President Obama has the power to shorten the sentence of federal prisoners. But he has only used it once
This week, Attorney General Eric Holder spoke out against the impacts of “draconian” sentences for nonviolent drug offenders. “Too many Americans go to too many prisons for far too long, and for no truly good law enforcement reason,” said Holder.
But in unveiling the new “smart on crime” initiative, Holder skipped mention of the sweeping power the president has to shorten or forgive a federal prisoner’s sentence.
President Obama has given just one person early release from prison. As ProPublica has documented, Obama has overall granted clemency at a lower rate than any modern president, which includes both commutations – early release – and pardons. Last year, ProPublica reported that the Justice Department’s Office of the Pardon Attorney rarely gives positive clemency recommendations to the president. Experts have been calling for reform of the entire clemency process.
“Holder’s speech begs the question, why is not more attention given to the broken pardons office?” said Robert Ehrlich, a former Republican governor of Maryland who recently started a law clinic devoted to pardons.
One person who is still waiting to hear about his petition for commutation is Clarence Aaron. He has been in prison since 1993, when he was sentenced to three life terms for his role in a drug deal. Aaron was not the buyer, seller, nor supplier of the drugs. It was his first criminal offense.
The White House ordered a fresh review of Aaron’s petition last year after ProPublica found that the pardon attorney, Ronald Rodgers, had misrepresented Aaron’s case when it was brought to President George W. Bush. An Inspector General’s report released in December supported ProPublica’s findings, and referred the incident to the Deputy Attorney General to determine if “administrative action is appropriate.”
Nine months later, Justice Department spokesman Wyn Hornbuckle says the “issues raised in the report are still being examined.”
In his speech, Holder expressed concern about racial disparities in sentencing and treatment of prisoners. In 2011, a ProPublica investigation found that whites were four times as likely to receive pardons as minorities. Following our story, the Justice Department commissioned a study on racial disparities in pardons. Hornbuckle says that study is “ongoing.”
“The clemency process will need to be invigorated both from the bottom up and the top down,” said Jeffrey Crouch, a professor at American University, who wrote a book on pardons. “One step is the pardon attorney giving applicants a fair review and a positive recommendation. The other step is President Obama being more willing to use his pardon power.”
For now, Holder’s initiative has little to offer prisoners already behind bars. He directed prosecutors to avoid charges that carried mandatory minimum sentences for certain low-level, nonviolent drug offenders and urged the passage of legislation to change those sentencing requirements. But in 2010, there were more than 75,000 people in federal custody that had been given mandatory sentences.
“We’ve been getting a lot of calls asking, does this mean my loved one gets to go home?” said Molly Gill, government affairs counsel at Families Against Mandatory Minimums. “For the vast majority of people it doesn’t change their sentences and it isn’t retroactive.” (Holder did expand “compassionate release” for some elderly prisoners.)
While clemency does not generally reach wide swaths of prisoners, Presidents Gerald Ford and Jimmy Carter used it to affect policy on a larger scale, creating programs to forgive thousands of Vietnam War draft evaders.
In the 1960s, Attorney General Robert F. Kennedy also took a stand against what he described as “grossly unjust” outcomes of sentencing practices – and used commutations to do so. He directed federal prison wardens to seek out and bring him prisoners deserving of early release. Kennedy acknowledged that presidential commutations were “at best only stop-gaps” in a sentencing regime that needed reform. President John F. Kennedy commuted 100 sentences in total, and President Lyndon B. Johnson 226.
Mark Osler, a law professor at St. Thomas University who runs a clinic on commutations, said Obama could also do more. “Holder’s emphasis on how wrong these laws have been, and how damaging the Justice Department’s enforcement of those laws has been, gives me hope that this only the first step,” Osler said.
Fund houses have covered nearly every sector and every theme. Strangely, funds covering the top-performing sectors are few. Jason Monteiro shows how funds have missed the best of themes and followed the fashion-of-the-day
A mutual fund scheme has been launched for almost every sector, banking, fast-moving consumer goods, infrastructure, media, MNCs etc. If you wish to invest in public sector companies, there are PSU funds. But many of the sectors have been fads for a particular period and fund houses have just rushed in to launch such schemes. Several of these schemes have performed poorly. In terms of returns, banking, FMCG, MNC and pharmaceutical sector fund schemes have led the list with double digit returns over the five-year period. The schemes from other sectors have been average to poor. Before the financial crisis, fund houses had rushed in to launch infrastructure and power sector fund schemes, which were fad themes at the time. Out of the 25 schemes that belong to the infrastructure and power sectors, as many as 19 schemes are from infrastructure sector. Surprisingly, very few fund houses have launched schemes for defensive sectors like FMCG and pharma. There are just two FMCG sector schemes and three pharma sector schemes. And these have been the best-performing sectors.
Therefore, fund houses have launched such schemes merely as an asset gathering exercise. Only when a particular sector was ‘hot’ or showing a rising trend, fund houses begin to launch schemes. Not only sector schemes, but we have seen other schemes such as MIPs or hybrid schemes investing in gold being launched one after the other to lure investors.
At present there are just two FMCG schemes, SBI FMCG Fund and ICICI Prudential FMCG. SBI FMCG Fund has done better with an average return of 30.96%. The scheme from ICICI Prudential Mutual Fund delivered a lower average return at 23.75%. The S&P BSE FMCG index delivered a return of 25.98%.
All three of the pharma sector schemes have a track record of over five years. Apart from Reliance Pharma Fund which has a corpus of over Rs600 crore the other two schemes— SBI Pharma Fund and UTI Pharma and Healthcare Fund have a corpus of little above Rs100 crore. In terms of average returns, the SBI Pharma Fund has been the best among the other two schemes with a return of 17.02% marginally beating the S&P BSE Healthcare index which delivered 16.86%. The scheme from Reliance MF and UTI MF delivered a return of 24.74% and 17.82% respectively.
A few infrastructure schemes may have done better than their benchmark. However, on deeper analysis, we found that many of these schemes invest a significant portion in sectors apart from construction and related sectors. Out of the 19 infrastructure sector schemes, there are seven schemes that have their highest allocation to banks. Schemes like Birla Sun Life Infrastructure Fund, HDFC Infrastructure Fund and ICICI Prudential Infrastructure Fund have an allocation of over 20% to the financial sector. These schemes have delivered an average return of -0.90% over a five year period while the CNX Infrastructure index delivered a return of -9.86% over the same period.
Infrastructure schemes have been one of the worst-performing sector schemes of the past. There are as many as 19 infrastructure schemes which have delivered an average annualised return of -6.24% while the CNX infrastructure index has delivered an average of -8.67%. Two schemes of the 19 which have been able to consistently beat the benchmark are Religare Invesco Infrastructure Fund and ICICI Prudential Infrastructure Fund. Schemes such as Reliance Infrastructure Fund and Escorts Infrastructure Fund have delivered a negative return of -26.59% and -25.39% respectively.
Sector Funds are not for the average investor. Investing in a sector fund is riskier than normal. If you do not get your timing right, you may face a significant loss of capital. Even fund managers find it difficult to beat the benchmark of their particular sector. And of course, as you can they get their sector selection itself wrong – chasing the wrong sector at the wrong time.