Joe Loses. Again

Miller and His Beard

For a lawyer who claimed on his website to have “mastered the law,” Joe Miller’s record in the last twelve months is dreadful. He’s now 0-6. Ouch.

1. He lost his fight to keep secret his felonious conduct at the Fairbanks North Star Borough Department of Law.
2. He lost the general election by 12,000 votes to a write-in candidate.
3. He lost his attempt to defeat the will of the voters in Alaska Superior Court.
4. He lost his second attempt to defeat the will of Alaska voters in the Alaska Supreme Court.
5. He lost his attempt to overturn the election in U.S. District Court.
6. And now he has lost his complaint to the Federal Election Commission.

The Federal Election Commission slapped down Miller’s complaint against the regional Native corporations. The case was summarily dismissed. Miller claimed that the regional Native corporations – Doyon, CIRI, Sealaska et al. – were “federal contractors.” A “federal contractor” is not permitted to make most kinds of campaign contributions. Joe “I’ve Mastered the Law” Miller failed to distinguish between a parent corporation and a subsidiary. Federal law doesn’t attribute the conduct of a parent corporation to its subsidiary. You’d think an avowedly really smart guy like PAC Man would have a grasp of the law of corporations. Apparently, you’d be wrong.

Miller seems to have only mastered arrogance.

Two other notes:

(1) WC thought candidate Miller was opposed to all forms of federal government not specifically authorized by the U.S. Constitution. The FEC sure isn’t mentioned there. So what’s he doing filing a complaint against the regional Native corporations of Alaska before a federal agency he professes to believe is unconstitutional?

(2) The U.S. Supreme Court’s decision in Citizens United, that removed all restriction on corporate contributions to political campaigns, remains a disaster for the American electoral process. But, just this once, it was sweet to see karma work against Teabaggers.

Okay. So Miller has mastered hypocrisy, too.

Case Study: When It Hits the Fan

WC offers this story – news which is still developing – as an illustration of just how far the . . . mud . . . can fly when it hits the fan. WC, as some readers may recall, uses an Olympus E-5 digital single lens reflex camera, and has a large collection of the superb Olympus (actually Olympus subsidiary Zuiko) lenses. So when Olympus, a company publicly traded on the tokyo stock exchange, suddenly shed half its value in two business days, WC was a little concerned.

The story is complex. Olympus apparently made some “acquisitions” outside of its core expertise in the 1990s. Olympus is primarily an imaging company, with the majority of sales in medical imaging. These acquisitions were a long ways from that area of core expertise. Even more unusually, up to a third of the acquisition price was paid to an obscure financial advisor, Axes America, as “advisory fees.” The advisory fees were about thirty times greater than what you might have expected in a merger and acquisition transaction, amounting to at least $687 million. The total amount is still unknown.

The scandal was discovered by Michael Woodford, the recently appointed, non-Japanese (but career Olympus employee) President of the company. Woodford was then fired because of a reported “culture clash.” Let WC translate that: he was fired because he discovered grave misconduct and tried to force an investigation.

Two weeks later, the chairman of the board of directors, who had fired Woodford, was forced to resign. The scandal has widened, and more officers have been fired. However, the board of directors remains unchanged, and still includes the chairman who resigned, Woodford and others. An outside committee reported that as much as a$1 billion may be involved.

Investors have voted with their feet. As of Tokyo stock market close today, Olympus had given up 49% of its share value in two days. The total decline is a breath-taking 70% since the scandal broke.

WC has to wonder where the auditors were in all of this. Reportedly, KPMG was the external auditor of Olympus. The New York Times reports KPMG “had a falling out” over the form of payments to an advisor. In 2009. Where had KPMG been for the last ten years?

Plainly, investors and customers don’t have the full story yet. Reuters links the payments to the dubious Akio Nakagawa, who engineered a since-banned technique for hiding corporate losses. Reuters reports Nakagawa is linked to Axes America. Reuters implies the banned loss-shuffling techniques may have still been going on, which in turn implies blackmail. Time Magazine quite properly reports that the explanations offered by the newest CEO Shuichi Takayama don’t make any kind of sense. CBS Money watch speculates:

No corporations like losses (unless the engineered kind that reduce taxes). Announcing them to investors is painful, so you can understand why executives might want them to go away. But there’s a big difference between wishful thinking and corrupt financial engineering, which is what some people at the top of Olympus allegedly did.

Although the details are still sketchy, apparently Olympus had suffered decades of losses on investments. Instead of admitting to one level of ineptitude, a few executives took things to a whole new level. They covered over the losses and then disguised them as acquisitions. Oh, they acquired companies, but the prices were sometimes outrageously high and the size of the fees to advisors, stunning.

So how far can the excrement splatter? All the way to Fairbanks, Alaska. The least profitable division of Olympus is reportedly the single lens reflex camera division. If your company is on the ropes, and you are looking to cut losses, which one will you axe? Which would leave WC with orphaned products. And because digital single lens reflex cameras are still rapidly evolving, WC’s gear would shortly be obsolescent. Sigh.