June, 15 2010, 08:22am EDT
For Immediate Release
Contact:
Bea
Edwards, International Reform Director
Phone: 202.457.0034, ext.
155
Email: beae@whistleblower.org
or: Dylan Blaylock,
GAP Communications Director
Phone: 202.457.0034, ext.
137
Email: dylanb@whistleblower.org
GAP Scrutinizes Nominee for Deputy Attorney General
Inside Sources Prompt Questions about James Cole’s Record at AIG as Independent Monitor
WASHINGTON
The Government Accountability
Project (GAP), which has been critical of the nomination of James Cole
since he
was rumored to be on the short-list for Deputy Attorney General, has
posted
mock questions for members of the Senate Judiciary Committee to pose to
Cole at
his confirmation hearing later today.
Cole was nominated by the
Obama administration last
month to be second-in command at the Department of Justice. For years,
Cole has
served as the Independent Consultant (IC) stationed at insurance
behemoth AIG
as a result of two deferred prosecution agreements (DPAs) between the
corporation, the SEC, and the Department of Justice in 2004 and 2006.
The DPAs
were put in place as part of a settlement when AIG previously faced
massive
fraud charges.
"The administration is
trying to deflect
attention from Cole's poor record of oversight at AIG in the years
leading up to the financial crisis by claiming he was not asked to
monitor the
troubled subsidiary," said Bea Edwards, GAP's International Program
Director. But in fact, it was Cole's own decision that exempted that
subsidiary from his scrutiny."
When rumors of Cole's
potential nomination began
to emerge in April, GAP began receiving frequent and disturbing calls
from AIG
alumni and current staff about serious problems with Cole's actions
during his tenure. Since then, Edwards has been steadily posting
blog entries about Cole based on the disclosures we have received.
In advance of this
hearing, Edwards has produced a
primer on Cole's role at AIG, followed by five questions GAP believes
should be asked at the hearing.
Click
here to read the primer!
The questions that GAP would like to pose to
Cole involve the following
topics (please click the first few words of each topic to go directly to
the
video question):
- Cole's
interaction with AIG-Financial Products (AIG-FP) CEO Joseph Cassano,
who was in a
position to oversee the AIG subsidiary that oversaw credit default
swaps.
According to our sources, this corporation, which primarily
generated and
traded these swaps, was
exempted from compliance obligations and oversight at the
corporate
level. - The
interactions between
Cole and three AIG officials - General Counsel Anastasia Kelly, Chief
Compliance Officer Kathleen Chagnon, and subsequent-Chief
Compliance
Officer Suzanne Folsom (of Paul
Wolfowitz-World Bank infamy) - regarding
their conduct,
credentials and hiring. - A
September 2008 purge (one month after the meltdown) of AIG senior
compliance attorneys, that was (according to sources) executed under the
authority of Kelly
and Folsom. - The
independence of Cole's reports to the Department of Justice, and the SEC, as
specified by the DPA. - Cole's
involvement (or lack thereof) of oversight of AIG-FP, and his
recommendation
to not subject AIG-FP to a higher level of scrutiny and oversight, despite
that
subsidiary's serious problems in the past (related to fraud).
That subsidiary, in charge of the CDSs, became heavily involved in
the
future 2008 problems.
"Cole was the Justice
Department's and the
SEC's eyes and ears at AIG as the corporation assumed unmanageable risk.
If, as the administration claims, he actually was completely unaware of
what
was happening at AIG-FP, that alone should raise serious questions about
his
suitability for the post of Deputy Attorney General," said Edwards.
The Government Accountability Project (GAP) is a 30-year-old nonprofit public interest group that promotes government and corporate accountability by advancing occupational free speech, defending whistleblowers, and empowering citizen activists. We pursue this mission through our Nuclear Safety, International Reform, Corporate Accountability, Food & Drug Safety, and Federal Employee/National Security programs. GAP is the nation's leading whistleblower protection organization.
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