opposition could jeopardise the High Court ruling and undermine the SADC Tribunal ruling as well.
There is something greater than politics at play here. What is at stake in all of these proceedings is the legitimacy of the SADC Tribunal itself. That tribunal represents both SA and Zim together as members of SADC. If the SA High Court ruling is not respected it is tragic for all the parties involved because it destabilises the SADC ruling. A working and respected SADC Tribunal takes all disputes under SADC jurisdiction, out of domestic courts and sets them for resolution in an arena that is consensual and co-operative. I think this is a good thing. The facts surrounding this ruling make it more interesting to write (and read) about but for me it is about alternative dispute resolution and not racial and political friction in that desperate part of the planet.
I look forward to learning about the basis for the SA government opposition. You may recall, they did not oppose the registration of the SADC ruling way back when it made sense to do so.
Politics may win out-it seems to trump everything down there. Yet, I am hopeful. Civil procedure is a powerful thing. It’s like laser surgery-little or no blood, but it eradicates the target.
www.news24.com/.../Zim_property_seized_in_Cape_Town - South Africa
http://iluvsa.blogspot.com/2010/04/i-am-confused.html
I teach Civil Litigation, and have done for many years, through the University of California, at Irvine, Paralegal Extension Program. Procedural matters are thrilling. It is in the process of satisfying judgments that you begin to emerge from the smoke (and mirrors) of the dispute and reach a state of clarity. You have a judgment and it will be satisfied. The dispute is over so there is no more emotional turmoil only satisfaction of the judgment. I like that imagined space.
The Zim government originally claimed that the property had diplomatic immunity so it could not be attached. News reports stated that this was not the case and the property was in fact attached in order to satisfy the court judgment. (see endnote citation)
However, in a fascinating twist the South African Government said it would oppose the attachment of property. I wait with interest for any news regarding the grounds of this opposition. The opposition could jeopardise the High Court ruling and undermine the SADC Tribunal ruling as well.
There is something greater than politics at play here. What is at stake in all of these proceedings is the legitimacy of the SADC Tribunal itself. That tribunal represents both SA and Zim together as members of SADC. If the SA High Court ruling is not respected it is tragic for all the parties involved because it destabilises the SADC ruling. A working and respected SADC Tribunal takes all disputes under SADC jurisdiction, out of domestic courts and sets them for resolution in an arena that is consensual and co-operative. I think this is a good thing. The facts surrounding this ruling make it more interesting to write (and read) about but for me it is about alternative dispute resolution and not racial and political friction in that desperate part of the planet.
I look forward to learning about the basis for the SA government opposition. You may recall, they did not oppose the registration of the SADC ruling way back when it made sense to do so.
Politics may win out-it seems to trump everything down there. Yet, I am hopeful. Civil procedure is a powerful thing. It’s like laser surgery-little or no blood, but it eradicates the target.
www.news24.com/.../Zim_property_seized_in_Cape_Town - South Africa
http://iluvsa.blogspot.com/2010/04/i-am-confused.html
Sunday, April 11, 2010
Growing Pains
I spent the weekend with my old Aunties in Salt Lake City, Utah. They were very concerned about South Africa.
Hate Speech is a sophisticated concept. Once a country paves the way for Hate Speech they have to deal with lots of unintended consequences.
The SA Hate Speech provisions read:
In South Africa, Act No. 4 of 2000: Promotion of Equality and Prevention of Unfair Discrimination Act.contains the following clause:
10. (1) Subject to the proviso in section 12. no person may publish, propagate, advocate or communicate words based on one or more of the prohibited grounds, against any person, that could reasonably be construed to demonstrate a clear intention to -
(a) be hurtful;
(b) be harmful or to incite harm;
(c) promote or propagate hatred.
All I can think about is Martin Luther King Jr. (Sorry, I am Muzungu after all). I asked my old Aunties what it was really like when he was shot. They said the entire country was horrified, appalled and distressed. I was just trying to get a bead on the time when race relations in the US was ‘bad’, like people died. [some may argue that happens everyday through the dominance of the white majority but that is not actually everywhere in the US, mostly in urban areas, if at all]
I don’t really understand racial relations in SA. But I do think that Hate Speech takes a lot of getting used to. You need to put yourself in the other guy’s shoes. You cannot just say what you like. You have to worry about inciting violent acts as a consequence of your speech. That is exceedingly difficult.
I worry about the World Cup and I worry that the growing pains of racial tolerance have hit SA at the worst possible time, just like everyone else.
Hate Speech is a sophisticated concept. Once a country paves the way for Hate Speech they have to deal with lots of unintended consequences.
The SA Hate Speech provisions read:
In South Africa, Act No. 4 of 2000: Promotion of Equality and Prevention of Unfair Discrimination Act.contains the following clause:
10. (1) Subject to the proviso in section 12. no person may publish, propagate, advocate or communicate words based on one or more of the prohibited grounds, against any person, that could reasonably be construed to demonstrate a clear intention to -
(a) be hurtful;
(b) be harmful or to incite harm;
(c) promote or propagate hatred.
All I can think about is Martin Luther King Jr. (Sorry, I am Muzungu after all). I asked my old Aunties what it was really like when he was shot. They said the entire country was horrified, appalled and distressed. I was just trying to get a bead on the time when race relations in the US was ‘bad’, like people died. [some may argue that happens everyday through the dominance of the white majority but that is not actually everywhere in the US, mostly in urban areas, if at all]
I don’t really understand racial relations in SA. But I do think that Hate Speech takes a lot of getting used to. You need to put yourself in the other guy’s shoes. You cannot just say what you like. You have to worry about inciting violent acts as a consequence of your speech. That is exceedingly difficult.
I worry about the World Cup and I worry that the growing pains of racial tolerance have hit SA at the worst possible time, just like everyone else.
Sunday, April 4, 2010
US conference on Zimbabwe
Interesting conference trying to create a middle-path discussion about Zimbabwe.
http://www.africaaction.org/conference-home.html
http://www.africaaction.org/conference-home.html
Thursday, March 25, 2010
Securities Regulatory Reform
(I do not think this is a repeat but...apologies if some of it is...also I need to figure out how to use end notes on Blogger!!!!)
Regulation raises questions: is it good or bad, an obstacle to social progress? While securities industry financial reform is still a proposal in the United States, there is time yet for reflection on how best to reform securities regulation. There are two concepts that should be part of the reform dialogue, one is education and the other is responsibility.
Education of everyday participants in the economy should be required in an financial reform anticipated in the US. It is hubris not to include a heavy dose of education. As discussed above, regulators worldwide think investor education is important for a healthy market. Investor education must encompass more than an effort to build confidence in the markets—it must actually inform the investor. It is heartening to note that IOSCO and the International Forum for Investor Education (“IFIE”) have already organized a conference to address global standards for investor education. While the IFIE only began in 2005 and only 125 people were invited to attend, the conference goals were encouragingly ambitious, and necessary. The speaker list included educators from around the globe, including Africa. This is a good beginning because it is an example of how responsible regulators must think. This type of responsible forward thinking must inform our regulatory reform.
Responsibility of Care
There is a tendency in the West, to talk about capitalism- of which stock exchanges are the bell weather- as non-moral while all the time the morality is implicit. Taking responsibility for ones actions is a moral act and not one that international financial actors are accustomed with. But that does not prevent us from considering moral responsibility as part of the inevitable financial reform. Financial reformers will be better able to provide prudent legislation by considering the crisis through a lens of ethical responsibility owed by businesses involved.
As legislators contemplate how to reform financial regulations, and education, they need to consider making financial actors more responsible. Borrowing from concepts of Corporate Social Responsibility, the relationship between business and society, whether global or domestic, is permeated by ethical values. Business ethics includes social responsibility owed by companies and corporations as they interact with one another and individuals. John Rawls argued that rational persons enter into terms of association based on principles of fairness or justice, as opposed to a social contract. All persons are “similarly situated” so that no one has the upper hand in deciding their own moral fate, as opposed to how they treat others. The association garners its equality from a hypothetical ignorance of one’s own advantages and qualities. Corporations and business must consider these concepts from a global perspective.
Corporate Social Responsibility is not the only paradigm we can utilize. Self-regulation within industries can develop into industrial morality. Within the self-regulated industry there develops a responsibility to consider not only what is good for the members of the industry, and what is best for society in general. Eventually, responsibility becomes institutionalized and, when making decisions, like a moral individual, the industry will reflect on the consequences of various choices. Similar to the concept of sustainability, one of the Millennium Development Goals (“MDG”), actors in the securities industry can be incentivized through regulation to consider what is best for the common good.
Securities regulation was not at the heart of the GFC, banking regulation was. The White Paper however contains securities related reforms. The securities industry will be changed along with the banking industry by the inevitable legislative reforms. Now is the opportunity to explore the full extent of helpful securities regulatory reform. Africa does far afield from this discourse but our securities industry, through our government machinery, is involved. We need to realize that. We also need to appreciate that a global financial community exists and along with it comes responsibility. As far as the effect of the GFC on East African exchanges, since the beginning of the crisis, Kenya, Uganda, and Tanzania have postponed bond issues on international exchanges. External financing is no longer available, so African regional integration projects have stopped. The African Development Bank has, to the extent it is capable, attempted to co-finance projects. Participating in the global financial community has its risks and benefits. There are advantages to liberalized capital markets, such as the possible establishment of international standards, an increase in transparency and accountability, and potential increases in domestic competition and economic growth.
The situation in Africa illustrates the fact that liberalization exposes the economy to potential outflows of capital causing economic contraction and hardship. The question then arises whether the benefits of liberalization are outweighed by the costs—in human terms. At the same time, discussion of the GFC is not limited to economic or legal frameworks; there is an education framework. We in developed financial systems can learn from East Africa to include more education in our securities regulation regime. Additionally, there are ethical dimensions to the crisis. The consequences of risk-taking by bankers and investment professionals, namely the GFC and the global recession, were catastrophic worldwide. Regulatory reform is inevitable in the developed world in light of how devastating the effects of the GFC have been there. To be effective any reform should be guided by an understanding of the ethical responsibilities inherent in making decisions that have the potential for such dire consequences.
END NOTES
Rebuilding Investor Confidence: IOSCO and IFIE Hold Major Investor Education Conference.... REUTERS, Jan. 12, 2009, http://www.reuters.com/article/idUS177539+12-Jan-2009+PRN20090112.
Press Release, Int’l Forum for Investor Educ. & Int’l Org. Of Sec. Commissions, More than 100 of the World’s Investor Education Leaders to Attend IOSCO/IFIE Conference in Washington, D.C. (2009), available at http://www.ifie.org/assets/files/IFIE_IOSCO_DC_conference_2nd_advisory.pdf. The goal of the conference was to gather capital market experts and provide attendees information needed to start investor education programs. Id.
Id. BothAllen Rwakakooko from Uganda and an official from the CMA in Egypt were invited to speak. Id.
James Ferguson, GLOBAL SHADOWS: AFRICA IN THE NEOLIBERAL WORLD ORDER, 80-88 (2007).(discussing structural adjustment programmes imposed by the World Bank and IMF on borrower African nations)
Id at 86.
Antonion Argandona, Can Corporate Social Responsibility Help Us Understand the Credit Crisis 10 (IESE Business School, Working Paper No. WP-790, 2009).
This Article assumes that the reader is familiar with the causes of the financial crisis as well as the responsible actors such as credit rating agencies, mortgage lenders and banks. See generally, MARTIN BAILY, ROBERT LITAN, AND MATTHEW JOHNSON, BROOKINGS INST., THE ORIGINS OF THE FINANCIAL CRISIS, (2008) (explaining the causes of the financial crisis).
See Elisabet Garriga & Domènec Melé, Corporate Social Responsibility Theories: Mapping the Territory, 53 J. BUS. ETHICS 51, passim ( 2004).
PETER NUNNENKAMP, KIEL INST. FOR WORLD ECONS. CORPORATE SOCIAL RESPONSIBILITY AND SOCIALLY RESPONSIBLE INVESTMENT 1 (2004).
John Rawls, A Theory of Justice, in AN INTRODUCTION TO BUSINESS ETHICS 214 (GEORGE D. Chryssides & John H. Kaler eds., 1993).
See Karen Ellis, Is CSR just Corporates saying the Right Things?, OVERSEAS DEV. INST. 100, 100 (2008), available at http://www.odi.org.uk/resources/download/1226.pdf.
Neil Gunningham & Joseph Rees, Industry Self-Regulation: An Institutional Perspective, 19 LAW & POL’Y, 363, 276 (1997).
Id. at 378.
Id. at 381-82.
African Development Bank, Africa and the Financial Crisis: An Agenda for Action, Policy Briefs on the Financial Crisis, No. 13 (2009).
Id. at 3.
Id. at 4.
See Paul Olivera, Investment Including Capital Movement, INT’L TRADE L. & REG., at 40 (2009).
Id. at 44.
Regulation raises questions: is it good or bad, an obstacle to social progress? While securities industry financial reform is still a proposal in the United States, there is time yet for reflection on how best to reform securities regulation. There are two concepts that should be part of the reform dialogue, one is education and the other is responsibility.
Education of everyday participants in the economy should be required in an financial reform anticipated in the US. It is hubris not to include a heavy dose of education. As discussed above, regulators worldwide think investor education is important for a healthy market. Investor education must encompass more than an effort to build confidence in the markets—it must actually inform the investor. It is heartening to note that IOSCO and the International Forum for Investor Education (“IFIE”) have already organized a conference to address global standards for investor education. While the IFIE only began in 2005 and only 125 people were invited to attend, the conference goals were encouragingly ambitious, and necessary. The speaker list included educators from around the globe, including Africa. This is a good beginning because it is an example of how responsible regulators must think. This type of responsible forward thinking must inform our regulatory reform.
Responsibility of Care
There is a tendency in the West, to talk about capitalism- of which stock exchanges are the bell weather- as non-moral while all the time the morality is implicit. Taking responsibility for ones actions is a moral act and not one that international financial actors are accustomed with. But that does not prevent us from considering moral responsibility as part of the inevitable financial reform. Financial reformers will be better able to provide prudent legislation by considering the crisis through a lens of ethical responsibility owed by businesses involved.
As legislators contemplate how to reform financial regulations, and education, they need to consider making financial actors more responsible. Borrowing from concepts of Corporate Social Responsibility, the relationship between business and society, whether global or domestic, is permeated by ethical values. Business ethics includes social responsibility owed by companies and corporations as they interact with one another and individuals. John Rawls argued that rational persons enter into terms of association based on principles of fairness or justice, as opposed to a social contract. All persons are “similarly situated” so that no one has the upper hand in deciding their own moral fate, as opposed to how they treat others. The association garners its equality from a hypothetical ignorance of one’s own advantages and qualities. Corporations and business must consider these concepts from a global perspective.
Corporate Social Responsibility is not the only paradigm we can utilize. Self-regulation within industries can develop into industrial morality. Within the self-regulated industry there develops a responsibility to consider not only what is good for the members of the industry, and what is best for society in general. Eventually, responsibility becomes institutionalized and, when making decisions, like a moral individual, the industry will reflect on the consequences of various choices. Similar to the concept of sustainability, one of the Millennium Development Goals (“MDG”), actors in the securities industry can be incentivized through regulation to consider what is best for the common good.
Securities regulation was not at the heart of the GFC, banking regulation was. The White Paper however contains securities related reforms. The securities industry will be changed along with the banking industry by the inevitable legislative reforms. Now is the opportunity to explore the full extent of helpful securities regulatory reform. Africa does far afield from this discourse but our securities industry, through our government machinery, is involved. We need to realize that. We also need to appreciate that a global financial community exists and along with it comes responsibility. As far as the effect of the GFC on East African exchanges, since the beginning of the crisis, Kenya, Uganda, and Tanzania have postponed bond issues on international exchanges. External financing is no longer available, so African regional integration projects have stopped. The African Development Bank has, to the extent it is capable, attempted to co-finance projects. Participating in the global financial community has its risks and benefits. There are advantages to liberalized capital markets, such as the possible establishment of international standards, an increase in transparency and accountability, and potential increases in domestic competition and economic growth.
The situation in Africa illustrates the fact that liberalization exposes the economy to potential outflows of capital causing economic contraction and hardship. The question then arises whether the benefits of liberalization are outweighed by the costs—in human terms. At the same time, discussion of the GFC is not limited to economic or legal frameworks; there is an education framework. We in developed financial systems can learn from East Africa to include more education in our securities regulation regime. Additionally, there are ethical dimensions to the crisis. The consequences of risk-taking by bankers and investment professionals, namely the GFC and the global recession, were catastrophic worldwide. Regulatory reform is inevitable in the developed world in light of how devastating the effects of the GFC have been there. To be effective any reform should be guided by an understanding of the ethical responsibilities inherent in making decisions that have the potential for such dire consequences.
END NOTES
Rebuilding Investor Confidence: IOSCO and IFIE Hold Major Investor Education Conference.... REUTERS, Jan. 12, 2009, http://www.reuters.com/article/idUS177539+12-Jan-2009+PRN20090112.
Press Release, Int’l Forum for Investor Educ. & Int’l Org. Of Sec. Commissions, More than 100 of the World’s Investor Education Leaders to Attend IOSCO/IFIE Conference in Washington, D.C. (2009), available at http://www.ifie.org/assets/files/IFIE_IOSCO_DC_conference_2nd_advisory.pdf. The goal of the conference was to gather capital market experts and provide attendees information needed to start investor education programs. Id.
Id. BothAllen Rwakakooko from Uganda and an official from the CMA in Egypt were invited to speak. Id.
James Ferguson, GLOBAL SHADOWS: AFRICA IN THE NEOLIBERAL WORLD ORDER, 80-88 (2007).(discussing structural adjustment programmes imposed by the World Bank and IMF on borrower African nations)
Id at 86.
Antonion Argandona, Can Corporate Social Responsibility Help Us Understand the Credit Crisis 10 (IESE Business School, Working Paper No. WP-790, 2009).
This Article assumes that the reader is familiar with the causes of the financial crisis as well as the responsible actors such as credit rating agencies, mortgage lenders and banks. See generally, MARTIN BAILY, ROBERT LITAN, AND MATTHEW JOHNSON, BROOKINGS INST., THE ORIGINS OF THE FINANCIAL CRISIS, (2008) (explaining the causes of the financial crisis).
See Elisabet Garriga & Domènec Melé, Corporate Social Responsibility Theories: Mapping the Territory, 53 J. BUS. ETHICS 51, passim ( 2004).
PETER NUNNENKAMP, KIEL INST. FOR WORLD ECONS. CORPORATE SOCIAL RESPONSIBILITY AND SOCIALLY RESPONSIBLE INVESTMENT 1 (2004).
John Rawls, A Theory of Justice, in AN INTRODUCTION TO BUSINESS ETHICS 214 (GEORGE D. Chryssides & John H. Kaler eds., 1993).
See Karen Ellis, Is CSR just Corporates saying the Right Things?, OVERSEAS DEV. INST. 100, 100 (2008), available at http://www.odi.org.uk/resources/download/1226.pdf.
Neil Gunningham & Joseph Rees, Industry Self-Regulation: An Institutional Perspective, 19 LAW & POL’Y, 363, 276 (1997).
Id. at 378.
Id. at 381-82.
African Development Bank, Africa and the Financial Crisis: An Agenda for Action, Policy Briefs on the Financial Crisis, No. 13 (2009).
Id. at 3.
Id. at 4.
See Paul Olivera, Investment Including Capital Movement, INT’L TRADE L. & REG., at 40 (2009).
Id. at 44.
Tuesday, March 23, 2010
Bitter Blog post
I really think that there is this tricky game you must play in law and academics and it is not pretty. I know I can write but playing THAT game, working at a University, is another thing all together. You cannot have a minority view. If you do, then you are marginalised. (This is not code for the healthcare bill. I have not been following that.) This is about teaching and university positions and publication.
I just mean to say, that you need to work hard to get your minority position 'outed' so to speak. That is a job all by itself.
I soon attend the Law and Society meeting, this time in Chicago--the town of my birth. Will I espouse my minority viewpoint.....hell yeah. Does it matter? Well, sort of. My analogy is District 9.
No one understood the movie...including me most probably....but it is out there. Unlike my journal article on East African Securities law which has hit all sorts of snags. I honestly believe what I say is not very popular in America. I am trying to inform my people but it is not received very well.
This bitter blog is to say, intellectual life in the fringe is isolated but not lonely.
I just mean to say, that you need to work hard to get your minority position 'outed' so to speak. That is a job all by itself.
I soon attend the Law and Society meeting, this time in Chicago--the town of my birth. Will I espouse my minority viewpoint.....hell yeah. Does it matter? Well, sort of. My analogy is District 9.
No one understood the movie...including me most probably....but it is out there. Unlike my journal article on East African Securities law which has hit all sorts of snags. I honestly believe what I say is not very popular in America. I am trying to inform my people but it is not received very well.
This bitter blog is to say, intellectual life in the fringe is isolated but not lonely.
Friday, March 19, 2010
What must be done about past harms?
Many of the new laws and policies in Zimbabwe are (in their best light) an attempt to rectify past harms. In fact, much of the discourse about justice in Africa concerns compensation for past harms. Simplistically, the idea is that imperialism, invasion and exploitation harmed much (all) of the developing world. Independence of these nations ended that harm. However, the harm continues because years of dominance deprived indigenous populations of an opportunity to educate themselves, gain work experience and become middle-class rather than rural poor-this is the continuing harm that deprivation caused by oppression causes. Countries all over the world have attempted to compensate oppressed peoples of all kinds for harms caused to them from a dominant majority. It continues to this day. Does any of it make any sense?? There are real problems with attempts to pay for past ‘mistakes’ or oppression.
Firstly, many reparations schemes cannot hope to realistically address a continuing harm when the oppression lasted over many years, nay centuries in some cases. The law cannot always design programs that extensive. Laws can do simple things like pay money, even over time, but it cannot right vast wrongs. I belive Society needs to do that. Its continuing harm. If you start someone off wrong it can be nigh impossible to set that right. Just ask anyone with kids. You must do something drastic and it usually involves you changing as well.
Secondly, reparations schemes sometimes lack finality. Just look at Truth and Reconciliation (not exactly reparations per se) in South Africa. The multinational corporations never participated and now we have suits in American courts over things that took place way down there.
Historically reparations schemes worldwide some were predominantly for war related harms such as: France paying Germany for reparations after the Franco-Prussian Was of 1872, Holocaust reparations paid by West Germany after World War II, Iraq reparations for the Gulf War. In the US, Native American Indian reparations take the form of Indian gaming laws on reservations (Indian land) as well as Japanese American World War 2 internment reparations, Hawaiian Annexation reparations and there are some more on the list. Some of these programs have their critics. Indian gaming rights has not reduced poverty or significantly contributed to better education on reservations. It has, however, forced some tribes to give up power in order to exercise their federal right to allow gambling on reservations-kinds of a step backwards rather than forward. (See Naomi Mezey, Note: The Distribution of Wealth, Sovereignty, and Culture through Indian Gaming) What the US has never approved of are reparations to African-American for slavery and the continuing harm this causes to the African-American community in the US. A critical legal scholar argues that a dominant perspective frequently causes those included in the dominant culture –members of the class that exerts economic and ideological control over a society—to minimise the need for reparations.
The ‘other’ perspective is the oppressed. Under this rubric we each will frequently only understand reparations from our separate perspective and not from the other perspective. This is a problem for the oppressed who never have others see their point of view. (see Vincene Verdun, If the shoe fits wear it: an Analysis of reparations to African Americans, 67 Tul L Rev 597, 610, 1993) The majority does not understand the concept of a continuing harm and want African Americans, for example, to just get on with it and give up the pursuit for reparations. However, there is an entirely different viewpoint which is that of the African American, in this example. The other viewpoint is not that of American individualism and limitations on liability. It is the viewpoint of the continuing harm that cannot rise above the detritus of the oppression because it is pervasive.
And what about all the other genocides and atrocities world wide whose victims never saw reparations—such as the raping of Nanking along with the other terrible things the Japanese did in mainland China before the outbreak of WW2?? No one will ever be compensated for any of those horrific events. What can we do about that? Apparently not much and maybe because we don’t feel guilty enough. Judith Butler a feminist scholar has argued that we even consider some lives worth grieving for and others-not so much (see Judith Butler, Frames of War: When is life grievable? 36 (2009))
I do believe the Indigenisation law in Zimbabwe uses a similar argument to support itself. The argument is that there is a harm that cannot be rectified by cash payment-rather the payment must be in kind. Companies doing business in Zim must be owned by indigenous Zimbabweans. This is one creative way to rectify and remedy a past harm which is the oppression of blacks. We could not have something similar in the US because of our Constitution. While some Justices of the Supreme Court have argued that the Equal Protection clause of the Constitution is colour blind*, the simple fact is that a law can be passed that is strictly based on race but if challenged it would face the strict scrutiny test, which asks if the legislation is based on a compelling governmental interest and narrowly tailored to achieve that interest. What is the governmental interest in Zimbabwe that allows for the Indigenisation law ?
I think the main difference between most of the reparation schemes I know about and the Indigenisation law in Zim, is that most reparations schemes are designed with the idea that there will be continued interaction between the peoples who are currently resolving past harm issues. In Zim, the Indigenisation programme is corrective justice but on a societal level. Somehow these plans force out the white majority rather than work together with them. Furthermore, since foreign owned firms are also affected by the indigenisation empowerment programme, this law will reach beyond its borders.
If we agree with the critical legal academe that there is a dominant view, then many will criticise the indigenous empowerment programmes in Zim but only because they cannot see the other side. It is possible, for arguments sake, they these schemes are not so wrongheaded. Certainly, the US has not really been able to get things 'right' with the Native American Indians. Also, concepts of constitutional law have prevented us from providing reparations to certain groups who suffered great harm.
Ultimately, what must be determined is whether these laws are effective in achieving what they say they desire-black empowerment across the country--and not simply enriching a few.
http://nankingthefilm.com/
See Eric Posner, Adrian Vermeule, Reparations for slavery and other historical injustices, 103 Columbia L Rev 689 (2003)
*Adarand Constructor, Inc v. Pena, 515 US 200, 239 (1995)
Firstly, many reparations schemes cannot hope to realistically address a continuing harm when the oppression lasted over many years, nay centuries in some cases. The law cannot always design programs that extensive. Laws can do simple things like pay money, even over time, but it cannot right vast wrongs. I belive Society needs to do that. Its continuing harm. If you start someone off wrong it can be nigh impossible to set that right. Just ask anyone with kids. You must do something drastic and it usually involves you changing as well.
Secondly, reparations schemes sometimes lack finality. Just look at Truth and Reconciliation (not exactly reparations per se) in South Africa. The multinational corporations never participated and now we have suits in American courts over things that took place way down there.
Historically reparations schemes worldwide some were predominantly for war related harms such as: France paying Germany for reparations after the Franco-Prussian Was of 1872, Holocaust reparations paid by West Germany after World War II, Iraq reparations for the Gulf War. In the US, Native American Indian reparations take the form of Indian gaming laws on reservations (Indian land) as well as Japanese American World War 2 internment reparations, Hawaiian Annexation reparations and there are some more on the list. Some of these programs have their critics. Indian gaming rights has not reduced poverty or significantly contributed to better education on reservations. It has, however, forced some tribes to give up power in order to exercise their federal right to allow gambling on reservations-kinds of a step backwards rather than forward. (See Naomi Mezey, Note: The Distribution of Wealth, Sovereignty, and Culture through Indian Gaming) What the US has never approved of are reparations to African-American for slavery and the continuing harm this causes to the African-American community in the US. A critical legal scholar argues that a dominant perspective frequently causes those included in the dominant culture –members of the class that exerts economic and ideological control over a society—to minimise the need for reparations.
The ‘other’ perspective is the oppressed. Under this rubric we each will frequently only understand reparations from our separate perspective and not from the other perspective. This is a problem for the oppressed who never have others see their point of view. (see Vincene Verdun, If the shoe fits wear it: an Analysis of reparations to African Americans, 67 Tul L Rev 597, 610, 1993) The majority does not understand the concept of a continuing harm and want African Americans, for example, to just get on with it and give up the pursuit for reparations. However, there is an entirely different viewpoint which is that of the African American, in this example. The other viewpoint is not that of American individualism and limitations on liability. It is the viewpoint of the continuing harm that cannot rise above the detritus of the oppression because it is pervasive.
And what about all the other genocides and atrocities world wide whose victims never saw reparations—such as the raping of Nanking along with the other terrible things the Japanese did in mainland China before the outbreak of WW2?? No one will ever be compensated for any of those horrific events. What can we do about that? Apparently not much and maybe because we don’t feel guilty enough. Judith Butler a feminist scholar has argued that we even consider some lives worth grieving for and others-not so much (see Judith Butler, Frames of War: When is life grievable? 36 (2009))
I do believe the Indigenisation law in Zimbabwe uses a similar argument to support itself. The argument is that there is a harm that cannot be rectified by cash payment-rather the payment must be in kind. Companies doing business in Zim must be owned by indigenous Zimbabweans. This is one creative way to rectify and remedy a past harm which is the oppression of blacks. We could not have something similar in the US because of our Constitution. While some Justices of the Supreme Court have argued that the Equal Protection clause of the Constitution is colour blind*, the simple fact is that a law can be passed that is strictly based on race but if challenged it would face the strict scrutiny test, which asks if the legislation is based on a compelling governmental interest and narrowly tailored to achieve that interest. What is the governmental interest in Zimbabwe that allows for the Indigenisation law ?
I think the main difference between most of the reparation schemes I know about and the Indigenisation law in Zim, is that most reparations schemes are designed with the idea that there will be continued interaction between the peoples who are currently resolving past harm issues. In Zim, the Indigenisation programme is corrective justice but on a societal level. Somehow these plans force out the white majority rather than work together with them. Furthermore, since foreign owned firms are also affected by the indigenisation empowerment programme, this law will reach beyond its borders.
If we agree with the critical legal academe that there is a dominant view, then many will criticise the indigenous empowerment programmes in Zim but only because they cannot see the other side. It is possible, for arguments sake, they these schemes are not so wrongheaded. Certainly, the US has not really been able to get things 'right' with the Native American Indians. Also, concepts of constitutional law have prevented us from providing reparations to certain groups who suffered great harm.
Ultimately, what must be determined is whether these laws are effective in achieving what they say they desire-black empowerment across the country--and not simply enriching a few.
http://nankingthefilm.com/
See Eric Posner, Adrian Vermeule, Reparations for slavery and other historical injustices, 103 Columbia L Rev 689 (2003)
*Adarand Constructor, Inc v. Pena, 515 US 200, 239 (1995)
Subscribe to:
Posts (Atom)