What does Gaza mean for the Democrats in November?

Elections are won by who comes out to vote and who stays home and by which side has the money to spend on advertising and access. The Democrats have the deeper pockets by far at the moment, so they will be able to flood the airwaves.

But the other side may become problematic. When voters simply cannot stomach a candidate or policies but equally will never vote for the other party, they elect to stay home. And they stay home because they say, “Not in my name.”  

Gaza may become such an issue for Biden and the Democrats. He is setting the policy, and his administration is being seen to support Israel no matter what. Stern diplomatic words do not mean anything to the voters because they are diplomatic words, words designed to convey desired changes in other countries' policies or practices. Rarely do governments say, “Do this or else”. There is an implied “or else” associated with the diplomatic words, but too often we have seen the US fail to follow through on the “or else" (also known as “Red Lines”). 

 

In Syria, the US made it clear through diplomatic speak that the use of chemical weapons would be a red line. Assad ignored Obama, and Obama did nothing material or materially visible to the public in response. The US said what their red line was, and it was ignored. 

 

The US is in that situation with Netanyahu and Israel now. The diplomatic speak is telling Israel to back off, to protect civilians, and to let aid flow. But Netanyahu and the Israeli state and military are ignoring Biden. They know they can. Biden must respond strongly. 

 

Sanctions against a handful of the vilest settlers is a start, but it is window dressing. Highly visible but meaningless in terms of engendering actual change in Israeli policy. Too little, potentially too late, and with virtually no chance of creating any meaningful change. 

 

What Gaza does not have is time. What Biden does not have is time. There would seem to be a golden opportunity to do something meaningful, and not to present the Democratic Party and Biden as stooges for Netanyahu. People are dying. They are starving. Soon there will be pictures of Palestinian children with distended bellies, glassy eyes, and mothers too weak to hold them. 

 

When those photos go viral, and they will, either Biden responds meaningfully, or the consequences could be highly damaging in November.  

 

“But Trump is worse” is not a valid response to this crisis. Trump only needs to keep his mouth shut on Israel and he comes across as the lesser problem. But he won't keep his mouth shut. He will say in classic Trumpingly fashion “Only I can solve this". And he will follow that up with “When I’m President, the war will be over in 24 hours." And there will be people who will believe him. 

 

Some Democrats will believe him—not because he has any diplomatic skills, but precisely because he does not. He will say, “No more aid,” and Israel will listen. It is pretty obvious that a Bull in a China shop is what is needed right now, and Trump certainly fits that bill. (realistically Trump will do nothing except look for how he can have his pockets lined out of this.)

 

Biden does not have the time for diplomatic niceties. Whatever he does needs to be done soon enough to push the crisis from the front page, and that will require the bombs to stop falling and the tanks (and soldiers) to stop shooting.  

 

The sooner this happens, the sooner the voters can worry about other issues.  

 

I don't know how long, scientifically, it will take for people to allow Gaza to fade into the background. But someone does know. They know exactly how long it takes for messaging to change minds. And they should be working on this right now (as I expect they are). They also will know what it will really take to change the script, and that will be more than Israel will be willing to accept. 

 

Chuck Schumer's call for fresh elections in Israel is an indication of just how seriously some Democrats are taking this. For the ranking Jewish Senator to make that statement in complete defiance of diplomatic norms should demonstrate just how serious the situation is, and their understanding of the damage that is being caused. 

 

Here I'm talking about Amerikan voters, not the global community. And I'm not talking about the Palestinians in Gaza because they do not get to vote, anywhere. But because for Democrats (and Republicans), it is only the American voter that matters in this. Democrats need voters to come to the polls. Republicans gleefully hope that Democrats will stay home, saying to themselves, “Not in my name”. And anyone who thinks that won't happen is kidding themselves.  

 

Biden is running out of time.  

 

He needs to response, and respond big, and do it now. 

 

What could be done? He could announce that the US will deliver aid to south and north Gaza, trucks and convoys flying the American flag. He could announce that the US is investigating some number of situations and individuals for potential war crimes, including senior unnamed members of the Israeli government. 

 

There are many other things he could do. 

 

He is running out of time. 

When someone tells you ethics don't matter, believe them

If we are going to trust company financial statements, we need to trust the Auditors. As a rule, I have limited trust in Audit Partners until they demonstrate that they can make difficult decisions. Morality and ethics-based decisions. Generally, in my opinion, they fail. The most difficult choice many will make will be how low can they bid to win the business, and then how high can they push the fees in the following years and still retain the business. 

 

Last week Francine McKenna shared an article on LinkedIn: “We are all victims of Trump's fraud”. She highlighted a quote from the judge in the case: 

 

“In this particular case, in applying the law to the facts, the Court intends to protect the integrity of the financial marketplace and, thus, the public as a whole. Defendants’ refusal to admit error — indeed, to continue it, according to the Independent Monitor — constrains this Court to conclude that they will engage in it going forward unless judicially restrained.” 

 

A former Big-4 Partner commented on that post. To say that I was surprised is not exactly true, as many Big-4 and large accounting firm partners that I have known were very “conservative”, and in too many cases are simply unethical people. I turned down working for a partner because I had seen him lie on proposals. Not "little white lies” but glaring mistruths that he knew were lies. Real lies. But I digress. 

 

The comment made was "Utter nonsensical language. No one had a specific civil action? Where was this judge with Madoff?" 

 

It was, of course, a mealy-mouthed attempt to discredit the judgment against Trump, but what it really showed is how much we can, or cannot, trust that former Big-4 Partner. 

 

I fired off a response that was not very polite, then forgot about it. But it has been bothering me since. Partners sign off the Audit Reports of company financial statements, to be provided to regulators, banks, and capital markets, and via them, in effect to any retail investor. The Partners are the gatekeepers and protectors of financial markets. To “say the quiet bit out loud” is not something that they should do. They should not publicly state that unless someone can find an actual individual that they harmed, who cares, it doesn't matter, "no harm, no foul”. 

 

“Utter nonsensical language.” 

 

How many Big-4 or large accounting firm Partners hold this view? How many are so morally craven that they think their firm's signature on the Audit Report to the financial statements should carry no weight? It is just a signature, and the user of the reports should do their own due diligence; ignore the auditor's report or signature. That is not an argument for the fees they charge. After all, a Big-4 signature is supposed to tell the markets that the company is reputable and that financial processes are robust enough to withstand a rigorous audit. Further, Big-4 Partners will happily remind clients and prospective clients that a Big-4 signature will add value to their share price. 

 

“No one had a specific civil action?” Really? The new standard for company executive and auditor accountability should be whether they were subject to a “specific civil action” by an identified individual? 

 

Audit does not exist to support the client's lies. To do so makes the auditor complicit in those lies. It is a fine line between not caring about the lies and actively supporting the production of the lies (Parmalat comes to mind). That line was drawn very clearly with Andersen, eventually. The entire premise of the PCAOB is to ensure Auditor integrity, not reporting company integrity. And on the whole, I'm not confident that the PCAOB or any oversight body will alter the moral compasses of Audit firm Partners.  

 

The Mission of the PCAOB is simple. "The PCAOB regulates the audits of public companies and SEC-registered brokers and dealers in order to protect investors and further the public interest in the preparation of informative, accurate, and independent audit reports."

 

Remember that the PCAOB came into existence because auditors could not be trusted. If Auditors (and by inference Audit Partners) could be trusted, there would have been no need to create the PCAOB. After all, its name says it all, the “Public Company Accounting Oversite Board”. 

 

Sure, I've met a few Big-4 and other firm Partners that I consider to the honest and with a level of integrity that makes them, in my eyes, worthy of the public's trust. Because that is what they are supposed to do, provide the investing public with confidence that what a company reports are, barring overt fraud that was well hidden, worthy of trust. A level of trust that the public can place in the word of the Auditor. But the list is short.  

 

More frequently they give themselves away by what they say and do. 

 

This is a world in which a former Andersen senior manager and later senior partner in a “second tier” firm told me that he was successful and would be rich because “God and Jesus love me more than he loves other people". You mean like the poor or those who suffer a negative life-changing event? Yes, was his answer, the event probably happened because they didn't love Jesus enough and Jesus doesn't love them enough. Success for him did not require any moral or ethical choices, because if he did something immoral or unethical and he got away with it, that was because God loves him more than God loves others. (I'm not making this up, this was a real conversation, and yes, he is now a Senior Partner in a second-tier firm.) 

 

In the other case, the partner included in a proposal that the firm has 450 dedicated Internal Audit professionals, 150 of whom had at least eight years of experience. This was a lie. I had told him two weeks earlier that a survey of the first had identified 150 people who could spell “Internal Audit", of whom maybe 30 had eight or more years of experience. He knew it was a lie, and he put it in a proposal anyway. When asked to work for him for six months to meet an overload situation, I declined saying that I could not work for someone who overtly lied on proposals. Frankly, there was too much risk to the firm and to me that he would continue to lie to the client, putting me, the account team, and the firm's reputation at risk. The response to my statement that he lied on proposals was “he's a salesman, what do you expect”. 

In a third case, we were shortlisted to provide Anti-corruption training. But when the director of procurement at the client asked us if we could "do something for the team", we answered that we couldn't as it would breach the UK Bribery Act. It was so ludicrous that we thought it must have been a joke, or a test. A Big-4 firm won the work. I wonder to this day if they "did something for the team". Anti-corruption training.

So, to bring this back to the original statement: if someone tells you ethics don't matter, believe them. And if they tell you they support Trump, then they have proved that ethics and morality do not matter to them. Believe them.