Summary: A deeper investigation of the forces at play and routes of funding for SCO

BACK IN July, SCO was found in the midst of a major scandal which might not relate to its litigation against Linux but might as well do. We wrote about this in:

• IBM's Latest Filing Regarding SCO Bankruptcy Mentions “Fraud”
• SCO Scandals Finally in the News
• Link Found Between Potential SCO Rescuers and Microsoft
• SCO and Darl McBride Paid $100,000 to Steven Norris

An investigative report from from Capital Madrid has just unraveled some more details and Groklaw has the translation.

If you are interested in the Pelican Equity litigation against Darl McBride and the gang, here's an article in Capital Madrid, a Spanish financial newsletter, that provides some background on the parties. If you don't read Spanish, you can use Google Translate. Here's the English translation.

The article particularly focuses on Robert Brazell's accomplishments, because one of his businesses is in the news in the Spanish language press, and it mentions that Steven Norris is "a friend of the Bushes and of Saudi Prince Al-Waleed bin Talal Al Saud" ("amigo de los Bush y del príncipe saudí Al-Waleed bin Talal Al Saud").

It is worth remembering that Bill Gates is also a mate ("amigo") of Prince Al-Waleed bin Talal Al Saud. We wrote about the role of Norris in [1, 2, 3, 4, 5, 6, 7]. And on goes Groklaw:

I always remember at the beginning of the saga a SCO executive, Chris Sontag, saying we shouldn't be surprised if the government submitted an amicus brief in the SCO v. IBM case. That implied to me that they expected an appeal, at least, at which point they thought the government would support them, allegedly because of concerns about terrorists using Linux. If you recall, one of SCO's allegations in its complaint is that IBM had violated export regulations. Mozilla actually inquired about that issue in connection with Firefox, by the way, and it seems SCO's dreams were misplaced. It received a letter stating Firefox does not violate export regulations, which likely will impact the IBM case. Of course, SCO executives have said a lot of things, so maybe that hope of an amicus brief was more a dream than not, and the administration has since changed, but then again, who knows? My job is just to let you know everything I find, and others can do the rest.

There's that connection again between "terrorists" and Free software. The previous post refuted this FUD which had come from CBS/CNET/ZDNet. Several weeks ago we showed that Microsoft is still trying to compare Free software to terrorism when in fact, the only real "terrorist" here (by definition) is Microsoft [1, 2, 3]. Jim Allchin, Microsoft's President of Platforms & Services Division at one time, was quoted as saying: "I'm an American; I believe in the American way, I worry if the government encourages open source, and I don't think we've done enough education of policymakers to understand the threat."

As market forces show, there is nothing more capitalist than robust Free software which is sold commercially, as opposed to a monoculture where people are forced to buy one particular brand and nothing else. As SJVN puts it after Red Hat's fantastic results, GNU/Linux is heading upward while Microsoft's income has been down sharply for two consecutive quarters (with more of the same likely to come).

Take Red Hat for example. In Red Hat's latest quarter, which ended on August 31st, the company reported higher than expected revenue and profits. "Profits minus one-time expenses and including a 4-cent per share tax benefit hit $39.4 million, or 20 cents per share, up more than 30 percent from 2008."

It's not just Red Hat though. Novell recently reported a much more typical quarter for a tech. company in 2009. That is to say Novell also had a poor quarter. Except for their Linux lines -- that was a different story. There, Novell saw its Linux revenue go up 22% from the same quarter last year.

Microsoft? Oh, they're still worth billions and billions, but "Microsoft revenue declined 17% and net income declined 29% year over year in the company's fiscal 2009 fourth quarter due to continued weakness in global sales of PCs and hardware servers." Funny, that didn't seem to bother the Linux companies.

In another new post from Groklaw, insight is offered into the cleaning up that SCO's new Trustee ought to make.

Here's what the Chapter 11 Trustee has been doing:

9. The Trustee has been diligently reviewing the Debtors' pending litigation and business operations and prospects. Indeed, the Trustee's recent appointment has not allowed for sufficient opportunity to review and evaluate fees incurred and sought in these cases. Moreover, the Trustee is evaluating the retainers received by professionals and any unused retainers available to certain professionals. The Trustee interposes this Reservation of Rights to request additional time to review and evaluate the reasonableness of the Fee Applications that have been filed. Absent a more fulsome review of the Fee Applications, the Trustee is unable to take a position on the reasonableness of the fees requested by the Fee Applications.

10. Accordingly, the Trustee files this Reservation of Rights to reserve all rights to object to interim and final allowance of the Fee Applications, if any, until the Trustee has completed the review process. Any failure by the Trustee to have filed or to file an Objection with respect to a Monthly or Interim Fee Application shall not serve as a waiver to the Trustee's right to object to the reasonableness of any Professional's fees on a final basis.

With closer inspection (by an outsider) of what SCO has been doing, more dirty secrets are likely to come out. ⬆