The Madoff Scandal: Nothing Is Settled
Francois Vidal - Les Echoes
Bernard Madoff has been sentenced with the maximum punishment. The swindler-of-the-century will finish his life behind bars. So, in barely six months, the American justice system has closed the file on this $65 billion fraud. The affair will have been briskly conducted ... at least on the judicial level. On the other hand, with respect to the substance of the issue, nothing has been settled. The heart of the Madoff matter remains to be elucidated. And nothing guarantees that a new scandal of the same type is impossible today.
Three Francophone editorialists argue from right, left and center that Bernard Madoff's sentencing for the swindle of the century fails to reveal both the inner workings of that swindle and other dark sides of the whole financial system. (Photo: AP)
With respect to the affair itself, we are far from knowing everything. By choosing to plead guilty, the former Nasdaq boss put to a premature conclusion any in-depth investigation of an extraordinary rip-off that stretched out over two decades. With the sentencing, whole sections of the pyramid fraud remain in the shadows (possible accomplices, hidden beneficiaries ...), undoubtedly for a long time.
Also see below:
Laurent Joffrin | Redemption •
Pierre-Alexandre Sallier | Another Affair Within the Madoff Affair •
Similarly, the lessons to be drawn with respect to protection of savers have not been ascertained. Some initiatives, certainly, have already been taken on both sides of the Atlantic. Just yesterday the AMF [French Financial Markets Authority] committed itself to better surveillance of products sold in France. But almost everything still needs to be done. And tinkering at the margins will not be enough to restore investor confidence. For the scandal has revealed the scale of regulatory failure, particularly in Europe. In the system of selection of the funds salable within the Union, first of all. The affair has, in fact, shown that the European passport, supposed to operate for investment funds the way the Schengen system works for individuals, did not provide all the necessary guarantees, far from it. Then the mechanism for the indemnification of victims has also proved lacking. Because now we know that the fate of savers in the event of a disaster basically depends on the good will of their depositary, that is, on the guardian of the invested monies and the authorities of the country in which it is located. Consequently, it is urgent that Brussels and the national regulators reform those norms in depth.
As for the funds management industry, which may be counted among "Bernie's" victims, it must also question itself over the validity of its dominant model. A model that showcases alternative strategies, that is, "hedge funds," all the while tolerating the existence of "black boxes" like the former broker's, as long as they perform. Reforming the model is the price they'll have to pay to regain savers' confidence, already seriously undermined by the financial crisis of the century.
--------
Translation: Truthout French language editor Leslie Thatcher.
:::::::::::::::::::::::::::::::::::::::::::::::::
Redemption
Monday 30 June 2009
by: Laurent Joffrin | Visit article original @ Libération
One hundred fifty years in prison: the absurdity of the number of years of detention inflicted on Bernard Madoff reflects a peculiarity of American penal law. But it also amounts to an ironic symbol: the excess years of prison are those that quite a few other people who bear responsibility for this affair have escaped.
Certainly Bernard Madoff is no scapegoat. He ruined numerous savers, many of whom were not rolling in money and must now finish their lives in poverty for having trusted him. But he is all the same the symbol of a system and even of an ideology: that of laissez-faire. All those who decried excess risk - they were more numerous than people believe - were answered that the free play of the market was worth more than any regulation, that cheating was a marginal reality, that the remedy of public control would be worse than the disease.
Has this ideology admitted its errors in the face of the accumulated disasters? Not in the least. Madoff's life sentence acts like a redemption. The system shows it is merciless to those who fall. Therefore, it may endure and continue in rediscovered serenity. It will wait for the parenthesis of the crisis to close before taking up again where it left off. Sure, the Obama administration and the regulatory authorities want real reforms. But they have powerful interests supported by intelligent and creative ideologues arrayed against them. The battle is underway. Some advances have been obtained, far less than we could have hoped. Will Madoff's punishment exonerate those who are responsible?
--------
Translation: Truthout French language editor Leslie Thatcher.
:::::::::::::::::::::::::::::::::::::::::::::::::
Another Affair Within the Madoff Affair
Tuesday 30 June 2009
by: Pierre-Alexandre Sallier | Visit article original @ Le Temps
One hundred fifty years. "Perpetuity" for having run the biggest savings rip-off of all time.
One hundred fifty years. "Perpetuity" for having run the biggest savings rip-off of all time. As severe as that imposed on a murderer, the sentence reflects the outrage of American public opinion in the face of a rip-off supposed to symbolize "Wall Street's" excesses as much as it does the scale of the casino Bernard Madoff organized.
Story over? Not at all. The expiatory sentence of the New York swindler must not shut down the Madoff issue. An "affair within the affair" still remains to be adjudicated - in the United States, but also in Europe. The one that will reveal how - for years - dozens of financial companies directed the money confided by credulous clients towards the infernal spiral Madoff devised.
Obviously, the very prosaic objective of most of the complaints registered by the victims of the fraud is to obtain compensation from the companies that indirectly participated in their ruin. Now it seems easy after the fact to accuse a financier of having bestowed his trust on one of the masters of New York brokerage, whom the very policemen of the stock exchange found nothing to fault. And, as one lawyer rightly said, "You may accuse a financial advisor of stupidity, that doesn't make him a criminal."
The heart of the problem is elsewhere. It's not so much the blindness of those "touts" that the justice system must bring to light, but the cluster of personal interests that led them to confide the money of their "clients" with such munificence to Bernard M. In contempt of any verification, of any attempt to understand the magic returns Madoff promised. Only the victims' legal complaints will be able to contribute to illuminating the complex commissions system - commissions that frequently evaporate into offshore accounts - that allowed Madoff's galaxy of intermediaries to make their fortune. In short, it's a matter of revealing not only or simply the inner workings of the swindle of the century, but also one of the darker sides of the financial system.
--------
Translation: Truthout French language editor Leslie Thatcher.