Administration Opposes Federal Shield Law for Journalists

If they have the strength of their convictions when they write a story then they should face what could happen when information in that story is supposed to be secret. The people need to know that is true but being a reporter doesn't give you a blank check to be a dumbass either.

If what your reporting is that important then it shouldn't matter what happens to you, the story should be all that matters. If you do jail time then that should be an accepted as part of the job.

'SF Chron' Reporters Get 18 Months For Not Testifying
'SF Chron' Reporters Get 18 Months For Not Testifying
San Francisco Chronicle
Published: September 21, 2006

Two San Francisco Chronicle reporters were sentenced to a maximum 18 months in prison Thursday, pending an appeal, for refusing to testify about who leaked them secret grand jury testimony from Barry Bonds and other elite athletes.

Lance Williams and Mark Fainaru-Wada published a series of articles and a book based partly on the leaked transcripts of the testimony of Bonds, Jason Giambi and others before a grand jury investigating the Bay Area Laboratory Co-Operative, a Burlingame-based nutritional supplement company exposed as a steroid ring two years ago.

Federal prosecutors asked U.S. District Judge Jeffrey White to send the pair to prison for the full term of the grand jury investigating the leak, or until they agree to testify. Both sides have agreed to stay the ruling by U.S. District Judge Jeffrey White pending an appeal to the 9th U.S. Circuit Court of Appeals in San Francisco.

"The court is hopeful that perhaps they'll reconsider their position when faced with the reality of incarceration," White said Thursday.

Williams and Fainaru-Wada have said repeatedly they would go to jail rather than comply with the grand jury's subpoena and reveal their source or sources.

"I'm supposed to keep my promises when people help me and take me at their word," Williams said in court. "I do despair for our country if we go very far down this road, because no one will talk to reporters."

The reporters agreed with the government that they are in contempt of court, but had sought a "nominal monetary fine" and other punishment "short of full-blown incarceration," including house arrest and weekend jailing, according to court documents.

In arguing for the stiff penalty, federal prosecutors cited the reporters' own statements that they would go to jail before testifying.

"Only imprisonment would be the type of sanction that's going to get their attention," said Assistant U.S. Attorney Douglas Miller.

Authorities are seeking to prosecute whoever unlawfully leaked the transcripts, and told White the reporters are the only ones who know the identity of their sources. White ordered the two to testify on Aug. 15.

The criminal conduct being investigated in the Bonds leak case includes possible perjury and obstruction of justice by government officials, defendants and their attorneys in the probe of BALCO, a Burlingame-based nutritional supplement company exposed as a steroid ring two years ago.

All had access to the leaked documents, but have sworn they weren't the source of the reporting by Williams and Fainaru-Wada.

In August, White ruled his hands were tied by a 1972 Supreme Court precedent that said no one - journalists included - was above the law and may refuse to testify before a federal grand jury.

Chronicle executive vice-president and editor Phil Bronstein said the case highlighted the need for a federal law to protect journalists from having to reveal confidential sources.

"It's a tragedy that the government seeks to put reporters in jail for doing their job," said Bronstein, standing with the two reporters outside the courthouse after the hearing.

Fainaru-Wada Not Focused On Jail, Hoping To Still Win On App
These two journalists are being sentenced to jail and not for leaking classified information.---BBB

Fainaru-Wada Not Focused On Jail, Hoping To Still Win On Appeal
By Joe Strupp - E & P
Published: September 22, 2006 11:00 AM ET

Mark Fainaru-Wada is nothing if not optimistic. While the rest of the news world is speculating on the likelihood that he and fellow San Francisco Chronicle reporter Lance Williams could soon be jailed following a judge's order Thursday sentencing them to 18 months behind bars, he remains confident it will not happen.

"I continue to hope and feel that we are going to win at some point," the Chronicle scribe said Friday morning, just hours after the federal judge handed down the sentence, stayed for the moment on appeal. "We hope that someone is going to find some argument in the law. We have a good case and someone is going to recognize we have room here."

Speaking via cell phone from the airport, Fainaru-Wada was waiting to return to a week-long family vacation that had been interrupted by the hearing. He plans to be back at work Monday, where he and Williams will continue their BALCO investigation, jail and hearings not withstanding.

"This is a step in the process that we had to make," Fainaru-Wada said about the hearing. "We are still covering BALCO and whatever stories come around."

Fainaru-Wada stressed that it was not worth spending a lot of time worrying about jail because there was no question that the reporters would do anything to protect their sources. "It is not in our DNA to change course," he declared. "We made a promise and we have to keep that promise. It is not even a choice. I don't want to spend a minute in jail, but that is not part of the consideration."

Asked if he regretted doing the stories or promising confidentiality, he said: "I wouldn't change a thing. There were a number of positive things that came out of this. More than anything we were able to evoke positive change."

Fainaru-Wada and Williams gained national fame in 2004 for revealing grand jury testimony from the federal investigation into the BALCO steroid scandal, which indicated baseball players Jason Giambi and Barry Bonds admitted using steroids. The reporting later resulted in a book, "Game of Shadows," released earlier this year.

But it also drew attention from federal investigators, resulting in a second grand jury to determine who leaked the testimony. That grand jury issued subpoenas for Fainaru-Wada and Williams to testify, which they have defied. The pair were found in contempt and, on Thursday, sentenced to 18 months in prison. The sentence has been stayed pending an appeal that is expected to take several months.

Recognizing that the sentencing is a step toward possible jail, Fainaru-Wada, who is married and the father of two, contends he is not thinking about that. "Jail is something we are not focusing on in that way," he said. "It is better to focus on winning, the appeals process will play itself out."

He said the discussion of jail had been limited even in the past when the reporters and Editor Phil Bronstein first discussed reporting on the leaked testimony more than two years ago. Asked when the first considerations of going to jail to protect their sources came up, Fainaru-Wada said, "I don't remember. We did not spend a lot of time talking about this because we were doing our jobs, covering the story."

The reporter went on to point out the need for reporters to protect sources, whether in relation to a baseball scandal or national security issues. "If reporters don't have the opportunity to use confidential sources judiciously, it will be considerably harder to write stories about government corruption," he said.

During Thursday's hearing, Fainaru-Wada and Williams had some extra backing. Chicago Sun-Times sports writer Rick Telander led a group of out-of-town sports scribes - from TJ Quinn of the New York Daily News to Dave Kindred of The Sporting News - in a show of support at the court house. The group, many wearing T-shirts stating "Sportswriters for Freedom of the Press" even presented a petition to the judge signed by dozens of writers opposing the subpoenas.

"There are some people who understand the situation and appreciate it," Fainaru-Wada said.

Why should there be a law to protect journalists when they refuse to identify people who have illegally leaked testimony from grand jury proceedings?

Suits Say US Impeded Audits for Oil Leases
Would we be better off without whistle blowers? ---BBB

Suits Say US Impeded Audits for Oil Leases
By Edmund L. Andrews
The New York Times
Thursday 21 September 2006

Washington - Four government auditors who monitor leases for oil and gas on federal property say the Interior Department suppressed their efforts to recover millions of dollars from companies they said were cheating the government.

The accusations, many of them in four lawsuits that were unsealed last week by federal judges in Oklahoma, represent a rare rebellion by government investigators against their own agency.

The auditors contend that they were blocked by their bosses from pursuing more than $30 million in fraudulent underpayments of royalties for oil produced in publicly owned waters in the Gulf of Mexico.

"The agency has lost its sense of mission, which is to protect American taxpayers," said Bobby L. Maxwell, who was formerly in charge of Gulf of Mexico auditing. "These are assets that belong to the American public, and they are supposed to be used for things like education, public infrastructure and roadways."

The lawsuits have surfaced as Democrats and Republicans alike are questioning the Bush administration's willingness to challenge the oil and gas industry.

The new accusations surfaced just one week after the Interior Department's inspector general, Earl E. Devaney, told a House subcommittee that "short of crime, anything goes" at the top levels of the Interior Department.

In two of the lawsuits, two senior auditors with the Minerals Management Service in Oklahoma City said they were ordered to drop their claim that Shell Oil had fraudulently shortchanged taxpayers out of $18 million.

A third auditor, also in Oklahoma City, charged that senior officials in Denver ordered him to drop his demand that two dozen companies pay $1 million in back interest.

And in a suit that was filed in 2004, Mr. Maxwell charged that senior officials in Washington ordered him not to press claims that the Kerr-McGee Corporation had cheated the government out of $12 million in royalties.

On Wednesday, Interior officials denied that the agency had suppressed any valid claims and implied that the auditors simply wanted a share of any money recovered through their lawsuits.

"If these auditors believed there were fraud and or false claims on the part of the companies they were auditing, they should have followed the proper procedures," the Interior Department said in a written statement. "Instead, they opted to pursue private lawsuits under which, if they prevail, they could receive up to 30 percent of the monies recovered from the companies."

In defying their own agency, the Interior Department's auditors sued the oil companies under a federal law, called the False Claims Act, that was created to allow individuals to expose fraud against the government. People who successfully recover money for the government in such cases are entitled to a portion. A losing company is required to pay triple the amount of recovered money as well as back interest - potentially more than $120 million in the cases brought by the auditors.

Destin Singleton, a spokeswoman for Shell, said the company had not seen the suits and could not comment. John Christiansen, a Kerr-McGee spokesman, said, "We believe the case is without merit and we are defending against it."

In dollar terms, the suspected underpayments amount to a tiny fraction of the $8 billion in royalties that companies paid last year for oil and gas extracted from federal lands.

But the lawsuits come at a time when the Interior Department is already under fire from Congress, accused of covering up ethical lapses and managerial incompetence.

"These accounts, coming from the front lines, point a big red arrow at the large problem of taxpayers being stiffed," said Senator Ron Wyden, Democrat of Oregon, who has been investigating the accusations.

"If it was one isolated instance, you could say that's somebody who had a bad experience and was frustrated," Mr. Wyden said. "But when you have three or four professional, nonpolitical, independent auditors all bringing the same message, that is too important to ignore."

By any measure, the Interior Department under President Bush has placed top priority on increasing oil and gas production in the United States. Under its business-friendly agenda, the department has increased incentives for drilling in risky areas, has speeded approvals for drilling applications and has campaigned to open more coastal areas for oil exploration.

Lawyers who have specialized in lawsuits under the False Claims Act said they had never seen a group of government investigators use the law against their own agency.

"Most whistle-blowers are insiders at a company who spot something that government auditors have missed," said James Moorman, president of Taxpayers Against Fraud Education Fund, a nonprofit organization supported by lawyers that specializes in the False Claims Act.

"But here you have auditors saying, 'We did our job, we found the problems and our superiors don't want to hear about it,'" Mr. Moorman said. "If it were just one auditor, you could dismiss it. But with four auditors, that's a pattern of practice."

In their suits, the auditors contend that they had no choice but to go outside the agency because their supervisors ordered them to "cease work" on five separate investigations and drop their claims.

Documents recently unsealed in Mr. Maxwell's case against Kerr-McGee, which is scheduled for trial in November, show that federal officials abandoned his claims at almost the same moment that state auditors in Louisiana reached the same conclusions as Mr. Maxwell.

Under federal regulations, companies are supposed to pay the federal government a royalty of 12 percent or 16 percent on oil and gas they extract from federal lands or coastal waters.

Mr. Maxwell's job was eliminated in 2004. He received a settlement from the government and is now living in Hawaii.

A much-praised auditor who recovered hundreds of millions of dollars over a 20-year career, Mr. Maxwell concluded in late 2002 that Kerr-McGee had used a clever marketing deal to reduce its apparent sales receipts and royalty payments.

Under the marketing deal, Mr. Maxwell contended, Kerr-McGee sold its oil at $1 to $3 a barrel below market prices to a company called Texon. Mr. Maxwell's auditing team said that Texon was making up for Kerr-McGee's shortfall by providing marketing and administrative services. In effect, Mr. Maxwell contended, Kerr-McGee was being paid in both cash and services but only paying royalties on the cash portion.

Interior officials initially encouraged Mr. Maxwell when he raised the concerns about Kerr-McGee in early 2003. "I am sure we can make the case," wrote John Price, then head of the agency's appeals division, in an e-mail message to Mr. Maxwell.

But a few days later, lawyers in the Interior Department's solicitor's office urged him to drop the case. "Although I did not understand the reasoning, it was made clear to me that the agency did not want the order issued," Mr. Maxwell wrote in an affidavit for his suit. "The next day, Mr. Price telephoned me and reiterated to me that if I issued the order, the director would be very upset with me."

But Louisiana auditors were investigating the same practices in connection with royalties on state-owned land, and had concluded that Kerr-McGee was lowballing its sales price by $1.50 to $3 a barrel. Louisiana officials demanded more than $1 million in additional state royalties from the company, and eventually settled for $600,000.

In two of the lawsuits that were unsealed last week in Oklahoma, senior auditors in Oklahoma City said they had been ordered to drop claims that Shell Oil had underpaid by $18 million.

The suits were brought by Joel F. Arnold, a supervisory auditor who oversees a team of offshore auditors based in Oklahoma City, and Randall L. Little, a senior auditor on Mr. Arnold's team in Oklahoma City.

Like Mr. Maxwell, both of the Oklahoma auditors have more than two decades of experience in government and industry and have received numerous government awards for the money they have recovered.

In one suit, Mr. Little contends that he found evidence from his audit that Shell had reduced the sales value of oil from six leases by fraudulently inflating transportation costs. One practice, they said, allowed Shell to improperly escape $15 million in royalties. A second practice allowed Shell to save $3.8 million by claiming transportation costs for oil that was being delivered to the government at its own production site in the Gulf.

The Justice Department, which reviews such suits and sometimes joins them, declined to participate in these cases. But it did not urge the courts to dismiss the suits, as some senior Interior Department had wanted.

None of the Oklahoma auditors would agree to an interview. Elizabeth Sharrock, a lawyer for Mr. Arnold and Mr. Little, said both men had already been removed from their usual jobs and were afraid of being fired.

But according to their suits, the auditors presented their findings about Shell last October to their supervisor in Houston, Lonnie Kimball. Mr. Kimball, according to court papers, initially told the auditors to "go straight to Shell" with the complaints.

But in January, after meeting with a Shell executive, Mr. Kimball abruptly reversed course and told the auditors to "cease work on all false claims" against Shell.

In its statement on Wednesday, the Interior Department acknowledged that the auditors had been told not to send "issue letters" - an official notification that a company appears to have underpaid royalties.

But it said that other auditing offices had been investigating the issues and taken certain actions. "In fact," it said, "our actions to date include: issuing late-payment interest bills; continuing an ongoing audit; and determining that an issue was not supported by the regulations."

Interior officials did not say how much money they had recovered from companies named by the auditors. But the agency's own statistics indicate that revenue from auditing and enforcement plunged after President Bush took office.

From 1989 through 2001, according to a report by the Congressional Budget Office, auditing and other enforcement efforts generated an average of $176 million a year. But from 2002 through 2005, according to numbers that the department provided lawmakers last May, those collections averaged only $46 million.

In another clash, frustrated federal auditors have complained that the Interior Department no longer allows them to subpoena documents from oil companies.

"Subpoenas are a very powerful tool to get the information you need, but I don't think they've approved a single subpoena in years," Mr. Maxwell said in an interview. "In the good old days when we were able to issue subpoenas on our own, each of us was able to recover millions of dollars a year."

Agency officials acknowledged that they have not issued any subpoenas in the last three years. "Enforcement of subpoenas by the courts can take years and be very costly," the agency said in a written response to questions. "We have not found them to be a very effective tool."

Re: Suits Say US Impeded Audits for Oil Leases

That's another question for another thread. I don't know what an article about federal employees acting as whistleblowers has to do with a law aimed at protecting journalists, but perhaps you can explain that for those of us who fail to see the connection. As it is, it looks like you're trying to derail your own thread, BBB.