By JOE NOCERA
May 17, 2013

What first caught my eye was the op-ed article in The Wall Street Journal. Published in late February, it was written by Andrew N. Liveris, the chairman and chief executive of the Dow Chemical Company. Liveris, an Australian, has become quite the Washington player in recent years. Among other things, he heads President Obama’s efforts to revive manufacturing.

The op-ed was about one of my favorite subjects: the abundance of natural gas reserves discovered in the United States since the “fracking” revolution began. This newly found gas, Liveris wrote, offered “a historic opportunity to strengthen the economy, increase national competitiveness and create jobs.” I couldn’t have said it better myself.

Within a few paragraphs, however, the Liveris article took on a Pravda-like quality: a political insider sending a coded message to other insiders. He wrote, for instance, that the new jobs the natural gas boom was expected to create would depend on an “affordable” and “plentiful” supply. Given that that’s exactly what we currently have, what was the real subtext?

Then it became clear: Liveris’s plan for ensuring cheap domestic gas was — are you ready for this? — limiting exports. An export market driven by, you know, supply and demand was described as “unchecked.” What was left unsaid was that if natural gas could not be exported, the resulting oversupply would depress prices — and boost Dow’s profits.

Finally, Liveris acknowledged that Dow owned 15 percent of a proposed facility in Texas, which was causing “advocates of unchecked exports” to “attack” the company for being in a position to profit from exports while publicly opposing them. But, he insisted, Dow would not make a profit. Hmmm.

I bring all this up because on Friday, the Department of Energy, after a two-year hiatus, granted a permit to a facility called Freeport LNG, which will allow it to export liquefied natural gas to countries with which we do not have free-trade agreements.

Originally built to import natural gas, the plant will cost as much as $11 billion to retrofit and take years to complete. It will export only a tiny fraction of the natural gas that is consumed by Americans. And wouldn’t you know it? This is the facility in which a Dow Chemical limited partnership holds a 15 percent stake.

Exporting natural gas has enormous benefits for the United States. Exports create jobs that are every bit as good as manufacturing jobs. They help our trade deficit. They tie us closer to important allies like Japan, which desperately need the gas. According to Michael Levi, the author of an authoritative new book, “The Power Surge: Energy, Opportunity, and the Battle for America’s Future,” the prospect that America could export natural gas has even helped our European allies gain leverage with its primary supplier of fossil fuels, Russia.

“Most studies suggest that the main impact of exports will be to increase U.S. production rather than take away other uses,” Levi says. Thus, it will not likely have a major effect on the price of gas. Levi told me that one legitimate fear is that the additional drilling could increase the potential environmental risks posed by fracking. But the answer is to ensure that wells are drilled in an environmentally safe manner. That is true whether we export gas or not.

And what does Dow Chemical say now that “its” facility has been approved? I spent much of Friday afternoon peppering the company with questions, most of them revolving around Dow’s seeming hypocrisy in opposing “unfettered” exports while owning a big chunk of a facility that would someday be shipping natural gas to Japan.

Finally, more or less in exasperation, a Dow spokesman put Liveris on the phone. The Dow chairman pointed out that when the company originally invested in Freeport LNG, the facility was meant to import gas rather than export it. He said that the company won’t make money because its stake will be so diluted once capital is raised for the retrofitting. He insisted that he is a believer in market forces, but that the natural gas market is so different from other commodities that it must be treated differently.

He also said, though, that the company was not opposed to natural gas exports — just so long as it was limited.

Earlier, a Dow spokesman had sent out a press release claiming that the permit approval by the Department of Energy was actually a victory for Dow’s position. To put it in words that the press representative would never use, so long as the Department of Energy permitting process is so absurdly slow — thus creating a government bottleneck that restrains “unfettered” exports — Dow and Liveris have gotten exactly what they’ve been seeking: limited exports and plenty of cheap domestic gas to help fuel their profits.

There is a technical term for this. It’s called “having your cake and eating it, too.”

Read Full Article

By PEGGY NOONAN

May 17, 2013

We are in the midst of the worst Washington scandal since Watergate. The reputation of the Obama White House has, among conservatives, gone from sketchy to sinister, and, among liberals, from unsatisfying to dangerous. No one likes what they’re seeing. The Justice Department assault on the Associated Press and the ugly politicization of the Internal Revenue Service have left the administration’s credibility deeply, probably irretrievably damaged. They don’t look jerky now, they look dirty. The patina of high-mindedness the president enjoyed is gone.

Something big has shifted. The standing of the administration has changed.

As always it comes down to trust. Do you trust the president’s answers when he’s pressed on an uncomfortable story? Do you trust his people to be sober and fair-minded as they go about their work? Do you trust the IRS and the Justice Department? You do not.

The president, as usual, acts as if all of this is totally unconnected to him. He’s shocked, it’s unacceptable, he’ll get to the bottom of it. He read about it in the papers, just like you.

But he is not unconnected, he is not a bystander. This is his administration. Those are his executive agencies. He runs the IRS and the Justice Department.

A president sets a mood, a tone. He establishes an atmosphere. If he is arrogant, arrogance spreads. If he is too partisan, too disrespecting of political adversaries, that spreads too. Presidents always undo themselves and then blame it on the third guy in the last row in the sleepy agency across town.

The IRS scandal has two parts. The first is the obviously deliberate and targeted abuse, harassment and attempted suppression of conservative groups. The second is the auditing of the taxes of political activists.

In order to suppress conservative groups—at first those with words like “Tea Party” and “Patriot” in their names, then including those that opposed ObamaCare or advanced the Second Amendment—the IRS demanded donor rolls, membership lists, data on all contributions, names of volunteers, the contents of all speeches made by members, Facebook FB +0.46% posts, minutes of all meetings, and copies of all materials handed out at gatherings. Among its questions: What are you thinking about? Did you ever think of running for office? Do you ever contact political figures? What are you reading? One group sent what it was reading: the U.S. Constitution.

The second part of the scandal is the auditing of political activists who have opposed the administration. The Journal’s Kim Strassel reported an Idaho businessman named Frank VanderSloot, who’d donated more than a million dollars to groups supporting Mitt Romney. He found himself last June, for the first time in 30 years, the target of IRS auditors. His wife and his business were also soon audited. Hal Scherz, a Georgia physician, also came to the government’s attention. He told ABC News: “It is odd that nothing changed on my tax return and I was never audited until I publicly criticized ObamaCare.”

Franklin Graham, son of Billy, told Politico he believes his father was targeted. A conservative Catholic academic who has written for these pages faced questions about her meager freelance writing income. Many of these stories will come out, but not as many as there are. People are not only afraid of being audited, they’re afraid of saying they were audited.

All of these IRS actions took place in the years leading up to the 2012 election. They constitute the use of governmental power to intrude on the privacy and shackle the political freedom of American citizens. The purpose, obviously, was to overwhelm and intimidate—to kill the opposition, question by question and audit by audit.

It is not even remotely possible that all this was an accident, a mistake. Again, only conservative groups were targeted, not liberal. It is not even remotely possible that only one IRS office was involved.

Lois Lerner, who oversees tax-exempt groups for the IRS, was the person who finally acknowledged, under pressure of a looming investigative report, some of what the IRS was doing. She told reporters the actions were the work of “frontline people” in Cincinnati. But other offices were involved, including Washington. It is not even remotely possible the actions were the work of just a few agents. This was more systemic. It was an operation. The word was out: Get the Democratic Party’s foes. It is not remotely possible nobody in the IRS knew what was going on until very recently. The Washington Post reported efforts to target the conservative groups reached the highest levels of the agency by May 2012—far earlier than the agency had acknowledged. Reuters reported high-level IRS officials, including its chief counsel, knew in August 2011 about the targeting.

The White House is reported to be shellshocked at public reaction to the scandal. But why? Were they so highhanded, so essentially ignorant, that they didn’t understand what it would mean to the American people when their IRS—the revenue-collecting arm of the U.S. government—is revealed as a low, ugly and bullying tool of the reigning powers? If they didn’t know how Americans would react to that, what did they know? I mean beyond Harvey Weinstein’s cellphone number.

And why—in the matters of the Associated Press and Benghazi too—does no one in this administration ever take responsibility? Attorney General Eric Holder doesn’t know what happened, exactly who did what. The president speaks in the passive voice. He attempts to act out indignation, but he always seems indignant at only one thing: that he’s being questioned at all. That he has to address this. That fate put it on his plate.

We all have our biases. Mine is for a federal government that, for all the partisan shootouts on the streets of Washington, is allowed to go about its work. That it not be distracted by scandal, that political disagreement be, in the end, subsumed to the common good. It is a dangerous world: Calculating people wish to do us harm. In this world no draining, unproductive scandals should dominate the government’s life. Independent counsels should not often come in and distract the U.S. government from its essential business.

But that bias does not fit these circumstances.

What happened at the IRS is the government’s essential business. The IRS case deserves and calls out for an independent counsel, fully armed with all that position’s powers. Only then will stables that badly need to be cleaned, be cleaned. Everyone involved in this abuse of power should pay a price, because if they don’t, the politicization of the IRS will continue—forever. If it is not stopped now, it will never stop. And if it isn’t stopped, no one will ever respect or have even minimal faith in the revenue-gathering arm of the U.S. government again.

And it would be shameful and shallow for any Republican operative or operator to make this scandal into a commercial and turn it into a mere partisan arguing point and part of the game. It’s not part of the game. This is not about the usual partisan slugfest. This is about the integrity of our system of government and our ability to trust, which is to say our ability to function.

Read Full Article

By STEVEN RATTNER
May 16, 2013

Let’s stipulate that the scandal involving the Internal Revenue Service’s targeting of conservative nonprofit groups portrays government as if drawn in caricature — an almost Keystone Kops-style comedy of errors on the part of low-level staffers, with a vein of possible political bias.

Of course, the matter needs to be fully investigated, those responsible need to be held accountable and procedures need to be put in place to ensure that nothing like this can happen again.

But let’s also remember what the I.R.S. brouhaha is not. Unlike the abuse of the I.R.S. by President Richard M. Nixon, in this case there’s no evidence that anyone in the White House had any involvement in — nor even any knowledge of — what was going on within the agency’s Tax Exempt and Government Entities Division.

In the post-Watergate years, legislation was passed to protect the I.R.S. against political meddling from the executive branch. That included — unusually — a five-year term for the I.R.S. commissioner.

Until his departure in November 2012, the I.R.S. commissioner was Douglas Shulman, an appointee of President George W. Bush. (Yesterday, the acting commissioner, Steven Miller, who was a career civil servant, resigned under pressure.)

And finally, note that when Lois Lerner, the head of the Tax Exempt and Government Entities Division, learned that applications were being singled out if they contained words like “Tea Party” in their names, she ordered that the practice be stopped. Regrettably, a bureaucratic ant colony succeeded in circumventing her instruction for several months.

By way of background, the decision in 2010 to target groups with certain words in their names did not come out of nowhere. That same year, the Supreme Court decision in the Citizens United case substantially liberalized rules around political contributions, stimulating the formation of many activist groups.

In the year ended Sept. 30, 2010, the division received 1,741 applications from “social welfare organizations” requesting tax-exempt status. Two years later, the figure was 2,774. Meanwhile, the staff of the division tasked with reviewing these applications was reduced as part of a series of budget reductions imposed on the I.R.S. by anti-tax forces.

A far higher proportion of the new applicants wanted to pursue a conservative agenda than a liberal agenda. So without trying to defend the indefensible profiling, it wouldn’t be that shocking if low-level staff members were simply, but stupidly, trying to find an efficient way to sift through the avalanche of applications.

One of the bigger ironies about the I.R.S. imbroglio is that it had nothing to do with taxes. These newly formed entities didn’t seek 501(c)(4) status to avoid taxes — these groups don’t earn profits and therefore don’t pay any taxes, regardless of their status. The important benefit that came from achieving 501(c)(4) status was freedom from having to disclose the names of any of their donors.

That’s right, what the I.R.S. was really deciding in these cases is which organizations have to disclose their funders and which don’t. And what it was trying to do — however dumbly it went about it — was to reduce the abuse of the campaign-finance rules, not the tax laws.

Without 501(c)(4) status, these groups would have had to organize as what are known colloquially as “super PACs.” While this would have afforded them greater flexibility to overtly support candidates, the names of their donors would have to be made public.

In theory, 501(c)(4)’s are supposed to be social welfare organizations. But the rules are vague and are often stretched.

Some groups have interpreted the regulations as permitting them to spend as much as 49 percent of their funds directly advocating for or attacking the election of candidates, maintaining all the while the secrecy of their donors’ names.

Perhaps most incredibly, a 501(c)(4) can even transfer a portion of its funds to a super PAC, which can — thanks in part to the Citizens United decision — freely support candidates for office

Karl Rove established just such a structure by pairing a 501(c)(4) organization (Crossroads GPS) with a super PAC (American Crossroads). By some accounts he raised as much as $300 million for these entities. And yet there’s no evidence that the I.R.S. ever questioned the 501(c)(4) status granted to Crossroads GPS.

So let’s, by all means, find the wrongdoers at the I.R.S. and punish them. But the biggest take-away from the I.R.S. mess should be that our campaign-finance system is in desperate need of overhaul.

Read Full Article

The Atlantic
By, Ronan Farrow
May 16 2013

In a tense press briefing in the White House East Room on Monday, President Obama cleared his throat before addressing the subject on everyone’s mind: last fall’s attack on an American facility in Benghazi, Libya. Obama led with the basics: “Americans died in Benghazi…. Clearly, they were not in a position where they were adequately protected.”

Questioning how to change that truth is worth America’s time. As a former State Department official who worked with Ambassador Chris Stevens in the months before his murder in Benghazi, I feel that inquiry’s urgency. But the congressional hearings that have dominated the last week of headlines — with more promised by House Republicans — are not that inquiry. Congress could have focused on three time periods during their investigation: before, during, and after the attack. In all but exclusively focusing on what Administration officials said after Stevens’s death, Congress isn’t just wasting America’s time — it’s squandering a chance to save lives in the future.

This focus on the aftermath continues to yield few meaningful lessons. Last week’s major story was that Hillary Clinton’s Deputy Cheryl Mills — to whom I reported and whom I know to be an individual of integrity — called an American diplomat in Libya days after the attack, while a congressional delegation was visiting the country. The call apparently touched on concerns that Representative Jason Chaffetz, a leader of the Beghazi hearings, was denying State department legal and support staff access to his meetings with American officials in Libya. The diplomat testified that there was “clearly no direct criticism” in the call, but it has been painted by House Republicans as an attempt to intimidate him. I have worked at conflict zone Embassies during visits from congressional Delegations, which can be intrusive and fraught. The presence of numerous officials — sometimes including legal advisors — is not unusual. Cheryl Mills calling for an update would be similarly unsurprising. But even if one were to accept the most fanciful Republican characterization of events — that, as a Clinton loyalist, she was displeased with the potential for political exploitation — the story is at worst one of an official being protective of her department.

Read More

Associated Press
Published: May 16, 2013

KNOXVILLE, Tenn. — Former FBI irector Louis Freeh’s firm has been hired by trucking companies suing Cleveland Browns owner Jimmy Haslam’s company, Pilot Flying J.

Pilot Flying J, the nation’s largest diesel fuel retailer, has been alleged to have bilked customers out of rebates.
The evolution of the NFL:
Take a look at how the NFL has evolved from its humble roots, and the efforts being made to ensure it continues to grow.

Plaintiffs attorney Mark Tate confirmed to WBIR-TV in Knoxville and to the Plain Dealer in Cleveland on Wednesday that Freeh has agreed to work on the lawsuit filed after federal agents raided Pilot’s headquarters last month.

Jimmy Haslam bought the Browns last year. He is the brother of Tennessee Gov. Bill Haslam.

The FBI alleges members of Pilot’s sales team deliberately withheld rebates to boost Pilot profits and pad sales commissions. No criminal charges have been filed.

A Knoxville judge last month rejected a claim in the civil lawsuit that Jimmy Haslam was tampering with potential witnesses by contacting trucking companies and offering to reimburse them for any unpaid rebates.

Freeh’s firm last year issued a 267-page report for Penn State on the university’s handling of the Jerry Sandusky child sex-abuse scandal. He also has worked for the New Orleans Saints in response to the NFL’s bounty probe and investigated corruption allegations for FIFA.

A Pilot spokesman said the company had no comment on who was involved in the lawsuit.

Read Full Article

by John Avlon May 16, 2013

Conservatives should consider this a warning sign. The Republican National Committee’s former Hispanic outreach director for Florida has left the GOP and registered as a Democrat, citing a “culture of intolerance.”

Pablo Pantoja is a decorated Iraq war vet who began his brief career with the GOP by volunteering for John McCain’s 2008 presidential campaign and serving as field director for Marco Rubio’s triumphant 2010 senate campaign. He says he was originally drawn to the GOP “because of my business-minded mentality. Fiscal issues are important for all families—Hispanics and non-Hispanics.”

But a recent anti-immigration report from the right-wing think tank Heritage Foundation sent the Puerto Rican–born Pantoja heading for bluer pastures this week. Not only did the paper tally the cost of immigration form at an absurdly high $6.3 trillion, but its author, Jason Richwine, was found to have written an overtly racist dissertation in 2009 that labeled American immigrants as having lower IQs than those of white natives.

“This report form Heritage really hit me,” Pantoja, 33, says about his decision to decamp from the party, which he first announced to friends on Facebook. “It hit me. Immigration has made America great before and it will continue to do so. But when you look at their report, you start wondering, Wait a minute, is it really about the $6.3 trillion, or is it because they believe that Hispanics have a lower IQ and they’re less of a human being?”

“I was hopeful after the [RNC] autopsy report, but where was the strong condemnation? Are they afraid to stand up to Heritage?” Pantoja asks. “Those comments, that research, is just completely, completely, completely unacceptable.”

For a party that belatedly recognizes the existential need to reach out to Hispanic voters, the defection of one of the staffers it hoped would build bridges to the fastest growing demographic in the United States should be a wake-up call.

But while the Heritage report was the spark that lit the fire in Pablo Pantoja, his decision to switch had been a long time coming. “It’s a process, it’s a progression,” Pantoja says. Beyond some conservative activist groups’ opposition to immigration reform, the party’s blocking of universal background checks also bothered the Army National Guard vet, who enlisted on September 7, 2001.

“I believe in the Second Amendment,” Pantoja says. “But maybe ‘a well-regulated militia’ doesn’t necessarily mean that you need to have a 30-round clip in your magazine. Are we going to just completely forget about the capability of harm that a weapon like that has to eliminate a large amount of targets in a very short amount of time? We’re talking about real people. We’re talking about real lives being affected.”

“So is it really one person—or is it really the base?”

Pantoja is careful to express admiration for many of his former Republican colleagues, especially Sen. McCain, Senator Rubio, and his co-workers at Libre Initiative, the nonpartisan free-market advocacy group focused on the Hispanic community where he continues to work. “Some people say, ‘I’m staying. I’m going to change the Republican Party from within.’ More power to them. I respect their opinions. There’s some good people on all sides, obviously. But I do feel that it’s a bigger tent [in the Democratic Party]. I do feel that there are issues like civil rights and human rights that are kind of just more at the forefront as opposed to an afterthought, if you will.”

The “culture of intolerance” that concerns Pablo Pantoja does not characterize the entire party, but it has surfaced too much for him to dismiss it as a coincidence: “There was the incident with the black reporter who got some peanuts thrown at her [at the RNC convention] in Tampa. Now, you can look at it and say, ‘That was just one person.’ But then you look at what happened at CPAC with this other guy that said slaves should be thankful because they got food and shelter … So is it really one person—or is it really the base? Is it really the culture of intolerance? That’s what I view as what’s going on.”

Just as critical to Pantoja is some party leaders’ refusal to confront these voices. Even worse is when they cater to them. “You’ve got people who feel that they have to be, quite frankly, a little bit ‘out there’ to appeal to the base.”

Losing Pablo Pantoja is just the latest sign of how much work Republicans need to do when it comes to mending fences with the Hispanic community. The problem is rooted in aspects of the conservative populist base and its impact on policy. Too often this dynamic results in a toleration of demagogues who show callousness to communities of color in the USA. If you recognize that demographics are destiny, this is a recipe for Republican disaster.

“Hopefully they’ll renounce this kind of culture of intolerance overall,” Pantoja says. “Maybe the rhetoric will change. I don’t see it happening. But somebody’s got to take a stand.”

Read Full Article

By Lesley Messer

May 15, 2013 5:51pm

Last month he revealed that he’d lost 60 pounds, and now, Chaz Bono is down another five.

“I’m feeling really good,” he told People magazine Tuesday, adding that because he’s been steadily losing for so long, it’s becoming tougher to move the numbers on the scale. “I’d love to do ‘Dancing [with the Stars]‘ all over again. I’d do it so much better now than I did then!”

Bono’s weight loss journey began last November, when he announced that he wanted to trim 50 pounds from his then 250-pound frame. Three months (and 43 pounds) later, he upped the goal to 80 pounds. To do this, Bono, 44, said that he’d been avoiding starches and sticking to a diet of mostly meats and vegetables.

“I really feel very satisfied and comfortable with the way I eat now, which is amazing, and for me, kind of a miracle,” he said, adding that he no longer has cravings for unhealthy foods. “I never thought I’d be that kind of a person!”

As a result, the LGBT activist says that his blood pressure and cholesterol levels are low–but his self-esteem is sky-rocketing.

“I just have a lot more confidence and that feels really cool,” he said. “I really like what I see in the mirror.”

Read Full Article

May 15, 2013

Fmr. Attorney General Alberto Gonzales joins Morning Joe to discus the latest details in the DOJ’s tracking of Associated Press Phone calls.

Read Full Article

American Investor Targets Sony for a Breakup

By ANDREW ROSS SORKIN and MICHAEL J. DE LA MERCED

An American hedge fund billionaire known for starting big fights has called for a breakup of the entertainment and electronics colossus Sony, according to people briefed on the matter, possibly setting off a battle that could roil Japan’s famously staid corporate culture.

The call, which came on Tuesday, will most likely be viewed by government officials and corporate leaders in Tokyo as a shot across the bow from Wall Street, just as Western investors begin piling into Japanese stocks.

The hedge fund manager, Daniel S. Loeb, is pressing Sony to spin off part of its entertainment arm, which includes one of the biggest film studios in Hollywood and one of the largest music labels in the world, responsible for movies like “Skyfall” and artists like Taylor Swift.

Mr. Loeb — known for ousting Yahoo’s former chief executive and luring Marissa Mayer away from Google to run the company — also signaled that he would accept a seat on Sony’s board.

His hedge fund has quietly amassed a stake of about 6.5 percent in Sony, making it one of the biggest shareholders. The holding, made up of stock and derivatives, is valued at about $1.1 billion.

Still, even big Japanese investors have often faced resistance in seeking changes at companies, a hurdle that may be significantly higher for a foreign hedge fund manager.

A spokesman for Sony, Shiro Kambe, said in a statement that the company welcomes investments. “We are focused on creating shareholder value by executing on our plan to revitalize and grow the electronics business, while further strengthening the stable business foundations of the entertainment and financial services businesses,” he said.

But Mr. Kambe also pointed to repeated assertions by Sony’s chief executive, Kazuo Hirai, that Sony Entertainment contributes significantly to the overall company and is not for sale. “We look forward to continuing constructive dialogue with our shareholders as we pursue our strategy,” he said.

Mr. Loeb, 51, the founder of the hedge fund Third Point, flew to Tokyo this weekend for three days of meetings with government officials, regulators and senior Sony executives, according to people briefed on the matter. He hand-delivered a letter on Tuesday to Mr. Hirai that praised a turnaround effort but asked for more.

“So while Third Point supports your agenda for change, we also believe that to succeed, Sony must focus,” Mr. Loeb wrote in the letter, a copy of which was obtained by The New York Times.

After the meeting, the hedge fund manager told associates that he was impressed by Mr. Hirai and supported management, according to a person briefed on the matter.

Mr. Loeb said he believed that spinning off a portion of the entertainment business to Sony shareholders could sharpen the company’s focus and lead to higher profit margins, while helping to revive the core electronics business. He has also contemplated a potential spinoff or sale of other operations, including Sony’s insurance division, which accounted for much of the company’s profit last quarter.

The campaign is a bet that Japan will prove the next gold mine for global investors. Long hobbled by a so-called lost decade of little economic growth, the country has come to life in recent months under the stewardship of Shinzo Abe, who as prime minister has promoted policies meant to attract private investment. Mr. Loeb is betting that Mr. Abe will expand deregulation.

“Under Prime Minister Abe’s leadership, Japan can regain its position as one of the world’s pre-eminent economic powerhouses and manufacturing engines,” Mr. Loeb wrote in his letter.

Despite its decade-long slump, Sony, the 67-year-old electronics pioneer, remains one of the most prominent companies in Japan, with a market value of roughly $18 billion.

Still, Mr. Loeb has plenty of ammunition. Shares of Sony have plunged nearly 85 percent over the last 13 years. The company long ago ceded its crown as the king of cool electronics to Apple, and its dominance in televisions was eroded by the emergence of Korean rivals like Samsung and LG.

Last week, Sony reported its first annual profit in five years. But it reached that milestone thanks largely to the weakening yen and some belt-tightening, including the consolidation of businesses and the sale of its American headquarters.

Sony’s chief executive, Mr. Hirai, is scheduled to make a presentation about the company’s turnaround plan next week. He has argued that despite having come late to the era of digital media, the company that made the Walkman, the Trinitron television and the PlayStation can rebound.

To Mr. Loeb, more must be done, starting with the spinoff of Sony Entertainment. Though the division accounts for more than 40 percent of the company’s enterprise value, he said in his letter that it needed discipline to raise its profit margins. Mr. Loeb estimated that a partial spinoff of the entertainment business could bolster Sony’s share price by as much as 60 percent.

In his letter, Mr. Loeb proposed handing 15 to 20 percent of Sony Entertainment to existing shareholders. His firm would be willing to backstop the initial public offering up to $2 billion to ensure its success.

Other underappreciated assets include the company’s 60 percent stake in Sony Financial, which largely sells life insurance policies, as well as real estate holdings and stakes in other companies. And Mr. Loeb is expected to argue that Sony’s electronics division must sharply reduce costs, including by taking a cue from its protégé, Apple, in focusing on a few core products.

Mr. Loeb has recently expressed his interest in Japan. Referring to the changes by the Abe government, he called it “a huge game change” at an industry conference last week. “And there’s a lot more room to go,” he added.

Mr. Abe has called his revival effort a plan of “three arrows,” including aggressive monetary easing by the Bank of Japan and enormous stimulus spending by the government.

So far, that effort appears to have drawn investor plaudits. The yen weakened in value last week, to 100 to the dollar, a level unseen in four years, helping local companies like Sony and Toyota. And the Nikkei 225-stock index has risen 43 percent so far this year. At the same time two years ago, the Nikkei was down 5.7 percent.

Shares in Sony rose 1.2 percent in Tokyo on Tuesday, while the Nikkei closed down 0.16 percent.

But it is the third arrow that has Mr. Loeb’s attention. The Abe government hopes to shed Japan’s reputation as a land of strict hierarchy and bureaucracy. Business mistakes were often seen as shameful, and outright confrontation largely disdained.

“There’s an entrenched management culture there,” said Lawrence B. Lindsey, a former top economist in the administration of President George W. Bush. “Activists aren’t particularly popular here among management, and they won’t be popular in Japan either.”

No less than Howard Stringer, Sony’s own chairman, has criticized the status quo.

“Japan is a harmonious society which cherishes its social values, including full employment,” he said in a speech last year. “That leads to conflicts in a world where shareholder value calls for ever greater efficiency.”

Yet there have been changes. The percentage of foreign ownership in companies on the Tokyo Stock Exchange nearly quintupled, to 24 percent, from 1990 to 2008. And Japanese shareholders have increasingly adopted the aggressive tactics of Western fund managers.

Sony is the biggest bet yet for Mr. Loeb, an intense California native who built his name largely upon acidly written letters, berating targets for mismanagement and calling for change.

The strategy has proved profitable. Third Point’s returns are up 13.3 percent this year and up 2.6 percent for the first week of May. Forbes estimates Mr. Loeb’s net worth at about $1.5 billion.

Perhaps the most prominent victory has been Third Point’s investment in Yahoo, where Mr. Loeb pushed for the dismissal of a chief executive after exposing the executive for falsifying academic credentials.

Mindful of Japanese decorum, however, Mr. Loeb strikes a more conciliatory tone in his letter to Mr. Hirai of Sony. His calls are couched as suggestions aimed at improving the company, rather than aggressive demands.

“Third Point would not have made this substantial investment if we did not believe in a bright future for Sony’s global brand, superior technology, and dedicated employees,” he wrote. “We are confident that by acting as partners, Sony will grow stronger.”

Read Full Article

The Huffington Post | By Jack Mirkinson Posted: 05/14/2013 6:53 am EDT

The Obama administration woke up on Tuesday to another morning of scorching criticism about the Justice Department’s decision to secretly obtain months of Associated Press phone records.

The DOJ tracked the incoming and outgoing calls on more than 20 AP phone lines, as well as the home, office and cell phone lines for six individual journalists involved in writing a national security-related story about Yemen that the Obama administration did not want them to write.

The operation has been roundly condemned by journalists and press freedom groups. That condemnation continued on Monday night and Tuesday morning.

Reporters Without Borders called the probe an “extremely grave violation of freedom of information.”

NBC News’ Michael Isikoff quoted a whistleblower advocate who made the dreaded comparison to Richard Nixon:

“The Justice Department’s seizure of the Associated Press’ phone records is Nixonian,” said Danielle Brian, executive director of the Project on Government Oversight, a group that advocates on behalf of whistleblowers. “The American public deserves a full accounting of why and how this could happen.”

Speaking to Rachel Maddow on Tuesday night, Isikoff explained further why people were so alarmed.

“It is not unprecedented for the Justice Department to secretly get the numbers of reporters,” he said. “What’s remarkable is the sweeping nature of this, the dragnet approach … and that’s why you have some press watchdog groups tonight, and freedom of the press groups saying this is positively Nixonian. They have not seen a precedent for this in decades.”

Others also zeroed in on the link. Buzzfeed editor Ben Smith even put up a GIF that showed Obama transforming into Nixon in his article on the scandal.

Smith wrote that the nuclear nature of the probe could, in part, be traced back to Obama, who has made it a policy to aggressively go after leaks in a fashion not seen in any of his predecessors. Though the White House said it had nothing to do with the probe and referred reporters to the Justice Department, Smith wrote that it was not hard to see Obama’s hand in some way:

Elements of this approach, Obama’s friends and foes agree, come from the top. Obama is personally obsessed with leaks, to the extent that his second chief of staff, Bill Daley, took as one of his central mandates a major and ill-fated plumbing expedition. Attorney General Eric Holder, who pressed the leak policy, is a trusted Obama insider.

Writing for the Freedom of the Press Foundation, Trevor Timm also said that the scandal was one of the White House’s own making.

“The White House created this war-on-leaks monster,” he wrote. “Congress has only encouraged its expansion, instead of investigating the wrongdoing that many of the leaks exposed. And now, it’s out of control.”

On Tuesday, AP executive editor Kathleen Carroll underscored just how stunning the Justice Department’s actions were.

“I’ve been in this business for more than 30 years,” she said on “Morning Joe.” “Our First Amendment lawyers, and our lawyers inside the AP, and our CEO, who’s also a well-known First Amendment lawyer, none of us have ever seen anything like this.”

Speaking on the same program, famed Watergate reporter Carl Bernstein was even more scathing, calling the operation “inexcusable.”

“This administration has been terrible on this issue from the beginning,” he said. “The object of it is to intimidate people who talk to reporters … there’s no excuse for it whatsoever.” He added that it was “nonsense” to say that the White House would have been unaware of such a probe.

“This is a policy matter, and this does go to the president,” he said. “There is no reason that a presidency that is interested in a truly free press and its functioning should permit this to happen.”

Read Full Article