CONDÉ NAST PORTFOLIO TRAVELS TO BOOMTOWN, IRAQ, WHERE BUSINESS IS THRIVING,
OIL DEALS ARE FLOWING, AND MCMANSIONS ARE RISING
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PLUS: YOUR HOSPITAL’S DEADLY SECRET; NEWS CORP.’S NEWEST AND YOUNGEST BOARD MEMBER 

New York–In the March 2008 issue of Condé Nast Portfolio, National Book Award winner Denis Johnson reports that amid the violence and misery of the war in Iraq, in the peaceful northern region of Kurdistan, mini-mansions are springing up, and oil bubbles forth unaided (“Boomtown, Iraq,” p. 120). Reporting from Erbil, the new wheeler-dealer capital of the Middle East, Johnson writes that the region is open for business, with an estimated 22 billion barrels of untapped oil. “The Kurdistan region is Paul Wolfowitz’s wet dream: maybe not a beacon of democracy, but certainly a red-hot ember—peaceful, orderly, secular, democratic, wildly capitalist, and sentimentally pro-American—afloat on an ocean of oil,” Johnson writes, noting that the Kurds calls it the “Other Iraq” and want the news out: This is what Cheney-Bush wanted. Stafford Clarry, the humanitarian-affairs adviser to the Kurdistan Regional Government tells Johnson, “In Kurdistan, the American effort is a success. All right, yes, at least 50,000 have died in central Iraq. Yes, untold destruction, unbelievable mistakes, yes, all of that is true. But what you see around you in Kurdistan is also true. It doesn’t justify the destruction, but it has to be recognized as a fact.” In a region that appears to be relatively safe for foreigners, a $1 billion shopping mall with 800 shops and 400 offices has sprung up, and a project called the Dream City, which includes an amusement park, plans for entire new communities, and what will be the tallest building in Iraq, is under way. Although the Iraqi central government has yet to pass an oil-revenue-sharing law, in 2007, the K.R.G. passed its own statute that allows its oil fields to be developed. So far, more than a dozen international firms have signed deals for exploration and extraction with the secular K.R.G., including Hunt Oil, the Dallas firm run by Ray Hunt, who sits on President Bush’s Foreign Intelligence Advisory Board. Oil giants BP and Exxon Mobil are staying out of Kurdistan because Iraqi oil minister Hussain al-Shahristani has declared that companies doing business with the K.R.G. will not be allowed near the supergiant oil fields in the south. Baghdad has also denied Kurds access to all government-owned pipelines, so Kurdish crude is being trucked across the borders with Turkey and Syria, an extremely expensive way to export the oil. Meanwhile, money is starting to flow. DNO, a Norwegian firm that signed a deal in 2004 with the K.R.G., even before the Iraqi constitution was finalized, has tapped a reserve that is currently producing 90,000 barrels a day. Johnson spends time with Americans on the ground, who believe the model for Kurdistan is Dubai—oil-rich and almost entirely dependent on imported expertise, goods, and workers.
 
Also in the March issue:

“Your Hospital’s Deadly Secret” (page 138). Contributing editor Katherine Eban reports that hospital pharmacies across America are being contracted out to companies with little medical expertise, and patients are paying the price. Eban recounts the harrowing story of Alyssa Shinn, a one-pound-four-ounce preemie who was born to relatives of the late Terry Schiavo and who was the victim of a prescription translated incorrectly by Summerlin Hospital pharmacist Pamela Goff. Just hours before the incident, Goff had appealed to her boss to reform bureaucratic procedures that she believed would avert potential errors. “It would take months for [Baby Alyssa’s mother, Kathleen Shinn] to learn the truth: that metastasizing problems of turnover and training lapses had left the Summerlin Hospital pharmacy in disarray,” Eban reports. “For years, Universal Health Services, the for-profit health-management company that owns Summerlin, had outsourced its pharmacy to a series of drug-distribution companies, which, taken together, buy and sell 90 percent of the country’s medicine. For these companies, managing hospital pharmacies came as an add-on to their core business of selling drugs, a response to pressure for profit in the distribution business. The management of the pharmacy—and U.H.S.’s oversight of its contractor—would later prove fateful to Alyssa Shinn.” Eban reports that McKesson Corp. ran the pharmacy for U.H.S. and was technically its owner, noting that outside companies can seem like a godsend for hospital C.E.O.’s facing soaring pharmaceutical costs and a nationwide shortage of pharmacists. But a fundamental problem exists, says Kurt Patton, former executive director of hospital accreditation services for the Joint Commission, an independent oversight agency that inspects and certifies hospitals. Hospitals that turn over their pharmacies to management companies often cede nearly total control. This can create a dangerous disconnect between the hospital’s medical staff and the pharmacy. Eban explains how McKesson became the pharmacy’s owner, staffed it, bought the drugs, used its own computer systems, and received a daily fee from Summerlin based on the number of patients the hospital treated. Louis Ling, general counsel for the Nevada State Board of Pharmacy, says this kind of total-outsourcing arrangement left the hospital blind to what was happening in the pharmacy. The hospital has since reached a confidential settlement with the Shinn family. In public, the hospital blames McKesson. Through the prism of a tragic medical error, Eban reveals that Goff and Kathleen Shinn were able to forge a relationship and now hope to work together as advocates for patients.

“Lady Sings the News” (p. 134). In an exclusive profile, Sophia Banay sits down with Natalie Bancroft, the 27-year-old fledgling opera diva who is the newest member, and only woman, on the board of Rupert Murdoch’s News Corp. Bancroft was handpicked by Murdoch to fill a board seat after News Corp. bought Dow Jones & Co. from the Bancroft family for $5.6 billion last year. Public reaction to her appointment ranged from disbelief to ridicule, Banay reports. “I know that me as a choice was kind of scandalous—this 27-year-old opera singer that no one knows anything about,” Bancroft says. “There’s been people saying, ‘She’s going to be a potted plant and a pushover.’ The last thing I am is a pushover,” she says. “I’m not just some idiotic girl in piggytails yodeling.” Murdoch’s offer to create a board seat for a family representative was part of his overture in early April 2007. The Bancrofts decided that interested family members should nominate themselves, Banay writes. “There were better candidates than me by far, but they weren’t in the running,” Bancroft says. “I wouldn’t say I was excited. There were so many negotiations going on, and the family was screwing it up right and left. My focus was more on, Jesus Christ, how am I related to these people?” Out of roughly 35 eligible family members, Bancroft garnered two votes, hers and her father’s, not enough to win, Banay reports. Although Murdoch was notified of the whole family’s choice, Banay notes that he never met with other nominees and instead met privately with Bancroft, who was subsequently selected by the News Corp. board. When asked if she’s planning to get an M.B.A. to help prepare for the position, Bancroft replies, “in journalism?”
 
“The Toxic Ten” (p. 144). Contributing writer Harry Hurt III reports on 10 companies that talk the green talk but don’t walk the green walk. For all the environmental-speak coming out of American corporations these days, many remain polluters. Hurt investigates why the following companies should be doing better: Alcoa, American Electric Power, Apple, Boeing, Cargill, Chevron, Ford Motor, J.R. Simplot Co., Massey Energy, and Southern Co. On the other end of the spectrum, Hurt names the Green 11—America’s most eco-savvy corporations: Bank of America, Ceres, Dupont, General Electric, Innovest, Organic Valley, Starbucks, Tesla Motors, Wal-Mart, Whole Foods, and the city of Austin, Texas.
 
“Inside Wall Street’s Black Hole” (p. 130). Contributing writer Michael Lewis explains how the complex Black-Scholes formula, used to calculate risk throughout the financial world, is under attack, having been shown to be irrelevant after the market crash of 1987. “If too many investors are trying to unload stocks as a market falls, they create the very disaster they are seeking to avoid,” Lewis writes. “Their desire to sell drives the market lower, triggering an even greater desire to sell and, ultimately, sending the market into a bottomless free fall.” He concludes, “Financial panics have become almost commonplace; events that are meant to occur once in a millennium now seem to occur every few years. Could this be because the financial system was built on an idea that badly underestimates the risk of catastrophes—and so conspires with human nature to create them?”

“Ballots and Wallets” (p. 53). Andrés Martinez argues that although the amount of money spent getting a candidate elected this year will reach the billions, it is actually a serious bargain.  “Most civic-minded folks who care about politics wince when they hear about the amounts of money involved… But why all the carping? Don’t the stakes justify spending a billion dollars?” Martinez writes. “The big money in presidential politics reflects both the resources used to reach the least engaged voters and the surging engagement of millions more.  That’s not a matter for hand-wringing.  That’s a cause for celebration.”

“Obamanomics” (p. 85). Washington editor Matthew Cooper reports that despite the great similarities between the economic plans of Hillary Clinton and Barack Obama, it is the Illinois senator’s approach that has the edge. “Obama’s campaign is a testament to his abilities. It is flexible. It’s fast. And it got built quickly, unlike the Clinton machine, which has been assembling itself for years, like a conglomerate that keeps acquiring new companies,” Cooper writes.

“How to Value It: The Lott Lobby” (p. 92). Tory Newmyer does a back-of-the-napkin analysis of what Republican former Senate majority leader Trent Lott’s influence may be worth to corporate clients and himself. In assessing his speaking gigs, his firm, and his stints on corporate boards, Newmyer puts Lott’s bottom line at between $4 million and $6 million.
 
“Would You Buy a Bridge From Warren Buffett?” (p. 76). Senior writer Jesse Eisinger reports why the Oracle of Omaha’s foray into the municipal-bond-insurance business sustains an unnecessary industry. Eisinger’s solution: Eliminate muni-bond insurance for good; cities and states would save billions if they didn’t buy insurance and received proper ratings instead.
 
“The Bankers’ Bailout” (p. 71). Contributing editor John Cassidy reports how Washington is quietly planning a massive rescue for banks stuck in the subprime mess.

Online:
The March issue of the magazine, plus additional content including an Oscar-themed "Reel Money" package on five Hollywood players who are changing
the movie business, the "faces of the credit crisis” as well as a behind-the-scenes look at the web drama "Lonely Girl."

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