Saturday, October 13, 2018

PEU Boys Going to Riyadh Ritz (Crown Prince's Contracted Prison)


The greed and leverage boys will join Saudi Crown Prince Mohammed bin Salman (MBS) for his Vision 2030 meeting the end of October.  Vision 2030 will be held at the Riyadh Ritz Carlton, the site where numerous members of the Royal family were imprisoned in a "corruption investigation."

The Vision 2030 meeting has been called "Davos in the Desert."  The real 2018 Davos ended with a Vision 2030 luncheon sponsored by Saudi Arabia.  It coincided with the release of Saudi Prince Alwaleed bin Talal, widely known in the West for his investment acumen.

Who's November 2017 jail cell will TPG's David Bonderman occupy?  Will Blackstone's Stephen Schwarzman commit as much as more as the Saudi Prince Alwaleed bin Talal's settlement with MBS?  Will Peter Thiel's Palantir protect the power hungry players willing to use violence to shutter critics?  Did Palantir protect the Turkish Saudi Embassy, the site of Washington Post journalist Jamal Khashoggi's disappearance and likely murder? 

How much U. S. taxpayer money can Treasury Secretary Steven Mnuchin send the Prince's way?  Mnuchin knows how to torment and torture mortgage holders.   Will he and the Crown Prince coach each other on ways to inflict physical and emotional torture?

KKR's David Petraeus knows how to harm and spy on masses of people.  Surely, KKR can profit from Saudi Arabia's oppression of their people and neighbors.

The greed and leverage boys expect one thing, outsized returns and this requires outsized influence.  I don't think PEUs care about optics from going to the event.  In the PEU world the more distressed the investment,  the better the returns.

Update 10-19-18:  Many PEU boys dropped plans to attend the Saudi event.

Update 10-21-18:  U.S. Intelligence has evidence of Crown Prince's involvement in Saudi journalist's execution.

Update 12-4-18:  U.S. Senators heard evidence of the Crown Prince's ordering the murder of a Saudi journalist.

Update 12-28-18:  Consulting giant McKinsey abandoned a Saudi partner who is yet to be released from the Crown Prince's abusive shakedown.

Update 10-24-19:  Davos in Desert is back in full swing. The Khashoggi killing is old news and Prince Mohammed bin Salman, the man behind the murder, has money to dangle.

Thursday, October 4, 2018

Middle East Forgives Rubenstein for Carlyle Capital Corporation


PRNewswire ran a piece on Carlyle Co-founder David Rubenstein:

ABANA, the preeminent US organization for finance professionals and institutions with interest in the Middle East and North Africa, honored David M. Rubenstein, Co-Founder and Co-Executive Chairman of The Carlyle Group,

Khaldoon Khalifa Al Mubarak, Group Chief Executive Officer and Managing Director of Abu Dhabi's Mubadala Investment Company, said: "It was my pleasure to introduce David Rubenstein as he received the 2018 ABANA Achievement Award. David's work, spanning several decades, has helped develop the investment and asset management industry across the MENA region, with Carlyle as one of the most established investment partners for many regional institutions."
Mubadala purchased a $1.35 billion chunk of Carlyle in 2007 adding another $500 million in 2010.   Past winners of the award included Kuwait's Bader al Sa'ad and Saudi Prince Alaweed bin Talal. 

FT reported in November 2009 of Kuwait investor anger over the collapse of Carlyle Capital Corporation.

A prominent Kuwaiti conglomerate is suing the Carlyle Group in a local court, alleging that the US private equity firm misrepresented the safety of its affiliate, Carlyle Capital Corp, a public debt fund that collapsed in March 2008.

CCC became one of the first casualties of the financial crisis, because of its high leverage, which made it highly sensitive to small moves in prices. Its investors lost all their money.  

The implosion of CCC has damaged Carlyle’s reputation in the Middle East, where the affiliate raised most of its funding, according to people familiar with the matter. It is a personal setback for Carlyle’s co-founder and chief fundraiser, David Rubenstein, a frequent visitor to the Gulf. “Arab money made Carlyle what it is,” said the head of the investment bank of one major financial institution in Dubai. 
All is forgiven.  David Rubenstein is once again legend in the Middle East.  His silence over the detention of Saudi Prince Alaweed bin Talal likely helped.   Truly inspiring.

Monday, October 1, 2018

CHS Settles HMA Kickback Case with Feds for $262 million


The Justice Department settled a fraudulent billing case with Community Health System's HMA for $262 million. 

Between 2009 and 2012, two former HMA hospitals, Lancaster Regional Medical Center and Heart of Lancaster Medical Center in Pennsylvania, billed federal health care programs for services referred to the hospitals by individual physicians and physician groups.  According to the government, HMA compensated these physicians and physician groups through complex kickback arrangements in exchange for a patient referral stream. In one instance, HMA bought two businesses from a physician group for grossly inflated amounts.  HMA also paid that same physician group under a contract that was styled as payment for services that were never performed or that neither party ever had any intention of performing. In another instance, HMA paid a local surgeon exorbitantly more than the fair market value of his services.  According to the government, these arrangements were intentionally structured to disguise payments which were, in actuality, payments for patient referrals, not for legitimate services
President Obama appointed White House Health Reformer Nancy Ann Deparle in March 2009.  Her for-profit health care credentials included serving on the board of Legacy Hospital Parnters, which is incestuously related to Community Health Systems (CHS) through Chairman Denny Shelton.  Community Health Systems bought HMA in 2014 after buying Shelton's Triad Hospitals in 2008.

Greed drives unethical behavior, in healthcare as in finance.   Australians have awakened to this fact.

A royal commission this year, the country's highest form of public inquiry, has exposed widespread wrongdoing in the industry.  It released an interim report on Friday, condemning an industry which it said valued profit over people.  The Australian government called the report a "scathing" assessment.  "[The report] shines a very bright light on the poor behaviour of our financial sector," Treasurer Josh Frydenberg said.  "Australians expect and deserve better."
Former Medicare Chiefs consistently arise from the for-profit healthcare industry and return to their swampy roots afterwards.    Former Medicare Chief Gail Wilensky sold nursing home giant Manorcare to The Carlyle Group as a board member.  Wilensky set up a structure that would prevent patients being harmed by Manorcare's PEU ownership.  It did not prevent Carlyle from bleeding the company for well over $6 billion in cash before completely bankrupting it. 

Nancy Ann Deparle returned to her PEU roots with Consonance Capital after designing greed focused PPACA.  Just days ago Bloomberg reported:

A new federal watchdog report warns that privately run Medicare health plans used by millions of older Americans may be improperly denying patients medical care.

Federal auditors have found “widespread and persistent problems related to denials of care and payment in Medicare Advantage,” the privately administered plans that insure more than 20 million people, according to the report from the Health and Human Services Office of Inspector General.
For-profit healthcare companies have internal incentive programs which distort behavior, as in the case of HMA.

According to the Justice Department, HMA, beginning in 2008, defrauded government healthcare programs like Medicare and Medicaid by illegally pressuring and inducing doctors into increasing the number of emergency department patient admissions.  Those admissions were made without regard to whether the they were medically necessary, prosecutors said.
PPACA instituted a complex series of pay for performance initiatives, HAC, HRRP, VBP, VM, MIPS, APM, MACRA, which drive similar bad behavior.  Reward/punishment systems distort behavior to achieve the reward and/or avoid the negative.

Roughly 30% of corporate executives cheated by backdating stock options to maximize their executive compensation.  President Obama once said "if pay for performance works," without sharing vast research that it causes major distortions by causing people to focus on the reward, not the quality of their work.  Many like executives at HMA will cheat to garner the prize.

The government settlement absolves CHS of any criminal charges:

Health Management Associates, which Community Health acquired in 2014, agreed to pay the sum to resolve criminal and civil claims as part of a deal in which a subsidiary also agreed to plead guilty to conspiring to commit healthcare fraud.
White collar criminals have their company's pay fines for unethical and illegal behavior.  Jail time is reserved for street urchins, not the landed gentry. 

Update 10-1-18:  Davita settled with the Justice Department for $270 million for overcharging Medicare via Medicare Advantage plans.  Health reformer Deparle was on the Davita board when President Obama tapped her.