Posted by Pratap Chatterjee on April 2nd, 2013 CorpWatch Blog
Bank sign in Limassol, Cyprus. Photo: Leonid Mamchenkov. Used under Creative Commons license.
A few years ago Yiannis Kypri and Andreas Vgenopoulos, senior executives at the two biggest banks in Cyprus, were on top of the financial world. Kypri courted wealthy Russian investors in Moscow while Vgenopoulos handed out millions in loans to companies in Greece, the country of his birth.
Both Kypri, the former CEO of the Bank of Cyprus, and Vgenopoulos, the former CEO of Laiki Bank, were fired when their financial institutions collapsed, bringing down with them the economy of the tiny Mediterranean island country. Last week anyone who had deposited more than €100,000 ($129,000) in the two Cypriot banks was forced to write off between 40 to 80 percent cut of their holdings in order to finance a €10 billion international bailout of the country.
Cypriots are understandably angry although the people who will lose the most appear to be expatriates, notably from the former Soviet Union who have been flocking to the country over the last decade. “There is a generation of Russian businessmen like me who have lost faith in the Russian government, in Russian banks and in Russian laws. That is why we are in Cyprus,” Sergey Ivanov, a Russian wine merchant in Cyprus told the New York Times.
Thousands of companies that existed just on paper were set up in Cyprus over the last few years by accountants and lawyers for wealthy expatriates in order to help them avoid taxes. (There are 320,000 registered companies for just 860,000 residents) Andreas Marangos, a Cypriot lawyer, says he alone set up 6,000 shell companies for Russian and Ukranian investors. Michalis Papapetrou, another Cypriot lawyer, told National Public Radio that one of his Russian clients deposited €100 million in the island.
Indeed one in three rubles that left Russia in 2011 went to
Cyprus, and almost as much came back, according to the International Monetary
Fund. Why? “They were overwhelmingly Russian cash “round-tripping” through
Nicosia shell companies and re-entering as foreign investment,” writes Ben
Judah, author of the forthcoming book “Fragile Empire: How Russia Fell In and
Out of Love With Vladimir Putin.” This even included money state entities like Rosneft,
the oil giant, Sberbank and VTB, both major banks, and of course the Russian
billionaires who control the steel companies.
Bank of Cyprus acquired 80 percent of Uniatsrum, a Russian bank, in 2008 in order to cash in on this bonanza. “We are utterly convinced as to the huge potential of the Russian economy,”
Kypri, who was then group chief general manager of Uniatsrum, told a
Moscow press conference in 2010. “Once Uniastrum securities are accepted
for trading on the Russian stock market, the bank’s appeal will
increase, providing it with access to equity in rubles and further
solidifying its position as one of Russia’s foremost banking
institutions.”
At the same time, tens of thousands of ordinary Russians also flocked to the southern Cypriot town of Limassol to take advantage of the sunny weather, the banking system and a welcoming mayor who coincidentally speaks fluent Russian. A Russian radio station and two Russian-language newspapers, as well as dozens of shops selling Russian products have sprung up. Indeed, some have taken to calling the city “Limassolgrad” because of the overwhelming Russian presence.
Unfortunately Kypri, Vgenopoulos and their staff squandered the deposits that they were entrusted with on a variety of questionable schemes ranging from a property boom in Cyprus to large bets on Greek bonds, which they bought at 70 percent of their original value. Those bonds sank to a quarter of the original value under a deal engineered by the European Union in late 2011. Laiki alone lost €2.3 billion, an amount equal to an eighth of the national gross domestic product, while the Bank of Cyprus lost €1.6 billion.
Foolish ventures aside, some say the European Union deliberately forced Cyprus to the brink in order to break up the money laundering and tax dodging schemes on the island. “If we knew at the time what might eventually happen, we might not have been so willing to join,” Afxentis Afxentiou, former governor of Cyprus’s central bank from 1982 to 2002, told the Financial Times. “It seems they wanted to punish Cyprus.”
A committee of former Cypriot Supreme Court judges is scheduled to start work this week to attempt to discover who was responsible for the financial mess – presumably investigating the work of senior executives like Kypri and Vgenopoulos. They are expected to report back in three to six months.
Mind you such questions have been asked for a while with no answers forthcoming. "How could (the Cypriot authorities) be fooled by a man who took the capital of Cypriot depositors to Greece and turned it into thin air?" Zacharias Koulias, a Cypriot independent member of parliament asked his colleagues last May. "Is it even possible for a man to come to our country, grab the capital and leave, and all these managers didn't realize what was going on?
Posted by Pratap Chatterjee on February 13th, 2013 CorpWatch Blog
Riot logo created by Raytheon. Image via the Guardian newspaper
Raytheon, a U.S. military manufacturer, is selling a new software surveillance package named “Riot” that claims to predict where individuals are expected to go next using technology that mines data from social networks like Facebook, Foursquare and Twitter.
Based just outside of Boston, Massachusetts, Raytheon sells $25 billion worth of equipment a year to military clients like the Pentagon. Some of its most famous products include Sidewinder air-to-air missiles, Maverick air-to-ground missiles, Patriot surface-to-air missiles and Tomahawk submarine-launched cruise missiles.
Raytheon’s Rapid Information Overlay Technology (Riot) software extracts location data from photos and comments posted online by individuals, and then analyzes this information to create a variety of spider diagrams to show where the individuals like to go, what they like to do and whom they communicate with.
A video demonstration of the software was recently published online by the Guardian newspaper. In it, Brian Urch of Raytheon shows how Riot can be used to track “Nick” – a company employee – to predict that the best time and place to steal his computer or put spy software on it.
“Six a.m. appears to be the most frequently visited time at the gym,” says Urch in the video which is dated November 2010. “So if you ever did want to try to get a hold of Nick - or maybe get a hold of his laptop - you might want to visit the gym at 6:00 a.m. on Monday.”
Adams says that nobody has bought the software – which is still under development - yet. However, company filings indicate that Riot is classified as an "Export Administration Regulations 99" item which allows it to be sold or exported to any client.
But it is certainly true that a number of U.S. government agencies have been eagerly pursuing surveillance software to exploit the vast quantities of data that individuals are posting online about themselves. In January 2012 the Federal Bureau of Investigation posted a request for an application that would allow it to “provide an automated search and scrape capability of social networks including Facebook and Twitter … and (i)mmediately translate foreign language tweets into English.”
Last month the U.S. Transportation Security Administration asked contractors to propose applications “to generate an assessment of the risk to the aviation transportation system that may be posed by a specific individual” using “specific sources of current, accurate, and complete non-governmental data.” The initial plan is to use it to screen volunteer flyers who will be offered the benefits of “expedited screening lanes … leave on their shoes, light outerwear and belts, as well as leave laptops and … compliant liquids in carry-on bags.”
Privacy activists say that the Riot package is troubling. "This sort of software allows the government to surveil everyone," Ginger McCall, the director of the Electronic Privacy Information Center's Open Government program, told NBC News. "It scoops up a bunch of information about totally innocent people. There seems to be no legitimate reason to get this."
“(T)he government has no business rooting around people's social network postings—even those that are voluntarily publicly posted—unless it has specific, individualized suspicion that a person is involved in wrongdoing,” writes Jay Stanley, a senior policy analyst at the Speech, Privacy and Technology Project of the American Civil Liberties Union. “Among the many problems with government “large-scale analytics” of social network information is the prospect that government agencies will blunderingly use these techniques to tag, target and watchlist people coughed up by programs such as Riot, or to target them for further invasions of privacy based on incorrect inferences.”
Indeed, it would also be possible for a tech-savvy malcontent to lead security officials on a wild goose chase, or even deliberately frame anyone they wanted.
Posted by Pratap Chatterjee on February 5th, 2013 CorpWatch Blog
Standard & Poor's photo: TreyDanger. Dollar bills photo: Adam Kuban. Used under Creative Commons license
The medieval alchemists claimed they could turn ordinary metals into gold. Analysts at Standard & Poors (S&P), Wall Street’s top ratings agency, claimed that bad loans to poor people were wildly profitably. A U.S. government investigation alleges that S&P financial analysts are no different from the hucksters of yore.
On Monday, the U.S. Department of Justice sued S&P for $5 billion for misleading the Western Federal Corporate Credit Union, the first federally chartered credit union, which collapsed in 2008. Sixteen states have joined the lawsuit while the U.S. Securities & Exchange Commission has also launched an investigation. S&P has offered to settle for $100 million instead without admitting any guilt.
The lawsuits are based on a special government investigation named “Alchemy” into top ratings provided by S&P for “collateralized debt obligations” (CDOs) composed of sub-prime mortgages. The federal officials allege that analysts knew that the loans were likely to go sour.
Sub-prime mortgages are a name for loans made to people who have bad credit and cannot borrow money to buy houses under normal circumstances. A flood of such loans from U.S. banks that lasted till 2006 created over $1 trillion in debt, typically for poor people, whose property values crashed when the housing bubble burst in 2007.
Two dozen government lawyers spent several years, conducting over 150 interviews, to find out how much the ratings agency knew about the quality of the CDOs. Some of the documents they uncovered were pretty damning.
“This market is a wildly spinning top which is going to end badly,” wrote David Tesher, an S&P managing director in an email on December 11, 2006, according to documents released by the government. “Let’s hope we are all wealthy and retired by the time this house of cards falters,” another S&P employee wrote four days later, according to documents released by the U.S. Senate.
"Watch out // Housing market went softer // Cooling down // Strong market is now much weaker // Subprime is boi-ling o-ver // Bringing down the house,” sang an analyst in a parody video of Talking Heads' 1983 song "Burning Down the House" that he recorded for his colleagues in March 2007.
“We allege that S&P falsely claimed that its ratings were independent, objective, and not influenced by the company’s relationship with the issuers who hired S&P to rate the securities in question,” said Eric Holder, the U.S. attorney general, at a press conference on Tuesday. “When, in reality, the ratings were affected by significant conflicts of interest, and S&P was driven by its desire to increase its profits and market share to favor the interests of issuers over investors.”
“Claims that we deliberately kept ratings high when we knew they should be lower are simply not true. S.&P. has always been committed to serving the interests of investors and all market participants by providing independent opinions on creditworthiness based on available information,” the Wall Street firm said in a statement released to the press.
S&P has also tried to claim in court that its ratings are protected under the first amendment to the U.S. constitution, which guarantees the right to free speech. Federal judges have been skeptical like Shira A. Scheindlin, who recently ruled against the argument.
S&P is one of three major agencies on Wall Street. No federal action has been announced yet against the other two agencies – Fitch and Moody’s – despite evidence gathered two years ago that suggest they knew of the problem too.
Other lawsuits have also uncovered evidence that Wall Street firms were aware of the problems with sub-prime loans as far back as 2005, according to documents just released in a New York court under a lawsuit against Morgan Stanley, a major U.S. investment bank, that was brought by the China Development Industrial Bank (CDIB) from Taiwan. The bankers cracked jokes about the quality of the CDO that they sold to the Taiwanese suggesting that it should be called “Subprime Meltdown,” “Hitman,” “Nuclear Holocaust” and “Mike Tyson’s Punchout” or “Shitbag.”
Posted by Pratap Chatterjee on February 4th, 2013 CorpWatch Blog
Protest outside Partido Popular headquarters in Madrid. Photo: Popicinio. Used under Creative Commons license
Top executives from three major Spanish construction companies - Fomento de Construcciones y Contratas (FCC) from Barcelona, Obrascón Huarte Lain (OHL) and Sacyr Vallehermoso from Madrid - are in the limelight for allegedly contributing money to Partido Popular, the Spanish ruling party.
The conservative Partido Popular was in power from 1996 until 2004 when they were ousted in part because of popular anger against the war in Iraq. During - and even after their time at the helm - a series of undisclosed payments were allegedly made to senior party officials listed in handwritten notes kept by Luis Bárcenas, the party’s former treasurer and his colleague Álvaro Lapuerta, that were revealed in El País newspaper last week.
In fact, all three companies won billions of euros in Spanish government contracts and concessions during the boom times – Sacyr’s toll road projects were once worth €7.9 billion. OHL reported €3.87 billion euros in road construction work in its 2008 annual report while FCC recently estimated that it is still owed €1.7 billion by Spanish local governments. (Both Sacyr and OHL have revenues of about €5 billion a year while FCC is approximately twice as big)
Questions are now being raised about the possible connections between the lucrative public sector contracts and the Bárcenas payments, which came to light when the former party treasurer submitted details of a secret Swiss bank account to the tax authorities under an amnesty program set up shortly after Rajoy came to power. The account, which was operated by Bárcenas, held as much as €22 million at times.
Mariano Rajoy, the current Spanish prime minister, has been accused of personally receiving €25,200 ($34,100) a year from the slush fund over a period of 11 years starting in 1997 when he served first as minister of public administration and later as deputy prime minister.
Rajoy has denied receiving the money. "Never, I repeat, never, have I received undeclared money," he told an emergency gathering of the party's executive committee on Saturday. "It is not true that we received cash that we hid from tax officials.”
Meanwhile close to a million people have signed an online petition on change.org demanding that Rajoy resign, while thousands of Spaniards have also taken to the streets of Madrid, holding nightly demonstrations in front of the party’s headquarters.
Posted by Pratap Chatterjee on January 23rd, 2013 CorpWatch Blog
Protest outside San Francisco Federal Reserve. Photo: Steve Rhodes. Used under Creative Commons license.
Morgan Stanley, a major U.S. investment bank, was well aware of the problems in the sub-prime mortgage market as far back as 2005, according to documents just released in a New York court under a lawsuit brought by the China Development Industrial Bank (CDIB) from Taiwan.
Sub-prime mortgages are a name for loans made to people who have bad credit and cannot borrow money to buy houses under normal circumstances. A flood of such loans from U.S. banks that lasted till 2006 created over $1 trillion in debt, typically for poor people, whose property values crashed when the housing bubble burst in 2007.
On July 15, 2010, CIDB brought a lawsuit in New York State Supreme Court in Manhattan over a $275 million portion of a collateralized debt obligation (CDO) sold to them by Morgan Stanley which contained large quantities of mortgage-backed securities that were built on pools of such loans. “The complaint asserts claims for common law fraud, fraudulent inducement and fraudulent concealment,” wrote Morgan Stanley in a summary of the legal charges it was facing in its annual filings. The plaintiffs alleged that the bank “knew that the assets backing the CDO were of poor quality when it entered into the credit default swap with CIDB.”
The court allowed CIDB to examine Morgan Stanley’s emails which have just been made public. Jesse Eisinger of ProPublica, an investigative website, has written an excellent article explaining the scam. The documents reveal that the Wall Street bankers even cracked jokes about the quality of the loans that they packaged and resold to the Taiwanese suggesting that the CDO be called “Subprime Meltdown,” “Hitman,” “Nuclear Holocaust” and “Mike Tyson’s Punchout” or “Shitbag.” Instead they played it safe and named the financial instrument STACK 2006-1.
“We are pleased that the court in this case is ordering Morgan Stanley to turn over damning evidence, so that the jury will get to see what Morgan Stanley really knew about the troubled nature of its supposedly ‘higher-than-AAA’ quality product,” Jason Davis, a lawyer representing CIDB, told ProPublica. “While investors and taxpayers all over the world continue to choke on Wall Street’s toxic subprime products, to this day not a single major Wall Street executive has been held accountable for misconduct relating to those products.”
The bank has not denied the emails. “While the e-mail in question contains inappropriate language and reflects a poor attempt at humor, the Morgan Stanley employee who wrote it was responsible for documenting transactions,” the bank wrote in a statement to ProPublica. “It was not his job or within his skill set to assess the state of the market or the credit quality of the transaction being discussed.”
But even more damning is the fact that Morgan Stanley had already laid bets in the markets that such CDOs would fail. Howard Hubler, who set up an internal hedge fund named the Global Proprietary Credit Group at the bank in April 2006, where he “shorted” the sub-prime mortgage market. Hubler, however, made a costly mistake though by insuring other mortgages to pay for his bet, a tale told in Michael Lewis’s book – The Big Short, which costs Morgan Stanley $9 billion.
It’s a remarkable turnaround for the company which received a massive $182 billion bailout from the U.S. government in September 2008 after facing certain collapse when it became obvious that the risky mortgages that it had insured were likely to fail. At the time the federal government took a 80 percent ownership stake in the company in return for the loan.
“We’ve repaid every dollar America lent us. Everything plus a profit of more than $22 billion,” intone the AIG officials in the video. It ends with the words: “Now let’s bring on tomorrow.”
Well, tomorrow is here, and now the board of directors of AIG have been asked to consider suing the federal government over the terms of the bailout.
Until now AIG’s board has been silent about whether they would join the lawsuit but earlier this week, the board of directors of AIG held an unusual private mock-trial-like session about the matter, in which they heard from attorneys, representatives from the U.S. Treasury and the Federal Reserve.
What the AIG board was asked to decide was whether or not they would like to join the lawsuit, take it over and pursue the claims independently, or if they would try to stop Greenberg’s lawyers from pursuing the case on the company’s behalf. If they tried to prevent Greenberg from continuing with the suit, AIG would potentially lose out on any lucrative potential settlement.
After the board meeting was reported Monday night, the backlash from legislators, regulators and the financial press was swift and scathing.
"Don't even think about it," wrote Peter Welch, a Congressman from Vermont, in a letter to Robert S. Miller, AIG’s chairman: "AIG became the poster company for Wall Street greed, fiscal mismanagement, and executive bonuses—the taxpayer and economy be damned. Now, AIG apparently seeks to become the poster company for corporate ingratitude and chutzpah."
But former CEO Greenberg, who helped built AIG up from its beginnings in the 1960s, believes he has a case. “The (g)overnment loaned billions of dollars to numerous other financial institutions without taking any ownership in those institutions; it loaned billions of dollars to domestic and foreign institutions at interest rates that were a fraction of those charged to AIG; and it guaranteed hundreds of billions of dollars to institutions like Citigroup, Inc,” the lawsuit states. “AIG and its (c)ommon (s)tock shareholders, by contrast, were singled out for differential - and far more punitive – treatment.”
The lawsuit also accuses the government of violating the fifth amendment to the U.S. constitution which prohibits “taking private property for public use without just compensation” when it took the majority of the company’s shares in return for the loan.
The plaintiffs contend that the government used AIG as “a vehicle to covertly funnel billions of dollars to other preferred financial institutions, including billions of dollars to foreign entities, in a now well-documented ‘backdoor bailout.’”
The terms of the other bailouts were different, says commentators, because AIG was not a bank. “Those institutions were either banks that were already closely regulated by the Fed or became bank holding companies and submitted themselves to Federal Reserve regulation in return for access to the Fed’s lending facilities,” Time magazine reported.
Others note that AIG got a really good deal for the price, give the size and the nature of the loan. "Warren Buffett
loaned Goldman Sachs $5 billion at 10 percent annual
interest, plus upside in the form of warrants," writes Daniel Indiviglio of Reuters. "He ended up
booking an annual return of 14 percent without exercising the
warrants - far better than the government has managed from AIG
on the same basis." (The government ended up with about four percent in interest a year.)
Federal regulators also stress that the massive bail out of AIG was necessary because AIG was selling credit-default swaps that were intended to protect against subprime mortgage default - a major cause of the 2008-2009 financial crisis. If the insurance company had collapsed, the other banks and financial systems that it has insured would have gone down with it also.
Posted by Pratap Chatterjee on January 8th, 2013 CorpWatch Blog
Protest outside San Francisco Federal Reserve. Photo: Steve Rhodes. Used under Creative Commons license.
Ten major U.S. banks settled charges of illegally kicking people out of their homes for pennies on the dollar, under two agreements with the government announced this week. The biggest beneficiary is Bank of America which will win a get-out-of-jail free card for selling fraudulent loans to two government-sponsored mortgage finance companies.
Bank of America sold bad mortgages that led to numerous foreclosures via subprime mortgage lenders Countrywide Financial Corporation and Countrywide Home Loans, Inc. that it acquired in 2008. “Through a program aptly named ‘the Hustle,’ Countrywide and Bank of America made disastrously bad loans and stuck taxpayers with the bill,” said Preet Bharara, the U.S. Attorney for the Southern District of New York when he sued the company for $1 billion on behalf of the government last October.
David Lazarus of the Los Angeles Times put the numbers in context – he estimates that the average amount that most borrowers will get is just $2,000. On the other hand, Lazarus notes that the banks have done quite a bit better in 2011 - the year covered by the settlement: “Citigroup pocketed $11.3 billion in profit. JPMorgan Chase saw record profit of $19 billion. Wells Fargo posted almost $16 billion in profit. (Bank of America) was the poor relation of the family. It earned only $1.4 billion in profit.”
Some 900 open-air toxic waste pits still dot the area, where approximately 9,000 people are expected to contract cancer unless it is cleaned up, according to a study by Dr. Daniel Rourke, former of the Rand Corporation.
An initial lawsuit was filed by Ecuador’s indigenous communities in 1993. At the time the company asked for a trial in Ecuador to avoid a U.S. court battle. A second lawsuit was filed in 2003 by Fajardo and Luis Manza on behalf of 30,000 Ecuadoreans.
In 2011 the Ecuadorean courts ruled against Chevron and ordered the company to pay $18.2 billion in damages, which was increased to $19 billion this past July. Chevron appealed the judgement but the Ecuadorean appellate court ruled against the company on January 3, 2012.
Chevron is now trying a multitude of ways to defeat the ruling such as appealing the Ecuadorean fine in U.S. courts. "The Ecuador judgment is a product of bribery, fraud, and it is illegitimate ... We do not believe that the Ecuador judgment is enforceable in any court that observes the rule of law,” the company said in a statement.
Unfortunately for the company, U.S. courts have not been very sympathetic so far, presumably since the company argued that it wanted the case to be heard in Ecuador in the first place. Last month the Supreme Court refused to hear an appeal to block the Ecuadorean judgement.
The company has also attempted to have the judgement thrown out by a secret arbitration panel under a provision in the U.S. Ecuador Bi-Lateral Trade. The Permanent Court of Arbitration under the United Nations Commission on International Trade Law in the Hague will begin hearings on the dispute later this month.
Chevron has also filed a lawsuit in the U.S. against the plaintiffs for fraud, which will be heard in October 2013. The company has even created a special website, named “The Amazon Post” to documents its allegations.
The Argentine ruling is a major setback for Chevron, say the plaintiffs.
"We have fought now for almost two decades to correct the injustice created by Chevron in Ecuador,” commented Pablo Fajardo Mendoza, the lead lawyer in the lawsuit, who grew up in the oilfields polluted by Texaco. "While Chevron might think it can ignore court orders in Ecuador, it will be impossible for Chevron to ignore court orders in countries where it maintains substantial assets.”
If Elcuj’s ruling is enforced, Chevron may forfeit as much as $2 billion in Argentine assets and also lose roughly $600 million a year in revenue from ongoing operations in that country, according to estimates by the plaintiffs. The company has appealed the ruling.
Posted by Puck Lo on October 24th, 2012 CorpWatch Blog
Photo: Byzantine_K. Used under Creative Commons license
Privatization of major medical laboratories from the National Hospital Service (NHS) in Britain has led to a dramatic decline in service quality, according to “Transforming Pathology, the Serco way,” a recent report from UK-based researchers Corporate Watch.*
A 2006 UK government report, authored by Lord Patrick Carter, urged that pathology labs – which conduct the study and diagnosis of disease that determine 70 to 80 percent of clinical treatments – be run as “managed pathology networks” to cut costs by as much as 30 percent - or $1.2 billion a year across the nation.
In 2009 and 2010, a joint venture named GSTS won bids to take over pathology services for two major London hospitals - King’s College and St. Thomas’ Hospital. GSTS is a joint venture between the two trusts that manage King’s and St. Thomas with Serco, a UK contractor that has over 750 contracts in 37 countries to run prisons, immigrant detention centers, military operations, nuclear weapons facilities, schools and transit systems. The deals are worth £800 million ($1.28 billion) over the next decade.
But instead of saving money and improving services, the GSTS joint venture lost money and suffered 400 clinical “incidents” at St. Thomas’ labs during 2011, including misplacing and mislabeling blood and tissue samples, according to documents obtained by Corporate Watch using Freedom of Information Act requests.
“There appeared to be an increase in the number of these incidents since GSTS took over,” Corporate Watch stated in a September 30 report.
Performance reviews of St. Thomas’ hospital show that under GSTS management pathology lab “turnaround times” did not meet expectations 46 different times in 2011 and exceeded “critical risk levels” 14 times. During that same period computer failures led to inaccurate kidney damage readings and a patient receiving “inappropriate blood.”
One reason maybe that the “reform of the workforce” has led to losing experienced scientists who are not being replaced, suggest union activists. Unite, the union which represents NHS hospital workers, says that new recruits are given less training and fixed term contracts, as opposed to the pay packages enjoyed by NHS workers.
“Pathology staff take years to train and need constant development and training to keep pace with rapid scientific changes,” said Frank Wood, a biomedical scientist at King’s hospital and a member of the national executive of Unite. “The private sector has made frequent attempts to run [National Health Services] NHS pathology services and has failed due to its inability to retain and attract these type of staff.”
“A report by the Care Quality Commission from June this year said GSTS was ‘not compliant’ with the regulation to ensure staff were ‘properly trained and supervised, and have the chance to develop their skills,’” the Corporate Watch report added.
Financially Serco also appears to have benefited unduly from the GSTS joint venture. Documents show that Serco did not contribute capital into the equally split three-way partnership, yet the hospital trusts provided labs, staff, equipment and nearly $5 million.
In its first six months of operation GSTS lost almost $350,000. Yet in 2010 GSTS paid Serco consultants $16 million to implement a “transformation program” and in bidding fees. By the end of 2011 GSTS went over its budget by $8.1 million, forcing Serco’s partnering hospital trusts to subsidize the venture again. In 2011 King’s Hospital trust lost over $1 million, and Guy and St. Thomas’ trust went into the red as well, Corporate Watch reported.
While GSTS lost money, Serco as a whole continued to profit. The company made $163 million during the first half of 2012. By May, a senior leadership strategy document declared that GSTS had “no future if it cannot be commercially viable.”
But GSTS rejects claims that it is failing and announced in an official statement that it is “on track to break even this financial year.” Responding to the Guardian article, GSTS said, “The pathology service provided by GSTS compares favourably with any pathology service in the NHS and patient safety and the quality of our service are our foremost priorities. There is no evidence to support the Guardian’s claim that the creation of GSTS … led to any of these incidents happening. The incidents listed in the article are the sort that happen in all pathology services and which GSTS has a good record of reducing year on year.”
More dramatic changes are under way at the two hospitals. Before the end of 2012 GSTS intends to consolidate many of the pathology services at the two hospitals: Immunology and blood testing currently done at St. Thomas’ Hospital will be moved to King’s College Hospital to reduce duplication, GSTS said. The bulk of St. Thomas’ toxicology department will be sold or closed. “Staff worry this will overload the service at King’s, causing severe delays and risk the quality of tests provided,” Corporate Watch wrote.
The pathology lab problems are not the first time that Serco (dubbed “the company that runs Britain” by the Daily Telegraph) has come under fire for its health care service and provision in England.
For example Ethan Kerrigan, a six-year-old boy, died in 2010 from a burst appendix in Cornwall, the westernmost region of Britain, after Serco staff at a medical clinic advised putting him to bed rather than sending a doctor to examine him. That incident and other complaints of long lines and chronic understaffing have led to an investigation by the Care Quality Commission, the UK public regulator that oversees healthcare.
AU Optronics is the fourth-largest LCD producer in the world, supplying computer, phone and TV screens to many major electronic manufacturers. Between 2001 and 2006, the company held 60 secret meetings with LG, Samsung, Sharp, Hitachi, Toshiba, Epson and several other electronics producers in luxury hotels, tearooms and karaoke bars, according to detailed notes and legal documents from AU Optronics executives.
High-ranking executives made deals on production levels and set prices of LCD screens used in “almost every laptop computer and computer monitor sold in the U.S.,” smart phones and other electronic devices, according to a statement issued by the U.S. Department of Justice. A third of the $74 billion made by the cartel’s LCD sales came from U.S. companies like Apple, Dell, HP and other electronics and television manufacturers, the New York Times reported.
“This long-running price-fixing conspiracy resulted in every family, school, business, charity and government agency who bought notebook computers, computer monitors and LCD televisions during the conspiracy to pay more for these products,” said Scott Hammond, deputy assistant attorney general for the Department of Justice’s antitrust division’s criminal enforcement program.
In early 2006 the group meetings stopped due to fear of detection, according to legal documents filed by the Department of Justice. But AU Optronics continued to meet one-on-one with its supposed competitors in karaoke bars around Taipei to coordinate production and set prices.
“The defendants, unlike their coconspirators, are remorseless, having refused to accept responsibility or provide any assistance that would justify a reduction in their sentence,” the government lawyers said.
Several other LCD producers charged with price-fixing by the U.S. have previously pled guilty. In 2008 LG Electronics agreed to pay a $400 million fine to avoid trial. Hitachi, Sharp and Samsung, agreed in December to pay a total of $538 million in settlement fees. Only AU Optronics denied the allegations and took their case to a jury trial.
After AU Optronics and its executives were found guilty this past March, the Department of Justice petitioned Judge Ilston to impose maximum penalties upon the company.
“A $500 million fine would be a cost-of-doing-business fine for a large-scale, highly successful cartel like the one proven in this case,” the Department of Justice statement said. “It is possible that even a $1 billion fine will not deter the type of pernicious conduct before the court, but it is the maximum deterrent message that can be sent in the most serious price-fixing cartel ever prosecuted by the government.”
Wall Street law firm Skadden, Arps law issued a warning to clients that the size of the fine should serve as a warning to collaborate with the goverment: “(T)he case leaves room for companies to continue to negotiate resolutions based on the many factors that bear on a final penalty — from the level of affected commerce to mitigating circumstances and proportionality in sentencing.”
Had the judge imposed a $1 billion penalty and ten-year prison sentences, as requested by the government lawyers, the fine would have set a record and could have represented a “watershed moment in antitrust law,” the Wall Street Journal reported.
AU Optronics issued a statement on September 21, saying it “regrets” the judgment and intends to appeal the decision. The company added that there were “important, yet unresolved, legal questions surrounding this matter.” In a previous statement it said that the U.S. government wanted "to punish AUO for its temerity in electing to subject the validity of the government's charge to the test of a jury trial."
Posted by Puck Lo on September 24th, 2012 CorpWatch Blog
Father and daughter, resettled by Oyu Tolgoi. Photo by CEE Bankwatch Network. Used under Creative Commons license
Mongolian livestock herders are worried that a series of massive gold and copper mining projects will dry up scarce water reserves and exacerbate desertification in
the delicate Gobi Desert when operations begin next year to tap one of the world’s largest copper and gold deposits.
A landlocked country of 2.8 million caught between China and Russia, Mongolia is home to the first "cowboys" - nomadic herdsman. Even today, two out of five people in Mongolia still make their living herding livestock, and the same number live in poverty.
Eurasia Capital, a Hong Kong-based investment bank, estimates that Mongolia sits on $1.3 trillion worth of untapped mineral assets. They predict that the country’s gross domestic product could swell from $5 billion to $30 billion by 2020, based on its mineral resources alone.
The biggest project to date - the $6 billion Oyu
Tolgoi gold and copper mine (“Turquoise Hill” in Mongolian) - is now nearly ready to open. Located just 50 miles north of the Chinese border, it is
expected to be one of the world’s three largest mines when it reaches
full production in 2018. Two thirds of Oyu Tolgoi is owned by Canadian-owned Turquoise Hill (formerly Ivanhoe Mines), which in turn is majority-owned by Rio Tinto, the world’s largest private mining company, based in London.
Indeed, even
while under construction Oyu Tolgoi accounted for 30 percent of
Mongolia’s current economy, according to the mine’s spokesperson.
Already thousands of young people in their 20s and 30s have flocked to
the capitol, Ulan Bator, seeking jobs working for Oyu Tolgoi. The
noveaux rich spend time at the new Irish pubs near the Louis Vuitton store and watch Hummers drive by alongside Soviet-era buses.
“When
international investors make big decisions to employ their scarce
capital, cutting-edge technology, management expertise, and marketing
prowess, they look for responsible partners,” Oyu Tolgoi’s Australian
CEO Cameron McRae, said. “Partners like Rio Tinto prefer to
invest in countries when the government takes the long view, as we do.”
But critics say that the large-scale mining operations have dire social and environmental costs.
“We don’t need money from mining,” Battsengel Lkhamdoorov, a 40-year-old former herder, told the New York Times. “What we need is water and land.”
Sukhgerel Dugersuren, head of Oyu Tolgoi Watch, a Mongolian non-governmental organization that keeps tabs on the mine, says the agreement with Rio Tinto is a bad deal for Mongolia. Dugersuren said that the investment agreement the government signed with Rio Tinto is unfair and that World Bank leadership pushed too hard for the Mongolian government to sign on. She told the Bank Information Center in Washington DC that the World Bank extended "too much credit to Mongolia” in support of mining “without implementing compliance monitoring mechanisms or impact assessments.”
Today, the Mongolian government owns just 34 percent of the mine under the deal that was signed with Rio Tinto in 2009. Mongolian members of parliament are now pressuring the government to push the mining companies to
renegotiate for a majority 51 percent share but the company has refused - noting that the agreement only
allows for the state to negotiate for a larger share after the project has been in operation for 30 years - and even then no more than 50
percent.
“(Oyu Tolgoi) does not understand the dynamics of herding and the need to follow the livestock to adequate pasture and water sources,” the report stated. “It is economically and psychologically difficult for herder families to move from their traditional land.”
Rio Tinto says it is committed to having a “zero impact on community water sources.”
“The water source for Oyu Tolgoi is the Gunii Hooloi aquifer - a deep, non-drinkable water source that is separate from the shallow water sources used by households and animals,” the company states on its website. “Oyu Tolgoi is only allowed to use approximately 20 per cent of the water from Gunii Hooloi, so the aquifer can never be exhausted. We do not need to take water from any other source.”
Oyu Tolgoi Watch believes that the country should invest instead in sustainable economic development that bolsters traditional livelihoods like cashmere production and organic beef ranching.
“If the same amount of credit was made available to developing world standards products and services from these sectors Mongolia could sit on its wealth until there is dire need to disturb the earth,” Dugersuren said. “Unfortunately, this does not coincide with the interest of the World Bank to support Western industries to extract and sell minerals to China.”
The government has made a major effort to ban mining in
environmentally sensitive areas but ironically this has the heaviest economic impact on the 100,000 Mongolian
self-employed miners rather than on Rio Tinto. By contrast, Oyu Tolgoi will employ about 3,500 workers when it is fully operational, according to the World Bank.
Posted by Pratap Chatterjee on September 13th, 2012 CorpWatch Blog
Food labeling campaign image courtesy Yes on 37
A new study, issued by scientists at the Freeman Spogli institute at Stanford university in California, that suggests that organic food has no medical or health values is deeply flawed, say outraged activists.
NGOs immediately questioned the conclusions of
the study. "There was just no way that truly independent scientists with the expertise required to adequately answer such an important question would ignore the vast and growing body of scientific literature pointing to serious health risks from eating foods produced with synthetic chemicals," says Charlotte Vallaeys, food and farm policy director at the Cornucopia Institute Institute, an organic farm policy organization in Wisconsin.
"Make no mistake, the Stanford organics study is a fraud," says Mike Adams of Naturalnews.com and Anthony Gucciardi of Naturalsociety.org. "The mainstream media has fallen for an elaborate scientific hoax that sought to destroy the credibility of organic foods by claiming they are "no healthier" than conventional foods (grown with pesticides and genetically modified organisms).”
Adams and Gucciardi note that Dr. Ingram Olkin, a co-author of the organics study and a professor emeritus in statistics at Stanford, has deep financial ties to Cargill, the agribusiness multinational which sells genetically engineered foods. Olkin also accepted money from the tobacco industry’s Council for Tobacco Research, according to letters dating back to 1976.
“I learned, in visiting with Dr. Olkin, that he would like to examine the theoretical structure of the "multivariate logistic risk function." This particular statistical technique has been employed in the analysis of the Framingham study of heart disease,” wrote William W. Shinn, a lawyer with Shook Hardy & Bacon who represented the tobacco industry's Committee of Counsel at the time. “He is asking for two years of support at the rate of $6,000 per year … We believe that a modest effort now may stimulate, a broader interest in such questions especially among theoretical statisticians at Stanford and elsewhere. Dr. Gardner has reviewed and approved the proposal.”
Stanford University has reacted to the controversy in a defensive manner: “This paper was published in a reputable, peer-reviewed journal, and the researchers received no funding for the study from any outside company. We stand by the work and the study authors,” the university is quoted as saying in the Los Angeles Times. “Stanford Center for Health Policy (where the study was conducted) has never received research money from Cargill.”
One of the reasons that the Stanford study has become a lightning rod is a ballot initiative that California voters will be asked to vote on in November. Proposition 37 will require labeling on raw or processed food “if the food is made from plants or animals with genetic material changed in specified ways” and also “prohibit labeling or advertising such food as ‘natural.’”
See “The Devil is in the Details” for a good technical review of the Stanford study, authored by Dr Charles Benbrook, former executive director of the subcommittee of the House Committee on Agriculture in the U.S. Congress, that explains the scientific errors.
In 2009, the SG Sustainable Oils Cameroon, Ltd. (SGSOC), which is wholly owned by Herakles Capital, acquired a 99 year lease to land in Ndian and Kupe-Manenguba divisions where it drew up plans for a $350 million palm oil plantation. (Herakles Capital has several other investments in Africa such as the Bujagali dam in Uganda, the Boke Alumina Project in the Republic of Guinea and an East African undersea fiber-optic project.)
SGSOC has gone to great lengths to convince the public that it is socially responsible. “Our project, should it proceed, will be a big project with big impacts – environmentally and socially,” Herakles CEO Bruce Wrobel wrote to the Oakland Institute in July 2011. “The big question – and the real story – is whether it ends up strongly positive or strongly negative. I couldn’t be more convinced that this will be an amazingly positive story for the people within our impact area.”
In addition to Herakles, Wrobel operates a non-profit dedicated to poverty reduction named “All for Africa” that boasts board members like Nigerian-American actor Gbenga Akinnagbe who shot to fame in The Wire, a U.S. TV series, and the film: The Taking of Pelham 123.
And SGSOC also applied to join the international Round Table on Sustainable Palm Oil (RSPO), which has signed up 779 members and associates including almost every major industry player in the world, in an effort to burnish its social responsibility credentials.
Indeed RSPO was created in 2004 to address the numerous clashes over palm plantations around the world with the help of non-government organizations such as the World Wildlife Fund which helped set up the organization. But the palm oil industry – which produces 50 million tons of edible oils and biofuels a year - remains deeply controversial.
As CorpWatch writer Melody Kemp noted in her recent article for us “Green Deserts: The Palm Oil Conflict” the plantation companies make money in two ways: First they clear cut and sell the existing high-value trees, burning the residue. The haze from those forest fires has interrupted regional air traffic and caused severe respiratory illnesses in countries like Indonesia, Malaysia as well as Singapore. Then the companies plant the spiky oil palms trees, creating vast, eerily silent monoculture plantations.
Activists have sparked a raging debate over the industry, faulting palm oil for contributing significantly to carbon dioxide and methane emissions, the loss of biodiversity and precious carbon sequestering forests, land subsidence, poverty, and for exacerbating starvation resulting from land appropriation.
The very same problems have been predicted in an Environmental and Social Impact Assessment (ESIA) conducted by SGSOC itself. The company assessment suggested that the negative impact of the plantation on livelihoods will be “major” and “long-term.”
Nor is the Herakles investment the most efficient way to support the local economy, according to a report by on the SGSOC deal by two Cameroonian NGOs, the Centre for Environment and Development (CED) and Réseau de Lutte contre la Faim (RELUFA). The groups calculated that the government of Cameroon could generate 13 times more employment and significantly larger tax revenue if it were to require local bread-makers to use 20 percent locally produced flour (derived from sweet potatoes, corn or cassava), using just 15,000 hectares of land.
Local farmers and politicians are especially skeptical of SGSOC because palm oil plantations are not new to the region. Beginning in 1927, companies like Pamol have operated similar projects for decades. “Plantation jobs have always been modern day slavery,” says Joshua Osih of the Social Democratic Front, Cameroon’s main opposition party, in an interview for the film “The Herakles Debacle” just released by the Oakland Institute. “We’ve seen a lot of industrial plantations develop around this area and nothing, absolutely nothing, has happened positively to the population.”
“Everybody here is self employed,” Okie Bonaventure Ekoko, a cocoa farmer from Mboko village told the film maker Franck Bieleu. “There is no advantages that the people here will have (from Herakles investments). We don’t need them, we are fine.”
“And if they come and say they want to take this land from us, we are not ready for it,” says Esoh Sylvanus Asui, a farmer from Bombe Konye village. “We will fight and we will die for our land.”
In May 2011, some 50 local and international environmental and community groups wrote a letter to Wrobel expressing concern. In March 2012 a number of the same groups lodged a formal complaint against Herakles with the RSPO alleging that Herakles' project violated Cameroonian laws and noted that it "would disrupt the ecological landscape and migration routes of protected species." Meanwhile local farmers have begun to organize against the project. On June 6, 2012, villagers from Fabe and Toko held a protest against the plantation during the visit of the local governor.
“The RSPO regrets this withdrawal of membership by Herakles Farms,” the organization said in a brief statement posted to its website. “This action pre-empts recommendations from the RSPO Complaints Panel to further verify the allegations made by the complainants.”
Posted by Pratap Chatterjee on August 29th, 2012 CorpWatch Blog
Saudi security forces. Photo: Omar Chatriwala, Al Jazeera English. Used under Creative Commons license
Four cars worth £201,000 were allegedly gifted to Saudi generals and £278,000 paid out to rent a villa to win a military IT contract for a major European military contractor. Altogether at least £11.5 million ($18 million) in bribes were allegedly paid out via two Cayman Island companies.
The £2 billion ($3.2 billion) contract to build a military intranet as well as internet monitoring and jamming systems for Sangcom, the communications arm of the Saudi National Guard, was awarded in 2010 to GPT Special Project Management, a British subsidiary of European Aeronautic Defence and Space Company N.V. (EADS).
A UK Serious Fraud Office investigation is underway after Ian Foxley, a former project manager in Riyadh, Saudi Arabia, blew the whistle in 2011. “I have had first hand experience of the pernicious effects of corruption. My father was a high ranking civil servant who was convicted of corruption in defence procurement in the 1980s and pursued by the MoD Solicitor for a further 22 years,” wrote Foxley in a letter dated January 9, 2012, to Vince Cable, the UK Business Secretary.
“You may also imagine my utter horror and repugnance at the rank hypocrisy of the MoD’s obscene participation in similar corrupt practices throughout the whole period whilst relentlessly pursuing my father until 2002,” added Foxley. “Here is an organization whose officers are taught from the outset at RMA (Royal Military Academy) Sandhurst that the foundations of their profession rest on honesty, integrity and moral courage, yet which so duplicitously condones and complies with corruption for commercial gain.”
The contract is now managed by EADS, a Netherlands-based company which was created in 2000 by the merger of French, German and Spanish arms manufacturers. EADS generated revenues of over €49 billion ($61.5 billion) in 2011 and is best known as the manufacturer of the Airbus passenger jets.
Mike Paterson, then financial controller of GPT Special Project Management, first noticed unusual payments to Simec International and Duranton International in the Cayman islands. He reported the matter to his managers in 2007 but no action was taken.
EADS has kept relatively silent about the scandal. “Certain allegations have been made in connection with the company’s contracts with a subcontractor group. These allegations have been notified to the UK authorities with whom EADS is maintaining a dialogue,” the company wrote in a statement to the Financial Times. “The relevant subcontracts were terminated. This termination has led recently to an unquantified claim from the subcontractor group for monetary damages.”
A UK fraud investigation was halted in 2006 and Tony Blair, the prime minister, took “full responsibility.” Later BAE agreed to pay out over $400 million in fines after the U.S. launched an investigation into multiple instance of corruption in several countries including Saudi Arabia.
Today critics question whether the EADS case will be properly investigated by UK authorities. “(T)here appears to be prima facie evidence of bribery. Will the SFO break the trend of decades by fully investigating the allegations and, if appropriate, charge the corporate entity and the individuals responsible?” asks Andrew Feinstein, a former South African member of parliament and author of the book “The Shadow World: Inside the Global Arms Trade.”
Gazprom is drilling in the Prirazlomnoye oil field located in the Pechora Sea off the northwest coast of Russia. It is the first company to attempt commercial extraction of the 526 million barrels of oil that are estimated to be located in the offshore fields. To date it has been impossible to work in the region because it is blocked by thick ice for eight months of the year. The Prirazlomnaya rig, a Russian all weather oil platform, was specially designed at the Severodvinsk shipyard, to overcome the harsh conditions.
“We climbed Gazprom's rusting oil platform backed by over a million people who have joined a new movement to protect the Arctic,” Kumi Naidoo, the executive director of Greenpeace international, said in a press release. (Naidoo was one of the climbers.) “(I)t’s not a question of if an Arctic oil spill will happen, but when. The only way to stop a catastrophic oil spill occurring in this unique region is to permanently ban all drilling now."
Gazprom received a permit to drill for oil in July 2007. The company submitted an official oil spill response plan that expired last month. The original document “shows that the company would be completely unprepared to deal with an accident in the Far North, and would rely on substandard clean-up methods — such as shovels and buckets — that simply do not work in icy conditions,” says Greenpeace.
“We can often observe conditions when the operating company will not be able to contain and recover (potential oil) spill(s),” says Valentin Ivanovich Zhuravel, the project manager at the Informatika Riska, a Russian consultancy, that was asked by Greenpeace and WWF Russia to comment on the response plan."This can lead to significant pollution in the Pechora Sea coast and protected areas.”
The company disagrees. "Last winter demonstrated the platform['s] safety and reliability in the Arctic environment," a Gazprom spokesperson told the Moscow Times in an e-mail. "A professional emergency response crew works night and day. Crews of the offshore ice-resistant stationary platform and support vessels were trained under a dedicated program for emergency response and first aid in case of sea accidents.”
Greenpeace has received support for its protest from the local indigenous community in the Komi Republic. “The peoples of the north will no longer be bought with dimes and cents to stand silently by while the oil companies destroy our native land,” says a support statement issued by the Save the Pechora River committee. “Our culture and history cannot be bought off and replaced with pipelines and drill rigs.”
Meanwhile, ice cover in the Arctic Ocean has thawed to a record low of less than 4.0 million square kilometers. The numbers could drop further given that ice cover typically continues to melt till the end of September.
"This is due to climate change," Nicolai Kliem, head of the ice service at Danish Meteorological Institute (DMI) told Reuters.
Posted by Pratap Chatterjee on August 27th, 2012 CorpWatch Blog
Ayoreo woman. Photo: Survival International
Grupo San Jose, a Spanish construction company, has been accused of bulldozing the forest home of the Ayoreo, one of the last uncontacted tribes outside the Amazon. The indigenous community lives in the Chaco forests, a semi-arid zone in northern Paraguay not too far from the borders with Brazil and Bolivia.
In late July, Paraguayan forestry officials caught workers for Carlos Casado SA “bulldozing forest, constructing buildings and reservoirs, and putting up wire fencing” on land that the Totobiegosode – a sub-group of the Ayoreo - are known to inhabit. The discovery was confirmed by a letter from the Paraguayan ministry of environment sent to Organizacion Payipie Ichadie Totobiegosode (OPIT)
Carlos Casado SA is a ranching subsidiary of Grupo San Jose. The president of both Carlos Casodo and Grupo San Jose is Jacinto Rey González, who is also the controlling shareholder of Grupo San Jose.
“It’s shocking to discover that one of Spain’s biggest companies is involved in such scandalous behavior. Perhaps they thought that as this is happening in a far-off corner of South America, no-one would notice,” Stephen Corry, director of Survival International, a UK-based NGO, said in a press release. “But if they continue, they will be directly responsible for the destruction of the Ayoreo’s heartland – in flagrant violation of Paraguayan and international laws.”
The Ayoreo are nomads who hunt wild pigs and large tortoises. They live in small communities of three to four families and shun the outside world. First contact was established by Mennonite farmers in the 1940s and 1950s, followed by the New Tribes Mission - a Florida-based evangelical group that attempts to spread the Bible by translating it to into other languages – who sponsored manhunts to track down the Ayoreo in 1979 and 1986.
Almost 70 years later, some of the members of the tribe have managed to elude all contact with others and environmentalists argue that this isolation needs to be maintained. One of the major reasons is that these tribes lack immunity to illnesses and diseases that are common elsewhere, and could die from exposure.
Guyra, an environmental group in Asunción, estimates that some 1.3 million acres of Chaco forest have been cleared in the last two years, for cattle ranches. http://www.guyra.org.py/index.php/reportes-de-cambios-de-uso-de-la-tierra-del-gran-chaco-americano Lucas Bessaire, a U.S. anthropologist told the New York Times that the rate of deforestation was so rapid that even during the day, the sky turns “twilight grey” from the forest fires. “One wakes with the taste of ashes and a thin film of white on the tongue,” he said.
Today the Mennonites farmers and Brazilian ranchers have coverted vast swathes of the Chaco region. Displaced Ayoreo live in poverty outside the new ranching boomtowns, sleeping under plastic bag tents under the trees.
“We are witnessing ethnocide in action,” Gladys Casaccia and Jorge Vera of Gente, Ambiente y Territorio (GAT), a Paraguayan NGO that supports environmental initiatives for the indigenous people of the Chaco. “This crime is a human tragedy, an embarrassment for Paraguay in the eyes of the world – and it will only stop if those responsible are caught and punished.”
Posted by Pratap Chatterjee on August 23rd, 2012 CorpWatch Blog
Cyril Ramaphosa photo courtesy Mining Weekly video. Rustenberg platinum processing plant courtesy bbcworldservice. Used under Creative Commons license
A third wildcat strike this year has closed yet another South African platinum mine less than a week after the police opened fire and killed 34 miners at the Lonmin mine north of Johannesburg. The latest to lay down tools are a thousand workers at the Royal Bafokeng Platinum Mine at Rasimone this Wednesday.
The strikes have hit the global supply of platinum, which is mostly used by the car manufacturing industry to make catalytic converters. Some 80 percent of the world’s supply of the precious metal is mined in South Africa.
Clashes between South Africa’s powerful mining companies and the government are only part of the story. A battle to win membership between two rival unions – the older establishment affiliated National Union of Mineworkers (NUM) and the newer more radical Association of Mineworkers and Construction Union (AMCU) – is also reported to be a major factor in the violence.
NUM - which was founded by Cyril Ramaphosa in 1982 – was deeply involved in rallying black mine workers against apartheid. AMCU was created in 1998 by Joseph Mathunjwa who left the NUM after he fell out with Gwede Mantashe, then general secretary of the older union.
Today Mantashe has become the right hand man of Jacob Zuma, the president of South Africa and Ramaphosa has become a powerful and wealthy businessman. Last year Ramaphosa took over the franchise for McDonald’s in South Africa. He also serves on the board of Lonmin, the UK-based platinum mining company where workers were killed last week.
But while the NUM’s former leaders have become powerful actors in post-apartheid South Africa, the union has started to lose members. “The National Union of Mineworkers doesn’t care about the workers,” Thabo Moerane, a Lonmin supervisor told Bloomberg. “It is eating with management. We’ve been trying to get a decent salary increase since 2007. That is why we wanted to join AMCU.”
AMCU, which has grown to about a tenth of the size of NUM with 30,000 members nationally, has also attracted its own share of controversy. “Its leaders call themselves devout Christians and say life is sacred,” wrote Reuters recently. “But its supporters march with spears, machetes and clubs and anoint themselves with magic potions to ward off police bullets.”
Meanwhile, local anger at the mining companies has been brewing for a while. “Lonmin has done nothing for the local community. They take our platinum and enrich themselves but where is our royalty money going? We don't have tar roads and our youth are unemployed,” a woman worker told the BBC. “They cut off our water supply every day during the day. The water comes back only late at night. The water stinks and we have to buy purified water.”
Over the next week, violent attacks and clashes resulted in ten deaths, including two police officers and at least one worker who was hacked to death on his way to work.
Then on August 16, the police claim they came under attack from workers armed with guns, spears and machetes. “Police had no option but to open fire,” police commissioner Riah Phiyega said. “This is a dark moment for the country.”
The police killed 34 people and injured another 78. The deaths caused shockwaves to roll through South Africa, where it brought back memories of the apartheid era shootings of protestors. Lonmin said it would not insist that workers return to work this week and Zuma came to meet with the workers Wednesday.
“Workers feel that (violence) adds both positive and negative value,” Crispen Chinguno, a sociologist at the University of Witwaterstrand who conducted research among the platinum workers, told the Mail & Guardian newspaper. "At Implats, where workers were also demanding a salary adjustment (of 9,000 rand) outside of a bargaining agreement, they ended up getting more than 8,000 rand. The strike was illegal, some were dismissed, but most of them got their jobs back. From that perspective, the workers feel the use of violence is working for them. The negative aspects are some job losses, injuries and death."
Others say the killings reflect the reality of the new South Africa. “The story of the Marikana mine shootings is that of a trade union that cosied up to big business; of an upstart and populist new union that exploited real frustration to establish itself; and of police failure,” writes Justice Malala, founding editor of South Africa's ThisDay newspaper, in the Guardian. “It is a story which exposes South Africa's structural weaknesses too: we are one of the world's top two most unequal societies (with Brazil). Poverty, inequality and unemployment lie at the heart of the shootings this week.”
Posted by Pratap Chatterjee on August 21st, 2012 CorpWatch Blog
Poster designed for Oxfam by net_efekt. Used under Creative Commons license.
Novartis, the Swiss pharmaceutical company, will appear before the Indian Supreme Court Wednesday to appeal against a patent rejection for a popular cancer drug. A decision in favor of the company could have a devastating impact on cheap supplies of many kinds of generic drugs for poor patients.
"It would quite simply be a death sentence for us," Vikas Ahuja, president of the Delhi Network of Positive People, told the Guardian. Ahuja was diagnosed with HIV almost 20 years ago. "I am quite sure that if Novartis wins, other multinationals will follow suit and other drugs will become prohibitively expensive."
The patent that the judges will examine is for imatinib mesylate, which is used to treat various forms of cancer. Developed by Nicholas Lydon in the 1990s, imatinib mesylate is now marketed under the brand name Gleevec by Novartis.
In the U.S. companies are issued 20 year patents, after which the drug becomes available for anyone to make. Novartis filed for a patent on imatinib mesylate in India in 1997 but Indian regulators ignored the application. At the time India refused to recognize international patents on essential drugs in order to keep prices affordable.
In 2005, India changed its laws to accept patents, as part of an agreement to join the World Trade Organization. At the time Gleevec was being sold by Novartis at prices of $32,000 per patient per year while Indian companies were selling the same drug for roughly $2,100 per patient per year. (Gleevec now retails for almost $70,000 a year)
In January 2006 the Patent Controller in Chennai ruled that Gleevec was not novel under section 3(d) of the patents law which explicitly requires that patents should only be granted on medicines that are truly new and innovative.
Novartis –said the court – was attempting to prolong an expired patent through an industry practice called “evergreening” – a tactic by pharmaceutical companies change the composition of the medicine or the way that it is delivered in order to claim a new innovation.
“Novartis argued that increased bioavailability of the salt form of imatinib meant increased efficacy, entitling it to a patent on imatinib mesylate,” a fact sheet from Médecins Sans Frontières (Doctors Without Borders) explains. “But at the time, Madras High Court clarified efficacy to mean ‘therapeutic effect in healing a disease.’The rejection of Novartis’s patent application was therefore confirmed.”
Novartis appealed the Indian decision in June 2006 and was rejected. The case has now wound its way to the Supreme Court where industry observers say a decision (which may not come down till November after several weeks of hearings) will have a dramatic impact of the future of foreign drug sales in the country.
For example, Leena Menghaney of Doctors Without Borders says that Indian generic drug manufacturers have been able to cut drug bills for HIV patients from $10,000 a year to just $150.
Pharmaceutical companies see the matter differently. If Novartis wins, the believe that India’s $11 billion drug market could be worth $74 billion by 2020.
Meanwhile Indian regulators are looking at setting price caps on as many as 348 drugs, up from 74 today, in order to protect poor patients.
Bayer, a German multinational, had been selling Sorafenib, under the brand name of Nexavar, for $5,600 a month. (The average per capita income in India is a little under $100 ie two percent of the price of the drug) Kurian allowed Natco Pharma, an Indian company, permission to sell the drug at $176 a month.
Posted by Pratap Chatterjee on August 20th, 2012 CorpWatch Blog
Maasai warriors. Photo: David Berkowitz. Used under Creative Commons license
Serengeti national park is under threat from Ortello Business Corporation (OBC) in a deal that could displace 48,000 indigenous Maasai and open it up for hunting of lions and leopards. An urgent action by Avaaz, an international campaigning group, has gathered close to a million signatures to protest the scheme.
The Serengeti region covers 12,000 square miles (30,000 square kilometers) from north Tanzania to south western Kenya. Over 2,000 lions roam the area among dozens of other species from the crowned eagles to elephants and rare black rhinos. It is most famous for an annual migration during which over a million wildebeest and about 200,000 zebras travel south from the northern hills to the southern plains in October and November and then move west and north between April and June.
The region is also called Maasailand, after the semi-nomadic indigenous community that lived there for centuries until the British colonialists started to grab their lands to build ranches. Today the colorfully dressed spear carrying tribe have become a global tourist attraction.
One of these operators is OBC, which is based in the United Arab Emirates, and markets big game safaris. The company prefers not to speak to the media but a Conde Nast Traveler reporter sketched a profile of the company and its recent conflicts with the local Maasai.
In July 2009, the Tanzanian army allegedly kicked dozens of Maasai out of the area for "trespassing" on OBC land. " They ordered us out of our bomas (thorn bush compounds), then they poured gasoline on them and set them on fire," a cattle herder told Hammer. "After the burning, we rebuilt, and they came and did it again."
A similar report was published by a Tanzanian fact-finding mission conducted in August 2009 by Feminist Activist Coalition (FEMACT) which reported that “there were ruthless eviction operations conducted in the Loliondo villages. Contrary to the District Commissioner’s claims, the investigation team came across testimonies and evidence of despicable despicable acts. The team came across women who had undergone miscarriages, rape, loss of children and other properties including food and shelter. Men who were chained beaten and humiliated in front of their families, those who had lost thousands of livestock among other properties and those who were imprisoned for no apparent reasons.”
In September 2009, James Anaya, the United Nations special rapporteur on the human rights and fundamental freedoms of indigenous peoples wrote to the Tanzanian government to ask for an explanation of the incidents.
A week ago Avaaz, a letter writing campaign group, heard from the Maasai that OBC had new plans to expand and asked for their help.
“The last time this same corporation pushed the Maasai off their land to make way for rich hunters, people were beaten by the police, their homes were burnt to a cinder and their livestock died of starvation,” wrote Avaaz’s Sam Baraat in an email sent out last week. “But when a press controversy followed, Tanzanian President Kikwete reversed course and returned the Maasai to their land. This time, there hasn’t been a big press controversy yet, but we can change that and force Kikwete to stop the deal if we join our voices now.”
The government denies the allegations. "(N)o eviction exercise has been planned for the Serengeti district, which is one of the districts in Mara region” George Matiko, spokesman for the resources and tourism ministry, told the newspaper. “In the Serengeti there is no hunting bloc allocated to Middle Eastern kings and princes to hunt lions and leopards."
The campaigners says that the government reply has been carefully worded to avoid the bigger question. "(T)he Tanzanian government is playing cynical word games – the Maasai lands in question are commonly understood to be within the Serengeti ecosystem’” says Emma Ruby-Sachs, campaign director at Avaaz. “If the government does not believe there is any threat to the Maasai lands, it should be easy for it to commit to a policy of not forcibly evicting any of its people to make way for foreign interests."
Posted by Pratap Chatterjee on August 17th, 2012 CorpWatch Blog
Hanwha building photo: riNux Kim Seung-youn photo: Πρωθυπουργός της Ελλάδας. Used under Creative Commons license.
Kim Seung-youn, the CEO of the Hanwha group in South Korea, has been sentenced to four years in prison and fined 5.1 billion won ($4.5 million). The jail time marks an unusual departure for the Korean judiciary who typically issue suspended sentences when prominent business bosses are found guilty.
Hanwha is the tenth largest “chaebol” or business conglomerate in South Korea. Started by Kim Chong-Hee as Korea Explosives Inc. in 1952, it now has an annual revenue of $30 billion and interests as diverse as dairy farming, finance and petrochemicals.
Kim Seung-youn, the son of the founder, has been in trouble with the law several times. In 1993 he was found guilty of smuggling cash to buy a large mansion in Los Angeles and then in 2004 he was found guilty of bribing a politician. In 2007, he was given a suspended sentence for assaulting workers with a steel pipe after his son got in a fight.
This time Kim has been accused of buying and selling shares in employees names to avoid taxes, bailing out his brother’s failing business and forcing his affiliates to sell shares in an oil company to his sister at below market prices.
"As a controlling shareholder of Hanwha Group, the defendant is passing on his responsibility to working-level officials and he has not shown remorse," said Seo Kyung-hwan, one of the three judges on the panel that decided the case. “Considering this, he needs to be strictly punished.”
Most chaebol got their start after the end of the Second World War when the government of Syngman Rhee encouraged entrepreneurs to rebuild the country. During the administration of General Park Chung Hee in the 1960s, the favored chaebol were given easy access to loans, foreign technology and large government contracts in order to rapidly industrialize the country. Today these elite companies – some of which have become global players like Hyundai, LG and Samsung – control much of the South Korean economy.
A few brave whistleblowers have risked their careers to speak out against the chaebol. "Our society is so corrupt, and people are blindfolded because everyone is living well and people are greedy,” says Kim Yong-chul, a Samsung whistleblower. “I am not a revolutionary, an ideologue or a revenge. But I am against business as usual.”
Kim wrote a book about his experiences: "Thinking of Samsung" ("Samsungul Sanggak Handa"). The book was never reviewed by the South Korean media and he has been ostracized by the business establishment. “Isn’t this a comedy?” Kim told the New York Times. “I am challenging them to slap my face, to file a libel suit against me, but they don’t. They treat me like a nut case, an invisible man, although I am shouting about the biggest crime in the history of the nation."
Despite the news blackout, his book has become a best seller, promoted solely by Twitter and word-of-mouth. And distrust of the chaebol has been growing among ordinary citizens – indeed a recent poll by a major think tank found that 74 percent of people believed that the conglomerates were not moral.
It is this change in the political mood in the country that anti-corruption advocates are hoping will make sure that Kim Seung-youn serves his sentence
Posted by Pratap Chatterjee on August 14th, 2012 CorpWatch Blog
Tag and Track footage from Ipsotek. Footage from company Youtube video.
TrapWire, a company founded and run by former Central Intelligence Agency (CIA) officers, that offers to track “suspicious” activities from surveillance video, has been spotlighted in a new Wikileaks release.
The system is described on the TrapWire’s website as "a unique, predictive software system designed to detect patterns of pre-attack surveillance and logistical planning.” The U.S. Department of Homeland Security paid TrapWire $832,000 to deploy Trapwire in Washington DC and Seattle in December 2011, according to federal spending data records.
The information on Trapwire’s contracts emerged from one of the five million internal emails from Stratfor, an Austin, Texas-based company that brands itself as a "global intelligence" provider, were recently obtained by Anonymous, the hacker collective, and were released in batches by WikiLeaks, the whistleblowing website, earlier this year.
The Trapwire technology was created at Abraxas corporation, which was founded by Richard "Hollis" Helms, a former CIA agent (but not the former head of the CIA under Nixon). Abraxas spun off Trapwire into another company which still has several senior employees who once worked at the agency. They include Dan Botsch, who worked at the CIA for 11 years as a Russian and Eastern European analyst, Michael Maness, a 20 year CIA veteran who worked in counterterrorism and security operations in the Middle-East, the Balkans and Europe, and Michael K. Chang, a 12 years CIA veteran on counterterrorism operations.
The company appears to have deleted the list of senior employees from its website when the Wikileaks release occurred. But the company still promotes their prior experience: “Our professionals have led successful intelligence operations against terrorist organizations and fought on battlefields across the globe.”
The software has been described as a real life version of a system portrayed in Minority Report, a Hollywood blockbuster. “Anyone who takes a photograph at high-risk locations is logged as a suspected terrorist on a vast network of secret spy cameras linked to the U.S. Government, according to leaked emails,” writes Rick Dewsbury at the Daily Mail, a tabloid newspaper in the UK.
Mainstream media have reacted more cautiously to the TrapWire leaks. The New York Times commented that the “reports appear to be wildly exaggerated” noting that the Homeland Security had ended trials on the technology last year “because it did not seem promising.” The company refused to comment.
“The notion that you can tag a person and let the system do the tracking is a dream come true for CCTV operators,” says Professor Sergio Velastin who is also co-founder of Ipsotek. “The system relies on the identification of a person through features, such as their appearance, which different cameras can then pick up on.”
A similar technology called Footpath, which is manufactured by Path Intelligence in the UK, tracks individuals based on the strength of their cell phone signals. The system was piloted by Forest City, a shopping mall company in the U.S. in Promenade Temecula in Temecula, California, and Short Pump Town Center in Richmond, Virginia last year.
How accurate are these new video surveillance technologies? “(I)t’s extremely difficult, and probably impossible, to distinguish the one-in-a-billion terrorist from innocent people doing ordinary things like taking pictures,” Jay Stanley at American Civil Liberties Union told the New York Times. And therein lies the greatest danger.
Posted by Pratap Chatterjee on August 8th, 2012 CorpWatch Blog
Pfelon t-shirt by Zazzle. Dollar bill photo: Adam Kuban. Photo of pills: e-magineart.com. Used under Creative Commons license
For three years, Pfizer Italy employees provided free cell phones, photocopiers, printers and televisions to doctors, arranged for vacations (such as “weekend in Gallipoli,” “weekend with companion” and “weekend in Rome”) and even made direct cash payments (under the guise of lecture fees and honoraria) in return for promises by doctors to recommend or prescribe Pfizer’s products.
Today, the New York headquarters of the pharmaceutical giant has agreed to pay a total of $60.2 million in penalties to settle the documented charges of bribery. The Securities and Exchange Commission (SEC) says that Pfizer Italy employees went out of their way to “falsely” book the expenses under “misleading” labels like “Professional Training,” and “Advertising in Scientific Journals.”
The penalty is roughly half a percent of the company annual profits that exceed $10 billion a year on global sales of $67.4 billion in 2011.
Italy was not the only country where Pfizer has been accused of bribing doctors and local officials. “Pfizer took short cuts to boost its business in several Eurasian countries, bribing government officials in Bulgaria, Croatia, Kazakhstan and Russia to the tune of millions of dollars,” says Mythili Raman, the principal deputy assistant attorney general of the U.S. Department of Justice’s (DoJ) criminal division.
“Pfizer H.C.P. admitted that between 1997 and 2006, it paid more than $2 million of bribes to government officials in Bulgaria, Croatia, Kazakhstan and Russia,” notes a press release issued by the DoJ. “Pfizer H.C.P. also admitted that it made more than $7 million in profits as a result of the bribes.”
Amy Schulman, executive vice-president and general counsel for Pfizer, said: “The actions which led to this resolution were disappointing, but the openness and speed with which Pfizer voluntarily disclosed and addressed them reflects our true culture and the real value we place on integrity and meeting commitments.”
For example for almost six years, Pharmacia Croatia made monthly payments of approximately $1,200 per month into the Austrian personal bank account of a Croatian doctor. In 2003, Pfizer bought Pharmacia Croatia but allowed the payments to continue for three months.
A memo from a senior manager noted that the doctors was “a member of the Registration Committee regarding pharmaceuticals, I do expect that all products which are to be registered, will pass the regular procedure by his assistance. . . . He is a person of great influence in Croatia in the area of pharmaceuticals, and his opinion is respected very much; that’s the reason he is so important to us.”
In Russia, from the mid-1990s through 2005, Pfizer Russia had a special sales initiative called the “Hospital Program” under which employees were allowed to pay hospitals five percent of the value of certain Pfizer products. Some of this money was paid out in cash to individual Russian doctors “to reward past purchases and prescriptions and induce future purchases and prescriptions of Pfizer products.”
Government officials were also cultivated. On November 19, 2003, a Pfizer Russia employee sent in an invoice requesting “payment for the (motivational) trip of [the First Deputy Minister of Health] for the inclusion of [a Pfizer product] into the list . . . of medications refundable by the state.”
In another email June 27, 2005, a Pfizer Russia employee noted that a government doctor “should be assigned the task of stretching the amount of the purchases . . . to US $100 thousand” as an “obligation” in exchange for a trip to a conference in the Netherlands or Germany.
“If you are an executive, you know that the chances of getting caught are infinitely small, and the chances of getting caught and prosecuted are even smaller,” Dennis M. Kelleher, president of Better Markets, told the New York Times.
Questions are being raised by some members of Congress. “A lot of people on the street, they’re wondering how a company can commit serious violations of securities laws and yet no individuals seem to be involved and no individual responsibility was assessed,” Jack Reed, a Rhode Island senator, said at a recent hearing.
Posted by Pratap Chatterjee on August 7th, 2012 CorpWatch Blog
Richard Bracken, HCA CEO, speaking at Tulane university. Photo: Tulane publications. Used under Creative Commons license.
Hospital Corporation of America (HCA) – the world’s largest operator of private clinics and hospitals – has come under the spotlight for performing unnecessary cardiac procedures, notably in Florida.
Based in Nashville, Tennessee, the company has 163 hospitals and 110 surgery centers, and an annual revenue of $ $29.682 billion in 2011 with profits of $2.465 billion. About a fifth of its income comes from Florida, which has a large retiree population.
HCA previously paid out $1.7 billion in fines and repayments to settle charges of defrauding the government in 2000. One of the key agreements was “to resolve lawsuits alleging that HCA hospitals and home health agencies unlawfully billed Medicare, Medicaid and TRICARE for claims generated by the payment of kickbacks and other illegal remuneration to physicians in exchange for referral of patients.” (Medicaid, Medicare and TRICARE are U.S. government healthcare plans for poor people, elderly people and military personnel and their dependents respectively)
The company also signed a special eight year agreement from 2000 to 2008 with the U.S. Department of Justice that required them to promptly report fraud or face harsher penalties that other companies because of the previous fraud claims.
The procedures that are being questioned today are diagnostic catheterization (insertion of a tube into the heart) and cardiac stents (a tube inserted into cardiac arteries). Medicare normally pays the hospitals about $3,000 and $10,000 for each procedure respectively.
The newspaper revealed that internal investigations at HCA showed that between 2002 and 2010, company doctors were “unable to justify many of the procedures they were performing,” write Reed Abelson and Julie Creswell. “Questions about the necessity of medical procedures — especially in the realm of cardiology — are not uncommon. But the documents suggest that the problems at HCA went beyond a rogue doctor or two.”
A catheterization laboratory at the Lawnwood Regional Medical Center in Fort Pierce, Florida, accounted for 35 percent of the hospital’s net profits. There Dr. Abdul Shadani and Dr. Prasad Chalasani at Lawnwood are named by the New York Times as being quick to perform catherizations. Some 1,200 procedures were found to be unnecessary in a 2010 review.
Also singled out was Dr. Sudhir Agarwal who practiced at the Regional Medical Center Bayonet Point in the town of Hudson, also in Florida. An internal review found that his “style of clinical practice leads to unnecessary procedures and unnecessary complications.”
Dr. Agarwal and the other eight doctors have sued HCA for defamation in county court. Anthony Leon, a lawyer for the nine doctors, issued a statement that said: “There is absolutely no merit to any allegation that any of these doctors were performing unnecessary procedures or performing procedures that led to unnecessary complications as a style or pattern of practice.”
HCA is hardly alone in being accused of defrauding the government. A quick scan of the official press release index of the Department of Justice suggests that it is a rare week when the authorities fail to catch someone who has milked the taxpayer for $10 million or more.
For example, in December 2010 three companies – Abbott Laboratories, B Braun Medical, and Roxane Laboratories – agreed to pay $421 million to settle allegations of overcharging. (The companies were billing the government up to 20 times more than the actual consumer costs for products like intravenous drugs and solutions.)
One of the problems in the U.S. is the staggering sums involved: the government is expected to spend a trillion dollars, or seven percent of GDP, on Medicare and Medicaid, which, in turn, have become a gold mine for the private companies that provide the care. (An interesting statistical note: the UK National Healthcare Services which covers all citizens costs roughly five percent of national income)
“If you are a hospital that wants to boost its bottom line though, performing more surgeries — even those that aren’t necessary — is pretty much the way to go,” writes Sarah Kliff at the Washington Post blog. “Right now, doctors get paid for each service they provide. The cardiologist that inserts more stents and performs more surgeries tends to net a higher salary.”
Posted by Pratap Chatterjee on August 6th, 2012 CorpWatch Blog
Anti-fracking poster in Bulgaria. Photo: Пенка ГенадиеваБългария
Chevron - the Northern California-based oil and gas company – has been quietly acquiring rights to drill for natural gas in Eastern Europe using “fracking” technology – a controversial technique. However, grassroots opposition in Bulgaria and Romania has thwarted the companies plans so far.
An interview with Ian MacDonald, vice-president of Chevron Europe, Eurasia and Middle East, in the Financial Times suggests that the company is getting ready for what it believes is the next fossil fuel extraction boom in the region.
“For years, it has been snapping up exploration acreage along a geological faultline that stretches from the Baltic to the Black Sea,” writes Guy Chazan. “A crucial piece of its jigsaw fell into place in May when it won the right to negotiate a big shale gas contract in Ukraine. That left it with an almost continuous arc of concessions stretching from Bulgaria in the south-east to Poland in the north. The blocks in Romania alone cover 2,700sq km.”
But the company faces an uphill political battle to the technology that has been blamed for contaminating local water supplies and even causing earthquakes. Bulgaria banned fracking in January after a major protest against Chevron’s plans to drill in Dobrudja, the most fertile farm region in the country in January.
Chevron is also running into fierce opposition in Romania which has a moratorium on the technology. The company has licenses in the north-east and south-east Dobrogea region near the southern border with Bulgaria as well as for the in north-eastern Romania near the border with Moldova.
Why the opposition to fracking? Greenpeace explains here: “To access these reserves, fluid is pumped down a drilled channel (well) into the gas-bearing rock at very high pressures. This causes the rock to fracture, creating fissures and cracks through which the gas can 'escape'. The fracturing liquid generally consists of mainly water, mixed with sand and chemicals. Numerous different chemical agents are used, many of which are flagged as dangerous to humans and the environment (carcinogens, acute toxins).
“The fracturing of a single well requires a huge volume of water: around 9,000 - 29,000 m3 (9 -29 million litres). Chemicals make up about 2% of the fracturing liquid, i.e. about 180,000 – 580,000 litres. Only 15 – 80% of the injected fluid is recovered, meaning that the rest remains underground, where it is a source of contamination to water aquifers.”
The contamination has shown up in unusual place. For example communities in the U.S. have seen tap water catch on fire in fracking areas. (Watch this YouTube video and this one from Time magazine)
A new study from Cliff Frohlich, a seismologist at the University of Texas, Austin, just published in the Proceedings of the National Academy of Sciences, shows a high degree of correlation between local earthquakes and fracking. “Beginning in 2001, the average number of earthquakes occurring per year of magnitude 3 or greater increased significantly, culminating in a six-fold increase in 2011 over 20th century levels,” Frohlich wrote. “This suggests injection-triggered earthquakes are more common than is generally recognized.”
To learn more about the dangers of fracking, check out the film Gasland and the Drilling Down series in the New York Times.
Posted by Pratap Chatterjee on August 2nd, 2012 CorpWatch Blog
Women copper miners in the Congo. Photo: FairPhone. Used under Creative Commons license.
Eurasian Natural Resources Corporation (ENRC), a global mining company that got its start in Kazakhstan, has won a new $101.5 million license to dig for copper at the Frontier mine in the Democratic Republic of Congo. The company has been criticized by Global Witness for its purchases of rights from offshore companies connected to Dan Gertler, a controversial Israeli diamond merchant. http://www.globalwitness.org/library/possible-new-enrc-deal-raises-fresh-corruption-risks
Per-capita income in the Congo is under $300 a year and experts at the Carter Centre, which was founded by former US president Jimmy Carter, say there is a reason. "In a mining sector defined by irregularities and mismanagement, large industrial mining projects can earn huge profits for investors and government officials,” Sam Jones, associate director of the centre's human rights program, told the Guardian. “(L)ittle revenue finds its way back into desperately impoverished Congolese communities for schools, healthcare, or other social services.”
The Frontier copper mine is located near the town of Sakania in the Congo, about a mile from the Zambian border. It is located in the copper belt that straddles the border of the two countries that has been exploited commercially from the days of Belgian colonization to this day. Indeed the profits from the Union Minière du Haut Katanga, the original mining company in the region, was a major source of wealth for Belgium at the beginning of the 20th century.
First Quantum, a Canadian company, acquired the rights to mine for copper at Frontier in 2001 but was forced to turn it over to Sodimco, a state owned company in 2010 by the Congolese government. The licences were then sold to Fortune Ahead, a Hong Kong shell company. Meanwhile First Quantum filed multiple legal claims demanding $4 billion in compensation for Frontier and other assets nationalized by the Congolese government.
In January this year First Quantum agreed to turn over all its prior mineral rights to ENRC for $1.25 billion. ENRC had already bought rights to the giant Kolwezi tailings project for $175 million and purchased CAMEC, yet another Congolese company that owned a half share in the SMKK copper and cobalt mine.
But exactly who paid whom how much for mining rights in the Congo is up for debate. “ENRC’s purchase of its stake in Kolwezi was structured through a deal between itself and at least seven companies registered in the British Virgin Islands, all connected to Dan Gertler,” states a Global Witness fact sheet. “When ENRC bought the remaining 50 per cent stake in SMKK, it purchased it from another British Virgin Islands company linked to Mr Gertler. Even ENRC’s acquisition of CAMEC involved sale purchase agreements with several offshore companies linked to Dan Gertler which held shares in CAMEC.”
Gertler, an Israeli diamond merchant, has been doing business in Congo for over a decade, working first with Laurent-Désiré Kabila, the former president of the Congo, and now with his son, Joseph Kabila, the current president.
“The nature of these deals raises serious questions about whether corrupt Congolese officials could be benefitting from Congo’s considerable mineral wealth at the expense of the Congolese people,” says Balint-Kurti. “Global Witness has been calling for ENRC to publish the full results of an external audit into its dealings in Congo, conducted by the law firm Dechert.”
It is certainly not the first time Gertler and the Kabila clan have been linked. A lawsuit filed in Israel by Yossi Kamisa, a former Israeli fighter who worked for Gertler, says that the diamond tycoon had offered the elder Kabila military aid to the Congolese army in 2000.
“At the time, the Second Congo War (1998-2003) was raging - one of the most brutal conflicts in the history of the African continent, involving eight countries, dozens of guerrilla organizations and a horrific human toll that included large-scale rape and even cannibalism,” write Gidi Weitz, Uri Blau and Yotam Feldman in Haaretz newspaper. “This did not deter Gertler from realizing his plan to penetrate the lucrative diamond market in the DRC.”
Kamisa’s lawsuit charges that he “witnessed Gertler's method of operation, involving paying considerable sums of money as bribery to different individuals in the Congo government ... all in order to pave the way to a meeting with the president of Congo and to improve the terms of the future agreement that was to be struck between him and the state.”
Gertler denied these allegations, calling them vengeful and baseless, says the newspaper.
Posted by Pratap Chatterjee on August 1st, 2012 CorpWatch Blog
Giant Syabas tap visible from the highway. Photo by suanie. Used under Creative Commons license.
Syabas, a private water company in Malaysia, has threatened to start water rationing in the state of Selangor after claiming that it had almost no water reserves left. The local government has called foul and critics claim that the threat is a ploy to win more lucrative contracts and to favor a rival political party.
“Here, we have a corporation holding a state government and public to ransom,” Charles Santiago, the coordinator of the Coalition Against Water Privatisation who is also a local member of parliament, told Free Malaysia Today. “The truth is not coming out. They have vested interest to overthrow the state.”
Selangor is the richest and most populous state in Malaysia with over seven million inhabitants and many of the country’s key industries in the area surrounding the national capital of Kuala Lumpur. It is governed by Pakatan Rakyat (PR) parties, an opposition coalition.
Syabas (which is short for Syarikat Bekalan Air Selangor) has a monopoly on providing water to Selangor. The company won a 30 year contract to provide water in December 2004 when the ruling Barisan National coalition privatized the state water supply.
Rozali Ismail, the treasurer for the United Malays National Organisation (UMNO) party in Selangor, owns 40 percent of Puncak Niaga Berhad, which in turns owns 70 percent of Syabas. UMNO is one of the key members of Barisan National.
Syabas is now lobbying heavily to raise rates for water but the Selangor government is insisting that the company first reduce the rate of “non-revenue water” which amounts to 30 percent of treated water.
Another option is the construction of a new RM3.6 billion ($1.15 billion) Langat 2 water treatment plant which is also likely to benefit Syabas and its affiliates.
“From what I understand from my industry sources, Umno boys are getting a lot of the contracts,” says Santiago. “I am talking about contracts for things like laying the pipes to others. Industry sources also tell me that Puncak Niaga is also getting the contract to operate and manage this.”
Tony Pua, another opposition politician, says that Barisan National wants to use the water issue as a way to prove that the state is being mismanaged. "They want to influence the course of the elections. They have a monopoly over water resources and are holding the people to ransom," Pua told Reuters.
“(I)n Selangor, the private concession companies chosen to treat and distribute water were not skilled nor experienced in the water services industry,” Khalid Ibrahim, the chief minister of Selangor, told the Sixth World Water Forum in Marseille, France, in March. “There should have been specific and detailed clauses providing penalties for the companies’ failure to comply with conditions. In our case, the agreement was so flawed that when the distributor experienced financial difficulties, the government eventually underwrote the companies’ debts.”
Others say that the idea that water privatization will serve the public better is simply untrue. “Proponents of privatization consistently argue that it saves costs due to competitive pressures private providers face to be more efficient,” writes Mildred E. Warner for the Trans National Institute in the Hague. Yet the reality is quite different. “The majority of the studies (11) found no difference in costs between public and private production,” she adds.
For example, Manila Water and Maynilad, two private corporations have run the water supply of eastern and western Manila since 1997. “Since then, water prices have soared, with increases between 450% - 850% for residents of each zone,” writes Corporate Accountability International. “Quality has suffered, with severe public health consequences, and the much-needed infrastructure investment which was used to justify the privatization has failed to materialize.”
The same was true in Jakarta where PT PAM Lyonnaise Jaya (Palyja) manages the west part of the city and PT Aetra Air Jakarta (Aetra) manages the east part. (Palyja’s major shareholder is Suez Environment, a French water company while Aetra is currently owned by Acuatico Ltd, a company based in Singapore)
“Citizens in Jakarta are suffering from unimproved services, high prices, bad quality of water and environmental deterioration,” writes Irfan Zamzami of the Amrta Institute for Water Literacy. Zamzami predicts that the city will soon owe the companies 18.2 trillion rupiah. ($2.04 billion). “(W)ater service should be re-municipalized. This is a global trend and needs international solidarity to prevent citizens of the world from a privatized and inaccessible water service.”
"It is difficult at this stage to numerically estimate the possible damage,” Junko Nakagawa, chief financial officer of Nomura. “All we want to do is make efforts to regain trust."
In 2010 Nomura underwrote new share offerings for Inpex (an oil and natural gas exploration company), Mizuho Financial Group (one of Japan’s largest banks) and Tokyo Electric Power Company. Such offerings typically have an impact on share prices, so any advance knowledge of such plans allows traders to cash in.
Nomura employees allegedly secretly told a First New York Securities fund manager about the plans for the Tokyo Electric Power Company allowing the manager to take out a “short position” days before the utility company made a share offering in September 2010. First New York Securities made 7.2 million yen ($85,000 at the time) profit as a result.
Likewise Nomura employees gave out nonpublic information on Mizuho and Inpex to fund managers at Chuo Mitsui Asset Trust (now called Sumitomo Mitsui Trust Bank, Japan's biggest trust bank). Chuo sold Inpex holdings a higher price on behalf of foreign investors and bought them back a lower price to make a profit of ¥10 million ($119,000).
In March 2012, Japanese regulators handed out a fine of 8,000 yen (about $600). “The amount was so tiny—it would cover the cost of a fancy dinner for four in a Tokyo restaurant—that some critics questioned whether it would have any deterrent effect,” scoffed the Wall Street Journal at the time.
Despite the small fines, the scandal has had a huge impact on Nomura. The Journal reports that Nomura has been dropped from underwriting deals for at least eight Japanese companies including one to act as joint global coordinator for a $6 billion share issue by Japan Airlines, expected to the biggest deal of the year. The company also says its profits for the second quarter have plunged 90 percent.
The scandal on insider trading in Japan may widen, as the SESC is investigating several other firms. Tadahiro Matsushita, the Japanese financial services minister, has asked 12 top brokers in Japan to submit reports by early August on how they handled nonpublic information.
Posted by Pratap Chatterjee on July 25th, 2012 CorpWatch Blog
Protestors in Khimki forest. Photo by Daniel Beilinson/Coalition "For the Forests of Moscow Region!" Used under Creative Commons license.
A mysterious fire and a missing activist have contributed to the concerns of Russian activists fighting a new highway between Moscow and St. Petersburg. The highway is being built by a consortium that involves Vinci, a French company, and individuals rumored to be close to prime minister Vladimir Putin.
"The torching of the vehicles in the Khimki forest is a provocation aimed at smearing the Khimki forest campaigners who use only peaceful, legitimate and non-violent methods," Chirikova wrote on Twitter.
A few months prior, in July 2009, "Severo-Zapadnaya Concessionnaya Kompaniya" (North-West Concession Company (NWCC) was awarded an $8 billion contract to build a 700 kilometer (437 mile) highway. NWCC is a joint venture between Vinci - the largest construction company in Europe with over €28.5 billion ($37 billion) in orders last year – which owns half of the venture and a secretive group of investors.
The NGO also noted that Igor Levitin, a former Russian minister of transport who is now a presidential advisor, was formerly deputy CEO of SeverstalTrans, one of the Russian partners. “Levitin is also a Chairman of the Board of Directors of the Sheremetyevo International Airport corporation,” writes CEE Bankwatch. “A considerable part of the first section of the motorway coincides with the route of another project, the MRAR (Moscow Ring Auto Road)- Sheremetyevo-3 toll road, which would bring direct economic advantages for the airport company.”
Violence has dogged the highway project. Mikhail Beketov, a local newspaper editor who supported the cause, was viciously beaten in November 2008 leaving him half paralyzed and unable to talk. Stanislav Markelov, his lawyer and a human rights activist, was shot and killed on a Moscow street in January 2009. In 2010 Khimki opposition activist Konstantin Fetisov had his skull fractured in an assault shortly after leaving a police station where he had been questioned about a protest. And Oleg Kashin, a reporter with the Kommersant newspaper, was savagely beaten with an iron bar and his fingers were smashed, after reporting on the project.
A few months later, Pur Projet, a a French consultancy, was hired to advise on minimizing the environmental impact of the road.
Last month, Khimki activists traveled to Brussels to lobby the European Parliament to take action against the project. "This case is a powerful example of the need for a law banning European companies from involvement in corruption outside the EU," Satu Hassi, a green Member of the European Parliament and former Finnish environment minister who organized a hearing on the highway project, told The Moscow Times.
On July 20 the construction company made “a sudden attempt” to cut down an oak grove at the site. “In the morning, loggers with heavy machines started to cut down trees there (100-years-old oaks among them)” wrote the activists in a news flash, “Destruction of the forest was protected by few men with criminal appearance, presumably private security guards. Trees were also cut down near the mesotrophic bog – another piece of pristine wilderness heavily damaged by the project.”
“They destroyed many, but it’s far from destroying all. This time we were lucky enough to repel them,” Sergey Ageev, one of the activists, tweeted. That night, a mysterious fire destroyed the construction equipment and soon after Shekhtman disappeared.
“(T)he official pre-text for this action was Pavel’s participations in an anti-Putin rally on May 6 where our movement formed a “Green Column” demonstrate that Russian environmentalists oppose Putin’s course in both economics and politics,” an activist press release announced this morning. “Fortunately, he was ultimately released and returned to the Khimki Forest Camp.”
Posted by Pratap Chatterjee on July 23rd, 2012 CorpWatch Blog
Image courtesy: The Bureau of Investigative Journalism
SpectorSoft spyware is the latest tool to be employed by some U.S. government officials to conduct surveillance on staff. Best known for its off-the-shelf products for parents to track children, the Vero Beach, Florida, digital manufacturer has been revealed to be selling “keylogger” software to the U.S. Food and Drug Administration (FDA) to track every digital move of certain employees.
Police officials have long been happy to endorse the 14 year old private company’s products: "Our Internet safety presentation for parents and children has several tools that are important for parents, and Internet monitoring software is one of the tools," Sergeant Paul Garcia of Albuquerque, New Mexico, was quoted as saying in company literature in 2009. "Along with our IT team, I tested several products, and our first choice is Spector."
Dr Jefrrey Shuren, the director of the Center for Devices and Radiological Health at the FDA, apparently concurs. According to a court filing by Steven Kohn, a lawyer at the National Whistleblower Center, Shuren personally sent federal investigators at the office of the inspector general “several screen shots and documents obtained through spying on the private email correspondence of Dr. Robert C. Smith, Dr. Ewa M. Czerska, Mr. Paul T. Hardy, and Mr. Julian J. Nicholas.” (all FDA scientists apart from Hardy who worked for the U.S. Public Health Service Commissioned Corps)
The surveillance began soon after the scientists sent a letter in January 2009 letter to John Podesta, then director of the transition team of the newly elected Obama administration, blowing the whistle on how senior FDA staff “ordered, intimidated, and coerced FDA experts to modify their scientific reviews, conclusions and recommendations in violation of the law.”
Journalists took an immediate interest in the concerns raised by the scientists. An article published on January 12, 2009, took issue with the SecondLook Digital Computer-Aided Detection System for Mammography manufactured by iCAD Inc. of New Hampshire. The reporter quoted an internal FDA review of the product that suggested it might miss cancers and risked “unnecessary biopsy or even surgery (by placing false positive marks) and unnecessary additional radiation.”
A second critical article appeared in the New York Times in March 2010 challenging FDA approval for coloscopy devices manufactured by General Electric of New York. “One CT colonoscopy device that they exposed made it onto the market, 600 to 800 times the radiation dosage of similar devices that are more effective,” says Kohn. (Researchers estimate that as many as 14,000 people may die every year of radiation-induced cancers as a result of excessive use of such scanning practices).
After the articles appeared GE officials and iCAD CEO Ken Ferry allegedly complained to the FDA the whistleblowers may have revealed trade secrets. In June 2010 Shuren took a personal interest in the matter by sending the results of the surveillance of the scientists to federal investigators. (To the credit of the investigators, they declined to act noting that government employees have the right to blow the whistle to Congress.)
The agency denies it broke the law. "FDA did not monitor the employees’ use of non-government-owned computers at any time. Neither members of Congress nor their staffs were the focus of monitoring," the FDA told Democracy Now! “At no point in time did FDA attempt to impede or delay any communication between these individuals and Congress. Employees have appropriate routes to voice their concerns without disclosing confidential information to the public, and FDA has policies in place to ensure employees are aware of their rights and options.”
However, Quality Associates Inc. of Fulton, Maryland, another FDA contractor mistakenly posted the data retrieved by the SpectorSoft software on the Internet, where one of the scientists recently discovered the data and the extent of the surveillance operation. “(O)ne congressman, Van Hollen, was specifically put on it. Aides for Senate and House were put on it. Journalists were on it. Scientists and doctors were on it,” says Kohn.
“This is the insidious nature of electronic surveillance, because once they had the first whistleblower, Dr. Smith, target number one, they were able to learn who he was talking to and who was supportive of what he was trying to change. They were able to then identify all the other whistleblowers and then people who endorsed them. And then they created a list. And this list set forth additional targeted monitoring or surveillance.”
While one would hope that the FDA’s action was a rogue operation, it is definitely not the only agency in the market for covert surveillance spy software to track federal employees. A contract posted in June by the Transportation Security Administration (TSA) seeks a product to “monitor user activities through keystroke monitoring/logging; chat monitoring/logging; email monitoring/logging; attachment monitoring/logging; website monitoring/logging; network activity monitoring/logging; files transferred monitoring/logging; document tracking monitoring/logging; screenshot capture; program activity monitoring/logging,” with a key requirement that the “end user must not have the ability to detect this technology.” (first revealed by NextGov)
The solicitation was simply posted for public information, the TSA will not accept unsolicited bids. One presumes that SpectorSoft would be keen to bid. The company is in no trouble since it did not break any laws in selling software to the FDA. On the other hand, Quality Associates, which has a $20 million document archival contract with the FDA as well as a $30 million contract with the National Institutes of Health, seems likely to be shunned for future government contracts.
Posted by Pratap Chatterjee on July 20th, 2012 CorpWatch Blog
HSBC protest in Hong Kong. Photo by twak. Used under Creative Commons license. Photo of David Bagley testifying at the Permanent Subcommittee on Investigations taken from official video feed.
HSBC, one of the world’s largest banks, has been accused of laundering money for Mexican drug cartels. At a hearing conducted by the U.S. Senate earlier this week, David Bagley, HSBC's head of compliance, apologized and resigned.
"I recognize that there have been some significant areas of failure. Despite the best efforts and intentions of many dedicated professionals, HSBC has fallen short of our own expectations and the expectations of our regulators," Bagley told the U.S. Senate Permanent Subcommittee on Investigations.
HSBC traces its origins back to the Hong Kong Shanghai Banking Corporation that was set up in 1865. Today it is one of the largest financial institutions in the world, with over $2.5 trillion in assets, 89 million customers, 300,000 employees, and 2011 profits of nearly $22 billion. The CEO is still based in Hong Kong but the bank is run out of London.
In 2002, HSBC bought up a Mexican bank named Banco Internacional, S.A. from Grupo Financiero Bital, S.A. de C.V. “A pre-purchase review disclosed that the bank had no functioning compliance program, despite operating in a country confronting both drug trafficking and money laundering,” noted a report prepared for the U.S. Senate. “It opened accounts for high risk clients, including Mexican casas de cambios and U.S. money service businesses, such as Casa de Cambio Puebla and Sigue Corporation which later legal proceedings showed had laundered funds from illegal drug sales in the United States.”
HSBC officials, however, treated the new Mexican unit as low risk. Paul Thurston, chief executive of retail banking and wealth management, who was dispatched to Mexico in 2007 to look into the matter, told Congress that he was "horrified" by what he found. "I should add that the external environment in Mexico was as challenging as any I had ever experienced. Bank employees faced very real risks of being targeted for bribery, extortion, and kidnapping – in fact, multiple kidnappings occurred throughout my tenure," he said.
Other HSBC staff also raised the alarm. “The AML (anti-money laundering) Committee just can’t keep rubber-stamping unacceptable risks merely because someone on the business side writes a nice letter. It needs to take a firmer stand. It needs some cojones. We have seen this movie before, and it ends badly,” wrote John Root, a senior HSBC Group Compliance expert, wrote in an email to Ramon Garcia, the compliance director in Mexico, on July 17, 2007.
All told, the Senate report estimates that HSBC’s Mexican affiliate transported $7 billion in physical dollars to the U.S. between 2007 and 2008 alone, outstripping other Mexican banks, even one twice its size. One Cayman islands subsidiary set up by the Mexican division of HSBC handled 50,000 client accounts and $2.1 billion in deposits, but neither staff nor offices. (Pro-Publica has a nice annotated summary of the 335 page report here.)
While Bagley was taking the bullet, his former boss, Lord Stephen Green, who was chief executive of HSBC between 2003 and 2006 and chairman until 2010, has been avoiding calls to testify. An ordained priest and the author of a book titled "Serving God? Serving Mammon?" he is now the UK Trade minister.
Posted by Pratap Chatterjee on July 19th, 2012 CorpWatch Blog
DNA sequence exhibit at the Science Museum in London. Photo by John Goode. Used under Creative Commons license.
Should a private company be allowed to patent isolated human genes? A lawsuit to be heard Friday pits Myriad Genetics of Utah against the American Civil Liberties Union (ACLU). Myriad wants to be the exclusive U.S. commercial provider of genetic screening tests for breast cancer or ovarian cancer but the non-profit says the patent limits scientific research as well as health care options for women.
Myriad Genetics Inc. has filed patents on the BRCA1 and BRCA2 genes which allow it to figure out if a woman is at risk of breast cancer or ovarian cancer. The tests cost over $3,000 and no other company is allowed to do research on the genes without permission from Myriad.
The Myriad screening test is also mostly based on results gathered from white women. The patent has limited further research to see if the results are accurate for women of other races, says Kim Irish of Breast Cancer Action who cites the example of Runi Limary, an Asian woman who received ambiguous results when she had genetic testing done. “Runi was told that this “variant of uncertain significance” has been seen in Asian women, and that these ambiguous results seem to come up more for women of color,” says Irish.
However the Obama administration has recently started to limit this approach. “The chemical structure of native human genes is a product of nature, and it is no less a product of nature when that structure is ‘isolated’ from its natural environment than are cotton fibers that have been separated from cotton seeds or coal that has been extracted from the earth,” wrote lawyers for the U.S. Department of Justice in a legal brief in 2010. "Common sense would suggest that a product of nature is not transformed into a human-made invention merely by isolating it.”
Myriad may be in for a difficult fight, given the government opinion.
Posted by Pratap Chatterjee on July 13th, 2012 CorpWatch Blog
Thames river police boarding teams in Olympics security exercise, London. Photo: Terry Seward, UK Ministry of Defense.
Two global institutions – the United Nations and the Olympic Games – face charges that they are using “unaccountable and out of control” private security contractors. One of the companies at the heart of both controversies is G4S, a private security company in the UK.
Preparations for the Olympic Games in London later this month have been plunged into chaos because G4S failed to hire sufficient security while the U.N. has been alleged to have quietly been ramping up the use of such contractors in foreign missions including G4S.
G4S won a £284 million ($450 million) contract to provide 13,700 guards for the 2012 Olympics. A few days ago, the company was discovered to have only 4,000 in place.
One G4S trainee, an ex-policeman, described the hiring process to the Guardian as "an utter farce". "There were people who couldn't spell their own name. The staff were having to help them. Most people hadn't filled in their application forms correctly. Some didn't know what references were and others said they didn't have anyone who could act as a referee. The G4S people were having to prompt them, saying things like "what about your uncle?"
The guards who were hired “had received no schedules, uniforms or training on x-ray machines” just 14 days to go until the Olympics opening ceremony.
The Guardian newspaper also published a memo that G4S sent out Thursday to retired police. "G4S Policing Solutions are currently and urgently recruiting for extra support for the Olympics. These are immediate starts with this Tuesday, Wednesday, Thursday and Friday available. We require ex-police officers ideally with some level of security clearance and with a Security Industry Association [accreditation], however neither is compulsory."
The UK government is now making emergency preparations to deploy the British military if G4S cannot meet the requirements laid out in the contract.
Other companies hired by the U.N. included Dyncorp and Saracen, according to GPF. Dyncorp of Virginia also recieved $3 million in U.N. contracts in 2010. (DynCorp became infamous for a sex trafficking scandal during the U.N. mission in Bosnia in the 1990s) Saraccen of South Africa was hired to support the Monusco peacekeeping mission in the Democratic Republic of Congo in 2010 and 2011.
The U.N. Development Program spent $30 million of this amount. The U.N. peacekeeping program came second with $18.5 million while U.N. refugee programs spent and $12.2 million for private security contractors. This carries heavy risks, says GPF. "Armed security contractors can … smuggle weapons into conflict zones and sell them or make them available to parties to the conflict, as has happened in Bosnia, Sierra Leone, Afghanistan and Somalia," the report warns.
The GPF report underlines the fact that the U.N. does not have an overview of which contractors it is using. "U.N. security officials themselves cannot give an estimate of total security contracting within the U.N. system or a complete list of companies hired. This suggests a system that is unaccountable and out of control," the report says.
The U.N. has defended its policies. "U.N. contracting policies have improved and we need to continue to improve them," Martin Nesirky, a U.N spokesman, told the Associated Press. "The distinct differences in the ways that private security contractors go about their work also must be borne in mind."
Kilimo Kwanza which translates as “Agriculture First” is a recent Tanzanian government initiative to promote a “greener revolution” through agricultural modernization and commercialization via public-private partnerships. The program was launched in August 2009 by Tanzania's President Jakaya Kikwete.
Enter Agrisol Energy LLC's - an Iowa-based investment company that specializes in agribusiness. The company’s goal is to find “underdeveloped global locations that have attractive natural resources but lack best-in-class agricultural technology, farming techniques, equipment and management.” The company opened talks with the government to start large-scale crop cultivation, beef and poultry production, and biofuel production in three “abandoned refugee camps” - Lugufu in Kigoma province (25,000 hectares) and Katumba (80,317 hectares) and Mishamo (219,800 hectares), according to company business plans.
A 2011 investigation by the Oakland Institute, a California based NGO, revealed that the refugee camps were not abandoned but very much occupied by Burundian refugees who have lived in the area for 40 years.
Agrisol does not deny this. Henry Akona, AgriSol Tanzania's director of communications, says that the company officials were initially told that plans had been made to move the refugees from the settlements. "We were considering those areas a few years ago, but we have suspended any plans because the land is occupied," Akona told the Daily Iowan. "We should have done better homework."
Oakland Institute profiled Sembuli Masasa, the father of seven children, who had been farming in Katumba for 39 years who told researchers: “They are giving us $200, ask us to dismantle our own house and to move to a place we have never seen before.”
"Initially promised citizenship, the residents still await their papers, conditional on them vacating their homes and lands in order to make way for the foreign investor,” says Anuradha Mittal, executive director of the Oakland Institute. “The residents have been banned from cultivating crops including perennial crops such as cassava or building new homes and businesses, leaving them with no other option but to consider moving.”
The new report alleges human rights abuses of the refugees “which range from the burning down of houses and crops and violation of their freedom of speech to inequities in social services.”
Akona disputes charges that the company is responsible for the fate of the Burundians. “AgriSol has absolutely nothing to do with the refugees in Katumba and Mishamo,” he told the Daily Iowan.
The Oakland Institute report has created a storm in Iowa, notably for Bruce Rastetter, CEO of AgriSol Energy who worked with Iowa State University's College of Agriculture and Life Sciences in Ames, Iowa, to get support for the deal.
Faced with growing questions, the university pulled out in February 2012
Iowa Citizens for Community Improvement, a community group in Des Moines, Iowa, has filed an official conflict of interest complaint against Rastetter with the Iowa Ethics and Campaign Disclosure Board, and are lobbying for Bruce Rastetter to be removed as Iowa Board of Regents President Pro Tem.
The Tanzania project is part of a new phenomenon that activists are calling “land grabbing.” GRAIN, a global agricultural think tank based in Barcelona, estimates that at least 50 million hectares of good agricultural land – enough to feed 5 million families in India – have been transferred from farmers to corporations in the last few years alone.
Economists say that governments have to be very careful about inviting corporations to manage vast swathes of land in poor countries. “If it’s done properly, and if African governments take care of their countries and their populations, this can be a big benefit,” says Jeffrey Sachs of Columbia University told Dan Rather reports. “If they in effect give away these valuable resources, then what happens is these scarce resources benefit some other part of the world. And Africa is left even worse off than it was before.”
A record £290 million ($450 million) fine for fixing rates at which banks lend to each other has been levied on Barclays bank in the UK by U.S. and U.K. authorities. The scandal has forced Bob Diamond, the Barclays CEO who had ignored activist protests over his sky-high $28 million salary, to resign on Tuesday.
Perhaps even more importantly, the scandal has shone a light into how banks set – and manipulate - rates at which $360 trillion in international deposits are loaned out every day. While most of these loans are overnight transfers between banks, they affect the price of consumer loans like mortgages, car loans and credit card loans.
Minos Zombanakis, a Greek banker who worked at Manufacturers Hanover Trust, invented a system in 1969 to estimate “market” rates for lending money when he was asked to work on a $80 million loan to Iran. “We had to fix a rate, so I called up all the banks and asked them to send to me by 11 a.m. their cost of money,” he told the New York Times. “We got the rates, I made an average of them all and I named it the London interbank offer rate.”
In subsequent years, the British Bankers Association took on the daily task of setting “LIBOR” rates for as many as 150 different kinds of loans. These BBA-determined rates are now considered the global benchmark says Donald MacKenzie, a sociologist at the University of Edinburgh, who wrote a fascinating article in 2008 about how they are set.
“This can now be done on-screen, but – especially if large sums are involved or market conditions are tricky and changing rapidly – it’s often better to use the ‘voicebox’. This is a combination of microphone, speaker and switches that instantly connects each broker by a dedicated phone line to each of his clients in banks’ dealing rooms.”
“A broker needs to pass information to his clients as well as to receive it: that’s a major part of what they want from him, and a good reason to use the voicebox rather than the screen. The brokers’ code of conduct prohibits passing on private knowledge of what a named bank is trying to do (unless a client is about to borrow from it or lend to it), but that restriction leaves plenty of room for brokers to tell traders what has just happened and to convey the ‘feel’ of the market.”
Matthews goes on to add: “The direct effect for consumers here was to make loans cheaper, but the indirect effect, or the intended one at least, was to lessen chances of government action against the banks.”
For example, one trader is reported to have told a Barclays employee: "Coffees will be coming your way either way, just to say thank you for your help in the past few weeks". The reply came back: "Done, for you big boy."
Public speculation that the rates were being fixed date back to at least 2007. Libor rates could “be manipulated if contributor banks collude or if a sufficient number change their behaviour” concluded a 2008 study by the Bank for International Settlements. So did a paper published on the Social Science Research Network which found evidence of “questionable patterns.”
Heads are continuing to roll. Marcus Agius, the chairman of the British Bankers’ Association, resigned Monday over the scandal. By coincidence, or perhaps not, Agius was also chairman of Barclays.
But that may not be enough, say some. “(T)oday’s leaders must be for finance but against banking behemoths. The instruments of finance, from risk models to derivatives, are useful when used responsibly,” concludes Sebastian Mallaby in the Financial Times. “But the structure of modern finance – vast institutions that borrow cheaply because taxpayers are on the hook to save them – is an abomination that must stop.”
Posted by Pratap Chatterjee on June 27th, 2012 CorpWatch Blog
Image by Friends of the Earth International
The United Nations Rio+20 Conference on Sustainable Development in Brazil concluded this past weekend with no new government pledges. On the other hand, multinationals scored a public relations victory by claiming that they will implement $50 billion of sustainable changes to help save the environment, under an initiative led by UN Secretary-General Ban Ki-Moon.
The conference was supposed to take advantage of the 20th anniversary of the 1992 United Nations Conference on Environment and Development in Rio de Janeiro to commit to further efforts to save the global environment.
“They came, they talked, but they failed to act. Paralysed by inertia and in hock to vested interests, too many leaders were unable to join up the dots and solve the connected crisis of environment, equality and economy,” wrote Wisdom Mdzungari in of Zimbabwe.
“Microsoft has committed to going carbon neutral and will be rolling out an internal carbon fee that will apply to Microsoft’s business operations in over 100 countries. Italian energy company Eni has earmarked approximately $5 billion to achieve its gas flaring and carbon intensity reduction goals; and, the Renault-Nissan Alliance has committed approximately $5 billion to commercialize affordable zero-emission vehicles,” boast the United Nations in an official statement.
“Bank of America has set a ten year $50 billion environmental business goal. the World Bank Group has committed to doubling the leverage of its energy portfolio by mobilizing private, donor and public contributions to World Bank-supported projects."
Twenty years ago, at the original 1992 Earth Summit, similar pledges were made by the World Bank and a number of multinationals, yet today emissions of greenhouse gases in a number of countries exceeded worst case estimates.
The new Sustainable Energy For All pledges represent just a drop in the bucket, say activists. Daniel Mittler, political director of Greenpeace noted: “The epic failure of Rio+20 was a reminder [that] short-term corporate profit rules over the interests of people…They spend $1 trillion a year on subsidies for fossil fuels and then tell us they don’t have any money to give to sustainable development,” he told the Guardian.
Some activists say that the initiative is just “greenwash” and that the Sustainable Energy For All initiative proves that the UN has sold out to corporate interests. “Governmental positions have been hijacked by corporate interests linked to polluting industries,” said Nnimmo Bassey, chairman of Friends of the Earth International.
Posted by Daniel Nelson on June 20th, 2012 CorpWatch Blog
Rio+20 protest. Photo: youthpolicy. Used under Creative Commons license
The curtain rises Wednesday on the 20th anniversary of the “Earth Summit” in Rio de Janeiro in 1992. Once again environmental groups and global dignitaries will gather in Brazil to talk about saving the planet.
Last time the eyes of the world were upon the United Nations Conference on Environment and Development when George Bush (senior) joined 108 other heads of state, 172 countries, 2,500 official delegates, and about 45,000 environmentalists, indigenous peoples, peasants and industrialists came together.
“Helicopters thundered up and down the chic Copacabana and Ipanema beaches. Tanks guarded the bridges and tunnels. The favelas were in lockdown, schools closed and supermarkets stood empty,” remembers John Vidal in the Guardian. “The Dalai Lama meditated with Shirley MacLaine on the beach at dawn, Jane Fonda and Pelé turned up, as did Fidel Castro, train robber Ronnie Biggs, and an obscure US senator called Al Gore.”
The 2012 United Nations Rio+20 Conference on Sustainable Development that runs from 20-22 June event is a relatively tame affair but make no mistake, there have been major changes in the last two decades. One of the biggest differences is the enormous growth in corporate power.
Just before the first Rio Summit, the UN Code of Conduct on Multinational Corporations was abandoned, and just after the meeting, the UN Centre on Multinational Corporations was closed. Subsequent deepening corporate involvement with UN agencies stems from their accreditation to the summit, alongside civil society groups. A decade later, the international environmental organisation Friends of the Earth commented, “Some people date the rise of corporate globalization” from this period.
Yet as Helena Paul of EcoNexus points out, greater corporate participation has not been accompanied by greater obligations.
The proposal would commit states to develop regulations or codes to “encourage the integration of material sustainability issues” in large companies’ annual reports. There is an opt-out clause for companies, but they would have to explain their non-participation to shareholders or other stakeholders. The proposal says nothing about what shareholders could do if they didn’t accept the company’s explanation.
Use of the weasel word “encourage” is in line with the language of the Rio+20 documents. Lasse Gustavsson, the head of the WWF team at the conference, said on Sunday that “’encourage’ is used approximately 50 times in the negotiating text, while the word ‘must’ is used three times.”
The net result, in Paul’s view, is that “At present, serious debate on international regulation of corporations appears to have been effectively marginalized.” A good beginning, Dr Alison Doig, Christian Aid’s senior adviser on sustainable development, said at an event on Sunday in the Rio Centro hosting the negotiations, would be for multinationals to pay the $160 billion a year which the charity estimates is lost every year to tax dodging by multinationals.
Posted by Pratap Chatterjee on June 14th, 2012 CorpWatch Blog
Cartoon by Khalil Bendib
Martin Sorrell, CEO of WPP, the global ad agency, was defeated Wednesday in his attempt to get shareholders to approve his $20 million (£13 million) a year salary. He was at least the 12th CEO to face a shareholder revolt against excessive compensation this spring.
“Ever since the first revolts erupted in earnest this year, the “shareholder spring” has been searching for its own Hosni Mubarak to rally against,” writes Jonathon Ford in the Financial Times. “Now a suitably pharaonic candidate has emerged in Sir Martin Sorrell.”
WPP began life as Wire and Plastic Products plc in 1971, as a company that manufactured wire shopping baskets, but was bought out in 1985 by Martin Sorrell, former finance director of Saatchi & Saatchi. Today it is one of the most powerful ad agencies in the world, after having bought up some of its most famous rivals like Burson-Marsteller, Grey, Hill & Knowlton, JWT, Ogilvy Group and Young & Rubicam. Sales in 2011 hit £10 billion ($16 billion)
Sorrell defended his salary in a June 5 Financial Times commentary titled "I Act Like The Owner That I Am." "I find the controversy over my compensation
deeply disturbing. Some imagine that I wake up every morning and make
decisions, including those over compensation, in the shaving mirror ... If the government or institutions believe pay is excessive, tax it. Do
not fiddle with the market mechanism. WPP is not a failure, it is a
success."
A week later, some 60 percent of shareholders voted against Sorrell’s pay package. The revolt “appeared to stun the board directors as they watched the results appear on TV screens” wrote the Independent. (The directors were meeting on Wednesday in Dublin, where the company is headquartered to avoid taxes)
"People are concerned because there is a recession, they're concerned about inequality, inequality of wealth and incomes,” a suitably chastened Sorrell told a Reuters meeting in Paris on Thursday. “At times of recession people become more concerned about that, you see that politically.”
Here is the CorpWatch list of CEOs who have seen significant shareholder votes against their multimillion dollar salaries so far this spring.
* David Brennan, CEO of AstraZeneca, the Anglo-Swedish pharmaceutical company, resigned April 26 after shareholders voted against his £9 million pay ($14.4 million) * Andrew Moss, CEO of Aviva, the top UK insurance company, was forced to resign on May 8 after he lost a vote against his £2.7 million ($4.3 million) pay package * Sly Bailey, CEO of Trinity Mirror, the UK’s biggest newspaper group, decided to step down May 3 after shareholders voted against her £1.7 million ($2.7 million) pay * Vikram Pandit, Citibank’s CEO, faced a revolt against his proposed salary of $15 million from some 55 percent of shareholders * Brady Dougan, CEO of Credit Suisse, saw his salary slashed in half to $6.37 million * Bill Gammell, founder of Cairn Energy, lost share options worth £2.5 million ($4 million) after 67 percent of shareholders voted against his pay package * Mike Davies, chairman of Pendragon, a UK car dealership, saw 25 percent vote against his salary * Andrew Sukawaty, the executive chairman of Inmarsat, the satellite phone company, saw a shareholder revolt against his £2.66 million salary ($4.25 million) * Ralph Topping, CEO of William Hill, a major UK betting company, saw 49.9 percent of shareholders vote against his £1.2 million ($1.92 million) pay package * Ivan Glasenberg, CEO of Swiss mining company Xstrata * Kaspar Villiger, chairman of UBS bank in Zurich
Posted by Pratap Chatterjee on June 13th, 2012 CorpWatch Blog
Pills. Photo: e-magineart.com. Used under Creative Commons license
Are Africa and South East Asia just suffering from a deluge of fake medicines that is causing disease resistance to rise? Or are they also suffering from a deluge of poorly informed media articles, encouraged by the pharmaceutical industry that wants to make war on generic drugs?
A recent article published in the latest issue of the Lancet Infectious Diseases magazine examines a new study by the U.S. National Institutes of Health noting that a third of malaria drug samples examined from the two regions were found to be fake or substandard.
Pfizer, a New York company, is particularly active in the campaign against “fake drugs.” There is good reason for Pfizer to be concerned: Viagra, Pfizer's brand of sildenafil citrate, is one of the most popularly faked drugs. James Love, the executive director of Knowledge Ecology International, a Washington NGO, notes that “It is quite clear that the overwhelming majority of counterfeit busts involve Viagra and other erectile dysfunction drugs.”
The data on drug busts is not that surprising given the fact Viagra is an expensive drug in high demand from people who are willing to buy it under the counter or online.
However, such “lifestyle” drugs – as they are often called – are quite different from cancer drugs which are not faked quite as often. Indeed the problem is far more complex: there is a wide range of so-called “fake” drugs such as spurious drugs, counterfeit drugs, falsely labeled drugs (wrong dates, missing ingredients etc.) and poor quality drugs which the Lancet proposes to lump together.
And by introducing the term “devoid of considerations of intellectual property” the Lancet is also including the trade in generic drugs.
It is these generic drugs that pharmaceutical industry lobbyists like the Pharmaceutical Research and Manufacturers of America (PhRMA) and the U.S. Chamber of Commerce, both major lobbyists in the U.S., want the media to attack, says Love.
Love says that the Lancet suggestion to use "simplified and neutral" language could well lead to problems for buyers in poor countries. He notes that “corporate intellectual property right holders … are lobbying governments for stronger IPR enforcement measures. These lobby groups present dangerous drugs as the core motivating factor for legislation that has little to do with solving the bulk of the substandard and dangerous drug problem, and they also seek to introduce measures the undermine the trade in high quality legitimate generic products.
“One risk is that the various anti-counterfeit drug initiatives will be used to further undermine legal parallel trade in branded drugs. Another is that surveillance of trade in unpatented and unbranded chemicals will be used to further expand monopoly power,” Love adds.
Let’s unpack that a bit. What’s the legal parallel trade in branded drugs? Well, drug manufacturers themselves often sell their drugs cheaper in countries with big public health systems or just because the population is too poor to pay for Western prices. These drugs are sometimes sold back legally to buyers in other countries. Technically this trade could be shut down. (See “Murky Medicines” for an interesting article on how the U.K. buys medicines abroad legally at cheaper prices)
What about unpatented and unbranded chemicals? Are they a good idea? Well, it turns out that even the major drug makers use unpatented and unbranded chemicals all the time. Drugs typically contain one or more active pharmaceutical ingredients (APIs). If these APIs are patented, the patent holder can make a lot of money. But a lot of drugs are made from cheap (and perfectly good) unpatented APIs that even the big companies buy to make their branded drugs.
When countries like Thailand or India allow generic manufacturers to make drugs (either because the license has expired or to deal with an urgent healthcare crisis), these manufacturers turn to the very same API producers. Where it gets complicated is that the API producers are in a tough spot because if they supply the generic manufacturers, the big boys have been known to cut them off. (Bristol-Myers Squibb used this strategy in Thailand to cut off production of the AIDS drug ddI)
Basically what Love is saying is that if we use a hammer to address the issue of drugs, all the problems of generic, spurious, counterfeit, falsified and poor quality drugs look like different kinds of nails, when in fact some of them may not even be nails at all. “If authors systematically see the problem in ways consistent with drug company lobbyists, they are not seeing the whole picture,” he concludes.
Stamp out spurious drugs by all means, check to make sure that expired drugs are not re-labeled, and test batches to make sure that low quality drugs are not slipped into the market, but be careful of stopping the sale of perfectly good generic drugs that can save lives at a dramatically cheaper price by making them illegal.
Posted by Pratap Chatterjee on June 8th, 2012 CorpWatch Blog
Photo: Gasland still. From the film by Josh Fox.
Aubrey McClendon, the founder and CEO of Oklahoma-based Chesapeake Energy, who championed natural gas to the extent of paying environmental groups to oppose coal, is facing angry shareholders for his profligate ways. Chesapeake is one of the leading users of fracking - an environmentally questionable method of extracting natural gas by injecting fluids underground at high pressure.
Chesapeake Energy, a 23-year old oil and gas company with 2011 sales of $11.64 billion, has bought up rights to drill on millions of acres of land in the U.S. This past March Rolling Stone magazine described the company thus: “It’s not only toxic – it’s driven by a right-wing billionaire who profits more from flipping land than drilling for gas,” wrote Jeff Goodell. “McClendon's primary goal is not to solve America's energy problems, but to build a pipeline directly from your wallet into his.”
McClendon aggressively promoted natural gas as part of the solution to climate change. He gave over $25 million to the Sierra Club’s Beyond Coal campaign and in return former executive director Carl Pope even accompanied him to speak out in favor of natural gas. (The Sierra Club’s new director, Michael Brune, has returned the remaining money)
But in the last four years, the company’s share price has dropped from almost $67 in June 2008 to about $18 now because of the crash in natural gas prices as well as the company heavy debt load. Shareholders have forced McClendon to resign as chair and this Friday, they voted out a number of individuals that he appointed to the board of directors.
Fracking uses a mix of water, sand and a variety of chemicals, many of which are dangerous to humans and the environment. A study by the U.S. Congress estimated that out of 2,500 hydraulic fracturing products "(m)ore than 650 of these products contained chemicals that are known or possible human carcinogens, regulated under the Safe Drinking Water Act, or listed as hazardous air pollutants.”
Then there is the problem of waste waters. "Since there were no laws covering the disposal of this stuff at first, they (fracking companies) just dumped it into rivers or hauled it off to sewage plants to be 'treated,' which they knew didn't work," Deborah Goldberg, a lawyer at Earthjustice, told Rolling Stone. "They just wanted to get rid of the stuff as quickly and as cheaply as possible."
McClendon also brought attention to his company by funding right-wing causes like the Swift Boat attacks against John Kerry in 2004 and contributing more than $500,000 to stop gay marriage.
“In 2010, Chesapeake employees spent more than 15,000 hours working on McClendon's personal projects at a cost of about $3 million,” write John Shiffman, Anna Driver and Brian Grow. The journalists report that McClendon arranged for over $1.5 billion in personal loans using his interest in company-owned wells as collateral. He bought a house on Bermuda's so-called billionaire's row, which includes houses purchased by Michael Bloomberg, Ross Perot and Silvio Berlusconi.
He was generous with shareholder’s money too. “On one flight, nine friends of McClendon's wife took a Chesapeake-leased jet to Bermuda without any McClendons aboard,” Reuters reports.
Small wonder that Forbes magaine once called him “America’s Most Reckless Billionaire.” Today, it's a bit hard to shed a tear for his plunging fortunes.
Posted by Pratap Chatterjee on June 7th, 2012 CorpWatch Blog
Photo: SheepGuardingLlama. Used under Creative Commons license.
Can you name the eight largest banks in the U.S.? Seven of them are easy – Bank of America, Citigroup, Goldman Sachs, JP Morgan, MetLife, Morgan Stanley, Wells Fargo. Then there’s Taunus at 60 Wall Street, New York. You mean to say you haven’t heard of Taunus? Well, you’d be even more surprised to learn it doesn’t even appear on the list of the top 50 banks maintained by the Federal Reserve.
Visit the 23 year old 55 story skyscraper and you might still be confused because for all practical purposes the building is occupied by employees of Deutsche Bank. Scratch a little deeper and you will soon discover that Taunus is the name of the holding company that controls Deutsche Bank and by rights should be counted as the eighth largest bank in the U.S. because its $354 billion of assets and 8,652 employees put it slightly ahead of the next contender.
This was after the German bank spent $3.4 million lobbying on Capitol Hill in 2010 followed by $2.2 million in 2011, according to numbers compiled by Deutsche Welle, the German public broadcast network. (By comparison Bank of America spent $3.7 million in 2011 and Goldman Sachs, generally considered to be the most politically connected Wall Street firm, spent $6.1 million) Deutsche Bank, like many others on Wall Street, apparently was concerned about the Dodd-Frank act, the 2010 law to improve transparency and accountability in financial institutions.
"Deutsche Bank has extensive business activities in the US and is subject to the rules and regulations there," Deutsche Bank spokesman Ronald Weichert told the German broadcaster by e-mail in response to a query about why it spent so much money on lobbying.
Deutsche Welle has a theory for why Deutsche Bank spent the money. At stake was an extra $20 billion that Taunus needed to keep on hand to comply with the new law which increased the minimum amount of money required in reserve to prove they were fiscally solvent. The Federal Reserve had previously given Taunus a waiver from the higher capital requirements, according to a recent Wall Street Journal article but Dodd-Frank made the waiver moot.
By delinking Taunus from a Deutsche Bank trust company, Tanuas was converted to doing just investment banking, which then allowed it change its listing with the Federal Reserve to "domestic entity—other” where it was no longer subject to the stricter new rules. (Deutche Bank is the second foreign institution to do this – after Barclays of the UK)
“Deutsche Bank in particular had been given some extraordinary and hard to believe advantages," Simon Johnson, a former International Monetary Fund chief economist, told Deutsche Welle. "They wanted to have very little capital in the (Taunus) operation to keep it as a highly leveraged and highly risky business and they were allowed to do that.” Footnote: The name Taunus comes from the parent Deutsche Bank which is headquartered on Taunusanlage in Frankfurt. Taunus is also the name of a low mountain range visible from the Germany’s financial capital.
Posted by Pratap Chatterjee on June 6th, 2012 CorpWatch Blog
Broken Promises video footage from Todd Southgate, Greenpeace.
The Xavante tribe in western Brazil and the Parakana tribe in the north-east are separated by a thousand miles of the Amazon basin but they face a common threat: the sprawling global beef export empire controlled by the Batista family from the state of Goiás.
JBS S.A. was founded in 1953 by Jose Batista Sobrinho as a small slaughterhouse in the town of Anapolis. In the last decade, JBS expanded to Argentina, acquired Smithfield and Swift Foods in the U.S. and Tasman in Australia, to make it a $33 billion multinational. Today JBS slaughters 90,000 head of cattle a day, employs 125,000 workers and exports to 150 countries, according to company statistics.
In an admiring article describing how the company now supplies beef from “farm to fork” to “feed ... the middle class” a Washington Post reporter described the efficiency of company operations in Lins, Brazil, in April 2011: “(T)he animal is rendered unconscious by a captive bolt pistol. It is hoisted up by its hind legs. A worker then slices the carotid artery and jugular vein, and the steer bleeds to death in seconds.”
“A processing line of workers, all in hard hats and white aprons, then skin, debone, slice, can and package the meat … The final product: rump roasts or tenderloins, corned beef or beef jerky, to be exported as far away as London.”
Over a couple of months in 2011, Greenpeace researchers traced 834 cattle raised on illegal farms with names like Panorama and Fortoleza (fortress) inside the Maraiwatsede reserve that were sent for slaughter to the Água Boa plant in Mato Grosso (financed by the International Finance Corporation, an arm of the World Bank). The reserve is the home of the Xavante people.
“The Xavantes can no longer fish because the rivers have run dry or are contaminated due to the destruction of forests, landfills invading river systems in an effort to expand pastoral areas, plus extensive use of agrochemicals. Now 85 percent of the forest has been cut down and the Xavante people’s reports to the authorities describe substantial conflict with farmers accused of attempted murder and destruction of property,” write the authors of JBS Scorecard, the new Greenpeace report.
The situation is similar for the Parakana tribe in the Apyterewa Indigenous Reserve. In 2009, a Reuters reporter told the story of Tamakware, a tribal elder daubed in black pigment who brandished an arrow, and “made a plaintive appeal to foreign visitors to tell President Lula to move the farmers out.”
Two years later, Greenpeace found that a JBS unit in Tucuma, Para was still buying animals from a farm located within the Apyterewa indigenous land.
The beef from these operations were exported by JBS to the UK where activists were able to identify them by serial numbers on “100 tins of beef chunks, mince and corned beef” at outlets run by Tesco, Britain’s biggest grocery chain.
The new Greenpeace report has had an immediate effect on JBS sales. Tesco announced today that it would stop buying JBS beef. “We started to cut back our supplies from JBS a year ago and have now ceased sourcing any canned beef products from JBS. Ethics and sustainability remain an important part of our dialogue with suppliers,” a spokesman told the Telegraph newspaper.
For its part, JBS wrote to Greenpeace claiming that it was "fully committed to sourcing livestock from farms that are not involved in any illegal activities, including illegal deforestation, the invasion of indigenous lands or the use of any form of slavery.” It did not confirm or deny the NGO’s research.
Posted by Pratap Chatterjee on June 5th, 2012 CorpWatch Blog
Great Barrier Reef. Photo: PhOtOnQuAnTiQuE. Used under Creative Commons license.
A $6.3 billion coal mine project in the Galilee Basin in Queensland that could impact the Great Barrier Reef, has been halted by Tony Burke, Australian environment minister. The Alpha project is the first of several major coal projects in the northern Australian state that are being pushed by Campbell Newman, the state premier, who gave it the go-ahead in late May.
‘‘I don’t have the level of trust in the Queensland government which I wish I had,’’ Burke told reporters. ‘‘I cannot trust them with Queensland jobs. I cannot trust them with the Great Barrier Reef and that’s why I’ll be taking the action I’ve described.’’
Environmentalists say that the project will have a major detrimental impact on the Great Barrier Reef which is a United Nations Educational Scientific and Cultural Organisation (UNESCO) designated World Heritage Site. The Reef, which is the world’s largest coral ecosystem, provides nesting grounds to dugongs, green turtles and seabirds which live off the prawns, crayfish, and crabs that inhabit the seagrass meadows. One species that is likely to be impacted is the rare snub nose dolphin. “Boom Goes the Reef” – a new report issued by Greenpeace Australia in March 2012 – notes that current plans for coal mining and export expansion call for 10,150 ship journeys out of Queensland ports by 2020, up from 1,722 in 2011. The environmental group noted that a number of accidents have already threatened the delicate corals such as the grounding of the Shen Neng 1 coal cargo ship in April 2010.
Just two weeks ago another ship – the ID Integrity from Hong Kong – broke down off Cairns, provoking a warning from activist group GetUp! which is also campaigning against the coal mining. "The incident should be of concern to all Australians. It's more likely to occur in the future as we see more and more ships use the Great Barrier Reef to export coal," GetUp! national director Simon Sheikh told ABC Radio.
The Australian Green party is also opposed to the coal developments in Queensland. “(We) are calling on the Australian Government to end this shambolic state of affairs, compel a real and comprehensive strategic assessment of the coal export developments for the Reef, and stop trying to give away their environmental responsibilities,” said Senator Larissa Waters, the party’s environment spokesperson. “Campbell Newman’s response … “We’re in the coal business”, could leave no shred of doubt that Queensland will not hesitate to allow the destruction of the environment, even our World Heritage icons, to boost the profits of mining billionaires.”
“The globe is sadly groaning with debt, poverty and strife And billions now are pleading to enjoy are better life Their hope lies with resources buried deep within the earth …
Develop North Australia, embrace multiculturalism and welcome short term foreign workers to our shores To benefit from the export of our minerals and ores The world’s poor need our resources: do not leave them to their fate”
Posted by Pratap Chatterjee on May 31st, 2012 CorpWatch Blog
Swedwood pine lumber from Karelia. Age range approx. 200-600 years old. Photo: Protect the Forest Sweden.
Kalevala, a 19th century epic poem from Finland, is often considered the heart of the Finnish national identity. It was inspired by traditional verses from the ancient forests on the border of central Finland and Russia. Today some of the 600 year old trees around the Kalevala national park are being chopped up to make cheap furniture for Ikea, the Swedish home furnishing chain, according to activists.
Ikea, which is based in Delft, Netherlands, sells €23.5 billion ($30 billion) worth of goods every year from shelves to entire kitchens through its 300 shops around the world. Wood is used in roughly 60 percent of the products that it stocks – according to IPS news agency - and one of the company’s slogans is: "We Love Wood"
Critics are now questioning what this love for wood really represents.
Protect the Forest immediately sent a letter of complaint to Nikolay Tochilov, the director of NEPCon, a Danish NGO that helps monitor sustainable forestry projects for Ikea. “Swedwood Karelia and their owner Ikea … state that they do not log primeval forests and that they do not cut hundred of years old trees,” wrote Viktor Säfve and Daniel Rutschman of Protect the Forest in a September 21, 2011 letter. “They … are clearly misleading their customers through marketing and through media, stating that their forestry is ecologically, socially and economically sustainable.”
Just 10 percent of the ancient old-growth forests remain in Karelia, according to the forest department of SPOK, the Karelia Regional Nature Conservancy, a Russian NGO. Swedish public service television recently estimated that Swedwood is further depleting that stock by cutting down about 1,400 acres of forest a year.
Protect the Forest say that the Kalevala forests hosts a number of red-list species, notably a number of lichen and fungi such as Antrodia crassa and Antrodia infirma (fungi), Bryoria Fremontii (black tree lichen), Hydnellum gracilipes (tooth fungus) and , Lobaria Pulmonaria (lungwort).
Earlier this week the forest activists launched a campaign against the company. "During our field visits to Russian Karelia, we have documented the reality of IKEA's forestry, and it's a far cry from the fine words in their advertising," Säfve wrote in the press release. "You must immediately stop logging old-growth forests, and you must stop lying! Those are two of the demands we make of IKEA."
“We believe the future of forestry in Russia lies in sustainably managing the vast areas of secondary forests – not in destroying the last intact areas of primeval forests,” Säfve and Rutschman wrote. “There are excellent conditions in Karelia to implement selective cutting methods in unmanaged, naturally regenerated secondary forests.”
Ikea disputes the charges. "Swedwood has played an important role in the advancement of forestry in Karelia. Our goal is to develop and improve forest management," Anders Hildeman, forest manager at Ikea told IPS. “We will continue to work according to the principles that we agreed on together with Russian environmental organisations like SPOK.
Wonderful sentiments, but what about when these banks make huge profits? Are they supporting the economy then? Or are they also taking money from some one else on those occasions?
Certainly hedge funds – a secretive group of financiers – often make a killing, though sometimes they lose their shirts. Much of the money is made in ways that are very hard to understand, but in simple words: by stealing legally from the rich like the investment banks, but also from the working class and the poor. (They don’t discriminate)
Here’s a more common example: Splunk, a data company, recently went public at $17 a share. A month later the stock had doubled to $35. The banks and hedge funds who bought the shares initially are happy because they can sell now and make a tidy profit, but it means that the company raised only half the money it wanted. Still that’s the way the world works and the financial community loves it. (Thanks, Joe Nocera, for that example)
Wall Street was not as happy when Facebook also recently went public at $38 and then the price dropped. Facebook walked off with extra money but many of the institutional buyers were the ones who lost out. (Perhaps Wall Street should have been less critical of a 28 year old with a hoodie who outsmarted them. He didn’t need a sharp suit to take their money away from them)
Now back to the hedge funds robbing the banks. Weinstein noticed that Iksil (known as the London Whale) was making large bets on credit derivatives that didn’t make sense and he bet against him. Weinstein, according to a recent New York Times profile who had himself lost $2 billion at Deutsche Bank when doing whale-sized bets, recognized the problem and moved quickly to profit out of it.
So who cares? One rich bank lost money to a rich hedge fund. Surely that is a zero sum game: They swap mansions and yachts, their partners swap diamonds and butlers, and it makes no difference to the rest of us. Or does it?
One of the biggest problems is that the world of finance is that it is actually awash in cash. And the owners of that cash want to make even more cash. “(C)orporate money has been flooding into JPMorgan, as companies pull their money out of eurozone banks,” notes Gillian Tett at the Financial Times who says that roughly $2 trillion is available for investment at any given time. “Somehow you have to stash that money in an incredibly safe place, but also produce some returns. So where do you put it? In Treasuries, which carry negative real returns and are becoming riskier by the day? In eurozone bonds or corporate credit? Or can you find something else, without creating new risk?”
Where did this money come from if the world economy is in a recession?
Well, the simple answer is that every day, both the banks and the hedge funds are taking little chunks of our money, although not in the extreme way that Soros did in Indonesia back in 1997. Higher interest rates; lower wages by moving factories; buying up farmland etc. etc.
Dimon’s remarks are being used to roast him now and it’s high time. We need better regulation of both banks and hedge funds. One important reform is to make sure that investment banks and regular banks are separated. If the rich want to trade mansions, they can do so. But the investment banks and hedge funds should not be bailed out. And if they want to take money from the rest of us, they need to be kept in check.
Unfortunately that may be the opposite of what happens. As the Washington Post’s Dana Milbank notes: “The trading scandal at JPMorgan highlighted the urgent need for tougher regulation of Wall Street, but (Alabama Congressman’s) Shelby’s harangue was part of a larger effort to use the scandal as justification to repeal regulations.”
Posted by Pratap Chatterjee on May 28th, 2012 CorpWatch Blog
Translation: The Rich Get Richer. Stop Poverty Wages! (Photo of Blocupy poster: linkskreativ. Photo of Euro: Slolee. Used under Creative Commons license)
The sudden economic crash in several southern European countries: Greece, Italy, Portugal and Spain as well as Ireland (sometime called the PIIGS, a rather dubious and perjorative name); is commonly blamed on lazy workers, a bloated social security system and unwise borrowings by greedy governments. This is why lenders like the European Central Bank (ECB) and the International Monetary Fund (IMF) are now asking these governments to cut social spending (austerity measures) and pay ever higher interest rates, despite the fact that only serves to make the situation worse.
"As far as Athens is concerned, I … think about all those people who are trying to escape tax all the time. All these people in Greece who are trying to escape tax," Christian Lagarde, the French head of the IMF told the Guardian.
In reality, a large chunk of the bailouts are for debts created by private banks in Greece, Ireland, Italy, Portugal and Spain borrowing abroad – for speculative real estate schemes and such like - not by shopkeepers, small entrepreneurs and ordinary citizens. And a surprisingly big chunk of the rash loans were handed out by private (and some public) banks in just four countries: France, Germany, the UK and Belgium (in that order).
Peter Böfinger, an economic advisor to the German government, put his finger on it when he told Der Spiegel last year: “[The bailouts] are first and foremost not about the problem countries but about our own banks, which hold high amounts of credit there.”
Let’s dig a little deeper. First were all the borrowing countries wildly spendthrift? Here are some very instructive numbers: before 2008, the Irish and Spanish governments had borrowed less than Belgium, France, Germany and the UK. The Irish owed owed roughly 25 percent of gross domestic product (GDP) in 2007, the Spaniards owed 36 percent. Meanwhile the Belgians had borrowed 84 percent, the French and German government had taken out 65 percent while the UK was at 44 percent. The Portugese were at about 65 percent – same as the Germans – and Greece and Italy admittedly were at over 100 percent.
Second, who was lending the money that is now so difficult to pay back? After all it takes two to tango, as they say. Borrowers and lenders share in the risk and the blame.
How much of these loans were to the government? The Economist has some interesting numbers – just $36 billion went to the governments of Greece, Portugal and Spain. The rest was loaned out by banks like Munich based Hypo Real Estate that distributed over $104 billion for property schemes.
(For more details the BBC has an excellent graphic tool that shows which country was borrowing from whom: Spain’s biggest creditor is Germany at €131.7 billion ($171.2 billion) and Portugal’s biggest creditor is also Germany €26.6 billion ($34.6 billion). The Greeks owed most to France at €41.4 billion ($53.8 billion).
Finally, who profits out of this? Well, the German banks have since taken their money out: Bloomberg estimates that $590 billion was taken back after December 2009. But the debt remains so that is why the borrowing countries are forced to go to lenders like the ECB which in turn is getting it from the Bundesbank (the German central bank). The German government only has to pay an interest rate of 1.42 percent to borrow money for 10 year bonds, apparently the lowest they have ever paid. (The French are also doing fine at 2.42 percent)
The ECB money comes with strings attached – severe austerity. It is true the borrowing countries don’t have to take these conditional loans, they can also borrow at market rates but this can be very expensive: they have to pay between 5.5 percent (Italy) to an astronomical 30 percent (Greece) in interest for 10 year bonds.
In reality this crisis is at least partly (perhaps mostly) the fault of the banks in the wealthy countries like France and Germany and it is these banks that have really been bailed out by the ECB and the IMF.
The Indignados in Madrid, Blockupy in Frankfurt and Occupy Wall Street have it right.
“(T)he president concluded that the reward was worth the risk, and created an unusual interagency group, overseen by a midlevel White House aide, to clear Shell’s path through the often fractious federal regulatory bureaucracy,” write John Broder and Clifford Krauss.
In November 2010, almost two years after he was elected, Obama told William K. Reilly and Carol M. Browner, two former heads of the Environmental Protection Agency, what he wanted them to do. “Where are you coming out on the offshore Arctic?” he asked. “What that told me,” Reilly told the New York Times, “was that the president had already gotten deeply into this issue and was prepared to go forward.”
Shell spent over $35 million lobbying for the permission during the Obama adminstration. Marvin Odum, president of Shell North America, and Sara B. Glenn, a lobbyist, visited the White House 19 times to meet with Obama’s staff.
Some environmental groups are astonished at Obama’s role. “We never would have expected a Democratic president — let alone one seeking to be ‘transformative’ — to open up the Arctic Ocean for drilling,” Michael Brune, executive director of the Sierra Club told the New York Times.
Others indigenous activists spoke out also about Shell’s impact in other countries. “Shell has failed to address our concerns in Canada’s tar sands, by not meeting environmental standards and past agreements, and refusing to address their impacts on our constitutionally-protected treaty rights, leaving us with no option but to sue them,” said Eriel Deranger from Athabasca Chipewyan First Nation (ACFN). “Our Chief has said ‘Enough is enough!’ We fully intend to challenge all Shell’s future projects until they can demonstrate a true willingness to implement our rights.”
Posted by Carmelo Ruiz-Marrero on May 18th, 2012 CorpWatch Blog
Cordoban youth poster supporting the takeover of YPF. Photo: Chupacabras. Used under Creative Commons license
Repsol, a multinational based in Spain, has brought a class action lawsuit in New York courts against the Argentine government for the re-nationalization of YPF, the former Argentine state oil company. The company has also lodged a complaint with the World Bank's International Center for Settlement of Investment Disputes (ICSID).
President Cristina Fernández de Kirchner of Argentina signed a bill on May 4 seizing 51 percent of the company’s shares after over 80 percent of legislators in both the lower and upper houses of parliament voted in favor. Respol, which owned 57 percent of YPF, wants $10.5 billion in compensation although it may find it hard to collect since Buenos Aires has ignored previous ICSID fines.
"When corporate interests are not aligned with national interests, when companies are concerned only with profits, that's when economies fail, which is what happened globally in 2008 and what happened to Argentina in 2001," Fernández said in a speech on May 3 to explain her motives in pushing for the takeover alleging that Repsol under-invested in the company and paid out excessive dividends, essentially stripping out the value.
Fernández’s move has rattled international financial markets but drawn extensive praise from some popular movements. The Battle Against Privatization in South America
In the 1970s, most oil companies in South America were state owned, just like most utilities. Following the debt crisis of the 1980s, governments in the region were persuaded by the World Bank and the International Monetary Fund to privatize many of these state assets. A number of European multinationals – like Repsol of Spain and Suez of France - jumped at the opportunity to capture lucrative new sources of production and revenues. Financial institutions hailed this wave as an opportunity for the region to attract capital for modernization and to get rid of unnecessary bureaucracy.
Carlos Menem, who was elected the president of Argentina at this time, became the darling of global financial markets for his aggressive privatization strategy that brought in foreign direct investment, cut inflation and boosted productivity, although his policies also caused major unemployment. At the same time Menem also increased borrowing from the International Monetary Fund and failed to control the flight of capital out of the country by the country’s elite. In 2001, the Argentine economy collapsed again.
He was succeeded in 2007 by his wife, Cristina Fernández, who maintained his policies of keeping the international institutions and multinationals at bay.
The partial nationalization of YPF (49 percent of the company will remain in the hands of local and foreign private investors) repudiates the advice of international economists but is wildly popular in Argentina. It could bring an influx of cash to the Argentine economy but could also backfire, if it does not.
Then there is the threat of Western interests who do not take kindly to being kicked out. Notably, the government of Spain has not taken the news well. Spanish president Mariano Rajoy has threatened economic sanctions against Argentina, and vice president Soraya Saenz de Santamaria has stated that Spain and its allies "will protect the juridical safety of European investments worldwide". The European Union is considering bringing a case against Argentina to the World Trade Organization.
Fernandez says she has a very pragmatic reason for pushing for nationalization: Argentina’s bills for energy imports hit $9.4 billion last year affecting the country’s trade surplus.
Environmental Impact Questionable
She has the backing of some community activists.
"Repsol is still in debt to the people of Argentina and to nature,” proclaimed the National Peasant and Indigenous Movement (MNCI) on their website. “The REPSOL corporation must assume responsibility for the environmental harms it has caused and damages to natural resources, economically compensating the country and the peasant and indigenous communities that have been affected."
But not all movements are convinced that a state owned YPF will be that different. "As an ecologist collective, and being plainly conscious that the Argentina government was not thinking of environmental issues when it made its decision, we will remain vigilant of (YPF's) future actions," said Noelia Sánchez of the Spanish group Ecologistas en Acción.
Indeed Repsol-YPF has been tried three times by the Permanent Peoples Tribunal for environmental and human rights violations and found guilty. For example in 2010 YPF was accused of trampling on the rights of the Lonko Purran community of Mapuche people in the Cerro Bandera oil field.
Others note that YPF plans to exploit the country's "unconventional" oil and gas finds, such as the Vaca Muerta oil deposit in the province of Neuquen, using hydraulic fracturing (fracking) will mean business as usual, no matter who owns the company: "The future scenario could be one of profound environmental and social risk for much of the country, as experience abroad (of the environmental impact of fracking) has demonstrated,” warns Diego Di Risio, a spokesman for Petroleum Observatory South (Opsur)
Posted by Pratap Chatterjee on May 17th, 2012 CorpWatch Blog
CorpWatch report: Outsourcing Intelligence in Iraq
Two U.S. companies can be prosecuted for the alleged role of their employees in torture at the Abu Ghraib prison in Iraq, a U.S. federal court ruled last week. The companies are CACI of Arlington, Virginia, which provided the interrogators at the prison, and L-3/Titan of New York city, which provided translators at the same location.
Shimari says he was subjected to electric shocks, deprived of food, threatened by dogs, and kept naked while forced to engage in physical activities to the point of exhaustion. Rashid says he was placed in stress positions for extended periods of time, deprived of oxygen, food, and water, shot in the head with a Taser gun, and beaten so severely that he suffered from broken limbs and vision loss.
Al-Zuba’e says he was tortured by being subjected to extremely hot and cold water, his genitals were beaten with a stick, and he was detained in a solitary cell in conditions of sensory deprivation for almost a full year. Al-Ejaili says he was stripped and kept naked, threatened with dogs, deprived him of food, beaten and kept in a solitary cell in conditions of sensory deprivation
The other 72 Iraqis who sued L-3/Titan alleged that they were subjected to “electric shocks, rape and other forms of sexual assault, forced nudity, broken bones, and deprivation of oxygen, food and water” by the contractors during their detention.
CACI and L-3 say that since they were working for the federal government during combat, they cannot be judged by a court because of “absolute official immunity” and “sovereign immunity” respectively.
“Today’s ruling provides an opportunity for victims of torture at Abu Ghraib to tell their stories to an American court and to obtain justice from the private military contractors who played such a prominent role in one of the most shocking episodes of abuse in recent American history,” said Baher Azmy of the Center for Constitutional Rights, who co-argued the case for the plaintiffs.
“The ruling is especially important in light of the unprecedented rise in the use of private military contractors in war zones,” says Susan Burke, lead counsel on the case. “Ultimately, these cases should be about whether the actions of the defendants constituted war crimes and torture in violation of the law and not about whether or not the perpetrators should receive impunity even if they engaged in torture.”
The New York Times agrees. “Hawks may spin the Fourth Circuit’s decision as a victory for bleeding heart liberals,” writes Andrew Rosenthal, the newspaper’s editorial page editor. “But really this is about preserving the most traditional legal principle there is: that criminals should answer for their crimes.”
L-3/Titan’s work in Iraq has been the subject of a lengthy investigation by CorpWatch “Outsourcing Intelligence in Iraq.” Amnesty International provided a set of recommendations on how the federal government should address the role of contract interrogators and translators in the field.
Posted by Pratap Chatterjee on May 16th, 2012 CorpWatch Blog
Jean-Luc Deheane. Photo: European Movement Belgium. Used under Creative Commons license
“This Bud’s for you,” is a popular Budweiser ad jingle. Apparently Jean-Luc Dehaene, a Member of the European Parliament from Belgium, takes it personally, since he recently accepted shares worth $4.2 million in the company that makes the beer. What’s remarkable is that he forgot to mention this as a potential conflict of interest.
Dehaene is a former prime minister of Belgium and now a Member of the European Parliament. In this position, he has the ability to vote on regulations on the European food and drink industry, including the brewery sector.
When Dehaene served on the board of Anheuser Busch InBev – a Belgian company which manufactured and sold $39 billion worth of goods last year including Budweiser, Stella Artois and Beck’s beer – he was given stock options worth as much as €3 million. He left the board in March 2011 and as of April 30th is now able to cash in.
Yet Dehaene has failed to mention the shares in his official declaration of interests which he filed on February 12 of this year, despite the official rules that state that “a conflict of interest exists where a Member of the European Parliament has a personal interest that could improperly influence the performance of his or her duties as a Member.”
In a letter issued Tuesday and addressed to Martin Schulz, the president of the European Parliament, four activist groups – Corporate Europe Observatory, Friends of the Earth Europe, Lobby Control and SpinWatch – drew attention to this discrepancy. They write: “How will the parliamentary authorities guarantee that proper safeguards are put in place to avoid potential situations of conflict of interest in this particular case?”
“Jean-Luc Dehaene and Pierre Mariani, the chief executive officer, are responsible for the fiasco at Dexia,” Paul de Grauwe, a member of the economic advisory group to Jose Manuel Barroso, president of the European Commission, told the Mail on Sunday. “It is dangerous to speculate, to gamble with the money of ordinary citizens. The big problem is that Dexia abandoned traditional banking and started speculating to earn more. That ended miserably.”
“Known as ‘the plumber’ during his time as Prime Minister of Belgium, due to his ability to resolve crises, this time he appears to have drilled through the main standpipe,” commented the Mail.
A number of MEPs have recently come under close scrutiny for conflicts of interest after four of their number agreed to put forward “amendments” for fictitous clients in exchange for cash, by a team of reporters at the Sunday Times newspaper.
“You send me the amendment and what your client wants to change. Yes?” Ernst Strasser, former Austrian interior minister, told the reporters. “Of course I’m a lobbyist, yes, and I’m open for that, yes?” Strasser was forced to resign after the report was published.
Under a new code of conduct, approved last December, the politicians are now expected to list potential conflicts of interest that amount to over €5,000 a year. There is no law against such conflicts, however, and several have been discovered.
For example EuroPolitics notes that Klaus-Heiner Lehne, earns over €10,000 as a lawyer and partner at international law firm Taylor Wessing, while he chairs the Committee on Legal Affairs. Elmar Brok, who earns between €5,001 and €10,000 per month as an advisor at Bertelsmann AG, the media conglomerate, is chair of the Committee on Foreign Affairs.
That’s small beer compared to what Dehaene might make from selling his Anheuser Busch InBev stock.
Posted by Pratap Chatterjee on May 11th, 2012 CorpWatch Blog
Graphic: Giulia Forsythe. Used under Creative Commons license.
Over 11,000 academics have pledged to boycott Elsevier, the Dutch publishing giant, for profiting off their work and making it unavailable to the general public. Now Jimmy Wales, the founder of Wikipedia, is about to turn the world of corporate academic publishing on its head, in the same way that his website effectively took over from Encyclopedia Britannica as a quick reference guide.*
Elsevier is part of the Anglo-Dutch company Reed Elsevier, which had 2010 revenues of $9.3 billion and annual profits of over $1.67 billion. It publishes over 250,000 articles in some 2,000 journals a year that range from global publications like the Lancet to more specific ones like the Journal of the Egyptian Mathematical Society.
Publishers like Elsevier knew they were onto a good thing because before the arrival of the Internet, there was no other way for researchers to tell their peers about the important work they were doing, or vice versa. Plus getting published in a respectable journal was also the key to keeping academic jobs and getting promotions, so the researchers and professors – like rock musicians and best-selling writers – were leery about giving away their work for free.
“(P)ublishing companies became the de facto gatekeepers to scientific knowledge, restricting who could see the latest ideas rather than allowing ideas to spread as far as possible,” writes Aloke Jha in the Guardian.
But unlike rock musicians and best-selling authors, the market for these journals often number in the few hundreds or even less, specifically the relatively well endowed world of universities. Both the original research as well as the universities – ironically – are paid for by the general public, since most academic research is heavily subsidized by the government.
Professors have been chafing for a while. “We mathematicians produce the papers, serve as editors, and serve as referees, all for free (except of course for our support by our universities and employers). Then with relatively small improvement to the product, publishers turn around and sell it to our libraries at (in many cases) a very high price,” wrote Ron Kirby at the University of California at Berkeley in 1997 in a “Dear Colleague” letter.
“Why do we mathematicians put up with this? (W)e are human and like to see the fruits of our labor printed on high quality paper with elegant typesetting; it validates our hard work.”
On January 21, 2012, a Cambridge mathematician Tim Gowers posted a similar message on his blog and posed a question: “Why can’t we just tell Elsevier that we no longer wish to publish with them? (W)hy do we allow ourselves to be messed about to this extraordinary extent, when one would have thought that nothing would be easier than to do without them?
Gowers issued a call to action: “(I)f all libraries were prepared to club together and negotiate jointly, doing a kind of reverse bundling — accept this deal or none of us will subscribe to any of your journals — then Elsevier’s profits (which are huge, by the way) would be genuinely threatened. However, it seems unlikely that any such massive coordination between libraries will ever take place. What about coordination between academics?”
A few days later Gowers was contacted by Tyler Neylon, a mathematician based in Mountain View, California. The two of them set up a website called “The Cost of Knowledge”
“Numbers could quantify the scope, the revenue, the profit margins, and the number of people who cannot afford publishers' prices. But to me, these all fail to qualify the true consequences of sitting still, of doing nothing. The cost of doing nothing is the cost of knowledge,” Neylon wrote in the Guardian.
Elsevier decided to retreat a little. It dropped support for the Research Works Act (RWA) in the U.S. Congress that would prevented taxpayer-funded research to be made freely accessible online. (An alternative bill is now pending: the Federal Research Public Access Act which will expand the NIH system to all government agencies)
* Editor's note. The original sentence was amended from "effectively took down Encyclopedia Britannica" following a complaint from Encyclopedia Britannica. The publishing company noted in an email to CorpWatch: "Sales and print runs for the set plummeted in the 1990s, and it had become a marginal product, long destined for eventual extinction, by the time Wikipedia was born in 2001."
Posted by Pratap Chatterjee on May 10th, 2012 CorpWatch Blog
Yinka-Dene Alliance newspaper ad.
War has been declared on Enbridge, a Canadian oil company, by a chief from the Nadleh Whut'en in British Columbia. Chief Martin Louie was attending the company annual general meeting in Toronto where he spoke out Wednesday against the environmental impact of the company’s tar sands operations.
"How far are they willing to go to kill off the human beings of this country? Enbridge and the government are going to go on fighting us," said Louie. “The war is on."
Some 700 miles directly south of the Enbridge meeting, on the very same day, Bob Kincaid of Coal River Mountain Watch leveled similar charges against Brian Moynihan, the CEO of Bank of America at their annual general meeting in Charlotte North Carolina, for the impact of mountaintop removal mining.
"You are part of the poisoning of Appalachia and so is every one of your directors and so is every one of your shareholders," Kincaid said. "You are part of the destruction of an entire region of the country."
These two new and unconventional fossil fuel sources –tar sands and mountain top coal together with shale rock – have been dubbed “extreme energy” sources by Professor Michael Klare of Hampshire College, to signify the extraordinary and expensive technology needed to extract energy from them. The rush to exploit these source - from rural North Dakota (see “North Dakota Shale Boom Displaces Tribal Residents”) to the deserts of South Africa (see “Fracking South Africa”) that has sparked angry protests because of the devastating environmental consequences.
This week the battle against extreme energy was taken to the company annual meetings by environmental and social justice groups. The Nadleh Whut'en were part of the Yinka-Dene Alliance which is protesting Enbridge’s $5.5-billion project that would pipe crude from tarsands in Alberta over 1,100 kilometres to the West coast where the fuel is to be loaded on supertankers to take to Asia.
The protestors brought with them a declaration that read in part:
“We are the Indigenous nations of the Fraser River Watershed. We are many nations, bound together by these waters. Enbridge wants to build pipelines to pump massive amounts of tar sands crude oil through the Fraser’s headwaters. An oil spill in our lands and rivers would destroy our fish, poison our water, and devastate our peoples, our livelihoods, and our futures. Enbridge has many pipeline oil spills every year, including this year’s large spill into Michigan’s Kalamazoo river. We refuse to be next.”
The company claims it is doing a good job. "We wouldn't be proposing this project if we didn't have utmost confidence that we could both construct and operate the project with utmost safety and environmental protection," Enbridge spokesman Todd Nogier told CBC TV.
Brian Moynihan responded the same way to the activists in North Carolina who told him that Bank of America was poisoning Appalachia. "Sir, our environmental team will take a look at it. We look at it all the time,” he told the shareholders who booed him.
Coal River Mountain Watch activists disagreed. “A human health crisis is exploding in Appalachia and Bank of America lights the fuse every day," said Bob Kincaid, noting that as much as five million pounds of explosives are used every day in Appalachia to extract coal. Kincaid estimated that the practice caused 4,000 deaths a year in West Virginia: "That's a newborn who never knows a clear breath, a 4-year-old who never gets to be a 5-year-old, a mother who never gets to be a grandmother.”
At the same annual general meeting on Wednesday, Bank of America also saw a number of protestors speak out against the company’s mortgage practices. For example Sister Barbara Busch, a Catholic social justice worker who runs a Cincinnati-based homeowner advocacy group called Working In Neighborhoods, told Moynihan that his bank was the hardest to deal with (41 percent of her customers have their loans managed by Bank of America) “(W)we have no one to talk to. They do not call us back,’ she said of the loan officers. “I understand, Mr. Moynihan, that you really believe that you've done something, but ... you've got to do something about your mortgage servicing."
The North Carolina protests were coordinated by the Unity Alliance which brought together groups like Grassroots Global Justice Alliance, Jobs with Justice, the National Day Laborers Organizing Network, the National Domestic Workers Alliance, the Pushback Network, and the Right to the City Alliance.
Although the Bank of America protests are now over, the activists plans to be back – for the Democratic National Convention slated to take place in the city this coming September.
This is the latest in what has been perhaps the most diverse, widespread and sizeable protests of corporate annual meetings around the world to date. Traditionally these company gatherings are held in the spring after the publication of annual reports in April of each year. They tend to be dull affairs hosted by company management and attended by analysts from Wall Street and the City of London and a handful of shareholders.
Occasionally, church groups and environmental groups attend to speak out in favor of progressive resolutions that gather no more than five percent of votes from the big institutional investors who own the bulk of company shares. And sometimes there are a rallies outside led by the same groups.
But the scale of the protests 2012 has been different, first because of the return of the Occupy protestors who were evicted by police or winter conditions. These activists have bolstered the numbers outside the annual general meetings: in Detroit, hundreds of Occupy protestors marched to protest General Electric on April 25, 2012 to protest the way the company avoids paying taxes. Occupy also turned out in force to protest Peabody Coal in St. Louis, Missouri and Wells Fargo Bank in San Francisco last month.
“Wearing blue eagle masks and garlands of money, protestors gathered outside the Barclays bank shareholder meeting in London, while a giant, cigar-smoking inflatable rat accompanied activists at the Wells Fargo annual meeting in San Francisco. Meanwhile shareholders in Dallas voted overwhelmingly against a multi-million dollars pay package for Citibank’s CEO while almost a third did the same at the Credit Suisse meeting in Zurich.”
In the last week or so, this anger has spread, led surprisingly by institutional shareholders. The Financial Times and the Telegraph newspaper in the UK have labeled the phenomenon “shareholder spring” in which a number of CEOs have seen their multi-million dollar pay packages voted down under so-called “say on pay” rules that allow shareholders to reject excessive payments. In a May 4 editorial titled “Irresistible Rise of the Angry Investor” the Financial Times says: “Shareholders want executives to perform for their pay. Is that so much to ask?”
In a similar vein, the Observer newspaper in the UK noted: “Just weeks after the Occupy protesters were chucked out of the City, the sharp-suited fund managers who picked their way through the tents to get to their desks each morning have staged their own protest against fat-cat capitalism. On Thursday alone, five companies felt the wrath of investors and suffered revolts over their pay policies.”
It’s not just CEOs, board members have also come under fire. Alison Carnwath, a banker who sits on many UK boards, was protested at both Barclays bank as well as at hedge fund Man Group. “Alison Carnwath is the embodiment of "crony capitalism" that allows a small group of City figures to set each other's pay and bonuses without having to worry about the real world” wrote Jill Treanor and Rupert Neate in the Guardian.
One of the reasons that executives have managed to get away with excessive pay packages so far is the nature of corporate boards. Lord Myners, the former head of a hedge fund, told the Observer that the problem lay with the fact that company boards are handpicked by the chairman: "(W)e have the North Korean model, in which each candidate is re-elected
every year, and 99.99% of them get voted in with 99.99% of the vote.
Stay tuned: tomorrow we will have more reports on the protestors on the outside – at the Bank of America annual meeting in Charlotte and the Enbridge meeting in Toronto, Canada.
Posted by Pratap Chatterjee on May 7th, 2012 CorpWatch Blog
$100 bills. Photo: Adam Kuban. Used under Creative Commons license
Hedge funds, a publicity-shy sector of the financial industry where the super wealthy invest their money in the hope of making above-average profits, were just handed an opportunity to make even more money under a new law signed by President Barack Obama. Consumer advocates say that unsophisticated investors may be at risk as a result.
Most U.S. investment funds are regulated under the Securities Exchange Act of 1934 and the Investment Company Act of 1940 which restrict how much the fund managers are paid and what they do in order to protect naïve investors. Many hedge funds are designed to get around these restrictions by raising money from a select few sophisticated investors.
For example, big hedge funds seek “qualified purchasers” – who have at least $5 million in money – who are exempt from these restrictions under section 3(c)(7) of the 1940 Securities Exchange Act. Smaller hedge funds seek as many as 100 “accredited investors” - those with a net worth of over $1 million (not including their houses) or a minimum annual income of $200,000 (or $300,000 for married couples) – under the 3(c)(1) of the Investment Company Act of 1940.
Like any other exclusive club for the wealthy, hedge funds tend to be very secretive. Some of this is the law: “private placements” of securities are banned from advertising publicly but also because companies with less than 500 shareholders are exempt from publishing annual reports under the Securities Exchange Act of 1934.
In “More Money Than God: Hedge Funds and the Making of a New Elite” Sebastian Mallaby estimates that the hedge funds make some 11 percent profit, more than double other investment vehicles. This allows fund managers to ask for higher fees than regular bankers – typically they take between one and four percent of the investment every year as well as between 10 and 50 percent of profits in return for attempting to beat the stock market.
Some hedge fund managers mint money: Raymond Dalio of Bridgewater Associates was paid an estimated $3 billion in 2011, Carl Icahn of Icahn Capital Management earned $2 billion. The top European hedge fund manager in 2011 was Alan Howard of Brevan Howard Asset Management, who earned $400 million last year. All told, the 40 highest paid hedge fund managers were paid a combined $13.2 billion in 2011, according to a Forbes magazine survey.
Under the Jumpstart Our Business Startups (JOBS) Act, signed into law by Obama on April 5, 2012, the threshold for publishing annual reports has been raised to 2,000. It also allows hedge funds to conduct “general advertising” although specifics will have to be spelt out by the Securities and Exchange Commission (SEC) within 90 days.
Barbara Roper, director of investor protection at Consumer Federation of America told Reuters that she was worried that hedge funds might exploit unwary people. “Accredited investors are not necessarily sophisticated investors,” she said. “It will do more harm than good.”
Writing in the Financial Times Robert Pozen, a senior lecturer at Harvard Business School and Theresa Hamacher, president of the National Investment Company Service Association, recommend that the SEC should take two specific steps to protect these smaller investors. “First, it should update the definition of accredited investor, which was established 30 years ago, in 1982. To be a realistic proxy for sophistication in the present age, accredited investors should have an annual income of $600,000 and net worth of at least $3m, again excluding their home.
“Second, the SEC should establish uniform standards for reporting performance by hedge funds. Because reporting hedge fund returns is voluntary, managers can hide the performance of a poorly performing fund—either by not reporting it or by closing down the fund. As a result, the average reported return of hedge funds is overstated by more than three percentage points per year, according to several studies.”
The SEC, for its part, says it is intent on cleaning up the industry with the help of data that hedge funds have to provide under new disclosure rules enacted into law by the Dodd-Frank Act of 2010. "Pick your fraud of the day and the question is, 'Can we extract information from this data system together with the other databases we have access to and home in on problems before they do damage?'" Robert Plaze, deputy director in the division of investment management for the Securities and Exchange Commission, told the Wall Street Journal.
Posted by Pratap Chatterjee on May 4th, 2012 CorpWatch Blog
Photo: fluffymuppet. Used under Creative Commons license
KLM, the Dutch airline, has been forced to backtrack from a plan to use oil from jatropha seeds grown in Indonesia for commercial flights. After Friends of the Earth Netherlands (FOE NL) put out a report criticizing the potential impact on local food supplies, the airline company scrapped the idea earlier this month.
The February 2012 FOE NL report: “Biokerosene: Take-off in the wrong direction” examined the impact of a Dutch company named Waterland International, as well as the “dangerous myth of green flights.”
The plan for “sustainable” airline flights is partly state supported. In Europe, KLM was awarded a subsidy of €1.25 million ($1.61 million) by the Dutch ministry for transport in April 2010 to pursue “bio-fuels” while Lufthansa was given €2.5 million ($3.25 million) by the German federal ministry of economics and technology. Meanwhile the Indonesian government backed a scheme to grow jatropha plants on government-owned lands controlled by the State Forest Company, notably on a former Dutch colonial teak estate in central Java.
“Jatropha, it was promised, would grow well on marginal and waste lands, was inedible and so would not compete with food production,” write the authors of Biokerosene. “It would help with reforestation, and prevent further soil erosion, even enriching the soil with nutrients. Jatropha would not require a lot of attention once planted, no fertilizers, herbicides or any significant amounts of water. Farmers would be able to lie back and watch the money grow in the form of jatropha oil seeds.”
Geert Ritsema, international affairs coordinator at FOE NL, decided to investigate. A team traveled to central Java in late 2011 to meet with the jatropha farmers. They interviewed Suwarto, a farmer who was appointed supervisor of Wono Rejo, a farmers’ cooperative in a village named Tirem that had been convinced to grow jatropha plants from Waterland.
Suwarto says he earned 200,000 rupiah ($22) from the crop, a third of what he would have made had he planted corn. Moreover, people could have eaten the corn and the leaves could have been fed to the cattle. The jatropha plant had no such practical uses.
“At one point they got so mad, that they even turned their sickles on me,” Suwarto told FOE NL. “I asked Waterland, what they would do to help, when things turned violent and people were being physically threatened. Would they be there to protect me?”
Mrs Rumiyati, a laborer, confirmed the financial hardships created from jatropha cultivation. “If we go to help in other people’s rice or corn fields, we get 15,000 rupiah ($1.70) for half a day’ s work, and we get a free breakfast,” she told told FOE NL. “Picking jatropha for Waterland just earns us 7,000 rupiah ($0.78) at best, and no breakfast. This is really very, very low.”
“Not a single word was said about the Javanese farmers and workers, who have converted some of their land from food to fuel crops, in return for ridiculously low payments. For them, the introduction of jatropha has led to a fall in income, conflict and frustration,” concluded FOE NL.
After the report was released in February, KLM seems to have reconsidered the scheme. “KLM has informed Milieudefensie that it will not do business with Waterland. KLM has also told Milieudefensie that it has no current or future plans to directly or indirectly purchase raw materials to produce biokerosene from Waterland,” says a press release from the environmental group.
FOE NL says that more needs to be done: “The only solution to the problem is to reduce air traffic, foremost in Europe,” writes FOE NL in Biokerosene. “This might not be a welcome message for the aviation industry or for frequent fliers, but it is a blessing for poorer people in the South who suffer twice: from the effects of climate change and from the loss of valuable land which is used to grow fuel instead of food.”
Posted by Pratap Chatterjee on May 2nd, 2012 CorpWatch Blog
The Fever Book, Sonia Shah (Farrar, Straus & Giroux, 2010)
Why don’t drug companies invest enough money in treating malaria and tuberculosis? A recent study published in the Lancet magazine estimates that 1,238,000 people died from malaria in 2010. A similar number are believed to die from tuberculosis, together accounting for between one in ten and one in twenty disease related deaths around the world. Surely a wonder drug that stops these diseases would be wildly profitable?
For decades chloroquine has been the drug of choice to treat malaria, a disease carried by the female anopheles mosquito. When chloroquine-resistant malaria was discovered, artemisinin was chosen to take its place, promoted by international donors and the World Health Organization (WHO). This is a drug that was developed from the sweet wormwood plant by Chinese military scientists in the 1970s after a long and painstaking screening process of thousands of traditional medicines.
Now Novartis, a Swiss company, sells 100 million packets of Coartem, a version of the original Chinese drug, one of the most successful drugs in history. The company does so under a unique partnership with the World Health Organization (WHO) to distribute Coartem for pennies a dose to the poorest people in the world.
Unfortunately, recent reports now suggest that malaria parasites in western Cambodia have also become resistant to artemisinin. “Call it the revenge of the microbes. The more poison we throw at them, the faster they learn to circumvent our chemicals,” writes Shah.
So Novartis as well as other companies like GlaxoSmithKline, Pfizer, Ranbaxy, Sanofi and Shin Poong are putting some money into developing new drugs. Last week Ranbaxy, based in Gurgaon, India, announced a new drug: Synriam, on the occasion of the World Malaria Day.
While it is true that Big Pharma has played a role in some of the drug development (Novartis invented a child friendly version of artemisinin, for example, as well as done most of the manufacturing) mere capitalism and profit from the sale of “wonder drugs” would never have advanced the cause of global health.
Most of the progress made in fighting the disease is really as a result of government research and donors that have increased aid efforts from $200 million to $1.6 billion a year, over the course of the last decade, to help pay for access to basic drugs and improve methods of prevention.
There are also many important tasks other than sales of Coartem to continue to fight malaria: tests to track resistance as soon as it appears and more targeted use of drugs to make sure that they are not used too heavily. Another way to prevent malaria is to provide and make sure that families use mosquito nets and environmental management of standing bodies of waters where they breed as well as improving hospital hygiene.
China and Cuba are providing money for such projects but the West is wary of their traditional enemies. Writing in the Financial Times, Jack summarizes the worries and fears of Big Pharma and Western aid donors: “China’s malaria health centres in Africa have lacked sufficient technical support and training, while Cuba’s promotion of killing off mosquito larvae is viewed as a diversion from more effective measures.”
Shah agrees with the WHO. “Slowing the spread of drug-resistant malaria will take time and resources,” she writes. “But it’s better than the alternative: the loss of yet another wonder drug and a new era of unstoppable infections.” And the Financial Times concludes: “In an age of austerity, co-operation and co-ordination will be more important than ever.”
Posted by Pratap Chatterjee on April 30th, 2012 CorpWatch Blog
Salah, Sudanese farmer. Photo: Al Jazeera TV
Dalla Al Baraka, a Saudi conglomerate with an estimated $5 billion in annual revenue, has acquired two million acres of farmland in eastern Sudan, to produce food for export to the Middle Eastern kingdom. While the investors are hoping to wean Saudi Arabia off imports from South America, such agreements have also caused concern among local Sudanese farmers.
Sporadic protests have occurred in Jazira state where much of best land is being bid on by foreign investors. "The farmers are complaining, because the price they are being offered for their land is not fair," Majdi Selim, a local lawyer and political activist told Agence France Press last year. Their concerns are part of a trend that is accelerating around the world according to multiple reports tracked by farmlandgrab.org, a website run by GRAIN, an international NGO.
Sudan, which was divided into two countries in 2011, is expecting a sharp downturn in its export income because most of its oil deposits became part of the new nation of South Sudan. This has served as an impetus for Khartoum to seek other forms of income. Ali Mahmood Abdel-Rasool, the finance and national economy minister, led a delegation to Saudi Arabia in March to seek foreign investment.
Local farmers in Sudan are say they have not been consulted on the plans to lease off the country’s land. “The whole process is not clear to me because part of it is the sale of land, part is rent and part is lending,” Salah of the Al Jazira Land Owners Group told Mohamed Vall of Al Jazeera television in an interview about the subject this past January. “Agricultural land is the basic source of living for most people here, so if all the arable land is given to big companies, what are those people going to live on?” (the word “jazeera” means peninsula, and is a common business title)
Others think the new investors can help. “There is vast area of empty fertile (land) with plenty of water. This land has remained empty for hundreds, if not thousands of years and it will remain (that way) It needs mechanization, it needs capital,” Mamoun, Salah’s cousin, who is also a local farmer, told Al Jazeera TV.
Sudan is not the only country to be targeted for export agriculture. Indeed a new “gold rush” on farmland has begun in the Third World, say studies by GRAIN, a global think tank based in Barcelona, the International Land Coalition (ILC), based in Italy, and Oxfam in the UK. ILC and Oxfam have created a ‘Land Matrix’ of deals which suggest that 71 million hectares have been “grabbed” by international investors. Africa accounts for almost half at 34 million hectares, followed by Asia with some 29 million hectares and South America with about 6 million hectares.
These investments or “landgrabs” have fomented anger and even violence, on occasion. In neighboring Ethiopia, Saudi Star, a similar Saudi Arabian project in Gambella province, the extremely fertile southwestern region of the country, was attacked on April 28 evening. Ten people, most of whom were agricultural experts from Pakistan, were allegedly killed at the 10,000 hectare agricultural rice farm owned by the billionaire Al Amoudi.
Wearing blue eagle masks and garlands of money, protestors gathered outside the Barclays bank shareholder meeting in London, while a giant, cigar-smoking inflatable rat accompanied activists at the Wells Fargo annual meeting in San Francisco. Meanwhile shareholders in Dallas voted overwhelmingly against a multi-million dollars pay package for Citibank’s CEO while almost a third did the same at the Credit Suisse meeting in Zurich.
Annual general meeting season is in full swing and hundreds of people are showing up to protest excessive pay at banks around the world. The numbers have swollen from years past with the vigor injected from the long summer of Occupy protests around the world in 2011 that protested the failure of government to tackle the economic crisis and reign in private capital.
In London, activists with the World Development Movement and Robin Hood Tax, dressed up with blue eagle masks (mimicking the company’s logo) gathered outside the Royal Festival Hall. Some 800 shareholders attended the meeting where they heckled Bob Diamond, the CEO who was paid just shy of $28 million last year. One woman described the bank as “"ruthless, heartless, cruel" while another investor yelled: "You are all part of the same club.” Almost 27 percent voted against the company’s proposed pay package.
In Zurrich some 1,750 shareholders attended the Credit Suisse annual meeting on Thursday where almost a third of the votes recorded rejected individual pay packages as high as $9.35 million (for Robert Shafir who heads up the asset management team) "You should be ashamed of yourselves for taking so much money away from us," said Rudolf Weber, a shareholder, who spoke up during the meeting. “We are the owners of this bank, and you are our employees. We should be the ones who decide what you earn.”
On Tuesday Vikram Pandit, the CEO of Citibank, faced a revolt against his proposed salary of $15 million. Some 55 percent of shareholders voted against - the first time in history that a pay proposal at a major U.S. bank has been voted down since the law was amended to allow such voted under the Dodd-Frank act of 2010. Two days later, Stanley Moskal, a Citi shareholder, sued Pandit and the Citibank board for breaching their fiduciary duties stating that the vote had “cast doubt on the board's decision-making process, as well as the accuracy and truthfulness of its public statements."
The same Tuesday, thousands of activists gathered in San Francisco outside the Wells Fargo annual meeting at the Merchants Exchange Building to protest the bank which is the second-largest U.S. bank as measured by deposits. The crowd was joined by a fake stagecoach (the bank’s logo that reflects its Gold Rush history) labeled “Hell’s Cargo” and a giant cigar-smoking inflatable rat. A small group linked arms to prevent shareholders from attending the meeting while others went inside to protest. A total of 24 protestors – 14 inside the meeting and ten outside – were arrested.
"Wells Fargo is one of the largest and most corrupt Wall Street banks and has foreclosed on hundreds of thousands of homes," Charles Davidson of Move On East Bay told Reuters. "I think it's really important that we stand up to this or the economic crisis will continue."
However Wells Fargo shareholders failed to rally against CEO John Stumpf’s salary where over 90 percent voted for his $19.8 million pay package.
Posted by Pratap Chatterjee on April 26th, 2012 CorpWatch Blog
Image courtesy: The Bureau of Investigative Journalism
Facebook, the social network behemoth that is about to become a multi-billion dollar company, has been lobbying for a proposed new U.S. law called the Cyber Intelligence Sharing and Protection Act (CISPA) that would allow companies to share information with government agencies. Zaid Jilani at the Republic Report has been digging up details on the Washington lobbyists who are helping Facebook.
“Under CISPA, private companies may spy on user communications, whether stored or in transit, and freely pass personal information to the government as long as they claim a vague "cybersecurity" exception,” write Mark M. Jaycox and Lee Tien at the Electronic Frontier Foundation. “The bill also creates expansive legal immunity that makes companies and the government largely unaccountable to users. Companies ‘acting in good faith’ are also excused from all liability for engaging in potential countermeasures, even if they hurt innocent parties.”
This is not the first time that the U.S. Congress has tried to pass a dubious law on computer security in the name of stopping piracy. Last year, the Stop Online Piracy Act and the Protect IP Act – backed by Hollywood and opposed by Facebook, Google and Wikipedia – was defeated after a huge backlash. Opponents noted that the law – as drafted - would threaten freedom of speech and support Internet censorship.
Mike Rogers, a Republican from Michigan, and Dutch Ruppersberger, a Democrat from Maryland, are the sponsors of the new bill. Unusually for Washington, the two men work together well, according to the Washington Post. Rogers is a former Federal Bureau of Investigations agent who has been promoting the drone war, notes the Post, and the two men have the backing of people like Michael Hayden, former director of the Central Intelligence Agency and the National Security Agency. So it is small wonder that CISPA will help out the intelligence agencies by expanding their powers of surveillance.
But Facebook – which opposed the cyber-security bills last year – has decided to support CISPA. The proposed law “would make it easier for Facebook and other companies to receive critical threat data from the U.S. government,” Facebook’s Washington DC office posted on its blog. It would “impose no new obligations on us to share data with anyone –- and ensures that if we do share data about specific cyber threats, we are able to continue to safeguard our users’ private information, just as we do today.”
Zaid Jilani at the Republic Report points out that Facebook is actively paying a Washington lobby firm to lobby for CISPA. In his article titled “Dislike: Meet The Lobbyists Facebook Hired To Help The Government Spy On You” he reports on the people at Fierce, Isakowitz & Blalock that are working the halls of Congress to get the bill passed.
“What’s particularly interesting about all of these individuals is that every single one previously worked somewhere in the executive or legislative branches of the Federal government. They were paid by taxpayers to get the training and connections that now allow them to have high-paid lobbying jobs representing corporations,” writes Jilani.
After all, Facebook has a lot to gain from this such as the ability to “freely pass personal information to the government” and to be “excused from all liability even if they hurt innocent parties.”
On Friday, when Congress gets to vote, we will find out which members “like” Facebooks plans.
Posted by Pratap Chatterjee on April 25th, 2012 CorpWatch Blog
Bakken gas flare. Anonymous photo submitted to BakkenWatch
Heather Youngbird and Crystal Deegan used to live in a trailer at the Prairie Winds Mobile Home Park in the Fort Berthold Indian Reservation in North Dakota. Last week Leroy Olsen, their landlord, removed their front door and cut off the electricity and the propane supply. The reason? New homes to be constructed for out of town oil workers coming to take part in the shale exploration boom.
“This oil boom has divided the Mandan, Hidatsa and Arikara people and pitted them against each other in a negative way,” says Kandi Mossett, a tribal member and organizer with the Indigenous Environmental Network.
In 2010, WPX Energy of Oklahoma paid $925 million for the right to explore for oil on the 86,000 acres of the Fort Berthold Indian Reservation. The company plans to squeeze oil out of shale, the most abundant form of sedimentary rock. Until recently such exploration was prohibitively expensive, but with the evolution of technology and the rise in the price of oil, many rural communities from England to the Ukraine, from Argentina to North Dakota, have become targets for the shale oil boom.
Another company profiting from the Bakken boom, which has been described as the biggest oil find in North America in four decades with an estimated 4.3 billion barrels of recoverable oil, is Continental Resources, also from Oklahoma.
Fort Berthold – the center of the oil boom - has long suffered from crumbling roads and the lack of good housing and proper sewage facilities on the reservation. The companies plan to invest in housing and infrastructure for their workers and plants, but not for local residents.
“Right now, anything that’s available that has water and sewer on it is very attractive to anybody that’s trying to continue to grow their business,” says John Reese, the CEO of the United Prairie Cooperative company, which has taken over the trailer park.
“We were not even given a formal 30 day eviction notice and now that we have been kicked out of our home we are currently homeless,” said Heather Youngbird. The remaining residents of Prairie Winds Mobile Home Park have been told that they had to leave their trailers by May 1, but the eviction date has now been postponed until August 31.
More trouble is expected for the tribal community: Environmental groups note that residents may also soon see problems with their drinking water. “Information posted hydraulic fracturing fluid chemicals on the FracFocus web site indicates that Bakken Shale oil wells may contain toxic chemicals such as hydrotreated light distillate, methanol, ethylene glycol, 2-butoxyethanol (2-BE), phosphonium, tetrakis(hydroxymethyl)-sulfate (aka phosphonic acid), acetic acid, ethanol, and napthlene,” writes EarthWorks, a Washington DC based group.
Then there is the air pollution: the oil companies are not even bothering to capture the natural gas that is generated by the drilling, partly because there are no state regulations to force them to and partly because it is expensive. Instead the gas is being “flared” or burnt off, the same way Shell does in the Niger delta with similar environmental consequences.
“Across western North Dakota, hundreds of fires rise above fields of wheat and sunflowers and bales of hay. At night, they illuminate the prairie skies like giant fireflies,” wrote Clifford Krauss in the New York Times last September. “Every day, more than 100 million cubic feet of natural gas is flared this way — enough energy to heat half a million homes for a day.”
Perhaps the greatest irony is that North Dakota has the greatest wind resource of almost any state in the country, says Mossett. She says that North Dakota could supply 1.2 trillion kilowatt-hours (kWh) of annual electricity.
Posted by Pratap Chatterjee on April 23rd, 2012 CorpWatch Blog
Photo: Denis Sinyakov, Greenpeace
An oil spill in northern Russia from a joint venture between Lukoil and Bashneft has damaged fragile reindeer pastures in yet another blow to the indigenous Nenets people. Environmental activists have warned about such disasters for decades but few precautions have been taken by the oil companies.
Lukoil, which is now Russia’s largest oil company, and Bashneft are currently drilling for oil in the Trebs oil field in the Nenets Autonomous District which is estimated to hold 153 million tons of oil.
Vladimir Bezumov, chief of the local office of the Russian Environmental Agency, estimates that some 2,000 tons of oil gushed out of an exploratory well in the oil field this past weekend damaging as much as 14,000 square meters of land.
Oil exploration started in the region in the 1960s and expanded after the collapse of the Soviet Union. Activists warned that environmental problems were bound to get worse. "Western Siberia is already an ecological disaster area because of its many oil mishaps. Any oil accident would have serious consequences, that could reach upriver to the North Polar Sea," Ellen Schmidt wrote in a 1996 report for the World Wide Fund for Nature and a German environmental group called the Association for World Economy, Ecology and Development (AWEED) at the time.
Gail Osherenko, a Vermont-based anthropologist who works with the Nenets peoples, told IPS at the time that the idea oil drilling in the region would have only minimal impact was "wishful thinking."
And Russian and indigenous groups sent out an appeal in 1996 to ask the public to lobby the World Bank not to finance projects in the region. "We ask everyone to help us prevent an environmental nightmare. We ask you not to allow the use of your tax dollars, marks or kronor to facilitate further destruction of the environment," wrote Alexei Grigoriev of the Socio-Ecological Union in Russia in Taiga News.
The warnings were mostly ignored.
An Associated Press investigation by Nataliya Vasilyeva in late 2011 described some of the damage caused by the estimated half a million tons of oil spilled every year that make their way into the Arctic ocean, roughly two-thirds of the quantity of oil spilled in the Deepwater Horizon in the Gulf of Mexico. “On the bright yellow tundra outside this oil town near the Arctic Circle, a pitch-black pool of crude stretches toward the horizon. The source: a decommissioned well whose rusty screws ooze with oil, viscous like jam,” she wrote.
The indigenous communities say their traditional way of life has been devastated by the oil industry. “There is no future for us. People are dying. If oil companies behaved correctly, they would ask us, where drilling is possible and where not, which river is spawning, where fish comes for winter cabin. Fish comes to this bog in the autumn. And now all the rivers are blocked here, and fish has nowhere to go,” Valdimir Vello, a reindeer herder told Greenpeace recently for a report titled “Is there a life after oil?” “I think that there is no future. If the oil companies leave us, we can manage to save something here, to recover this place.”
Politicians are starting to pay attention. Last week, Yuri Trutnev, Russia’s minister for natural resources and ecology threatened to sue Lukoil rival, Anglo-Russian oil producer TNK-BP (owned jointly by British Petroleum and a consortium of the Alfa, Access and Renova groups) for numerous oil spills in Siberia. Trutnev said the company has 784 accidents last year.
"The land is practically flooded with oil," he said after a recent trip to the Khanty-Mansiisk region, according to a report by Gazeta.ru. "We didn't have to look for polluted places, we had to look for places that hadn't been touched by pollution."
The drilling ventures are hugely profitable so they are unlikely to be stopped but there is more than enough money to minimize some of the worst impacts. Since 2003, British Petroleum has paid out an estimated $19 billion in dividends, more than ten times more than it would cost to repair the aging infrastructure, according to an estimate by Gazprombank.
Posted by Pratap Chatterjee on April 21st, 2012 CorpWatch Blog
Wal-Mart: The High Cost of Low Price movie poster
Eduardo Castro-Wright, the former CEO of Walmart Stores USA, has been accused of leading a $24 million scheme to pay off Mexican city governments in return for permission to open supermarkets around the country.
Walmart, based in Bentonville, Arkansas, runs giant discount retail stores that sell consumer goods at rock bottom prices. It has grown to become the world’s largest private employer with 2011 sales of $421.85 billion.
Company bosses turned a blind eye to the scheme of Mexican bribes (called “gestores” in Mexico) when informed about it in 2005, according to an investigation just published in the New York Times. Michael T. Duke, now Walmart’s CEO, was also informed at the time but did nothing.
Castro-Wright was described by Forbes magazine at the time as “one of the sharpest executives in the land watching over his 3,250 U.S. stores” in a fawning write-up in January 2006.
The Texas A&M graduate took over the Mexico operations in 2002. Over the next four years, Forbes cited his ability to grow Walmart’s Mexican business by slashing “prices and expenses, squeez(ing) suppliers” and a “knack for public relations … when merchants protested the construction of a Wal-Mex store near an archaeological site.”
The magazine did not mention bribes.
In reality, the company grew quickly mostly because of a bribery scheme that was run by Sergio Cicero Zapata, a former executive, according to the New York Times investigation. Cicero, who was in charge of obtaining construction permits for the new stores, called the scheme “the dark side of the moon.”
The money was typically paid out to local governments via two of Cicero’s friends from law school: Pablo Alegria Con Alonso and Jose Manuel Aguirre Juarez. These bribes “bought zoning approvals, reductions in environmental impact fees and the allegiance of neighborhood leaders” according to the New York Times. “Permits that typically took months to process magically materialized in days.” The “gestores” helped catapult Walmart into becoming the largest employer in the country with 209,000 workers.
Cicero blew the whistle in September 2005 when he felt he was not promoted fast enough. When H. Lee Scott Jr. - then Walmart’s CEO - was informed, he covered up the matter and “rebuked internal investigators for being overly aggressive.”
José Luis Rodríguezmacedo Rivera, the general counsel of Wal-Mart de Mexico, who allegedly authorized the bribes, was hired to investigate the matter. Not surprisingly he found his colleagues innocent.
Castro-Wright left Mexico in late 2005 and returned to the U.S. The bribes stopped. But instead of being suspended or fired, Castro-Wright was promoted to vice-chairman of Walmart in 2008.
Paying bribes anywhere in the world is illegal for U.S. companies under the Foreign Corrupt Practices Act and Walmart is required to inform the Department of Justice of any violation. Walmart did not do this until December 2011, six years later, when it learned of the New York Times investigation
Walmart has not denied the charges. In a press release issued as soon as the New York Times article came out, David Tovar, Walmart's vice president of corporate communications says: "Many of the alleged activities in The New York Times article are more
than six years old. If these allegations are true, it is not a
reflection of who we are or what we stand for. We are deeply concerned
by these allegations and are working aggressively to determine what
happened."
None of Walmart’s aggressive expansion tactics in Mexico will come as a total surprise to activists in the U.S. like Food & Water Watch and the Institute for Local Self-Reliance (ILSR). The two groups issued a new report last week titled “Top 10 Ways Walmart Fails on Sustainability.”
“Walmart … forces smaller farmers and companies to get big or get out of business,” said Wenonah Hauter, executive director of Food & Water Watch. The activists noted that the company added 1,100 new stores in the U.S. since 2005, ignoring environmental objections, such as paving over land with endangered species.
Walmart has also been accused of “greenwashing” – a tactic by which companies “preserve and expand their markets by posing as friends of the environment and enemies of poverty.”
In 2005 Walmart hired public relations advisers and teamed up with the Environmental Defense Fund (EDF) in 2005, an NGO that has a history of working with big business.
With the help of EDF, the company released a report last week that touted numbers such as a claim that Walmart had kept “80.9 percent of all waste generated by our U.S. operations out of landfills. This has the potential to prevent 11.8 million metric tons of CO2 emissions annually.”
In reality, the company’s energy use has increased greenhouse gas emissions by 14 percent since 2005. In fact Food & Water Watch and ILSR note that barely one percent of Walmart’s Chinese suppliers have actually implemented waste reduction programs; that most of its products are so shoddy that they actually increase waste; that the company only sources four percent of its energy from renewable sources (other retailers like Whole Foods are already at 100 percent)
Bribery and greenwashing do make a business grow more quickly, after all.
Posted by Pratap Chatterjee on April 19th, 2012 CorpWatch Blog
EFSA Cartoon. Source: Corporate Europe Observatory
Should lobbyists for biotech and food companies be allowed to make the rules on scientifically questionable products sold in the supermarket and - by default - your kitchen? The companies like the idea because they stand to make a huge profit. Yet the European Food Safety Agency (EFSA) appears to have failed to properly regulate such conflicts
of interest.
EFSA, based in Parma, Italy, investigates food and feed safety, nutrition, animal welfare, plant protection and health. The agency’s assessments – which are conducted by expert panels - are used by the European Commission in Brussels to decide whether to authorize products on the European market.
Meet Mella Frewen, our exhibit #1. She was a food lobbyist for Monsanto, the U.S. biotechnology giant and Cerestar, then Europe’s biggest starch producer. Then she moved to become director general of the Confederation of the Food and Drink Industries of the EU and now EFSA wants to appoint her to their management board.
Would that be a conflict of interest? Nina Holland from the Corporate Europe Observatory (CEO) thinks so. “The EU Commission is not doing ESFA any favours by nominating a food lobbyist as candidate for the agency’s management board. If EFSA is to regain its independence in the future, people with ties to industry should be excluded from the (expert) panels as well as from the management board,” she says.
This revolving door works both ways. The men and woman at EFSA know that they can get good jobs in industry if they quit, to help lobby their former colleagues to weaken regulations.
Meet exhibit #2: Suzy Renckens, who ran EFSA´s GMO (genetically modified organisms) unit from 2003 to 2008. In 2008, Suzy Renckens was hired by biotechnology corporation Syngenta, which produces and markets genetically engineered plants, to become a lobbying for the company in Brussels.
Catherine Geslain-Lanéelle, the executive director of EFSA, recently admitted to European Union Ombudsman in Strasbourg that the agency had “regrettably” made a mistake by not properly examining the potential conflicst of interest. “Before leaving EFSA, Ms Renckens did not provide substantial details about her new employment. EFSA was still unfamiliar with this kind of occurrences and no specific processes were in place at the time,” wrote Geslain-Lanéelle in a letter that was released to the public yesterday.
Now for exhibit #3: Harry Kuiper was the chair of the so-called GMO panel at EFSA for nearly ten years. In that time, EFSA moved from a ban on genetically modified organisms, to approving two and eventually 38. Throughout that period, Kuiper had strong ties with the International Life Sciences Institute (ILSI), which is funded by agrochemical companies and the food industry.
“We urgently need more clarity. Harry Kuiper has been involved in each and every case of risk assessment of genetically engineered plants since the start of EFSA,” says Christoph Then of Testbiotech in Munich, Germany, who brought a complaint against Kuiper to the EU Ombudsman in March. “The public has a right to know if consumers and the environment were really protected in the best possible way.”
Testbiotech and CEO says the Renckens case also want further action by EFSA to show that they are serious about banning conflicts of interests. “EFSA should have admitted its problems much earlier. (I)t is still not clear if EFSA will stop such a move to industry in the future,” says Then. (Full disclosure: This writer serves on the advisory board of the Corporate Europe Observatory)
Posted by Pratap Chatterjee on April 18th, 2012 CorpWatch Blog
Wal-Mart: The High Cost of Low Price movie poster
Is Walmart going green? Mike Duke, the company’s CEO, says in a new 126 page report that the company is becoming more sustainable and responsible while “building meaningful, long-term change.” Activists disagree. Walmart’s “environmental impact has only grown over the last seven years” they say in a counter-report.
Walmart, based in Bentonville, Arkansas, runs giant discount retail stores that sell consumer goods at rock bottom prices. It has grown to become the world’s largest private employer with 2011 sales of $421.85 billion. The company has been a major target for union activists like United Food and Commercial Workers which started the Wake Up Wal-Mart campaign and the Service Employees International Union which started Walmart Watch (The two unions have since merged and so has the campaign) It was also the subject of a critical film: “The High Cost of Low Price” produced by Robert Greenwald in 2005.
Walmart responded by hiring public relations advisers and teaming up with the Environmental Defense Fund (EDF) in 2005. It was an easy solution - EDF has a history of working with big business: For example, in 1990 EDF signed a partnership with McDonald’s to begin a recycling program, one of the first instances of “greenwashing” – a tactic by which companies “preserve and expand their markets by posing as friends of the environment and enemies of poverty.” (as defined by Kenny Bruno in the Greenpeace Book On Greenwash issued in 1992) The New York-based NGO has since signed agreements with the Carlyle Group, Citibank and FedEx.
On Monday, Walmart released a list of top ten “sustainability” achievements which included such notables as the design of a new icon “Great for You” to encourage consumers to identify “healthy food options.”
The company also touted some numbers such as the claim that it had kept “80.9 percent of all waste generated by our U.S. operations out of landfills. This has the potential to prevent 11.8 million metric tons of CO2 emissions annually.”
Not everyone is convinced that the numbers add up. Food & Water Watch and the Institute for Local Self-Reliance (ILSR) have issued a new report titled Top 10 Ways Walmart Fails on Sustainability.
“No amount of greenwash can conceal the fact that Walmart perpetuates an industrialized food system that diminishes our natural resources, causes excessive pollution, and forces smaller farmers and companies to get big or get out of business,” said Wenonah Hauter, executive director of Food & Water Watch.
The two groups note that barely one percent of Walmart’s Chinese suppliers have actually implemented waste reduction programs; that most of its products are so shoddy that they actually increase waste; that the company only sources four percent of its energy from renewable sources (other retailers like Whole Foods are already at 100 percent) and in fact the company’s energy use has increased greenhouse gas emissions by 14 percent since 2005.
The activists contend that the company has added 1,100 new stores since 2005, sometimes paving over land with endangered species. The company’s “organic” milk comes from cows are housed in factory farms and fed grain (as opposed to grass)
“Once again, Walmart is using sustainability as a marketing tool to improve its public image and propel its growth," said Stacy Mitchell, senior researcher at ILSR.
Posted by Pratap Chatterjee on April 16th, 2012 CorpWatch Blog
Photo: Martin Wurt/Oxfam Australia
Adidas, the German sportswear company, is making Olympics uniforms for the UK team at sweatshops in Tangerang city, near the main international airport of Jakarta, Indonesia. Young female workers are paid 5,000 rupiah (54 cents) an hour for a 65 hour work week, according to revelations made in the Independent newspaper.
The new scandal comes on the heels of widespread protests against the Olympic stadium sponsorship by Dow Chemical, the new owner of Union Carbide Corporation, responsible for the 1984 Bhopal gas disaster which killed more than 15,000 people.
Britain’s new uniforms were designed by Stella McCartney, daughter of the former Beatles singer. The manufacturing contract was awarded to Adidas, a company with an annual revenue of $16 billion, which in turn outsourced production to a number of Indonesian contractors like Taiwanese-owned Shyang Yao Fung which manufactures women's sports shoes, PT Panarub Industry who make football boots, as well as PT Golden Castle and PT Tuntex which make clothing emblazoned with the Olympic logo.
Kathy Marks, the reporter who uncovered the story for the Independent, says she discovered that four of the nine contractors paid less than the minimum wage. (Adidas defended itself claiming that only one company did so!) Workers also complained about long working hours and bad working conditions.
"The management says that overtime is compulsory," a worker named Sobirin at Shyang Yao Fung told the newspaper. "And there are many times when workers are working without payment on overtime, or are not paid properly. Every day there's a worker who passes out because they're exhausted or unwell."
"It's hard to get permission even to go to the bathroom," said Yuliani, a 23-year-old seamstress told the Independent. "If you're forced to go, the pile of work becomes so high that you get shouted at by the production line leader. They call you a dog, brainless, uneducated. Sometimes we have to sacrifice our lunch break to reach the target."
The use of sweatshop labor to manufacture clothing is very commonplace. BehindTheLabel, an activist group, estimates that over 2 million people work in garment sweatshops producing clothes for U.S. retailers with about 80 percent of them working “under conditions that systematically violate local and international labor law.” http://www.behindthelabel.org/specialreports.php
Adidas has come under criticism before for its labor practices in south-east Asia. For example, 90,000 workers went on strike at the Pou Yuen Adidas suppler in Ho Chi Minh City last August against low wages and inhumane treatment, according to the Committee to Protect Vietnamese Workers. Campaign groups like Oxfam Australia have launched online protests to bring attention to the plight of workers. (see “Sneaky Business”)
Posted by Pratap Chatterjee on April 13th, 2012 CorpWatch Blog
Vampire Squid puppet. Photo: M.V. Jantzen. Used under Creative Commons license
In U.S. sports jargon, a “huddle” is the term used to describe players gathering in a tight circle to plan game strategy. When the Securities and Exchange Commission (SEC) discovered that Goldman Sachs researchers had weekly “huddles” with investment bankers and traders to provide them with stock tips, however, they called foul.
“From 2006 to 2011, Goldman held weekly huddles sometimes attended by sales personnel in which analysts discussed their top short-term trading ideas and traders discussed their views on the markets,” said the SEC in a press release issued earlier this week. “In 2007, Goldman began a program known as the Asymmetric Service Initiative (ASI) in which analysts shared information and trading ideas from the huddles with select clients.”
Insider trading – as we have noted before – is the practice of cashing in on information that is not known to the general public. Although it is not illegal in many other countries, the U.S. takes it very seriously and will jail violators and sometimes ban them from trading. Bigger companies – like Goldman Sachs – will typically pay out large sums in order to avoid such punishment.
This is not the first time that Goldman Sachs has been accused of insider trading. In 2003, the investment bank paid out $110 million as part of a $1.4 billion settlement with the New York state attorney general Eliot Spitzer to resolve claims of conflicts of interest. Business Week magazine’s Robert Kuttner described it thus: “(R)esearch analysts" were acting as stock touts for the firms' investment banking business instead of providing objective, independent analysis to investors.”
Three years later, it appears that the company was doing much the same thing. In 2009, the Wall Street Journal uncovered evidence: Susanne Craig published an article in which she gave specific example of a Goldman analyst named Marc Irizarry who rated mutual-fund manager Janus Capital Group Inc. as a "neutral" in early April 2008. Later that month, at an internal huddle, Irizarry said that he expected Janus to climb. The following day Goldman staff called some 50 preferred clients like Citadel Investment Group and SAC Capital Advisors, both hedge fund groups, to give them the tip. Less powerful clients had to wait six days for Irizarry’s bullish report, by which time the stock had already gained 5.8 percent.
In June 2011, Goldman Sachs paid state regulators in Massachusetts a $10 million fine to resolve the allegations of huddles. “We verified that there was a preference of some customers at the expense of others,” William F. Galvin, the state’s chief financial regulator, told the New York Times.
More details followed: An internal e-mail, written in November 2008, noted that over half of 115 accounts that were contacted by Goldman Sachs staff reported an increase in revenue. “The commercial value of these calls in the form of more revenue to GS … (is) substantial,” the complaint recorded one business manager saying. “In general we have seen about a 50 percent rise in revenue.”
This week’s settlement with the SEC requires Goldman Sachs to pay a fine of $22 million. “Despite being on notice from the SEC about the importance of (higher-order) controls, Goldman failed to implement policies and procedures that adequately controlled the risk that research analysts could preview upcoming ratings changes with select traders and clients,” said Robert S. Khuzami, the SEC’s enforcement director in a press release.
Goldman issued a statement saying that it “neither admitted or denied the charges.”
Given this history, it is hardly a surprise that Goldman Sach’s business model was recently caricatured by Matt Taibbi in Rolling Stone thus: “The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”
Posted by Pratap Chatterjee on April 12th, 2012 CorpWatch Blog
Dicarded Risperdal Receipt. Photo: Mindful One. Used under Creative Commons license
Johnson & Johnson has been fined $1.2 billion over sales of Risperdal, an antipsychotic drug. Tim Fox, a circuit judge in Arkansas, ruled that the company has to pay $5,000 for each of the 240,000 prescriptions that were paid for by the state’s Medicaid program. (The program provides health care for low-income citizens, financed by the taxpayer)
Risperdal was introduced in 1994 by Janssen Pharmaceuticals Inc., a subsidiary of New Jersey-based Johnson & Johnson. It is prescribed for treatment of schizophrenia and short term episodes of bipolar disorder (manic depression) as well as irritability connected to autism in children.
In 2004 the U.S. Food and Drug Administration (FDA) forced the company to put labels on the drug to warn that Risperdal places elderly patients with dementia at an increased risk of strokes, seizures, major weight gain, possible diabetes and fatally high blood sugar, as well as potential death.
Fletch Trammell, a Houston lawyer acting on behalf of Arkansas, told jurors that the company had previously sent out a letter saying the drug did not increase the risk of developing diabetes. Tramell noted that some patients gained 60 to 100 pounds (27 to 45 kilos) in weight as a result of taking the medication, which in turn increased the risk of diabetes.
"The law is broken once they tell a lie," Trammell said. "You have to ring the bell. You have to tell the public.” He noted that patients in rural Arkansas were not able to get up to date information from specialists.
Jurors in the Arkansas trial were also told that the company avoided such labels because of the potential impact on its share price, which could have reached $200 million.
But Johnson & Johnson says that Arkansas has no grounds to sue them because it did not pull the drug at the time. “They didn’t run off and sound the alarm at the time this suit was filed,” James Simpson, a lawyer for the companies, told the jury. He says Arkansas should have told patients: “Whoa, whoa, whoa, this stuff is dangerous.”
Dozens of states have sued the company. Last year, Johnson & Johnson and Janssen was fined $327 million in South Carolina and in January, Texas settled a lawsuit against the company for $158 million.
The Arkansas fine is the biggest so far. “Johnson & Johnson and Janssen Pharmaceuticals lied to patients and doctors because they cared more about profits than people,” said Arkansas attorney general Dustin McDaniel.
The company has said it will appeal. "Janssen firmly believes it did not violate the Arkansas Medicaid Fraud False Claims Act or the Arkansas consumer fraud statute. ... It is our position that an individual state should not penalize a pharmaceutical company for using an FDA-approved package insert or decide for itself whether a company complies with FDA rules," the company said in a statement.
Johnson & Johnson is also facing lawsuits over its hip-replacement technology. DePuy, a division of Johnson & Johnson, recalled 93,000 XL Acetabular metal-on-metal hips in August 2010 after experiencing a 13 percent failure rate. Some 5,000 product liability lawsuits have since been filed against the company. An FDA advisory panel of experts is to examine this issue in late June.
William Weldon, the company’s outgoing CEO, was confident that the company's finances will recover from the string of lawsuits because of their target audience. “Populations in the developed world are ageing rapidly, and we consume more healthcare as we grow older,” Weldon said. “Our investments continue to be aligned with these market opportunities.”
Posted by Pratap Chatterjee on April 11th, 2012 CorpWatch Blog
GPS record of felled tree within the Amazon basin. Photo: Hans Berninzon, Environmental Investigation Agency
Francesco Mantuano, an Italian living in Peru with a timber concession in Loreto region, was puzzled when he got a request in July 2010 from a merchant named Mauro Paredes Sandoval to certify hundreds of trees harvested after just eight days of logging. The wood was to be exported by Madrera Bozovich, a Peruvian company, to its sister company in Alabama.
"After putting two and two together, Mantuano concluded that Paredes was only interested in obtaining (his forest transport permits) in order to launder timber which had already been illegally extracted from other areas, ," write the authors of a new report“The Laundering Machine” just published by the Environmental Investigation Agency (EIA), a Washington DC NGO. "The average harvest operation lasts months - but the low water levels and lack of rain at that time of year in Loreto make it difficult to transport timber on the rivers.
The biggest culprit that EIA uncovered is Grupo Bozovich, a family business set up in the late 1940s by Batrich Bozovich when he arrived from former Yugoslavia and set up business in Oxapampa, in central Peru. The group – which now includes Maderera Bozovich in Peru, Bozovich Timber Products in Alabama and a third company in Mexico – is the biggest exporter of hardwoods from Peru and the biggest importer of such hardwoods into the U.S.
Surveys of forestry concessions used by Grupo Bozovich by the Supervisory Body for Forest and Wildlife Resources (OSINFOR) found some astonishing discrepancies: In the Productores Forestales Atacuaric concession, just one tree was actually cut down but its “extraction” yielded 311 cubic meters of wood. (The harvested tree in question measured just over 12 cubic meters and was found abandoned in the forest) In the Oroza Wood S.A.C. concession, government investigators found 14 cedar stumps that turned out to be “disks of roundwood cut from logs and planted in the ground for the benefit of the supervisors.”
“Sometimes intentionally, sometimes through sheer negligence, each of the actors and agencies involved in this system are working as gears in a well-oiled machine that is ransacking Peru's forests and undermining the livelihoods and rights of the people that depend on them," write the EIA investigators. The cost to Peru is estimated to be $250 million a year.
The company denies the allegation. "Bozovich's exports to USA comply with the terms and condition of Lacey Act and the Convention on International Trade in Endangered Species of Wild Fauna and Flora," a U.S. spokesman told Inter Press Service. (The 2008 Lacey Act requires buyers to practice "due care" to make sure that their products are legal. This is typically done by examining the export certificates)
Experts say that the problem is global. "Justice for Timber" - a March 2012 World Bank report explains the extent of the problem: “Every two seconds, across the world, an area of forest the size of a football field is clear-cut by illegal loggers. In some countries, up to 90% of all the logging taking place is illegal. Estimates suggest that this criminal activity generates approximately US $10-15 billion annually worldwide-funds that are unregulated, untaxed, and often remain in the hands of organized criminal gangs.”
Posted by Pratap Chatterjee on April 10th, 2012 CorpWatch Blog
Ten year old Mohammad Abd el Aal of Lebanon was injured by a cluster bomb on 27 March 2009. Photo: Cluster Munitions Coalition
Lockheed Martin and General Dynamics of the U.S. face divestment from major UK banks, for manufacturing cluster bombs. The Guardian newspaper has exclusively reported that Aviva, the UK’s largest insurance company; Scottish Widows (part of the Lloyds Banking Group) and the Co-op Bank will sell shares in these companies, following a similar move by the Royal Bank of Scotland last year after 10,000 people signed protest letters in a campaign led by Amnesty International.
Cluster bombs are made of dozens of “bomblets” that are delivered in a single larger weapon that scatters them on impact. The wide dispersal of these small bombs makes them hard to trace. Many linger for years – long after conflict has ended - before exploding when civilians dig or pick up unusual pieces of metal. For example, 200 civilians were killed in Lebanon after the conclusion of the August 2006 invasion by Lebanon. The Cluster Munition Coalition – an activist collaborative – estimates that a third of the casualties are children.
A treaty to ban the production, transfer and stockpiling of cluster munitions was signed by 94 countries in Oslo in December 2008. The Convention on Cluster Munitions became international law on 1 August 2010, after 30 countries ratified it in February 2010. (A similar treaty banning land mines was signed in Ottowa in 2007).
The UK has signed and enforced the treaty and has even expelled companies promoting such munitions from trade fairs in the country. However, a number of other countries - Brazil, China, India, Israel, Pakistan, Russia and the U.S. for example – all of which manufacture such weapons, have refused to sign the treaty.
The UK banks are using a list compiled by Ethix, a Swedish ethical investment consultancy, of the major manufacturers of cluster bombs. This includes Alliant Techsystems (US), Aryt Industries (Israel), Doosan Corporation (South Korea), GenCorp (US), General Dynamics Corporation (US), Hanwha Corporation (South Korea), L-3 Communications Corporation (US), Lockheed Martin Corporation (US), Poongsan Corporation (South Korea), Poongsan Holdings Corporation (South Korea), Singapore Technologies Engineering (Singapore) and Textron (US).
"The Aviva board has now determined that this exclusion should also be applied to Aviva policyholder funds. We are currently working to implement this decision and will provide an update when this is complete," a spokesperson told the Guardian. Aviva held $65 million worth of bonds in Lockheed Martin and $67 million in Textron in 2010.
"We are now well advanced in a process of identifying and divesting from overseas companies where there is strong evidence of involvement in activities prohibited by the convention,” a spokesperson for the Scottish Widows Investment Partnership told the newspaper.
"All of our active portfolios are no longer invested in such holdings and no further investments in such companies have or will be made through these funds," a spokesman from Co-op Asset Management told the Guardian. "By the end of this month we will also have divested all of our passive, tracker funds, which are non-retail funds owned by the Co-operative's life fund, from these companies."
Barclays and HSBC are the two other major UK banks that have yet to announce a policy on cluster bomb manufacturers.
Despite the official commitment to ban cluster bombs, the UK has been reported to be working behind the scenes with the US to “permit the use of cluster bombs as long as they were manufactured after 1980 and had a failure rate of less than one per cent” according to a report in the Independent newspaper last November. The attempt failed.
Posted by Pratap Chatterjee on April 9th, 2012 CorpWatch Blog
Sukhdev Sahoo mourns the loss of his betel farm. Photo: Basant Sahoo
Two controversial multinational projects in Orissa, an eastern Indian state, face high level decisions in the next few weeks: a bauxite mine in the Niyamgiri hills planned by Vedanta of the UK and an iron and steel refinery in Jagatsinghpur being developed by POSCO of South Korea.
As we noted last year, these two battles “encapsulate the chasm between two competing visions of how the second most populous country in the world should develop within the modern world. Jawaharlal Nehru, the country's first prime minister referred to dams and factories as the "temples of modern India," and his successors have gone cap-in-hand to international agencies such as the World Bank to fund major development projects such as the Narmada Valley Dams.
“Rural communities – with the help of city-based activist groups – have struggled to stop the mega-projects. They argue that the displacement of traditional communities, as well as the major environmental impacts of these projects, outweigh the financial benefits. The Narmada dams, for example, while generating electricity and irrigating great areas, would destroy villages and traditional farmland, displacing millions of people.”
Vedanta went before the Indian Supreme Court today to appeal an August 2010 decision by the Indian environment ministry blocking the mine from going forward because of the impact on the indigenous community. The court adjourned without making a decision but justices K S Radhakrishnan and C K Prasad are expected to rule before the summer vacations. The court may refer the matter to the brand new National Green Tribunal which started hearing cases last year.
The Tribunal which was created in 2010 is “a specialized court with expert members having extraordinary powers to provide remedies to environmental problems.”
One of the Tribunal’s most significant decisions so far has been the suspension of POSCO’s permit last week. The ruling was made when Prafulla Samantray, an activist from Bhoinagar, brought suit over the fact that a comprehensive environmental impact assessment (EIA) report was not done for the 12 million tonne production project. Ritwick Dutta, the lawyer for the activists, told CNN-IBN TV: "Strangely enough the environmental impact assessment studies (were) done only for a 4 million tonne project.”
These two important cases will demonstrate whether or not the National Green Tribunal is up to the task of protecting local communities and the environment in India. Blocking either or both projects will not stop other multinational corporations from continuing to try to exploit the country, but it will surely give them pause in the knowledge that powers that be in New Delhi will listen to communities that organize and push back successfully against irresponsible development and human rights abuse.
As Dongria elder Dodhi Sikaka told Survival: “We are fighting for our own people, for our ancestral land, for Niyamgiri. Those who are fighting for their rights are beaten up and put behind bars. Now all we Dongrias are together in resisting this.”
For a recent and very vivid description of what the Dongria Kondh face, see Bianca Jagger’s latest. She notes: “According to the UN, companies have a responsibility to respect human rights wherever they do business. It is deplorable that local inhabitants should have to implore and appeal to the better nature of shareholders and company executives to protect their human rights, their homes and their livelihoods. Companies who violate this fundamental right should be held accountable in a court of law.”
Adds Jagger: “In the 21st century, we need to redefine the meaning of "development." It must be sustainable. Any development project must take into account the needs and aspirations of the local communities, and should benefit all sectors of society.”
Posted by Pratap Chatterjee on April 5th, 2012 CorpWatch Blog
Ian Hannam, a senior JP Morgan banker and ex-soldier, who helped finance a number of flamboyant and controversial mineral extraction projects over the last couple of decades, has resigned, after being fined $720,000 for insider trading by the UK Financial Services Authority (FSA).
Among the projects Hannam helped bankroll were multinational comglomerates digging for gold in Afghanistan and Tanzania, drilling for oil in Kurdistan, digging for bauxite in India, copper in Kazakhstan, gold and silver in Mexico and iron in the Ukraine.
In India, Hannam financed Vedanta Resources, a UK company, that is threatening to despoil the Niyamgiri Hills in Orissa, home to the Dongria Kondh tribal people. In Tanzania, Hamman raised money for African Barrick Gold, where local police have killed local scavengers. In Kurdistan, Hannam helped Tony Buckingham, chairman of Heritage Oil and a former partner in Executive Outcomes, the now defunct South African mercenary operation.
Hannam raised tens of millions for each of these operations as JPMorgan’s global chairman of equity capital markets, attracting fawning attention from the world’s business elites. “In his wake, mountains are razed, villages electrified, schools built, and fortunes made,” wrote Fortune magazine last May in a glowing tribute to his plans to dig for gold in northern Baghlan province, Afghanistan. “If anyone can wrest a fortune from Afghanistan's rubble, it is this man, Ian Hannam.” Others were a little more critical. “There are those who feel he’s an unguided missile,” a South African banker told the Financial Times last September. “But the thing about missiles is they can be very effective.”
Hannam came unstuck when he fired off two emails to a business associate in Kurdistan in September 2008. The first suggest that Heritage Oil shares would soon be worth as much as £4 ($6.40) almost twice as much as the price at the time. The second email read: “PS - Tony has just found oil and it is looking good.” (Hamman was referring to a Heritage project in Uganda which later proved to be correct)
This is classic insider trading, giving out information that is not known to the general public, which allows the recipient to cash in quickly. Although it is not illegal in many countries, the U.S. frowns heavily on this and the U.K is starting to crack down on such violations.
The person Hamman emailed did not cash in on Heritage but was sufficiently impressed to hire the JP Morgan banker to set up a Kurdish investment fund.
Hannam told the FSA that the emails were an "honest error or errors of judgment” that he made "at a time of extreme turbulence in the financial markets, when he was under extreme pressure at work.”
The Financial Times has both praised and lamented the fines on Hamman. “City is right to crack whip on market abuse,” writes John Gapper. “The curse of the rainmaker strikes. Ian Hannam is the investment banker who helped turn London into the go-to financial centre for mining companies,” writes the Lex column. “(F)inancial centres such as London need to make sure that relationship banking continues to find a home.”
We agree with Gapper. But we are not so sure that the Lex column’s suggestion that “relationship banking” (read borderline insider trading) is such a good thing, especially when its purpose is to enrich a few at the expense of many, such as farmers and scavengers in Tanzania, as well as that of the sacred lands and environment of indigenous communities like the Dongria Kondh.
Posted by Pratap Chatterjee on March 29th, 2012 CorpWatch Blog
Karoo, South Africa. Photo: flowcomm. Used under Creative Commons license
The Karoo is not as well known as Kruger National Park with its elephants, leopards and lions. Located in the Western Cape region of South Africa, it is a desert area that is home to tortoises and eagles, and has been the subject of recent experiments to resettle the black rhino and resurrect the quagga, an unusual zebra like creature that went extinct in 1998. But today the people, flora and fauna of the Karoo are threatened by companies like Shell, the Anglo-Dutch oil company, which wants to drill for natural gas.
Like many ancient lands, the Karoo has fossil fuels trapped underground. Royal Dutch Shell, Falcon Oil & Gas and Bundu Oil & Gas want to explore 90,000 square kilometres for the natural gas using a controversial new technology called “fracking”
However, a coalition of concerned citizens - Treasure the Karoo Action Group (TKAG) – has sprung up to oppose the plan. Their mission to their fellow citizens is simple: “South Africa cannot afford to gamble with your water supply, food security, the health of your family, and the heritage of your children in pursuit of a short-term gain for foreign oil companies and our government.”
TKAG is supported by Greenpeace, who attempt to explain what this technology does: “To access these reserves, fluid is pumped down a drilled channel (well) into the gas-bearing rock at very high pressures. This causes the rock to fracture, creating fissures and cracks through which the gas can 'escape'. The fracturing liquid generally consists of mainly water, mixed with sand and chemicals. Numerous different chemical agents are used, many of which are flagged as dangerous to humans and the environment (carcinogens, acute toxins).
“The fracturing of a single well requires a huge volume of water: around 9,000 - 29,000 m3 (9 -29 million litres). Chemicals make up about 2% of the fracturing liquid, i.e. about 180,000 – 580,000 litres. Only 15 – 80% of the injected fluid is recovered, meaning that the rest remains underground, where it is a source of contamination to water aquifers.”
Chris Hartnady, a well known geologist, says that fracking could have a huge impact on the Karoo desert especially because it will deplete the dwindling water supply. “Shale gas production would become a serious competitor for water, requiring as much as four times the current annual usage of the groundwater in all three of the Shell exploration areas,” he said at the Shale Gas Southern Africa conference in Cape Town earlier this week.
Hartnady noted that surface water might also become contaminated with fracking fluids and waste water. Indeed, communities in the U.S. have seen tap water catch on fire in fracking areas. (Watch this YouTube video and this one from Time magazine) Fracking can also dramatically increase the likelihood of earthquakes, according to recent research in Youngstown, Ohio, where residents were hit last Christmas Eve and again on New Year's Eve.
To learn more about the dangers of fracking, check out the film Gasland and the Drilling Down series in the New York Times.
Posted by Pratap Chatterjee on March 28th, 2012 CorpWatch Blog
Syringe. Photo: prashant_zi. Used under Creative Commons license
U.S. imports of sodium thiopental - often called the “truth serum” – have been banned by a judge because of the poor quality of imports, particularly from the UK. The ruling has struck a serious blow against the death penalty in the U.S., because of the key role the drug plays in lethal injections. Not surprisingly, the state of Texas, which carries out the largest number of executions in the country, is furious.
The United States is the only Western country that executes prisoners. It ranks fifth in the world of countries that do so, after China, Iran, Saudi Arabia, and Iraq, just ahead of Yemen, according to Amnesty’s latest report on the death penalty. Authorities typically administer sodium thiopental as the first of cocktail of three drugs, to kill prisoners on death row.
Hospira, the only U.S. manufacturer of the drug, initially suspended production in the summer of 2010 because of quality control issues and then decided to exit the market altogether. This was because after the patent for the drug expired, the price plummeted to the point where the company could no longer compete with generic versions produced in other countries like India.
Enter Dream Pharma, a one-man operation above a driving school in Acton, West London. Mehdi Alavi, an Iranian-British businessman, who runs the company, did a brisk business selling of sodium thiopental to states like Arizona and Georgia.
The trouble with Alavi’s scheme was that the U.S. Food and Drug Administration has never approved the import of sodium thiopental. Arizona inmate Donald Edward Beaty and several others sued in February 2011 to stop executions over this discrepancy. Beaty was executed with pentobarbital sodium injection instead last year, but the case eventually went before U.S. District Judge Richard Leon who ruled that the imports were illegal.
"The FDA appears to be simply wrapping itself in the flag of law enforcement discretion to justify its authority and masquerade an otherwise seemingly callous indifference to the health consequences of those imminently facing the executioner's needle. How utterly disappointing!" Leon wrote in his final opinion.
Maya Foa, an investigator with Reprieve, a UK charity that campaigns against the death penalty, said: "Judge Leon's strong judgment in this case is most welcome, and will hopefully spell the end of the sordid scramble for execution drugs which we've witnessed over the past 18 months."
Reprieve, which exposed Alavi’s contracts with the state of Georgia, is now leading a campaign to get pharmaceutical companies to sign a tailor-made “Pharmaceutical Hippocratic Oath” that states: “We dedicate our work to developing and distributing pharmaceuticals to the service of humanity; we will practice our profession with conscience and dignity; the right to health of the patient will be our first consideration; we condemn the use of any of our pharmaceuticals in the execution of human beings.”
On March 28, 2012, Lundbeck, a Danish company, became the first to sign the oath. The company which is the only licensed U.S. producer of pentobarbital sodium (one of the drugs used to kill Beaty) has already stated that it will not sell Nembutal to prisons in U.S. states that carry out executions.
Texas authorities are furious. In a letter sent to the state attorney general, the Texas Department of Criminal Justice, says that Reprieve "crosses the line from social activists dedicated to their cause to authoritarian ideologues who menace and harass private citizens who decline to submit to Reprieve's opinion on the morality of capital punishment by lethal injection.”
The prison authority goes on to compare Reprieve’s tacticts to "classic, hallmark practices comparable to practices by gangs incarcerated in the TDCJ who intimidate and coerce rival gang members and which have erupted into prison riots.”
However the Texas Department of Criminal Justice stops short of suggesting the death penalty for human rights activists.
Posted by Pratap Chatterjee on March 27th, 2012 Special to CorpWatch
Mad Graffiti Week Iran Poster. Photo: United4Iran. Used under Creative Commons license
Big Brother is watching Iranians with a little help from Chinese and European companies. Reuters revealed last week that ZTE Corporation, a major Chinese telecommunications company, had sold Tehran surveillance technology that is “capable of monitoring landline, mobile and internet communications.” This comes in wake of revelations late last year by the Wall Street Journal that Creativity Software in the UK and Huawei in China had sold the Iranians location tracking equipment.
Steve Stecklow of Reuters reported on March 22 that Shenzhen-based ZTE sold Telecommunication Company of Iran (TCI) a $130.6 million package of networking equipment. TCI is the biggest telecommunication provider in Iran while ZTE sold equipment to more than 500 buyers in more than 160 countries for an annual revenue of $10.6 billion in 2010.
The ZTE equipment in question is called the ZXMT system which does "deep packet inspection” – that allows buyers to reconstruct individual web and email traffic and block users from accessing certain web sites.
Li Erjian, a ZTE spokesman in China, initially emailed Reuters to say that there was nothing unusual about the sale: "We sell standard equipment in Iran as we do globally,” he wrote. But Mahmoud Tadjallimehr, a former telecommunications project manager in Iran, told Reuters that the equipment was able "to locate users, intercept their voice, text messaging ... emails, chat conversations or web access."
And Privacy International says that ZTE has pursued business in Iran for a while. The London-based NGO obtained a copy of a May 2008, ZTE presentation to the Iran Telecommunication Research Center about the "ZTE Lawful Intercept Solution” among other products.
ZTE pulled back from the project immediately after the Reuters report came out. The very next day, ZTE spokesman David Shu told Reuters: "We are going to curtail our business in Iran.” On March 27, the Chinese company sent out a statement that said: “"Due to local issues in Iran and its complicated relationship with the international community, ZTE has restricted its business practices in the country since 2011. ZTE no longer seeks new customers in Iran and limits business activities with existing customers."
Last October, after the Journal revealed Creativity Software and Huawei's role in Iran, Bloomberg followed up with a report that Stockholm-based Ericsson AB and Dublin-based AdaptiveMobile Security Ltd. had sold Iran location tracking and text-message monitoring equipment.
Ericsson initially sold a mobile- positioning center for customer billing purposes to MTN Irancell Telecommunications Services Company, Iran’s second-largest mobile provider. Ericsson decided in October 2010 that it would stop selling products to Iran because of sanctions. AdaptiveMobile offered Iran equipment to “filter, block and store cell phone text messages” according to Bloomberg. The company claims the technology is to beat spam, viruses and “inappropriate content” not for repression, but has also decided to pull out of Iran because of sanctions. Huawei did the same.
The technology provided by Creativity Software allows buyers to get reports every 15 seconds about mobile phone users location. The company maintains, however, that it has not sold equipment for human rights abuse. “Any connection implied between technology supplied by CS and any alleged human rights abuses in Iran in 2009 are clearly erroneous,” the company announced in a statement issued last November. “Please also be aware that the use of the term “Surveillance equipment” in describing location based services technology is both pejorative and inappropriate, the statement added.
For more information on the boom in surveillance technology sales to governments around the world, please see: “State of Surveillance”
Posted by Pratap Chatterjee on March 23rd, 2012 CorpWatch Blog
Constance Lyttle reported to work at the AT&T office in New Castle, Pennsylvania, from 2002 to 2010. A major part of her job involved answering calls from Nigerian nationals, who claimed to be deaf, to help them order goods from U.S. stores with stolen credit cards, and have them sent to Nigeria.
Once Lyttle realized she had inadvertently become part of a scam, she reported her findings to her supervisor, Jean Ulica. But the managers at AT&T, the 20th largest telecommunications company in the world, were in a bind. The cost of the call – as much as $1.30 a minute - was borne by U.S. taxpayers to help deaf speakers communicate, under an agreement with the Federal Communications Commission (FCC).
The way the system worked was as follows: a person calls AT&T’s Telecommunications Relay Service (TRS) using a device known as a teletypewriter (TTY) and asks a communications assistant to place a call on their behalf and read out typed messages. By law, the phone number and location of the assistant are blocked so the person being called has no idea who they are talking to.
In 2008, under pressure from the FCC, AT&T set up a system under which they mailed postcards to deaf users with a ten digit identifying number to use TRS to limit the fraudsters. New Castle managers soon realized that this would cut off the cash cow, because as many as 95 percent of the calls they were processing were suspect.
“We are expecting a serious decline in [internet relay] traffic because fraud will go to zero (at least temporarily) and we haven’t registered nearly enough customers to pick up the slack,” Burt Bossi, an AT&T manager, told other members of the technical team on September 22, 2009, according to the lawsuit. The slowdown threatened the existence of the New Castle office which employed as many as 150 communications assistants at the location at any given time.
Instead AT&T told the communications assistants to simply ask callers to provide a U.S. address. So long as the address was real, the calls were connected. The company billed the U.S. government $16 million for such services after December 2009.
When Lyttle refused to participate in the scheme, she was fired on February 25, 2010. She retaliated with a whistleblower lawsuit against the company on October 23, 2010 which the U.S. Department of Justice agreed to join last week.
“Federal funding for Telecommunications Relay Services is intended to help the hearing- and speech-impaired in the United States,” Stuart Delery, acting assistant attorney general for the Justice Department’s civil division, said in a statement. “We will pursue those who seek to gain by knowingly allowing others to abuse this program.”
AT&T has a lot at stake – it is a major beneficiary of federal government contracts. The Project on Government Oversight’s Federal Contractor Misconduct Database estimates that the company has $681 million in government contracts.
AT&T doesn’t like to say no to Washington either – it has been more than willing to help the National Security Agency install software from Narus to spy on U.S. citizens. Mark Klein, a retired engineer provided evidence in support of the Electronic Frontier Foundation class action lawsuit against the company but the courts refused to hear the case.
This time AT&T is not likely to be so lucky. If the company settles – and it probably will - Constance Lyttle will get a big payout, (whistleblowers get as much as 20 percent of the money recovered) Nigerian scammers will lose out but AT&T will get to keep its lucrative deals with Washington.
Posted by Pratap Chatterjee on March 22nd, 2012 CorpWatch Blog
Chevron Spoof Ad. Photo: The Yes Men. Used under Creative Commons license
Brazil has demanded that 17 Chevron and Transocean executives surrender their passports while they await the outcome of criminal charges brought against them for a spill that took place off the coast of Rio de Janeiro last November. The company has also been sued for $11 billion in damages by a Brazilian federal prosecutor.
Chevron has issued a statement claiming the charges are "outrageous and without merit.” “We have sought to perform our operations in full compliance with Brazilian laws and industry practices and to comply with all applicable licenses and authorizations,” says a company press release issued Wednesday.
The jury is still out on the facts of the case. But it is hard to sympathize with a company that has played fast and loose with national justice systems in order to avoid paying compensation for toxic spills of immense proportions in the Ecuador by Texaco, a company that Chevron merged with in 2001.
Between 1964 to 1992 Texaco admitted to dumping more than 16 billion gallons of toxic “water of formation” into the streams and rivers used by local inhabitants for their drinking water, decimating indigenous groups and causing dramatically increased rates of cancer, according to a summary from Rainforest Action Network.
In 2002, Chevron asked for a trial in Ecuador to avoid a U.S. court battle. Eight years and 220,000 pages of evidence later, the courts ordered the company to pay $18.2 billion in damages. Chevron appealed but the Ecuadorean appellate court ruled against them on January 3, 2012. Now the company is attempting to have the judgement thrown out by a secret arbitration panel under a provision in the U.S. Ecuador Bi-Lateral Trade Agreement.
“Chevron won’t pay to clean up the toxic oil waste it deliberately dumped in the Ecuadorian Amazon, which has resulted in a human health crisis for the people living in the region. But it will pay thousands to lobby state leaders and ambassadors to extend its extreme investor rights, and continue to evade justice elsewhere,” said Ginger Cassady, campaign director at Rainforest Action Network.
Transocean, which is one of the largest offshore drilling contractors, has also been in trouble over oil spills. The U.S. company, which is headquartered in Switzerland was implicated in the Deepwater Horizon explosion that killed 11 men on April 10, 2010. Approximately 4.9 million barrels of oil were spilled into the Gulf of Mexico which caused major damage to the local marine environment and the fishing and tourism industries.
A Wall Street Journal review found that the company was involved in “three of every four incidents that triggered federal investigations into safety and other problems on deepwater drilling rigs in the Gulf of Mexico since 2008.” The newspaper noted that Transocean has accounted for 24 of the 33 incidents investigated by the U.S. Minerals Management Service despite during that time owning fewer than half the Gulf of Mexico rigs operating in more than 3,000 feet of water.
Oil companies rank among the most profitable in the world. Chevron pulled in $26.9 billion in profits last year and Transocean made close to a billion dollars. Surely they could spare some of that money to pay for the clean-up of the mess they leave behind?
Posted by Pratap Chatterjee on March 21st, 2012 CorpWatch Blog
Combined Systems tear gas canisters retrieved by protestors from Tahrir Square. Photo: omarroberthamilton. Used under Creative Commons license
A mysterious ship laden with weapons is expected to dock in Port Said, Egypt, this week. The MV Schippersgracht left Southport in North Carolina, the Pentagon’s largest ammunition port, on March 3, 2012. The ship is on contract to the U.S. Navy's Military Sealift Command, which refuses to explain what weapons are on board or what the ultimate destination of the weapons are, claiming security concerns.
Brian Wood, Amnesty International’s head of arms control, raised the alarm: “This ship of shame should not be allowed to unload its dangerous cargo in Egypt, and there is a substantial risk that this is what it plans to do,” he said in an Amnesty press release.
There is good reason to worry – the U.S. is one of the major sources of weapons that both the current and the previous regimes in Cairo have used against their citizens.
For example, a shipment for the Egyptian Ministry of Interior arrived from the US on November 26, 2011, carrying at least seven tons of "ammunition smoke" – which includes chemical irritants and riot control agents such as tear gas – from Combined Systems, Inc. of Jamestown, Pennsylvania. A U.S. State department spokesperson later confirmed that they had approved licenses for the export of such devices to Egypt.
That very month, more than two dozen people were killed and hundreds injured during protests against the ruling Supreme Council of the Armed Forces (SCAF). Protestors picked up spent cartridges in Tahrir Square marked with the logo of Combined Systems Inc.
"These licences were authorized during a period where the Egyptian government responded to protests by using excessive and often lethal force. It is inconceivable that the US authorities did not know of evidence of widely documented abuses by the Egyptian security forces. These licences should not have been granted," says Wood.
The U.S. accounts for 30 percent of global arms sales, according to a new report out from the Stockholm International Peace Research Institute (SIPRI). Russia is close behind at 24 percent, according to the annual publication. (The report does not track China, which is believed to be a close contender for first or second place.)
Among the details in SIPRI’s new report - Syria, which has embarked on a major crackdown on democracy activists and dissidents in the last 12 months - has increased its arms purchases by 580 percent since 2002, mostly from Russia.
This coming July, government negotiators from around the world are expected to convene in New York, to discuss how to address this burgeoning traffic in small arms with a new global treaty. Not surprisingly, countries like the U.S. and Russia are reluctant to commit to any binding agreements. We’ll keep you posted on the arms companies and governments that attempt to water down this important new legislation.
Posted by Pratap Chatterjee on March 15th, 2012 CorpWatch Blog
£50 banknotes. Photo: Images_of_Money. Used under Creative Commons license
Rich Ricci, Jerry del Missier and Bob Diamond took home paychecks of $15 million or more from Barclays bank last year, continuing a tradition of excessive pay in the UK. Bob Diamond, the CEO, made just shy of $28 million (£17.7 million), while Jerry del Missier and Rich Ricci, co-heads of Barclays Capital, made $17 million (£10.8 million) and $15 million (£9.7 million), respectively.
Of course this pales compared to what U.S. hedge fund managers make - Raymond Dalio of Bridgewater Associates was paid an estimated $3 billion in 2011, Carl Icahn of Icahn Capital Management earned $2 billion. The top European hedge fund manager in 2011 was Alan Howard of Brevan Howard Asset Management, who earned $400 million last year. All told, the 40 highest paid hedge fund managers were paid a combined $13.2 billion in 2011, according to a Forbes magazine survey.
The UK salaries have become public knowledge because of a pact made by the banking sector with the UK government, as part of Project Merlin signed in February 2011. The plan – named after the fictional wizard – was intended to boost bank lending for small businesses. The project has been a failure so far with lending falling every quarter instead.
Yet Project Merlin has been successful in revealing how well bankers are paid, often despite doing very badly for investors, he most scandalous revelation so far comes from the Royal Bank of Scotland (RBS), which received $70 billion (£45 billion) of taxpayer funds. Despite the fact that the loss-making bank is now effectively 83 percent state owned, RBS handed out shares worth almost $44 million (£28 million) to nine of its top executives in 2010. All told it paid out nearly $1.5 billion (nearly £1 billion) to its senior employees – even as it reported losses of $1.7 million (£1.1 billion) for 2010 and slashed pension payments to its employees.
Shareholders protested at the RBS annual meeting last April. "You should not be paying yourselves anything until the debt is paid off to the government and to the people," said one attendee, characterising the pay scales as "really obscene to the degree of greed and corporate theft."
And it's not just the average citizen who thinks salary levels are excessive. Three out of four financial workers in the City of London who responded to a survey by St Paul's Institute thought the wealth divide was too big.
In 2010, five of Barclays top managers also shared a payout of £110 million. That year, the bank's top two earners were also Jerry del Missier and Rich Ricci , who made over $15 million each last year. It needs to be noted that Ricci, del Missier and Diamond are not the highest paid people at Barclays. That distinction goes to company traders, whose salaries do not have to be revealed under UK rules (as opposed to bankers).
Perhaps one of the most curious facts to emerge from the banker’s pay scandals in the UK are the fact that some of the bankers are employed and paid outside the banks themselves. For example Stuart Gulliver, HSBC's highest paid banker, is not employed by the bank's main holding company despite taking over as chief executive but by a Dutch-based company called HSBC Asia Holdings. Part of his salary is paid into a Jersey-based defined contribution scheme called Trailblazer . And Bob Diamond, chief executive of Barclays, is seconded to the bank from a Delaware subsidiary known as Gracechurch. The banks say that there is no tax benefit to the arrangement.
Posted by Pratap Chatterjee on March 14th, 2012 CorpWatch Blog
Vampire Squid puppet. Photo: M.V. Jantzen. Used under Creative Commons license
Greg Smith, a Goldman Sachs employee in London, has quit the company with a fiercely critical op-ed in the New York Times in which he accuses the Wall Street investment bank of losing its moral compass.
“It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail,” Smith wrote.
The financial world is in an uproar over the incident. Some have praised his candor like Iain Martin in the Daily Telegraph: “It is refreshing when we rediscover that a knee in the nuts, in the form of an op-ed in a newspaper, can still have a serious impact.”
The Wall Street Journal has reacted with disdain: “A person familiar with the matter said Mr. Smith’s role is actually vice president, a relatively junior position held by thousands of Goldman employees around the world. And Mr. Smith is the only employee in the derivatives business that he heads, this person said.”
Readers of the Guardian say that his description of Wall Street should be no surprise: “I think this is the kind of revelation that would come as a complete shock out of the blue to the kind of people who believe in the Tooth Fairy.”
Many have mocked Smith. Blogger Deadspin says Smith was “trolling for a new job!” under a headline “Bronze Medal Ping Pong God Bravely Resigns From Goldman Sachs" noting “I like how he got the Stanford mention in right off the bat. Smith goes on to list his accomplishments at the firm: "I was selected as one of 10 people (out of a firm of more than 30,000) to appear on our recruiting video." "I managed the summer intern program in sales and trading." " My clients have a total asset base of more than a trillion dollars."
The Daily Mash has done a very funny re-write, titled: “Why I am leaving the Empire, by Darth Vader,” in which they advise Goldman Sachs to “Make killing people in terrifying and unstoppable ways the focal point of your business again. Without it you will not exist. Weed out the morally bankrupt people, no matter how much non-existant Alderaan real estate they sell. And get the culture right again, so people want to make millions of voices cry out in terror before being suddenly silenced.”
Smith himself paid homage to previous criticisms of Goldman, citing Matt Taibbi’s Rolling Stone feature of the company in which Taibbi described the company thus: “The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”
But honestly, is anyone really surprised that people at Goldman Sachs try to make as much money for themselves as they can? And can the vampire squid grow another tentacle to replace Greg Smith?
Real criticism of Goldman Sachs would delve into how they have ripped off the taxpayer and ordinary workers, and ruined the global economy. For that, once again, go read Matt Taibbi’s article in which he lays out the real story.
“(Goldman)'s unprecedented reach and power have enabled it to turn all of America into a giant pump-and-dump scam, manipulating whole economic sectors for years at a time, moving the dice game as this or that market collapses, and all the time gorging itself on the unseen costs that are breaking families everywhere — high gas prices, rising consumer credit rates, half-eaten pension funds, mass layoffs, future taxes to pay off bailouts … The bank is a huge, highly sophisticated engine for converting the useful, deployed wealth of society into the least useful, most wasteful and insoluble substance on Earth — pure profit for rich individuals.”
Posted by Pratap Chatterjee on March 12th, 2012 CorpWatch Blog
Pills. Photo: e-magineart.com.. Used under Creative Commons license
The decision by PH Kurian, the controller general of patents, designs and trademarks in India, to allow a local company to manufacture Sorafenib, a drug used to treat advanced kidney cancer and liver cancer, is a welcome move that supports the access of poor people to cheap life-saving drugs.
Bayer, a German multinational, has been selling Sorafenib, under the brand name of Nexavar, for $5,600 a month. (The average per capita income in India is a little under $100 ie two percent of the price of the drug) Natco Pharma, an Indian company which applied for permission to manufacture and sell the drug, will now be able to sell the drug for $176 a month.
Kurian’s decision is based on an Indian law which is aimed at keeping prices from skyrocketing beyond patients' reach and World Trade Organization rules that allow compulsory licenses for drugs for public health reasons. Few countries do this, however, for fear of the legal challenges that the companies can bring against them. To reinforce his decision, Kurian also noted that Nexavar was often hard to buy in major Indian cities even at the inflated price.
“Bayer has made billions from Sorafenib, and made little effort to sell the product in India, where its price is far beyond the means of all but a few persons,” says James Love of Knowledge Ecology International, an activist group in Washington DC. “The controller rightly rejected the several Bayer's defenses, and granted the compulsory license.”
This is the first time that the Indian law has been used since 2005, when India ended three decades of refusing to recognize international patents on essential drugs in order to keep prices affordable. Another key decision on this matter is expected soon when the Indian Supreme Court hears a case brought by Novartis, a Swiss company, to force Indian companies to stop selling generic versions of Gleevec which is used to treat a deadly form of leukemia. Novartis sells Gleevec for $70,000 a year in the U.S. versus the Indian version which retails for roughly $2,500 a year.
India is not the first country to act on this matter. Between November 2006 and January 2007, Thailand issued compulsory licenses for two AIDS drugs (efavirnz and the combination of lopinavir+ritonavir) and one antihypertension drug (clopidegrel). Several other countries - Ethiopia, the Congo, Tanzania and Uganda – are also considering similar action.
Indian activists have long lobbied the government to take action in support of cheap generic drugs. Amit Sen Gupta from the Indian Peoples Health Movement was one of three groups that put out a press release in 2009 to underscore the importance of the Sorafenib case: “The
Bayer case has implications for drug access, not just for patients in
India, but for poor people in large parts of the world. It would mean
giving sanctity to higher standards of patent protection than what is
required even by the TRIPS agreement. Bayer not only seeks to safeguard
its own monopoly right, the company also wants to set a precedent that
other corporations can benefit from. In essence it would mean that the
entry of generic versions of life saving drugs would be delayed.”
Philipp Mimkes from the Coalition against Bayer Dangers, an
international network based in Germany, added: “The interest of patients
is at risk if marketing approvals are linked with patents. Countries
like India must have the possibility to issue compulsory licenses to
generic companies or to impose price controls in order to make available
affordable drugs. We demand that Bayer quits this suit! Safeguarding
public health must take precedence over patents and monopoly profits of
drug companies!”
Others have noted that such precedents may also help AIDs patients. “As the HIV crisis continues to escalate, patients cannot continue to be denied access to life-saving drugs,” wrote Priti Radhakrishnan, the co-director of the Initiative for Medicines, Access & Knowledge (I-MAK).
“The burden on people living with HIV and on the Indian government’s
own health resources will be unbearable if prices escalate.”
Ironically many major pharmaceutical companies take advantage of cheap labor in India to help them boost their profits. “India took (China’s) place as the world’s pharmacy, and in recent decades has been the largest provider of cheap, lifesaving medicines in poor countries across the globe,” write Vikas Bajaj and Andrew Pollack in the New York Times. Doctors Without Borders estimates that 80 percent of the generic AIDS drugs that it distributes to 170,000 patients in Africa are made in India.
Posted by Pratap Chatterjee on March 8th, 2012 CorpWatch Blog
Poker Winnings. Photo: dcJohn. Used under Creative Commons license
Sherkhan Farnood, the founder of Kabul Bank in Afghanistan, is the focus of a front page New York Times article today. The 51 year old international poker player is held up as a symbol of the “pervasive graft (that) has badly undercut the American war strategy” noting that he owes the bank $467 million. But in reality, the powerful men behind the bank - Mahmoud Karzai, brother to the Afghan president, Hamid Karzai, and Abdul Hasin Fahim, brother to the vice-president, General Qasim Fahim – are the real symbols of corruption in the country.
Zahid Walid was started by Hasin Fahim with the help of his warlord brother who had been a key ally of the U.S. during the 2001 invasion. The company won a series of lucrative contracts to pour concrete for a NATO base, as well as portions of the U.S. embassy being rebuilt in Kabul and the city's airport, which was in a state of disrepair.
Next the company started importing Russian gas, and not long after that, Abdul Hasin set up the Gas Group, which markets bottled gas to households and small businesses. More lucrative deals followed - beginning in the winter of 2006, Zahid Walid won over $90 million in contracts from the Afghan ministry of energy and water to supply fuel to the diesel power plants in Kabul.
In 2007, Fahim and his fellow shareholders at Kabul Bank, approached Mahmoud Karzai with an offer – they would lend him $5 million to take an ownership stake in the bank. “The only way to get contracts and protection is to have support in the political system … That was political survivalism. They knew they needed a Karzai,” an Afghan political leader told the New York Times.
In early 2009, Hasin Fahim and Mahmoud Karzai approached the president with a suggestion – why not take on General Fahim as vice-president? After Hamid Karzai agreed, Kabul Bank, together with another politically connected bank, Ghazanfar, donated millions to his re-election campaign.
Mahmoud Karzai soon tired of Farnood. "The thing is, he's not sophisticated enough for today's global economy,” he told the Daily Telegraph.
It is true that Farnood was not a sophisticated jet-setter like Karzai (who has run restaurants from Boston to San Francisco) nor related to warlords or senior politicians. Born into a poor family in Kunduz, he made his money running money lending operations in Moscow and gambling on the side. He made rash business judgements – his airline acquired planes with forged documents – leading to a fatal crash.
But it isn’t the only time that the U.S. government and its political allies have entrusted large sums of money to neophytes willing to do their bidding in the War on Terror. In Iraq, the U.S. hired Ziad Cattan, a Polish Iraqi used-car dealer, to work at the Ministry of Defense where he spent $1.3 billion on military equipment that was “shoddy, overpriced or never delivered” such as aging Russian helicopters and underpowered Polish transport vehicles. "Before, I sold water, flowers, shoes, cars — but not weapons," Cattan told the Los Angeles Times. "We didn't know anything about weapons."
"He was somebody we recruited, and we were taking a chance on him just like on everybody else," said Frederick Smith, a former Defense Department official told the newspaper. "Ziad is not a choirboy. But he was willing to serve."
The same goes for 21 year old Efraim Diveroli, who was awarded a $300 million contract in 2007 to supply weapons to the Afghan security forces. Diveroli and his partner David Packouz sent decades-old Kalashnikov ammunition in corroded packaging to the war, and repackaging and obscuring the origins of Chinese cartridges procured from Albania. "I didn't know anything about the situation in that part of the world. But I was a central player in the Afghan war — and if our delivery didn't make it to Kabul, the entire strategy of building up the Afghanistan army was going to fail,” Packouz later told Rolling Stone. “Here I was dealing with matters of international security, and I was half-baked (high on marijuana). It was totally killing my buzz.”
Handing over millions to flower sellers, stoners, poker players – who gamble the money away - is it that surprising that the money for the War on Terror isn’t going very well
Posted by Pratap Chatterjee on March 6th, 2012 CorpWatch Blog
EFSA Cartoon. Source: Corporate Europe Observatory
How do you get rid of sticky chewing gum from city streets and lobbyists who want to promote dangerous foods in Europe? The European Food Safety Authority (EFSA), based in Parma, Italy, has approved two new proposals this week that proponents claim will get rid of these two menaces to society.
EFSA investigates food and feed safety, nutrition, animal welfare, plant protection and health. The agency’s assessments are used by the European Commission to decide whether to authorize products on the European market – from new types of chewing gum to pesticides and genetically engineered crops. A favorable assessment could generate millions or even billions of Euros in profit for manufacturers.
The new rules were prompted by a series of reports from Corporate Europe Observatory and the Earth Open Source, which documented cases where EFSA used industry scientists and employees to conduct risk assessment, despite conflicts of interest. (full disclosure: I am a board member of the Corporate Europe Observatory)
For example, a health claim by Kraft Foods was approved by the nutrition panel of EFSA under the chairmanship of by Albert Flynn, who is also happens to be a member of an advisory board at Kraft Foods, according to an October 2011 investigation conducted by Suddeutsche Zeitung, a German newspaper. A December 2011 report by Pesticide Action Network showed that 10 out of 13 experts on an EFSA working group on toxicology had conflicts of interest.
The food industry is not unique in attempting to influence European rule making. Indeed, some 90 percent of the 15,000 lobbyists who work in Brussels are employed by industry, with civil society groups such as environmentalists and trade unions making up less than ten percent. These corporate lobbyists are estimated to spend 750 million euros a year to influence these European bureaucrats.
One of the key ways these lobbyists influence legislation is via the 1,000 plus “Expert Groups” or advisory bodies to the European Commission who often determine the framework of most legislation. Until recently the membership of these groups was secret. Today even though some information has been made available in the last two years, the minutes, agendas, contributions of their meetings remain unavailable to the public.
Activists are waiting to see if the new EFSA rules will be strong enough. Nina Holland of Corporate Europe Observatory, notes that not all conflicts of interest are banned with the new system which she believes is still a cause of concern. “This month the membership of eight expert panels will be renewed, and this process will be closely watched by many critics.”
And the chewing gum? It’s a product that claims to be removable and degradable, according to Professor Terence Cosgrove at the University of Bristol who invented it. Rev7 Gum, which was just approved by EFSA, claims to be easy to remove from clothing as well as city streets.
CorpWatch is taking bets on which one Europe will be able to eliminate first – the chewing gum or the food lobbyists.
Posted by Pratap Chatterjee on March 2nd, 2012 CorpWatch Blog
Michael Douglas video for the FBI
The Federal Bureau of Investigation (FBI) has just released a public service advertisement featuring Michael Douglas, the Hollywood star who plays the fictional character Gordon Gekko in the “Wall Street” films to target insider trading in the financial industries.
“In the movie ‘Wall Street’ I played Gordon Gekko, who cheated to profit while innocent investors lost their savings. The movie was fiction but the problem is real,” says Douglas in the ad. “Our economy is increasingly dependent on the success and integrity of the financial markets. If a deal looks too good to be true, it probably is.”
Increasingly, however, it seems that the UK needs a similar campaign for the City of London, which has become the center for the mantra “Greed is Good.”
Why is London so attractive to wealthy traders? One of the reasons is the relative lack of enforcement against criminal activity. New York authorities have prosecuted 66 people for insider trading, with 57 convictions or guilty pleas since 2009.
The UK has relied on fines to push the envelope a little against financial services abuse. Philippe Jabre, a former managing director of hedge fund manager GLG Partners, was told to pay £750,000 in August 2006 for illegally dealing in securities of Sumitomo Mitsui Financial Group. JP Morgan was fined £33.3million in June 2010 by the FSA for failing to segregate client money in overnight accounts. Last month, David Einhorn and his fund Greenlight Capital, were fined £7.2m for insider trading about a planned 2009 equity fundraising by Punch Taverns.
“It has been far slower going in London, where many hedge funds operate, let alone in Geneva,” writes John Gapper of the Financial Times. “The small minority that breaks the rules has a much lower chance of either being caught or, when caught, jailed.”
One of the reasons is that the FBI has been more effective is its ability to monitor mobile phone calls and conference calls. The UK, however, does not allow phone-tapping to convict traders.
Although the UK convictions may seem paltry – they are still a sea change from the past, as a result of a crackdown initiated by Margaret Cole, the interim FSA director. She was recently placed on leave and is to be replaced by Martin Wheatley, who will head a new body called the Consumer Protection and Markets Authority.
Wheatley comes to the job from Hong Kong where he secured 171 convictions in the past three years as head of the Hong Kong Securities and Futures Commission (SFC), representing over two thirds of the cases in the last 23 years. Will he finally be able to crack down on the Gordon Geckos in the City of London?
Posted by Pratap Chatterjee on March 1st, 2012 CorpWatch Blog
Project Underground poster on Shell
Barinem Kiobel was executed on November 10, 1995 by the military dictatorship of General Sani Abacha of Nigeria. Almost 16 years later, the U.S. Supreme Court is poised to decide whether Shell, the Anglo-Dutch oil multinational, can be held responsible for his death.
The lawsuit has been brought under the Alien Tort Claims Act of 1789 which allows lawsuits against individuals in U.S. courts for violations of international law – but what the court will decide is if this law applies to corporations. If the Supreme Court rules in favor of the plaintiff – his widow Esther – it could represent a watershed in holding corporations accountable for crimes around the world. (See EarthRights for more on Alien Torts)
The 42 year old was one of nine activists from Ogoni land in the Niger Delta who were sentenced to death by hanging. Ken Saro-Wiwa, another of the men who was executed that day, had already become an international cause celebre as a poet and an outspoken leader of the Movement for the Survival of the Ogoni People (MOSOP) that was leading protests against the massive pollution of the region caused by its oil extraction. (See MOSOP website here)
In 2009, Shell agreed to pay out $15.5 million to settle a lawsuit brought by the Center for Constitutional Rights on behalf of Saro-Wiwa’s family against the company in which they were alleged to have conspired with the military to capture, torture and kill protestors. The company did not admit guilt: "While we were prepared to go to court to clear our name, we believe the right way forward is to focus on the future for Ogoni people," Malcolm Brinded, a Shell director, said at the time. The money was placed in a trust for the education of the Ogoni people. (See the Center for Constitutional Rights summary here)
“Businesses with mining and drilling operations abroad decimate local populations with the full consent of brutal regimes, and when the people affected assemble and protest, family members are abducted, people are murdered, profits are defended at all costs and no local justice or accountability is possible because of government complicity,” wrote Vincent Warren of the Center for Constitutional Rights in the New York Times. “The decision before the court now boils down to whether corporations — considered legal persons already in many cases — should be held to the same standards of accountability as actual people when they commit egregious crimes.”
What makes this argument compelling is another decision made by the Supreme Court on January 21, 2010, in Citizens United v Federal Election Commission, where the justices decided, by a vote of five to four, that, since corporations were legal persons, they were entitled to the protection of the first amendment, which guarantees freedom of speech. (The case was brought by Citizens United, a company that wanted to air a film critical of Hillary Clinton)
The bracing reality that America has two sets of rules -- one for the
corporate class and another for the middle class -- has never been more
indisputable.
The middle class, by and large, plays by the rules, then watches as
its jobs disappear -- and the Senate takes a break instead of extending
unemployment benefits. The corporate class games the system -- making
sure its license to break the rules is built into the rules themselves.
One of the most glaring examples of this continues to be the ability
of corporations to cheat the public out of tens of billions of dollars a
year by using offshore tax havens. Indeed, it's estimated that
companies and wealthy individuals funneling money through offshore tax
havens are evading around $100 billion a year in taxes -- leaving the rest of
us to pick up the tab. And with cash-strapped states all across the
country cutting vital services to the bone, it's not like we don't need
the money.
You want Exhibit A of two sets of rules? According to the White
House, in 2004, the last year data on this was compiled, U.S.
multinational corporations paid roughly $16 billion in taxes on $700 billion
in foreign active earnings -- putting their tax rate at around 2.3
percent. Know many middle class Americans getting off that easy at tax
time?
In December 2008, the Government Accounting Office reported
that 83 of the 100 largest publicly-traded companies in the country --
including AT&T, Chevron, IBM, American Express, GE, Boeing, Dow, and
AIG -- had subsidiaries in tax havens -- or, as the corporate class
comically calls them, "financial privacy jurisdictions."
Even more egregiously, of those 83 companies, 74 received government
contracts in 2007. GM, for instance, got more than $517 million from the
government -- i.e. the taxpayers -- that year, while shielding profits
in tax-friendly places like Bermuda and the Cayman Islands. And Boeing,
which received over $23 billion in federal contracts that year, had 38
subsidiaries in tax havens, including six in Bermuda.
And while it's as easy as opening up an island P.O. Box, not every
big company uses the dodge. For instance, Boeing's competitor Lockheed
Martin had no offshore subsidiaries. But far too many do -- another GAO
study found
that over 18,000 companies are registered at a single address in the
Cayman Islands, a country with no corporate or capital gains taxes.
America's big banks -- including those that pocketed billions from
the taxpayers in bailout dollars -- seem particularly fond of the Cayman
Islands. At the time of the GAO report,
Morgan Stanley had 273 subsidiaries in tax havens, 158 of them in the
Cayman Islands. Citigroup had 427, with 90 in the Caymans. Bank of
America had 115, with 59 in the Caymans. Goldman Sachs had 29 offshore
havens, including 15 in the Caymans. JPMorgan had 50, with seven in the
Caymans. And Wells Fargo had 18, with nine in the Caymans.
Perhaps no company exemplifies the corporate class/middle class
double standard more than KBR/Halliburton. The company got billions from
U.S. taxpayers, then turned around and used a Cayman Island tax dodge
to pump up its bottom line. As the Boston Globe's Farah
Stockman reported, KBR, until 2007 a unit of Halliburton,
"has avoided paying hundreds of millions of dollars in federal Medicare
and Social Security taxes by hiring workers through shell companies
based in this tropical tax haven."
In 2008, the company listed 10,500 Americans as being officially
employed by two companies that, as Stockman wrote, "exist in a computer
file on the fourth floor of a building on a palm-studded boulevard here
in the Caribbean." Aside from the tax advantages, Stockman points out
another benefit of this dodge: Americans who officially work for a
company whose headquarters is a computer file in the Caymans are not
eligible for unemployment insurance or other benefits when they get laid
off -- something many of them found out the hard way.
This kind of sun-kissed thievery is nothing new. Indeed, back in
2002, to call attention to the outrage of the sleazy accounting trick, I
wrote a column announcing I was thinking of moving my
syndicated newspaper column to Bermuda:
I'll still live in America, earn my living here, and enjoy
the protection, technology, infrastructure, and all the other myriad
benefits of the land of the free and the home of the brave. I'm just
changing my business address. Because if I do that, I won't have to pay
for those benefits -- I'll get them for free!
Washington has been trying to address the issue for close to 50 years
-- JFK gave it a go in 1961. But time and again Corporate
America's game fixers -- aka lobbyists -- and water carriers in
Congress have managed to keep the loopholes open.
The battle is once again afoot. On Friday, the House passed the American
Jobs and Closing Tax Loopholes Act. The bill, in addition to
extending unemployment benefits, clamps down on some of they ways
corporations hide their income offshore to avoid paying U.S. taxes. Even
though practically every House Republican voted against it, the bill passed 215 to 204.
The bill's passage in the Senate, however, remains in doubt, with
lobbyists gearing up for a furious fight to make sure America's
corporate class can continue to profitably enjoy the largess of
government services and contracts without the responsibility of paying
its fair share.
The bill is far from perfect -- it leaves open a number of loopholes
and would only recoup a very small fraction of the $100 billion
corporations and wealthy individuals are siphoning off from the U.S.
Treasury. And it wouldn't ban companies using offshore tax havens from
receiving government contracts, which is stunning given the hard times
we are in and the populist groundswell at the way average Americans are
getting the short end of the stick.
But the bill would end one of the more egregious examples of the
double standard between the corporate class and the middle class,
finally forcing hedge fund managers to pay taxes at the same rate as
everybody else. As the law stands now, their income is considered
"carried interest," and is accordingly taxed at the capital gains rate
of 15 percent.
The issue was famously brought up in 2007 by Warren Buffett when he noted that his receptionist paid 30 percent of her
income in taxes, while he paid only 17.7 percent on his taxable income
of $46 million dollars.
As Robert Reich points out, the 25 most successful hedge fund
managers earned $1 billion each. The top earner clocked in at $4
billion. And all of them paid taxes at about half the rate of Buffett's
receptionist.
Closing this outrageous loophole would bring in close to $20 billion
dollars in revenue -- money desperately needed at a time when teachers
and nurses and firemen are being laid off all around the country.
Hedge fund lobbyists are currently hacking away at the Senate's
resolve with, not surprisingly, some success. And it's not just
Republicans who are willing to do their bidding, but a number of
Democrats as well. Indeed, it was a Democrat -- Chuck Schumer -- who led the fight against closing the loophole in
2007.
"I don't know how members of Congress can return home and look an
office manager, a nurse, a court clerk in the eye and say 'I chose hedge
fund managers instead of you and your family'," said Lori Lodes of the SEIU.
Nicole Tichon, of the U.S. Public Interest Research Group, framed the debate in similar terms:
It's hard to imagine anyone campaigning on protecting hedge
fund managers, Wall Street banks and companies that ship jobs and
profits overseas. It's hard to imagine telling constituents that somehow
they should continue to subsidize these industries. We're anxious to
see whose side the Senate is on and what story they want to tell the
American people.
Up until now, the story has been a familiar narrative of Two
Americas, with one set of rules for those who can afford to hire a fleet
of K Street lobbyists and a different set for everybody else. It's time
to give this infuriating tale a different -- and far more just and
satisfying -- ending.
On June 2nd at 8pm, CNN’s Dr. Sanjay Gupta will be airing an hour-long investigative story into the environmental health and justice problems plaguing the community of Mossville, Louisiana. Nestled amidst an alarming cluster of chemical plants, Mossville is home to more PVC chemical plants than anywhere else in the entire country, and has been dubbed the Vinyl Manufacturing Capital of America.
CNN broke a terrific story a few weeks ago profiling Mossville which you can watch in this embedded video below. Dr. Sanjay Gupta’s June 2nd feature will explore how Mossville has been polluted by the chemical industry with vinyl chloride, Dioxins, and other harmful chemicals.
From Buffalo, NY to Mossville, Louisiana
I traveled to Mossville back in 2004 as part of an environmental health delegation that I led and organized, to bear witness to the environmental pollution the chemical industry has brought to this poor African American community. CertainTeed, one of our nation’s largest PVC manufacturers, was building a PVC fabrication plant on the Lake Erie waterfront in Buffalo, and we wanted to investigate how CertainTeed and other PVC plants had impacted Mossville in Louisiana. CertainTeed’s chemicals were manufactured just outside Mossville, and were then shipped to Buffalo to be fabricated.
At the time I was no stranger to contaminated communities. I had visited and worked with many impacted communities in the Buffalo area, from homeowners in Hickory Woods whose neighborhood was built on toxic waste, to parents fighting the only hazardous waste landfill in the Northeastern united States.
I was no stranger to toxic pollution, but was not prepared for the scope of pollution and cluster of chemical plants bordering this environmental justice community. Me and a few colleagues went on a toxic tour led by Mr. Edgar Mouton Jr., who is an inspiration to me. We met with concerned residents and former workers, and drove around parts of the community that had been turned into a ghost town – scores of homes were evacuated due to the plume of chemicals seeping into the neighborhood. We listened to residents’ stories of cancer, asthma, and reproductive health problems – diseases residents were sure was a result of the chemical industry.
I will never forget that visit. That experience and trip stays with me every day, and it motivates me to continue fighting for environmental health and justice.
A Posterchild for the PVC Chemical Industry
Mossville is not an isolated example, but instead a poster child for a broken chemical safety system. Mossville is also a posterchild for the PVC chemical industry’s pollution, as PVC plants are disproportionately located in low-income communities and communities of color, making the production of PVC a major environmental justice concern for neighboring residents.
Community members, led by Mossville Environmental Action Now, have been fighting for a healthy community for years. Just consider some of these alarming facts:
* A jury found one of the United States’ leading PVC manufacturers liable for “wanton and reckless disregard of public safety”, caused by one of the largest chemical spills in the nation’s history which contaminated the groundwater underneath the surrounding community.
* A 1999 U.S. Environmental Protection Agency (EPA) study found vinyl chloride levels in ambient air greater than 100 times the state air quality standard. * Independent studies confirmed groundwater is threatened by liquid toxic leachate, and there are contaminated fish, vegetables, and fruit in the area * Studies in 1998 and 2001 by the U.S. Agency for Toxic Substances and Disease Registry (ATSDR) found alarming results — residents had more than three times the national average of dioxins in their blood, elevated dioxins in breast milk, and high cancer mortality rates.
More recently a few years ago, MEAN compiled data from the USEPA and ATSDR and found 77% of the mixture of dioxin compounds released by the Georgia Gulf PVC plant were the same dioxin compounds that made up 77% of the dioxins detected in the blood of Mossville residents. This finding shows that residents are accumulating the same mixture of dioxin compounds being released from the Georgia Gulf PVC plant and this mixture includes the most toxic forms of dioxin
Mark your calendars! Wednesday June 2nd at 8pm – Toxic Towns, USA
Mark your calendars for Wednesday June 2nd at 8:00pm EST to watch Dr. Sanjay Gupta’s Toxic Towns and stand in solidarity with the community of Mossville, and all communities impacted by the PVC chemical industry.
British Petroleum is, rightfully, taking a lot of grief for the
massive oil spill in the Gulf of Mexico, but we should save some of our
vituperation for Transocean Ltd., the company that leased the ill-fated
Deepwater Horizon drilling rig to BP. Transocean is no innocent
bystander in this matter. It presumably has some responsibility for the
safety condition of the rig, which its employees helped operate (nine of
them died in the April 20 explosion).
Transocean also brings some bad karma to the situation. The company,
the world’s largest offshore drilling contractor, is the result of a
long series of corporate mergers and acquisitions dating back decades.
One of the firms that went into that mix was Sedco, which was founded in
1947 as Southeastern Drilling Company by Bill Clements, who would
decades later become a conservative Republican governor of Texas.
In 1979 a Sedco rig in the Gulf of Mexico leased to a Mexican oil
company experienced a blowout, resulting in what was at the time the
worst oil spill the world had ever seen. As he surveyed the oil-fouled
beaches of the Texas coast, Gov. Clements made the memorable remarks:
“There’s no use in crying over spilled milk. Let’s don’t get excited
about this thing” (Washington Post 9/11/1979).
At the time, Sedco was being run by Clements’s son, and the family
controlled the company’s stock. The federal government sued Sedco over
the spill, claiming that the rig was unseaworthy and its crew was not
properly trained. The feds sought about $12 million in damages, but
Sedco drove a hard bargain and got away with paying the government only
$2 million. It paid about the same amount to settle lawsuits filed by
fishermen, resorts and other Gulf businesses. Sedco was sold in 1984 to
oil services giant Schlumberger, which transferred its offshore drilling
operations to what was then known as Transocean Offshore in 1999.
In 2000 an eight-ton anchor that accidentally fell from a Transocean
rig in the Gulf of Mexico ruptured an underwater pipeline, causing a
spill of nearly 100,000 gallons of oil. In 2003 a fire broke out on a
company rig off the Texas coast, killing one worker and injuring several
others. As has been reported in recent days, a series of fatal accidents
at company operations last year prompted the company to cancel
executive bonuses. It’s also come out that in 2005 a Transocean rig in
the North Sea had been cited by the UK’s Health and Safety Executive for a
problem similar to what apparently caused the Gulf accident.
Safety is not the only blemish on Transocean’s record. It is one of
those companies that engaged in what is euphemistically called corporate
inversion—moving one’s legal headquarters overseas to avoid U.S.
taxes. Transocean first moved its registration to the Cayman Islands in
1999 and then to Switzerland in 2008. It kept its physical headquarters
in Houston, though last year it moved some of its top officers to
Switzerland to be able to claim that its principal executive offices
were there.
In addition to skirting U.S. taxes, Transocean has allegedly tried to
avoid paying its fair share in several countries where its subsidiaries
operate. The company’s 10-K annual report admits that it has been assessed additional amounts
by tax authorities in Brazil and that it is the subject of civil and
criminal tax investigations in Norway.
In 2007 there were reports that Transocean was among a group of oil
services firms being investigated for violations of the Foreign Corrupt
Practices Act in connection with alleged payoffs to customs officials in
Nigeria. No charges have been filed.
An army of lawyers will be arguing over the relative responsibility
of the various parties in the Gulf spill for a long time to come. But
one thing is clear: Transocean, like BP, brought a dubious legacy to
this tragic situation.
Editor's note: Michael Brune is
executive director of the Sierra Club and former director of the
Rainforest Action Network.
The oil disaster
plaguing the Gulf of Mexico and our coastal states puts our desperate
need for a new clean energy economy in stark relief. We need to move
away from dirty, dangerous and deadly energy sources.
We are
pleased that the White House is now saying it will suspend any new
offshore drilling while the explosion and spill are investigated, but
there should be no doubt left that drilling will only harm our coasts
and the people who live there.
Taking a temporary break from
offshore drilling is an important step, but it's not enough. We need to
stop new offshore drilling for good, now. And then we need an aggressive
plan to wean America from dirty fossil fuels in the next two decades.
This BP offshore rig that exploded was supposed to be
state-of-the-art. We've also been assured again and again that the
hundreds of offshore drilling rigs along our beaches are
completely safe. Now, we've seen workers tragically killed. We've seen
our ocean lit on fire, and now we're watching hundreds of thousands of
gallons of toxic oil seep toward wetlands and wildlife habitat.
This
rig's well is leaking 210,000 gallons of crude every day,
wiping out aquatic life and smothering the coastal wetlands of Louisiana
and Mississippi. As the reeking slick spreads over thousands of square
miles of ocean, it rapidly approaches the title of worst environmental
disaster in U.S. history, even worse than 1989's Exxon
Valdez oil spill. The well is under 5,000 feet of water, and it
could take weeks or even months to cap it.
This disaster could
unfortunately happen at any one of the hundreds of drilling platforms
off our coasts, at any moment. It could happen at the drilling sites
that the oil industry has proposed opening along the beaches of the
Atlantic Coast.
Indeed, even before this spill, the oil and gas industry had torn
apart the coastal wetlands of the Louisiana Bayou over the years. These
drilling operations have caused Louisiana to lose 25 square miles of
coastal wetlands, which are natural storm barriers, each year.
And it's
hardly just the environmental costs of oil spills that we have to worry
about with offshore drilling. The threat to the people who work on these
platforms has again become terribly clear. In fact, more than 500 fires
on oil platforms in the Gulf have injured or killed dozens of workers
in just the past four years, according to the federal Minerals
Management Service.
We don't need to pay this price for energy.
We have plenty of clean energy solutions in place that will end our
dependence on dirty fossil fuels, create good, safe jobs and breathe new
life into our economy.
One huge example came Thursday, when the
Obama administration approved our country's first offshore wind farm.
Our country has huge solar power potential as well. We can also save
more oil through simple efficiency measures than could be recovered by
new drilling on our coastlines.
This oil spill changes
everything. We have hit rock-bottom in our fossil fuel addiction. This
tragedy should be a wake-up call. It's time to take offshore drilling
off the table for good.
The opinions
expressed in this commentary are solely those of Michael Brune.
American based food companies are facing a spate of lawsuits charging that they have cooperated with and paid off groups officially designated as terrorists by the U.S. government.
In February, a federal judge refused to dismiss a civil suit filed against Chiquita, a global corporation that markets itself for “products and services [that] are designed to win the hearts and smiles of the world's consumers.” [http://www.chiquitabrands.com/CompanyInfo/CompanyInfo.aspx] The suit makes the less cheerful charge that the company paid “protection” money to leftist (FARC) guerrillas operating near its plantations in Colombia -- during a period when the FARC killed four American missionaries.
Families of the missionaries who are bringing this case (Julin et al. v. Chiquita Brands Int’l) to Federal District Court for the Southern District of Florida are suing Chiquita under the civil provisions of the Anti-Terrorism Act of 1991, which allows American citizens and their heirs to be compensated for injuries resulting from international terrorism.
This is not the first time that Chiquita has faced charges of complicity with “terrorists.” In March 2007, (US v. Chiquita Brands Intl) the company had pled guilty to violating U.S. antiterrorism laws by funding the right-wing paramilitary United Self-Defense Forces of Columbia (“AUC”). In the U.S. Department of Justice’s Factual Proffer to the Court in conjunction with Chiquita’s plea agreement in the 2007 case, the Justice Department stated that it could prove Chiquita made similar payments to FARC from 1989 through 1997. Both FARC and the AUC have been officially designated by the State Dept. as “Foreign Terrorist Organizations.”
Meanwhile, Dole is facing similar charges. The families of former plantation workers and land squatters are suing the world's largest producer and marketer of fresh fruit and vegetables in the Los Angeles Superior Court of California. The plaintiffs' complaint in Juana Perez 1-51/Juan Perez 5e-50 V. Dole Food Company, Inc., details a horrific litany of summary executions, off-the-bus abductions, forced-entry murders, kidnappings, ghoulish disappearances, and other crimes committed against trade unionists and land reform activists between 1997 and 2008 – the period when Dole, like Chiquita, allegedly supported the paramilitary AUC.
While Dole has denied making payments, Chiquita has taken a different route, voluntarily telling the Department of Justice about the payments. Its consistent position has been that both the left-wing guerrillas and right-wing paramilitaries extorted cash "to protect the lives of its employees." http://dolecsr.com/PressSection/PressReleases/April292009/tabid/5853/Default.aspx
Both positions have become increasingly untenable now that paramilitaries who took the payments have come in from the cold. In exchange for disarming, submitting to Colombia's "Justice and Peace" process, and confessing to all their crimes, the former combatants have been promised reduced jail time.
Dole’s denial of pay offs is contradicted by sworn affidavits filed in the ongoing litigation. Jose Gregorio Mangones Lugo (aka "Carlos Tijeras") was the former commander of the William Rivas Front of the AUC group that operated in northern Colombia, in the zone where the companies and their suppliers grew bananas. In a sworn statement, Tijeras described the AUC's relationship with the head of plantations controlled or owned by both Dole and Chiquita as "an open public relationship" involving everything from "security services" to the kidnapping and extrajudicial assassination of labor leaders fingered by the companies as "security problems."
Tijeras' statement–which reads like the confessions of a corporate death squad leader and directly refutes his paymasters' version of events – was entered into the record in the California case (Juana Perez 1-51/Juan Perez 5e-50 V. Dole Food Company, Inc), filed against Dole in April 2009 by attorneys with Conrad and Scherer, representing the families of the 73 people killed by the AUC.
“I've been told that Chiquita has asserted that they paid the AUC funds, but that this was coerced and was a form of extortion,” Tijeras states. “I have also heard that Dole claims to have never paid us any funds. Both of these assertions are absolutely false. In fact, my agreement with Chiquita and Dole was to provide them with total security and other services.”
“These terrorists have every reason to lie by making false allegations against international companies like Dole in order to minimize their own culpability and reduce their jail time,” said C. Michael Carter, Dole's Executive Vice President and General Counsel. "This lawsuit is irresponsible and the allegations are blatantly false."
Tijeras is not the only paramilitary to put some of the blame on the companies. Salvatore Mancuso, the overall commander of the AUC, also testified in early 2008 that Dole and Del Monte, like Chiquita, had been providing major support to the AUC since its inception. He repeated the accusation to 60 Minutes, which originally aired the segment in September 2008.
According to these and other witnesses, as well as investigators familiar with the bloody history of Colombia, the companies originally hired the AUC to drive the leftist FARC guerillas out of the banana-growing region and protect their plantations from, as Tijeras put it, "the gangs of common delinquents that robbed their supplies and equipment." Once the FARC was vanquished and order restored, the banana companies continued to pay the AUC to "pacify" their work forces, suppress the labor unions, and terrorize peasant squatters perusing competing land claims.
Tijeras: After we restored order and became the local agents of law enforcement, managers for Chiquita and Dole plantations relied upon us to respond to their complaints. ...We would also get calls from the Chiquita and Dole plantations identifying specific people as "security problems" or just "problems." Everyone knew that this meant we were to execute the identified person. In most cases those executed were union leaders or members or individuals seeking to hold or reclaim land that Dole or Chiquita wanted for banana cultivation, and the Dole or Chiquita administrators would report to the AUC that these individuals were suspected guerillas or criminals.
According to Tijeras, for years the companies provided up to 90 percent of the AUC's income.
When the families and heirs of dozens of victims filed the case against Dole in April 2009, the company immediately rejected the charges as "baseless allegations" that "are the product of the most untrustworthy sources imaginable" and "nothing more than the false confessions of convicted terrorists from Colombia, who had every motive to lie about their activities in order to minimize their jail time."
Dole’s use of the term “terrorist” to refer to the AUC accurately reflects the official U.S. State Department categorization of the group assigned (coincidentally) on September 10, 2001. That designation carries legal consequences for both Dole (if evidence of the payments is proven) and Chiquita: First, the Anti-Terrorism Act of 1991 allows U.S. citizens and their heirs to sue over injuries from international terrorism; and second, payments to designated terrorists are illegal even if coerced -- and whether or not the company is cognizant of or indifferent to the consequences.
The ongoing case against Chiquita in Florida is strengthened by the company’s March 2007 guilty plea in U.S. v. Chiquita Brands International, Inc., by its voluntarily disclosure of payments, and by its agreement to pay a $25 million criminal fine for violating U.S. antiterrorism laws. The 2007 Chiquita criminal case was remarkable for numerous revelations, not least that the company continued to make the payments against the advice of its own outside counsel, and even after notifying the Justice Department.
As part of that settlement, Chiquita acknowledged that it had also made payments to the FARC from 1989 to at least 1997 -- a period, according to relatives, when the guerrilla group abducted and killed the missionaries.
Pattern of Complicity with Terror
It has been almost 3 years since Rep. William Delahunt (D-MA), chair of the House Subcommittee on International Organizations, Human Rights, and Oversight, launched an investigation into U.S. multinationals' complicity with human rights violations in Colombia. At a June 2007 hearing, witnesses testified that there was a pattern of complicity between Colombian terrorists and multinational corporations -- including the Alabama-based Drummond Co. Inc., which allegedly paid members of a Colombian terrorist group to kill three union organizers. The Miami Herald reported just days before the hearing that paramilitaries had also come forward to talk in detail about payments Drummond made to the paramilitaries.
Drummond denies all allegations against the company and its employees made by attorneys working for relatives of murdered Drummond employees.
Other companies with operations in Colombia that were mentioned at Delahunt's hearing include Occidental, Coca-Cola and ExxonMobil.
An "independent" review commissioned by the company's board reinforced Chiquita's claim that its sole motivation in making payments to both the FARC and the AUC was to protect the lives of its employees.
That report may help deflect derivative lawsuits filed by the company's own shareholders, but is greeted with skepticism in Colombia, where Attorney General Mario Iguaran roundly rejected Chiquita's explanation, and reportedly threatened to extradite as many as eight Chiquita executives (including John Paul Olivo, Charles Dennis Keiser, and Dorn Robert Wenninger) who, he says, were responsible for approving the payments and maintaining a "criminal relationship" with the paramilitaries.
Another remarkable aspect of the Chiquita case is the fact that the lead attorney representing Chiquita Brands International is now the U.S. attorney general.
In August 2007, when he was still representing Chiquita, Eric Holder told the Washington Post that it would be unfair to treat "harshly" any company that voluntarily discloses payments to designated terrorists, and that even if the company was penalized, the individuals within the firm should not be. Yet just a few years before he first passed through the revolving door, U.S. Deputy Attorney General Holder authored the "Holder Memo," a famous corporate crime policy memo asserting that the "prosecution of a corporation is not a substitute for the prosecution of criminally culpable individuals within or without the corporation."
Jason Glaser, a documentary filmmaker who helped launch the Banana Land Campaign in December, says that Attorney General Holder has a clear conflict of interest and should recuse himself from any decision concerning the requested extradition of Chiquita executives or any other matter related to the investigation of multinational complicity in violence in Colombia.
“Holder is the nation's top cop, overseeing a department that regularly claims that fighting terrorism is a top priority,” Glaser points out. “If that’s true, then it's worth asking where’s the Department's investigation of Dole, which, unlike Chiquita won't volunteer any facts, and patently deny any allegations - when there is so much obvious evidence pointing their way?”
To learn more about the situation in Colombia and other countries check out The Banana Land Campaign and International Rights Advocates.
Notably the three reports do not address the issue of nepotism within the Afghan government. For more on how the family of the vice-president of Afghanistan profited from the electricity sector project, see this story: "Paying Off the Warlords."
Following up on our August 2009 feature, Jack Currie, the project manager for Black & Veatch's Tarakhil power plant, wrote CorpWatch in November to say that he was not dismissed from the Qudas project in Iraq but "left after my stint was complete due to family matters, pressures of being in a war zone."
He also added that the commissioning and operation of the Qudas plant in Iraq was 'challenged' because it did not have the correct quality fuel available to run the new engines, the new engines were designed to run on naptha, which was not available at the time, and the crude oil used caused significant problems. Black & Veatch was asked to start up engines that were installed by the Iraqis -- and despite having no drawings or manuals managed to get them up and running.
Yaguarete Porá, a Global Compact participant
from Brazil, has won Survival’s Greenwashing Award 2010. Survival is an
international organization that supports tribal peoples worldwide.
Yaguarete has won the award
for "dressing up the wholesale destruction of a huge area of the
Indians' forest as a noble gesture for conservation", says Survival's
director Stephen Corry.
The company owns 78,549 hectares of forest that is part of the Ayoreo-Totobiegosodetribe's ancestral territory. After satellite photos were published around the world revealing that it has destroyed thousands of hectares of the tribe's forest, the company issued a press release announcing it intends to create a "nature reserve"on its land.
But plans submitted by Yaguarete to Paraguay’s Environment Ministry reveal that the amount of "continuous forest" in the reserve will be just 16,784 hectares out of the 78,549 hectares total, and the company in fact plans to convert around two thirds of the land to cattle ranching.
Some
of the Totobiegosode have already been contacted and vehemently
condemned the plans for the 'reserve', pointing out that it violates
their rights under both Paraguayan and international law. The contacted
Totobiegosode have been claiming legal title to this land since 1993,
but most of it is still in private hands.
The Totobiegosode are the only uncontacted Indians in the world having their territory destroyed for beef production.
Survival director, Stephen Corry, said that "This is textbook
'greenwashing': bulldoze the forest and then 'preserve' a bit of it for
PR purposes. The public won't fall for it. Yaguarete should stop
playing games and pull out of the Totobiegosode's territory once and
for all."
The one redeeming feature of the abominable Supreme Court ruling
on corporate electoral expenditures is the majority’s retention of the
rules on disclaimers and disclosure. While opening the floodgates to
unlimited business political spending, the Court at least recognizes
that the public has a right to know when a corporation is responsible
for a particular message and a right to information on a corporation’s
overall spending.
Writing for the majority, Justice Kennedy states: “The First
Amendment protects political speech; and disclosure permits citizens
and shareholders to react to the speech of corporate entities in a
proper way. This transparency enables the electorate to make informed
decisions and give proper weight to different speakers and messages.”
There’s no question that steps must be taken to mitigate the
Citizens United ruling, whether through changes in corporation law,
shareholder pressure, enhanced public financing of elections, or even a
Constitutional amendment.
Yet while these efforts progress, it is also worth taking advantage
of the Court’s affirmation of the principle of transparency and push
for even greater disclosure than what we have now. Groups such as the
Sunlight Foundation are already moving in this direction.
The effort could begin with pressing the Federal Election Commission
to tighten the existing reporting rules on what are known as “electioneering communications” and to enforce them more diligently. But that’s not enough.
In the wake of Citizens United, we’ve got to demand more information
on the many ways corporations exercise undue influence not only on
elections but also on legislation, policymaking and public discourse in
general. Now that Big Business is a much bigger threat to popular
democracy, we have to subject corporations to intensive full-body scans
to find all their hidden weapons of persuasion. The following are some
of the areas to consider.
Lobbying. In his State of the Union Address,
President Obama said that lobbyists should be required to disclose
every contact with the executive branch or Congress. That’s fine, but
why stop there? Many corporations do their lobbying indirectly, through
trade associations which disclose little about their sources of
funding. How about rules that require those associations to disclose
the fees paid by each of their members and require publicly traded
companies to disclose exactly how much they pay to belong to each of
their various associations?
Front Groups. Corporations also indirectly seek to
influence legislation and public opinion by bankrolling purportedly
independent non-profit advocacy groups. Such front groups—such as those
taking money from fossil-fuel energy producers to deny the reality of
the climate crisis—do not have to publicly disclose their contributor
lists. Why not require publicly traded companies, at least, to reveal
all of their payments to such organizations?
Union-Busting. Encouragement of collective
bargaining is still, in theory, official federal policy. Yet many
companies violate the principle—and the rights of their workers—by
using corporate funds to undermine union organizing campaigns. The
existing rules on the disclosure of expenditures on anti-union
“consultants” are too narrow and not vigorously enforced. That should
change.
These are only a few of the ways that undue political influence and
other forms of anti-social corporate behavior could be addressed
through better disclosure. Yet, as we’ve seen, transparency by itself
does not counteract corporate power unless something is done with the
information.
This came to mind in reading the last portion of the Citizens United
ruling. Not all five Justices in the majority went along with the idea
of maintaining the disclaimer and disclosure rules. Parting with
Kennedy, Roberts, Scalia and Alito, Justice Thomas argued not only that
corporate independent expenditures should be unrestricted, but also
that they should be allowed to take place under a veil of secrecy.
He bases his argument not on legal precedent, but rather on dubious
anecdotal evidence that some supporters of California’s
anti-gay-marriage Proposition 8 were subjected to threats of violence
after their names appeared on public donor lists. Thomas thus suggests
that corporations should be able to make their political expenditures
anonymously to avoid retaliation.
While I am in no way advocating violence, I think activists need to
use the information that becomes public as the result of expanded
disclosure to make corporations pay a price for any attempts to buy our
political system. If we can get them to worry about (non-violent)
retaliation to the point that they limit their expenditures, then we
will have gone a long way toward neutralizing the pernicious effects of
the Citizens United ruling.
After J.P. Morgan was questioned by Congressional investigator
Ferdinand Pecora during a 1930s investigation of the causes of the
Great Crash, the legendary financier complained
that Pecora (photo) had “the manners of a prosecuting attorney who is
trying to convict a horse thief.” Morgan was also embarrassed when a
Ringling Bros. publicity agent placed a diminutive circus performer on
his lap in the middle of the proceedings.
At this week’s public hearing of the Financial Crisis Inquiry
Commission, the nation’s most powerful bankers were, unfortunately,
treated with a lot more deference. Sure, there was one satisfying
exchange between FCIC Chairman Phil Angelides and Goldman Sachs CEO
Lloyd Blankfein in which Angelides likened the firm’s practice of
betting against the very securities it was peddling to clients to that
of selling someone a car with faulty brakes and then buying an
insurance policy on the buyer.
But those moments were rare. For the most part, the bankers came
away unscathed. Most of the ten commissioners treated them not as
suspected criminals whose misdeeds needed to be probed, but rather as
experts whose opinions on the causes of the crisis were being
solicited. This gave the bankers abundant opportunities to pontificate
about industry and regulatory practices while avoiding any
incriminating admissions about their own firm’s behavior.
For example, Commissioner Heather Murren, CEO of the Nevada Cancer
Institute, asked Blankfein whether there should be “more supervision of
the kinds of activities that are undertaken by investment banks?” This
allowed him to babble on about the “sociology…of our regulation before
and after becoming a bank holding company.”
The bankers seemed to have expected tougher questioning. Their
opening statements sought to soften the interrogation by conceding some
general culpability, though it was done in a mostly generic way. Jamie
Dimon of JP Morgan Chase admitted that “new and poorly underwritten
mortgage products helped fuel housing price appreciation, excessive
speculation and core higher credit losses.” John Mack of Morgan Stanley
acknowledged that “there is no doubt that we as an industry made
mistakes.” And Brian Moynihan, the new CEO of Bank of America, noted:
“Over the course of the crisis, we, as an industry, caused a lot of
damage.”
But much too little time was spent by the commissioners exploring
how the giant firms represented on the panel contributed to that
damage. A search of the transcript of the hearing produced by CQ
Transcriptions and posted on the database service Factiva indicates
that the word “predatory” was not used once during the time the four
top bankers were testifying.
The commissioners failed to challenge most of the self-serving
statements made by the bankers to give the impression that, despite
whatever vague transgressions were going on in the industry, their own
firms were squeaky clean. Even Angelides failed to pin them down. When
he asked Blankfein to state “the two most significant instances of
negligent, improper and bad behavior in which your firm engaged and for
which you would apologize” the Goldman CEO admitted only to
contributing to “elements of froth in the market.” Angelides asked
whether that included anything “negligent or improper.” Blankfein again
evaded the question and the Chairman gave up.
The bankers also went unchallenged in making statements that were
incomplete if not outright erroneous. When Blankfein, for example,
claimed that Goldman deals only with institutional investors and
“high-net-worth individuals,” no one pointed out the firm’s ties to Litton Loan Servicing, which has handled large numbers of subprime and often predatory home mortgages.
The Goldman chief also made much of the fact that he and other top
executives of the firm took no bonuses in 2008. That’s true, but he
failed to mention that, according to Goldman’s proxy statement, he alone became more than $25 million richer that year when previously granted stock awards vested.
The bankers were at their slipperiest when it came to the few
questions about the issue of being too big to fail. They would not, of
course, admit to being too big, but in spite of every indication that
the federal government would never allow another Lehman Brothers-type
collapse to occur, they labored mightily to argue that they could
conceivably go under. This notwithstanding the fact that a couple of
them had just thanked U.S. taxpayers for the financial assistance their
firms had received.
I suppose it’s possible that the Commission is saving its best shots
for later stages of the investigation and its final report, but its
handling of the banker hearing deprived the public of a chance to see
some of the prime villains of the current crisis get a much-deserved
tongue-lashing.
Posted by Tonya Hennessey on December 14th, 2009 TakePart.com
Originally posted on TakePart.com, Participant Media's Social Action site.
Even now, after 17 years of working in the international NGO arena, fighting for environmental and human rights, and social justice, I am still taken aback by multinational corporations and the disproportionate power and influence these entities have amassed on the global stage. Don’t get me wrong: commerce and markets are as old as humankind, so it’s not about that.
But who holds multinational corporations accountable when things go wrong--especially overseas--and how? And what happens when one company buys another, one that is holding significant public liability? Doesn’t the liability go along with the purchase?
On the night of December 2-3, 1984, Union Carbide’s pesticide factory in Bhopal, India, leaked a deadly cloud of methyl iso cyanate gas that floated out into the surrounding area. 8,000 people lost their lives in the immediate aftermath of that terrifying night. According to Bhopal Medical Appeal, at least 25,000 people have died in total as a result of the tragedy.
Last week was the 25th Anniversary of this man-made disaster. And Dow Chemical has yet to clean up the contaminated site. The International Campaign for Justice in Bhopal estimates 100,000 more people--now including 2nd generation impacted children--are still suffering. Deformities, disabilities, miscarriages and other illnesses such as chronic respiratory problems are among the maladies documented.
I was hoping to get this blog post up last week, too, so as not to be late in honoring the survivors and the victims on this awful anniversary. Pesky deadlines and the unanticipated prevented me from doing so before I caught my flight on Thursday to Amsterdam, on my way to the climate talks now beginning in Copenhagen, Denmark. “Damn,” I thought, “I’ve missed the anniversary window, and now my blog would be late.”
Then it hit me. Wait a minute…talk about late! Twenty-five years is a long time to wait for Dow and Union Carbide to right this devastating wrong, and it’s even longer when the tragedy keeps on giving. Because site contamination has still not been adequately contained, nor cleaned up, the poisons continue to pollute the groundwater that more than 30,000 people rely on for drinking water.
Again, how is it that a corporation gets away with this? Countries have been invaded over lower numbers of victims (no number is a good number here), and if a non-state actor released a cloud of noxious gas that killed 8,000 pretty much off the bat, wouldn’t that be considered an act of terrorism? Or at the least, egregious criminal wrong-doing? Wouldn’t the clamor be deafening to hold to account those responsible?
Despite all this, Bhopali survivors are not giving up their struggle for justice. Take a look at this inspiring photo gallery of the rally they held last week on December 3rd.
December is also the first anniversary of Children Against Dow-Carbide, an association of about 60 youngsters. As 17-year old Safreen Khan, one of the co-founders of the youth group interviewed in our article, puts it, “The Bhopal struggle is not 25 years old. With our entry, the struggle has just entered its youthful phase, and we'll keep the fight alive for as long as it takes.”
What can you do to TakePart?
Inform yourself about what happened in Bhopal in 1984 through the International Campaign for Justice in Bhopal, and about the chemical industry, its impacts, and alternatives.
It is bigger than all but three (only ExxonMobil, BP and Shell are
larger). It is facing the largest potential corporate liability in
history ($27 billion) for causing the world's largest oil spill in the
Ecuadorian rainforest. It is the only major U.S. Corporation still
operating in Burma and, with its partner Total Oil Corp., is the single
largest financial contributor to the Burmese government. It is the
dominant private oil producer in both Angola and Kazakhstan, with
operations in both countries mired in human rights and environmental
abuses. It is the only major oil company to be tried in a U.S. court on
charges of mass human rights abuse, including summary execution and
torture (for its operations in Nigeria).
It is the only oil company to hire one of the Bush Administration's
"torture memo" lawyers (William J. Haynes). It is the largest and most
powerful corporation in California, where it is currently being sued
for conspiring to fix gasoline prices. It has led the fight to keep
California as the only major oil producing state that does not tax oil
when it is pumped from the ground, thereby denying the state an extra
$1.5 billion annually. It is the largest industrial polluter in the Bay
Area and is among the largest single corporate contributors to climate
change on the planet.
Chevron is also the focus of one of the world's most unique and well-organized corporate resistance campaigns.
That campaign got a jolt of energy when Yes Man Andy Bichlbaum came
to San Francisco on Halloween weekend for a special screening of The Yes Men Fix the World.
Global Exchange and I teamed up with Andy (the movie's co-writer,
director, and producer) and a host of the Bay Areas most creative
activists, to lead an entire movie audience out of the theater, into
the streets, and in protest of Chevron.
We spread the word early, far, and wide: The Yes Men are coming! The
Yes Men are coming! They will not only fix the world, they will fix
Chevron too!
Larry Bogad, a Yes Man co-hort and professor of Guerilla Theater,
helped concoct a masterful street theater scenario. A crack team of
protest and street theater organizers was compiled, including David
Solnit of the Mobilization for Climate Justice and Rae Abileah of Code Pink. Rock The Bike signed on and the word kept spreading.
On Sunday, the Roxie Theater in San Francisco's Mission District was
filled beyond capacity with an audience that came ready to protest.
They laughed, clapped, booed, and cheered along with the film. When the
movie ended, Andy answered questions, I talked about Chevron, and Larry
laid out the protest scenario.
Three Chevron executives, protected from the early ravages of climate change in SurvivaBalls,
were dragged up the street by dozens of Chevron minions with nothing
but haz-mat suits to protect them. Those unable to afford any
protection (i.e. The Dead) followed close behind. Next came resistance:
the Chevron street sweepers, actively cleaning up Chevron's messes who
were followed by the protesters, ready to change the story.
We didn't have a permit, but we took a lane of traffic on 16th
street anyway. The police first tried to intervene, then they "joined
in," blocking traffic on our way to Market and Castro.
As we marched and the music blared, people literally came out of
their houses and off of the streets to join in. Passersby eagerly took
postcards detailing Chevron's corporate crimes.
Once we arrived at the gas station, I welcomed everyone and
explained that we were at an independent Chevron (as opposed to
corporate) station, whose owner (whom I'd been speaking with regularly)
had his own list of grievances with his corporate boss. The particular
station was not our target of protest, but rather, the Chevron
Corporation itself.
Larry and Andy than led the entire crowd in a series of Tableaux
Morts. The Chevron executives in their SurvivaBalls drained the
lifeblood from the masses. The people began to rebel, forcing the
SurvivaBalls into the "turtle" position to fend off the attacks.
Ultimately, the separate groups saw their common purpose in resisting
Chevron's abuses. The dead rose, the Chevron minions rebelled, and the
sweepers and protesters joined together. They all chased the Chevron
executives off into the distance, and then danced in the streets,
rejoicing in their shared victory!
The Chevron Program
I direct at Global Exchange seeks to unite Chevron affected communities
across the United States and around the world. By uniting these
communities, we build strength from each other, and become a movement.
By expanding, strengthening, and highlighting this movement, we bring
in more allies and create a powerful advocacy base for real policy
change. Those changes will reign in Chevron, and by extension, the
entire oil industry. And, by raising the voices of those hardest hit by
the true cost of oil and exposing how we all ultimately pay the price,
we help move the world more rapidly away from oil as an energy resource
altogether.
Berkeley City Council last night approved a resolution urging the U.S. Senate to approve S.1700,
the “Energy Security Through Transparency Act” by U.S. Sen. Richard
Lugar, R-Ind., which would urge the Obama Administration to require
that companies disclose payments to foreign governments for oil, gas
and mineral rights. Oakland City Council passed a similar resolution last week.
“Good governance in extractive industries contribute to a better
domestic investment climate for U.S. businesses, increase the
reliability of commodity supplies, promote greater U.S. energy security
and thereby strengthen our national security,” says the summary on Lugar’s Web site.
San Francisco-based Justice in Nigeria Now hails the cities’ actions as a moral victory.
“I was tortured and imprisoned by the Nigerian military for my
peaceful protests against Shell Oil’s destruction of our land,” Suanu
Kingston Bere, a Nigerian activist who spoke at the Berkeley City
Council meeting, said in JINN’s news release. “I believe the City’s
support sends a strong message that communities in the U.S are
concerned about the human rights abuses and environmental damage
associated with oil extraction. I do not want to see my people continue
to go through what I went through.”
Berkeley’s resolution also calls on the State Department to support
third-party peace talks in the Delta to address environmental
destruction and lack of investment in the oil producing region. The
resolution was co-sponsored by Councilmembers Jesse Arreguin, Darryl Moore and Max Anderson and was introduced to the council through the Berkeley Peace and Justice Commission, which worked with JINN to draft it.
JINN says 50 years of oil exploitation in the Niger Delta has
produced over $700 billion in oil revenues shared between the Nigerian
government and oil giants like San Ramon-based Chevron as well as Exxon Mobil and Shell.
More than 40 percent of Nigeria’s oil is exported to the U.S. Yet
despite the corporate oil wealth, local residents’ quality of life has
deteriorated – their drinking polluted, their food fisheries poisoned,
their access to education, health care and even electricity limited.
“Oil companies in Nigeria have had long a relationship with the
notoriously corrupt and historically brutal Nigerian government where
rampant corruption, fraudulent elections and violent suppression of
peaceful protests are the norm in the Delta,” Nigerian writer and
activist Omoyele Sowore said in JINN’s news release. “The proposed ESTT
Act in the Senate is an important step toward holding oil companies
accountable for their collusion with the Nigerian government, which
protects their profits while killing and injuring innocent local people
and destroying the Delta’s fragile environment.”
The best time to announce the worst news is late on Friday. The
federal government and public relations firms have known this for
years. So it was that the National Marine Fisheries Service (NMFS)
scheduled its press conference last Friday for 3 p.m., Pacific Daylight
Time or (even better!) 6 p.m. in the east.
As planned, the news that stocks of Bering Sea pollock – America’s
largest fishery – have declined to a 30-year-low was reported only in
the fishing trade press and the Seattle and Anchorage papers. Mission accomplished.
Every summer, NMFS technicians survey pollock. The amount of fish
allowed to be caught in 2009 was based on the 2008 summer survey. The
2010 quota will be based on the 2009 survey and so on. On one hand,
these surveys are about “environmental protection.” (Alas, we must us
the dreaded quotation marks, because the environment has not
been protected.) On the other hand, the surveys are a
government-subsidized service for the industrial trawler fleet that
pulls the pollock from the sea.
On the other, other hand (we’re playing three hands today), most
people don’t know what a pollock is, but we eat enough of it. (As I
mentioned two paragraphs ago, it’s America’s largest fishery.) All that
imitation crabmeat in the supermarket wet case? Pollock. (And why must
pollock imitate crabmeat? American fisheries management.)
Pollock is the whitefish in all those
disgusting frozen fish sticks. Pollock is, or was, the fish in the
sandwiches at the fast food restaurants. Now that pollock is in severe
decline, McDonald’s is considering switching to hoki. This has nothing
to do with environmental awareness; McDonald’s requires a steady supply
of a consistent product at a predictable price. Hoki, a whitefish
that’s overfished by industrial trawlers in New Zealand waters, will be
a temporary fix, a few years at best. Thanks, Ronald.
Where was I? Oh right, severe decline. Three years ago, NMFS
allowed the trawlers to take 1.5 million metric tons of pollock out of
the Bering Sea. This year, because the decline was already evident in
last year’s survey, the quota was set at 815,000 metric tons. The
industry trade press headlines news like this as: “Pollock prices
likely to rise.”
The At-Sea Processors Association, the trade group that represents
the industrial trawlers, will try to convince the feds to keep the
quota high and if the past is any evidence, they’ll do it. That’s why
the fish population is crashing. What’s worse, they may bully the feds
into continuing the pollock roe season. Roe, of course, is fish talk
for eggs. The trawlers deliberately target the pregnant females, strip
the eggs out of their bellies and sell them for big bucks on the Asian
market.
What the Epicureans of Korea and Japan eat for dinner is what
doesn’t become a fish in the Bering Sea, with tragic consequences for
the sea and the other animals that live there. Pollock have
traditionally been mighty breeders, the rabbits of the northern seas
(one reason we fish them so hard). As such, they’ve provided much of
the food for the rest of the animals in the ocean, like Steller sea
lions and Pribilof fur seals. Because we humans got greedy with the
trawlers and the roe, now those species (and more) are in trouble.
Yes, eating the eggs is a great way to deplete a population of fish
(or any other wild creature) and yes, there’s more to it than that.
Global warming plays a role, with warm water moving north into the
Bering Sea, making conditions for pollock love less favorable than
they’ve been in decades past. The pollock don’t cause global warming,
though, nor do sea lions or fur seals. So yeah, we should stop burning
so many fossil fuels, but until we do, we have to back off with the
trawlers and give the pollock time to rebuild their numbers.
An irony here (not the irony, there’s too much irony for
that) is that Bering Sea pollock are often referred to (by the
industrial trawling people) as “the best-managed fishery in the world.”
Sadder still is that the statement is not far from accurate. Look at
Atlantic cod, that population crashed 15 years ago and has yet to come
back.
Yes, they can. And
they will, if the Supreme Court decides for corporations and against
real human beings and their democracy in a case the Court will be
hearing today, Citizens United v. Federal Election Commission.
Until
reaching the Supreme Court last year, this case has involved a narrow
issue about whether an anti-Hillary Clinton movie made in the heat of
the last presidential election is covered by restrictions in the
McCain-Feingold campaign finance law. However, in a highly unusual move
announced on the last day of the Supreme Court's 2008 term, the
justices announced they wanted to reconsider two other pivotal
decisions that limit the role of corporate money in politics.
The Court ordered a special oral argument on the issue, before the full start of their 2009 term in October.
The
Court will today hear argument on whether prior decisions blocking
corporations from spending their money on "independent expenditures"
for electoral candidates should be overturned. "Independent
expenditures" are funds spent without coordination with a candidate's
campaign. The rationale for such a move would be that existing rules
interfere with corporations' First Amendment rights to free speech.
Overturning
the court's precedents on corporate election expenditures would be
nothing short of a disaster. Corporations already dominate our
political process -- through political action committees, fundraisers,
high-paid lobbyists and personal contributions by corporate insiders,
often bundled together to increase their impact, threats to move jobs
abroad and more.
On the dominant issues of the day -- climate
change, health care and financial regulation -- corporate interests are
leveraging their political investments to sidetrack vital measures to
protect the planet, expand health care coverage while controlling
costs, and prevent future financial meltdowns.
The current system
demands reform to limit corporate influence. Public funding of
elections is the obvious and necessary (though very partial) first step.
Yet
the Supreme Court may actually roll back the limits on corporate
electoral spending now in place. These limits are very inadequate, but
they do block unlimited spending from corporate treasuries to influence
election outcomes. Rolling back those limits will unleash corporations
to ramp up their spending still further, with a potentially decisive
chilling effect on candidates critical of the Chamber of Commerce
agenda.
The damage will be double, because a Court ruling on
constitutional grounds would effectively overturn the laws in place in
two dozen states similarly barring corporate expenditures on elections.
More
than 100 years ago, reacting to what many now call the First Gilded
Age, Congress acted to prohibit direct corporate donations to electoral
candidates. Corporate expenditures in electoral races have been
prohibited for more than 60 years.
These rules reflected the
not-very-controversial observation that for-profit corporations have a
unique ability to gather enormous funds and that expenditures from the
corporate treasury are certain to undermine democracy - understood to
mean rule by the people. Real human beings, not corporations.
In
arguing to uphold the existing corporate expenditure restrictions, the
Federal Election Commission has emphasized these common sense
observations.
"For-profit corporations have attributes that no
natural person shares," the FEC argues. Noting that corporations are
state-created -- not natural entities -- the FEC explains that
"for-profit corporations are inherently more likely than individuals to
engage in electioneering behavior that poses a risk of actual or
apparent corruption of office-holders." The FEC also notes that
corporate spending on elections does not reflect the views of a
company's owners (shareholders).
Although the signs aren't good, there is no certainty how the Court will decide Citizens United.
There is some hope that the Court will decide that it is inappropriate
to roll back such longstanding and important campaign finance rules, in
a case where the issue was not presented in the lower courts, and where
the litigants' dispute can be decided on much narrower grounds.
Public
Citizen is organizing people to protest against a roll back of existing
restrictions on corporate campaign expenditures. To join the effort, go
to www.dontgetrolled.org.
People are pledging to protest in diverse ways -- from street actions
to letter writing -- today, and in the event of a bad decision, and
also networking for solutions to corporate-corrupted elections.
Ours
is a government of the people, by the people, for the people -- not the
corporations and their money. Corporations don't vote, and they
shouldn't be permitted to spend limitless amounts of money to influence
election outcomes.
Robert Weissman is president of Public Citizen.
Public Citizen attorney Scott Nelson serves as counsel to the original
sponsors of the McCain-Feingold law, who have filed an amicus brief in
the case, asking that existing restrictions on corporate election
expenditures be maintained.
In July 2006, CorpWatch exposed evidence that a Dutch shipbuilding company, selling military equipment to Chile, was offering bribes to officials there. CorpWatch’s reporting is now fueling calls by anti-corruption activists and opposition politicians for a formal parliamentary investigation into the operations of the company, Rotterdamse Droogdok Maatschappij (RDM).
The RDM case may become the first test for the Netherlands’ new anti-corruption legislation and for its will and ability to prosecute corporations for making foreign bribes.
The RDM bribery scandal dates back to 1998 when the company sold 202 Leopard tanks to the Chilean army. The Rotterdam-based company had purchased the tanks as scrap metal from the Dutch Department of Defense and rebuilt them. It then paid bribes to Chilean army officials facilitating the sale.
Joep van den Nieuwenhuyzen, the Dutch businessman, and officials of his company—who offered and facilitated the bribes—have never been prosecuted in relation to this case. The Dutch Public Prosecutor’s Office told CorpWatch that at the time of RDM’s bribes, the Netherlands had no laws against offering bribes to officials overseas. Legislation to make these practices illegal was introduced in 2001. Further muddying the waters, RDM went bankrupt in 2006, and Joep van den Nieuwenhuyzen, its owner, was jailed for fraud. He was released two years ago.
The current Dutch government investigation will delve further into the extent and mechanics of the bribery scheme, and interview key politicians active at the time. A Dutch parliamentary team is following up on the case in the Netherlands and in Chile. Key targets of the investigation include Edmundo Perez Yoma, Chile’s former minister of defense and currently its interior minister, along with his then deputy Mario Fernandez, now member of the Constitutional Court. Both are suspected of facilitating the bribery. Chile has announced similar investigations.
One Dutch official at the time of the tank sales, then Minister of Defense Joris Voorhoeve, joined the call for parliament to undertake a broad investigation into RDM’s bribes. He defended his own role. While Voorhoeve acknowledges that he issued an export license for the 202 Dutch Leopard tanks, he maintains he is appalled and shocked by the allegations of bribery. “The Netherlands government would never agree to pay bribes to get a deal closed,” he said, “nor participate in any other form of corruption.” The sales were justified, he said, because when they took place in 1998, Chile had become a democracy and General Augusto Pinochet, who had ruled from 1973 to 1990, was no longer president. But in fact, the former dictator still wielded considerable influence as senator for life and commander-in-chief of the armed forces, positions he retained until his death in 2006.
The parliamentary investigation, while welcomed by many, is late in coming. For years politicians ignored requests by the Netherlands Socialist Party for a formal investigation—again, sparked in part by CorpWatch’s reporting on the money RDM paid to the former dictator and his entourage.
According to a Swiss newspaper, van den Nieuwenhuyzen, currently a Swiss resident, said that he was not aware that the company he once owned was under investigation for payments to Chilean army officials.
But former RDM workers and associates charged that the company paid millions to Chilean colonels and brigadier generals through a third party, with $1.6 million going to a private consultant to the late general Pinochet. RDM said the $1.6 million was a donation to the Pinochet Foundation, a Santiago-based organization that promotes the general’s legacy.
Chilean and cooperating Dutch private investigators that examined the Pinochet’s overseas bank accounts have found that the dictator had stashed almost $28 million overseas, mainly in European bank accounts. Dutch investigators will look for links between that money, the two recently jailed Chilean army officers, and Pinochet.
The spokesperson of the Dutch Socialist Party in Rotterdam told CorpWatch that there have been no successful prosecutions of corporations in the Netherlands for foreign bribes, because it is extremely difficult to secure evidence in foreign countries. Of the scores of cases under consideration, none have yet reached the courts. If RDM is charged, it will be the first time Dutch officials or businesspeople are prosecuted under the new regulations.
These days just about every large corporation would have us believe
that it is in the vanguard of the fight to reverse global warming.
Companies mount expensive ad campaigns to brag about raising their
energy efficiency and shrinking their carbon footprint.
Yet a bold article in the latest issue of business-friendly Bloomberg Markets
magazine documents how some large U.S.-based transnationals are
complicit in a process that does more to exacerbate the climate crisis
than anything else: the ongoing destruction of the Amazon rain forest.
While deforestation is usually blamed on local ranchers and loggers, Bloomberg
points the finger at companies such as Alcoa and Cargill, which the
magazine charges have used their power to get authorities in Brazil to
approve large projects that violate the spirit of the country’s
environmental regulations.
Alcoa is constructing a huge bauxite mine that will chew up more
than 25,000 acres of virgin jungle in an area, the magazine says, “is
supposed to be preserved unharmed forever for local residents.” Bloomberg
cites Brazilian prosecutors who have been waging a four-year legal
battle against an Alcoa subsidiary that is said to have circumvented
the country’s national policies by obtaining a state rather than a
federal permit for the project.
Bloomberg also focuses on the widely criticized grain port
that Cargill built on the Amazon River. Cargill claims to be
discouraging deforestation by the farmers supplying the soybeans that
pass through the port, but the Brazilian prosecutors interviewed by Bloomberg expressed skepticism that the effort was having much effect.
Apart from the big on-site projects, Bloomberg looks at
major corporations that it says purchase beef and leather from
Amazonian ranchers who engage in illegal deforestation. Citing
Brazilian export records, the magazine identifies Wal-Mart, McDonald’s,
Kraft Foods and Carrefour as purchasers of the beef and General Motors,
Ford and Mercedes-Benz as purchasers of leather.
The impact of the Amazon cattle ranchers was also the focus of a Greenpeace report published in June. That report put heat on major shoe companies that are using leather produced by those ranchers.
Nike and Timberland
responded to the study by pledging to end their use of leather hides
from deforested areas in the Amazon basin. Greenpeace is trying to get
other shoe companies to follow suit.
Think of the Amazon the next time a company such as Wal-Mart tells
us what wonderful things it is doing to address the climate crisis.
Chipotle
is getting burned by the very scheme it cooked up as what it thought
was a great public relations opportunity - sponsoring free screenings
of Food, Inc. - is becoming a PR fiasco.
Food, Inc. director
Robert Kenner and co-producer Eric Schlosser speak out and Chipotle has
to answer tough questions in Tom Philpott's must-read article on Grist.org "Chipotle Grilled: Burrito chain’s Food, Inc. sponsorship generates off-screen drama over farm-worker issues."
Schlosser
explains that while many of Chipotle's efforts are great, he
nonetheless "cares more about human rights than any of those things."
He continues: "If Taco Bell, Subway, Burger King, and McDonald’s can
reach agreement with the CIW, I don’t see why Chipotle can’t."
Kenner
likewise, the article states, "made clear that he disagreed with the
company’s position on the CIW" even if he agrees with other things
Chipotle is doing. Kenner explains: "I was hopeful that by associating
itself with a film that promotes workers’ rights, [Chipotle] might be
inclined to sign with the Coalition . . . And now I’m not confident
they will.”
Our cameo
in this unfolding fiasco is also noted: "Chipotle clearly resents such
critical statements at events designed to demonstrate its
sustainability cred. At one of its screenings in Denver, Chipotle
employees barred people
from the Campaign for Fair Food to speak after the
screening—overturning an arrangement that had been made with Food,
Inc’s public-education campaign. " After investigating the incident,
the article decides: "In other words, people wanting to discuss the CIW
issue aren’t to be given stage time at the Chipotle-sponsored Food,
Inc. screenings."
Of
course Denver wasn't the only city where Chipotle got heat from Fair
Food activists while trying to bask in Food, Inc.'s glory. All over the
country allies of the Coalition of Immokalee Workers took to the movies to deflate Chipotle's hot air about "food with integrity" with some sharp truths about farm labor in Chipotle's supply chain. See the great photo report from the nationwide "Battle of the Burrito" on the CIW website.
References to this PR fiasco are popping up in unforseen places such as thedailygreen or even more surprising the mainstream investor blog The Motely Fool. And the bed which Chipotle made for itself in which it now must lie can't be feeling any more comfortable.
The lesson for Chipotle to learn from its bungled Food, Inc. PR experiment? The ecorazzi blog has these fitting words: "you can’t have your 1000+ calorie burrito and eat it too."
Wal-Mart has taken the latest in a long series of steps to make
itself look good by imposing burdens on its suppliers. The mammoth
retailer, which is thriving amid the recession, recently announced
plans to require its more than 100,000 suppliers to provide information
about their operations that would form the basis of a product
sustainability index.
Rating products is a good idea. It’s already being done by various
non-profit organizations that bring independence and legitimacy to the
process. Wal-Mart, by contrast, brings a lot of negative baggage. In
recent years, Wal-Mart has used a purported commitment to environmental
responsibility to draw attention away from its abysmal record with
regard to labor relations, wage and hour regulations, and employment
discrimination laws. It also wants us to forget its scandalous tax
avoidance policies and its disastrous impact on small competitors. The
idea that a company with a business model based on automobile-dependent
customers and exploitative supplier factories on the other side of the
globe can be considered sustainable should be dismissed out of hand.
Yet Wal-Mart is skilled at greenwashing and is, alas, being taken
seriously by many observers who should know better.
On close examination, Wal-Mart’s latest plan is, like many of its
previous social responsibility initiatives, rather thin. All the
company is doing at first is to ask suppliers to answer 15 questions.
Ten of these involve environmental issues such as greenhouse gas
emissions, water use, waste generation and raw materials sourcing. The
final five questions are listed under the heading of “People and
Community: Ensuring Responsible and Ethical Production.”
Two of them involve “social compliance.” It is an amazing act of
chutzpah for Wal-Mart, which probably keeps more sweatshops in business
than any other company, to claim moral authority to ask suppliers about
the treatment of workers in their supply chain.
The questions in this category seem to assume that suppliers don’t
do their own manufacturing. This is a tacit acknowledgement of how
Wal-Mart has forced U.S. manufacturers to shift production offshore,
and often to outside contractors. Now Wal-Mart has to ask those
companies to be sure they know the location of all the plants making
their products and the quality of their output.
The point about quality was one that CEO Mike Duke (photo) emphasized
when announcing the rating system. This is also highly disingenuous.
For years, Wal-Mart was notorious for pressing suppliers to reduce the
quality of their goods to keep down prices. Now the behemoth of
Bentonville is suddenly a proponent of proponent of products that “are
more efficient, that last longer and perform better.” Will Wal-Mart pay
its suppliers higher prices to cover the costs of improving quality?
I
can’t bring myself to jump on Wal-Mart’s bandwagon. If I want product
ratings I will turn not to Mike Duke but rather to someone like Dara
O’Rourke, who founded a website called Good Guide
that rates consumer products and their producers using independently
collected data from social investing firms such as KLD Research and
non-profits such as the Environmental Working Group. It uses criteria
such as labor rights, cancer risks and reproductive health hazards that
are unlikely to ever find their way into the Wal-Mart index.
Good Guide also rates companies, including Wal-Mart, which receives a mediocre score
of 5.3 (out of 10), and it reaches that level thanks to its marks on
p.r.-related measures such as charitable contributions and some but not
all environmental measures. In the category of Consumers it gets a 4.1,
Corporate Ethics 3.9, and for Labor and Human Rights 4.1 (which is
generous).
Maybe Wal-Mart should focus on improving its own scores before presuming to rate everyone else.
After thirteen years and
countless hours by lawyers, community members, and activists around the
world, Royal Dutch Shell finally settled the Wiwa v Shell case in a New York court for $15.5 million.
Plaintiffs in the case, which included Ken Saro-Wiwa Jr., and the
families of other Ogoni men hanged in November 1995, charged the
Royal Dutch/Shell company, its Nigerian subsidiary, and the former
chief of its Nigerian operation, Brian Anderson, with complicity in the
torture, killing, and other abuses of Ogoni leader Ken Saro-Wiwa and
other non-violent Nigerian activists in the mid-1990s in the Ogoni
region of the Niger Delta.
Shell says
they settled the case as a "humanitarian gesture" to the Ogoni. Does
anyone really believe that after fighting for more than a decade to
keep this out of court, Shell suddenly woke up and felt great
compassion for the Ogoni? Please.
Shell settled because they were scared, and they knew the evidence
against them was overwhelming. They publicly say they had nothing to do
with the execution of Ken Saro-Wiwa and the other Ogoni, and yet there
were documents and video that they fought hard to keep out of the public eye.
Evidence that was to be introduced in the case included an internal Shell memo
where the head of Shell Nigeria offered to intervene on Saro-Wiwa's
behalf, if only Saro-Wiwa and others would stop claiming that Shell had
made payments to the military.
Witness were set to testify that they saw Shell vehicles
transporting Nigerian soldiers, that they saw Shell employees
conferring with the military, that they saw money being exchanged
between Shell employees and military officers, and that they heard
military officers, including the brutal Major Okuntimo of the Rivers
State Internal Security Task Force, make admissions regarding the work
they were doing on behalf of Shell.
We have known some of Shell's involvement in this tragedy for a long
time. In early May of 1994, Ken Saro-Wiwa Sr. faxed me a memo authored
by Major Okuntimo which read "Shell operations still impossible unless ruthless military operations are undertaken for smooth economic activities to commence" and further called for "pressure on oil companies for prompt regular inputs."
I received that fax and immediately called Ken. He said "this is it.
They're going to kill us all. All for Shell." It was the last time I
talked with him. Several weeks later he was arrested on the trumped up
charges for which he was ultimately hanged.
In the last day, lots of people have asked me if $15.5 million is
enough to compensate for the hanging of nine men, the death of
thousands more, and for the destruction of an ecosystem. No of course
not. But was it on par with what a jury would have awarded in this
case? Yes, lawyers tell me, for sure.
More importantly, does the settlement bring relief to Ken Wiwa Jr.
and the families of the other men who were executed? If you read Ken's thoughtful and moving piece in the Guardian, the answer is clearly yes. That alone should be cause for celebration.
Ken Sr.'s famous last words from the gallows were "lord take my soul
but the struggle continues." In this moment, perhaps more than ever
before, we need to heed that call to action. The settlement in this
case brings satisfaction to the plaintiffs for an event that happened
14 years ago. It in no way, shape or form excuses or absolves Shell of
their ongoing destruction of the Niger Delta environment.
One of the central complaints of Niger Delta communities for forty
years has been gas flaring, which sends plumes of toxic pollutants into
the air and water of the Niger Delta. Gas flaring endangers human
health, harms local ecosystems, emits huge amounts of greenhouse gases,
wastes vast quantities of natural gas, and is against Nigerian law.
Shell does it nowhere else in the world in volumes that are even
remotely comparable to what they flare in the Delta.
But Shell is still flaring gas in Nigeria.
While there is no doubt that the settlement represented a
significant victory for the plaintiffs' in this one human rights case
against Shell, true justice will not be served as long as the people of
Nigeria continue to suffer the terrible impact of Shell's operations.
Shell estimates it would cost about $3 billion -- only 10% of just
their last year's profits -- to end Shell's gas flaring in Nigeria once
and for all.
But instead of putting their great "humanitarian concern" into
action, Shell points the finger at the Nigerian government and demands
that they pay to end this practice.
Send a message to Shell's CEO
Jeroen van der Veer, and let him know that if he really wants to prove
his great concern for the Ogoni people, he'll end gas flaring once and
for all.
When people with strong ideological perspectives are often outraged
by media coverage of their pet issues. When both sides are mad, you
know you're doing something right. But how often do you hear
corporations furious about they way they are covered in the business
section? The section seems to lend itself to favor-currying and
soft-shoeing.
In the lead-up to Chevron's annual shareholders meeting tomorrow in San Ramon, the company landed a puff piece on KGO focusing on its efforts to decrease its water usage. No mention of the Amazon controversy, and no mention of outside pressure on Chevron, EBMUD's largest water user.
I'm disappointed to say that a Chronicleinterview
with the company's top lawyer also softballs the issues, while giving
Chevron the opportunity to present its side of the story with no
opportunity for response from the company's many critics. [Update: Chron editors tell me there will be more coverage of Chevron later in the week.]
Well, Chevron's opponents, including San Francisco's Amazon Watch, have taken matters into their own hands, releasing an alternate annual report that presents the externalities
not listed in the company's balance sheet, which shows a record profit
of $24 billion, making the company the second most profitable in the
United States.
Did you know that Chevron's Richmond refinery was built in 1902 and emitted 100,000 pounds of toxic waste in 2007, consisting of no less than 38 toxic substances? The EPA ranks it as one of the worst refineries
in the nation. With 17,000 people living within 3 miles from the plant,
you'd think the San Ramon-based company would take local heat from more
than just a couple dozen activists.
Chevron has sought to brand itself an "energy" company, one eagerly pursuing alternatives to petroleum. Its aggressive "Will You Join Us?"
ad campaign asked regular folks to reduce their energy consumption,
suggesting that Chevron was doing the same. In actuality, the company
spent less than 3 percent of its whopping capital and
exploratory expenditures on alternative energy. And it has refused to
offer better reporting on its greenhouse gas emissions, despite strong
shareholder support for it. (The aggressive, and misleading, ad
campaign seems to have ired the report's researchers as well: The
report is decorated by numerous parodies, and some have been
wheat-pasted around town.)
It's a very well researched report, written by the scholar Antonia Juhasz,
clearly divided into regional issues, and it's a much needed
counterbalance to the friendly coverage Chevron is otherwise getting.
(Juhasz was interviewed on Democracy Now this morning.)
For information on protesting the shareholder meeting early tomorrow morning, click here.
Posted by Laura Carlsen on April 3rd, 2009 Americas Policy Program, Center for International Policy
At the end of
March, the Inter-American Development Bank (IDB) celebrated its 50th
anniversary in Medellin. The occasion presents an opportunity to revise
concepts and move toward a fairer development model. It is logical to
think that among the festivities, a process of evaluation and
self-critique would begin regarding the bank's actions and work in the
region.
The circumstances demand it. The continent has been plunged into a
grave economic crisis, in part because of the string of structural
reforms, deregulation, foreign market dependence, and privatization
that the IDB has supported in the region. Limits on the use of
non-renewable fuels have become more and more obvious while climate
change threatens to affect the production of basic foods and increase
the frequency of natural disasters. Forced migration characterizes
modern life and growing inequality has become the most important
challenge faced by all the countries in the region.
Medellin: site of the 50th anniversary of the IDB. Photo: www.skyscraperlife.com.
In spite of this gray outlook, it seemed that until now everything
suggested that the IDB would prescribe more of the same medicine. They
predicted an increase in loans to the region for the record figure of
US$18 billion for 2009 as a response to the crisis. This will generate
a new wave of debt in the recipient countries, while at the same time
the development model behind the loans faces a crisis of credibility
due to its dubious results. For the IDB, development is seen as a
process of ensuring the transnational mobility of capital, enabling
foreign investment, the transfer of goods, and access to natural
resources. In recent years, this model has been imposed on regions that
were previously closed off due to their geographical location or
because of little interest from big business. Now that the value of
natural resources is increasing and national economies have opted for
exports, mega-projects including transportation infrastructure and
hydroelectric power plants, among others, have become attractive again.
They generally target regions with a low population density, and, in
many cases, significant indigenous populations. While these communities
are often forgotten by their national governments and suffer high
levels of marginalization, at the same time their territories are rich
in both culture and biodiversity.
The IDB has been a major promoter of infrastructure mega-projects
designed to drive this vision. Two mega-project master plans have been
of particular interest to the IDB: The Plan Puebla-Panama (also known
as the Mesoamerican Integration and Development Project) and the
Initiative for the Integration of Regional Infrastructure in South
America (IIRSA). These plans include the construction of
super-highways, dams, electricity networks, and more. The projects
signal a drastic change in the use of land and resources. Local,
regional, and national markets—which generate more jobs and constitute
the majority of food distribution—are seen as a hindrance, and natural
resources—conserved by indigenous communities—are considered the spoils
of transnational business.
Among its objectives, the IDB aims to generate development in these
regions. However, a recent study revealed that the mega-projects
financed by the IDB in many cases end up displacing thousands of people
who are supposed to be the beneficiaries. The construction of dams is
the clearest example because it entails the involuntary displacement
through the flooding of vast areas which often include pre-existing
communities. One example is the La Parota hydroelectric dam in
Guerrero, Mexico which would displace around 25,000 people and has
currently been halted due to popular resistance. A group of 43
grassroots organizations met prior to the IDB meeting in Medellin. They
presented studies and testimonies on the impacts of these projects in
an effort to change the IDB's policies. Through the campaign known as
"The IDB: 50 years financing inequality," these groups argue that,
rather than alleviate the issue of poverty, mega-projects channel the
profits gained from natural resources into the hands of the private
sector and destroy the social fabric and community networks necessary
for indigenous survival.
The solution to poverty that the IDB fundamentally proposes would
seem to be: reduce poverty by expelling the poor. The two meetings—that
of the IDB authorities and that of the organizations which question its
practices—present an opportunity to revise the concept of development
and move toward a fairer development model.
Amid the worst financial and economic crisis in decades, the U.S.
business press tends to get caught up in the daily fluctuations of the
stock market and, to a lesser extent, the monthly changes in the
unemployment rate. By contrast, London’s Financial Times is looking at the big picture. It recently launched a series
of articles under the rubric of The Future of Capitalism. In addition
to soliciting varying views on this monumental question, the paper
published a feature this week presuming to name the 50 people around the world who will “frame the way forward.”
Kicking off the series, the FT’s Martin Wolf was blunt in asserting
that the ideology of unfettered markets promoted over the past three
decades must now be judged a failure. Sounding like a traditional
Marxist, Wolf writes that “the era of liberalisation [the European term
for market fundamentalism] contained seeds of its own downfall” in the
form of tendencies such as “frenetic financial innovation” and “bubbles
in asset prices.”
An article
in the series by Gillian Tett casually notes that “naked greed, lax
regulation, excessively loose monetary policy, fraudulent borrowing and
managerial failure all played a role” in bringing about the crisis.
Richard Layard of the London School of Economics weighs in with a piece
arguing that “we should stop the worship of money and create a more
humane society where the quality of human experience is the criterion.”
Did editorial copy intended for New Left Review mistakenly end up in the FT computers?
Wolf finished his initial article
with the statement: “Where we end up, after this financial tornado, is
for us to seek to determine.” Yet who is the “we” Wolf is referring to?
Following the damning critique of markets and poor government
oversight, the last ones we should turn to for leadership are the
powers that be. Yet that is exactly the group that dominates the list
of those who, according to the editors of FT, will lead the way
forward. The 50 movers and shakers include 14 politicians, starting
with President Obama and Chinese Prime Minister Wen Jiabao; ten central
bankers; three financial regulators; and four heads of multinational
institutions such as the IMF and the WTO. Also included are six
economists, including Paul Krugman and Obama advisor Paul Volcker, and
three prominent investors, among them George Soros and Warren Buffett.
The list also finds room for three chief executives (the heads of
Nissan, PepsiCo and Google) and, amazingly, the chiefs of four major
banks: Goldman Sachs, JPMorgan Chase, HSBC and BNP Paribas. It even
includes two talking heads: Arianna Huffington and Rush Limbaugh.
Except for Olivier Besancenot of France’s New Anticapitalist Party,
who is included among the politicians in a way that seems a bit
condescending, there is not a single person on the list directly
involved in a movement to challenge corporate power or even to
significantly alter the relationship between business and the rest of
society. There is not a single labor leader, prominent environmental
advocate or other leading activist. The editors at FT seem never to
have heard of civil society.
Then again, the problem may not be thickheadedness among FT editors.
Perhaps the voices for radical change have simply not been loud enough
to earn a place on a list of those who will play a significant role in
the shaping capitalism’s future. In fact, one of the articles in the FT
series suggests
that in Europe neither the Left nor the labor movement has taken a
leadership role in responding to the crisis, even as spontaneous
protests have erupted in numerous countries.
In the United States, where those forces are weaker, anger at the
crisis has to a great extent been channeled into support for the
Keynesian policies of the Obama Administration. That’s unavoidable in
the short term, but it doesn’t address the need for fundamental
alteration of economic institutions. If, as the Financial Times suggests, the future of capitalism is up for grabs, let’s make sure we all join the fray.
Before his execution, Socrates was visited in prison by his friend
Crito, who told him the bribes for the guards were ready and Socrates
could escape whenever he wished. Socrates refused to go.
Crito, angered, argued Socrates would a) leave his children orphans
and b) bring shame on his friends, because people would assume they
were too cheap to finance his escape. (Apparently, this sort of thing
was common in Athens in those days.)
Socrates replied that in his imagination, he hears the Laws of
Athens saying, “What do you mean by trying to escape but to destroy us,
the Laws, and the whole city so far as in you lies? Do you think a
state can exist and not be overthrown in which the decisions of law are
of no force and are disregarded and set at naught by private
individuals?”
In short, either Socrates or the rule of law had to die. Socrates
chose to die rather than diminish his city. Now, as then, he’d be a
lonely guy. His notion that the city lay within him – that he was the city of Athens – is striking.
All failure to enforce law – or to work
around it – is bad. This applies equally to speed limits, armed robbery
and banking regulations. Failure to enforce our agreed-upon standards
weakens our social bonds and undermines faith in both our justice
system and our government. If the police will not apprehend or the
courts will not prosecute or the legislatures draw protective circles
around certain elements in society, then society as a whole suffers.
There is within all of us an affinity for justice. The majority of
citizens have no training in law or political science, but we possess
intuitive notions of right and wrong. We’re willing to tolerate some
discrepancy on either margin of the page, but when things are pushed
too far out of balance on either side, then the door to vigilantism,
riot and revolution is opened.
This great imbalance – and we’re getting strong whiffs of it now –
is a failure by our institutions to enforce the terms of the American
social contract.
“America is a classless society.” “All citizens stand equal before
the law.” Blah, blah, blah. It’s illegal to rob a convenience store.
It’s illegal to defraud investors. The accused robber, who flashed a
knife and made off with eighty or a hundred bucks, sits behind steel
bars and waits for his overburdened public defender to get around to
speaking with him.
The accused fraudulent investment fund manager, who flashed a phony
set of books and made off with eight or fifty billion dollars, sits in
his cosmopolitan penthouse and consults a million-dollar legal team,
which he pays with ill-gotten dosh.
If we vigorously enforce laws on the working class and make only
half-hearted attempts to do so with the managing class, then the class
warfare Republican politician are always whining about comes closer to
reality.
Worse, by allowing Ken Lays, Bernie Madoffs and Allen Stanfords to
get off easy, it destroys real opportunity for people in the working
classes to realize the American dream for themselves and their
children. The crimes of the managing class – unlike the convenience
store robber – have the real effect of depriving millions – both here
and abroad - of their livelihoods and homes when the financial system
crashes.
In the news and before Congressional committee, we hear that
regulators were specifically warned for years that Bernie Madoff and
Allen Stanford were violating regulations.
While the beltway talkers argue over whether Wall Street bankers
should be allowed to keep their bonuses and exorbitant salaries, the
discussion that had yet to start is: why were these highly leveraged
instruments and securitized debt transactions legal in the first place?
We’re told incessantly that the Wall Street banking transactions were
so complicated that “no one really understands them.” There is,
however, the easily understood principle that one’s debts should be
balanced by one’s assets. Or one’s at least one’s assets should be
within shouting distance of one’s debts.
We have speed limits not because driving 110 is inherently evil, but
because it is unsafe and anyone who does shows reckless disregard for
themselves and others. And yet, a legion of reckless drivers loosed on
the interstate for a decade could not have wrought as much misery as
this handful of bankers, brokers and hedge fund managers.
We will now suffer for years. These will be hard times, but within
this hardship will be opportunities to rediscover the extent to which
our society lives within in us, as Socrates would have said.
For the past eight years, the oil giant formerly known as British
Petroleum has tried to convince the world that its initials stand for
“Beyond Petroleum.” An announcement just issued by the U.S.
Environmental Protection Agency may suggest that the real meaning of BP
is Brazen Polluter.
The EPA revealed
that BP Products North America will pay nearly $180 million to settle
charges that it has failed to comply with a 2001 consent decree under
which it was supposed to implement strict controls on benzene and
benzene-tainted waste generated by the company’s vast oil refining
complex in Texas City, Texas, located south of Houston. Since the
1920s, benzene has been known to cause cancer.
Among BP’s self-proclaimed corporate values
is to be “environmentally responsible with the aspiration of ‘no damage
to the environment’” and to ensure that “no one is subject to
unnecessary risk while working for the group.” Somehow, that message
did not seem to make its way to BP’s operation in Texas City, which has
a dismal performance record.
The benzene problem in Texas City was supposed to be addressed as part of the $650 million agreement
BP reached in January 2001 with the EPA and the Justice Department
covering eight refineries around the country. Yet environmental
officials in Texas later found that benzene emissions at the plant
remained high. BP refused to accept that finding and tried to stonewall
the state, which later imposed a fine of $225,000.
In March 2005 a huge explosion (photo) at the refinery killed 15
workers and injured more than 170. The blast blew a hole in a benzene
storage tank, contaminating the air so seriously that safety
investigators could not enter the site for a week after the incident.
BP was later cited for egregious safety violations and paid a record fine of $21.4 million. Subsequently, a blue-ribbon panel chaired by former secretary of state James Baker III found
that BP had failed to spend enough money on safety and failed to take
other steps that could have prevented the disaster in Texas City. Still
later, the company paid a $50 million fine as part of a plea agreement on related criminal charges.
In an apparent effort to repair its image, BP has tried to associate
itself with positive environmental initiatives. The company was, for
instance, one of the primary sponsors
of the big Good Jobs/Green Jobs conference held in Washington earlier
this month. Yet as long as BP operates dirty facilities such as the
Texas City refinery, the company’s sunburst logo, its purported
earth-friendly values and its claim of going beyond petroleum will be
nothing more than blatant greenwashing.
Norway's Ministry of Finance announced Friday that it would exclude mining giant Barrick Gold and U.S. weapons producer Textron Inc from the country's pension fund for ethical reasons. This is an especially significant judgment for Canada, as Barrick Gold is currently Canada's largest publicly traded company.
While the Norwegian Council of Ethics full recommendation mentions conflicts involving Barrick in Chile, Tanzania, and the Philippines, the panel acknowledged that, "due to limited resources," it restricted its investigation of Barrick to the Porgera mine in Papua New Guinea. The Porgera mine has been a prime target for criticism for its use of riverine tailings disposal, a practice banned in almost every country in the world.
"It's unbelievably embarrassing," admitted Green Party deputy leader Adriane Carr. "It's got to be bad news for Canada when a foreign government says it's going to sell its shares in a Canadian company they figure is unethical."
This isn't the first time that Norway's Fund has divested from a gold mining company. In fact, looking at a list, the fund – with the notable exception of Walmart – divests exclusively from mining (primarily gold mining) corporations and corporations that produce nuclear weapons or cluster munitions... an interesting juxtaposition highlighting the comparable nature of mining to the production of weapons of mass destruction, especially in terms of long-term environmental consequences.
Compare that to Canada's treatment of gold mining companies. Just this last December, Peter Munk, the chairman and founder of Barrick Gold, received the Order of Canada, Canada's highest civilian honor. Additionally, within Toronto he is honored as a philanthropist, with the Peter Munk Cardiac Center and the Munk Centre for International Studies at the University of Toronto both adorning his name. Similarly, Ian Telfer, the chairman of Goldcorp, the world's second largest gold miner behind Barrick, has the Telfer School of Management at the University of Ottawa bearing his name.
These symbolic gestures, along with the fact that several Canadian Pension funds and even Vancouver-based "Ethical Funds" are still heavily invested in Barrick Gold, show that Canada has a long way to go in demanding that its companies honor human rights and halt its colonial-style, exploitative economic regime. In fact, by its own admittance, Canada's Standing Committee on Foreign Affairs and International Trade stated that "Canada does not yet have laws to ensure that the activities of
Canadian mining companies in developing countries conform to human
rights standards, including the rights of workers and of indigenous
peoples." Since the date of that landmark confession, Canada has yet to adopt any intervening structures (like an ombudsperson) or develop any mandatory regulations for Canadian companies operating abroad.
Gold mining produces an average of 79 tons of waste for every ounce of gold extracted, 50 percent of it is carried out on native lands, and about 80 percent of it is used for jewelry, according to the "No Dirty Gold" campaign, a project of Oxfam and Earthworks. It is no wonder that in a portfolio with plenty of human rights abuses, the Norwegian Pension Fund decided to concentrate on gold miners, cluster munition manufacturers and nuclear weapon producers first. It is time that the rest of the world catch up.
There's surely no one party responsible for the ongoing global
financial crisis. But if you had to pick a single responsible
corporation, there's a very strong case to make for American
International Group (AIG), which has already sucked up more than $150
billion in taxpayer supports. Through "credit default swaps," AIG
basically collected insurance premiums while making the ridiculous
assumption that it would never pay out on a failure -- let alone a
collapse of the entire market it was insuring. When reality set in, the
roof caved in.
When food prices spiked in late 2007 and through the beginning of 2008,
countries and poor consumers found themselves at the mercy of the
global market and the giant trading companies that dominate it. As
hunger rose and food riots broke out around the world, Cargill saw
profits soar, tallying more than $1 billion in the second quarter of
2008 alone.
In a competitive market, would a grain-trading middleman make
super-profits? Or would rising prices crimp the middleman's profit
margin? Well, the global grain trade is not competitive, and the legal
rules of the global economy-- devised at the behest of Cargill and
friends -- ensure that poor countries will be dependent on, and at the
mercy of, the global grain traders.
Chevron: "We can't let little countries screw around with big companies"
In 2001, Chevron swallowed up Texaco. It was happy to absorb the
revenue streams. It has been less willing to take responsibility for
Texaco's ecological and human rights abuses.
In 1993, 30,000 indigenous Ecuadorians filed a class action suit in
U.S. courts, alleging that Texaco over a 20-year period had poisoned
the land where they live and the waterways on which they rely, allowing
billions of gallons of oil to spill and leaving hundreds of waste pits
unlined and uncovered. Chevron had the case thrown out of U.S. courts,
on the grounds that it should be litigated in Ecuador, closer to where
the alleged harms occurred. But now the case is going badly for Chevron
in Ecuador -- Chevron may be liable for more than $7 billion. So, the
company is lobbying the Office of the U.S. Trade Representative to
impose trade sanctions on Ecuador if the Ecuadorian government does not
make the case go away.
"We can't let little countries screw around with big companies like
this -- companies that have made big investments around the world," a
Chevron lobbyist said to Newsweek in August. (Chevron subsequently
stated that the comments were not approved.)
Although it is too dangerous, too expensive and too centralized to make
sense as an energy source, nuclear power won't go away, thanks to
equipment makers and utilities that find ways to make the public pay
and pay.
Constellation Energy Group, the operator of the Calvert Cliffs nuclear
plant in Maryland -- a company recently involved in a startling,
partially derailed scheme to price gouge Maryland consumers -- plans to
build a new reactor at Calvert Cliffs, potentially the first new
reactor built in the United States since the near-meltdown at Three
Mile Island in 1979.
It has lined up to take advantage of U.S. government-guaranteed loans
for new nuclear construction, available under the terms of the 2005
Energy Act. The company acknowledges it could not proceed with
construction without the government guarantee.
Sudan has been able to laugh off existing and threatened sanctions for
the slaughter it has perpetrated in Darfur because of the huge support
it receives from China, channeled above all through the Sudanese
relationship with the Chinese National Petroleum Corporation (CNPC).
"The relationship between CNPC and Sudan is symbiotic," notes the
Washington, D.C.-based Human Rights First, in a March 2008 report,
"Investing in Tragedy." "Not only is CNPC the largest investor in the
Sudanese oil sector, but Sudan is CNPC's largest market for overseas
investment."
Oil money has fueled violence in Darfur. "The profitability of Sudan's
oil sector has developed in close chronological step with the violence
in Darfur," notes Human Rights First.
A 1988 Filipino land reform effort has proven a fraud. Plantation
owners helped draft the law and invented ways to circumvent its
purported purpose. Dole pineapple workers are among those paying the
price.
Under the land reform, Dole's land was divided among its workers and
others who had claims on the land prior to the pineapple giant.
However, wealthy landlords maneuvered to gain control of the labor
cooperatives the workers were required to form, Washington, D.C.-based
International Labor Rights Forum (ILRF) explains in an October report.
Dole has slashed it regular workforce and replaced them with contract
workers.
Contract workers are paid under a quota system, and earn about $1.85 a day, according to ILRF.
In June, former New York Times reporter David Cay Johnston reported on
internal General Electric documents that appeared to show the company
had engaged in a long-running effort to evade taxes in Brazil. In a
lengthy report in Tax Notes International, Johnston reported on a GE
subsidiary's scheme to invoice suspiciously high sales volume for
lighting equipment in lightly populated Amazon regions of the country.
These sales would avoid higher value added taxes (VAT) in urban states,
where sales would be expected to be greater.
Johnston wrote that the state-level VAT at issue, based on the internal
documents he reviewed, appeared to be less than $100 million. But, he
speculated, the overall scheme could have involved much more.
Johnston did not identify the source that gave him the internal GE
documents, but GE has alleged it was a former company attorney, Adriana
Koeck. GE fired Koeck in January 2007 for what it says were
"performance reasons."
On February 7, an explosion rocked the Imperial Sugar refinery in Port
Wentworth, Georgia, near Savannah. Days later, when the fire was
finally extinguished and search-and-rescue operations completed, the
horrible human toll was finally known: 14 dead, dozens badly burned and
injured.
As with almost every industrial disaster, it turns out the tragedy was
preventable. The cause was accumulated sugar dust, which like other
forms of dust, is highly combustible.
A month after the Port Wentworth explosion, Occupational Safety and
Health Administration (OSHA) inspectors investigated another Imperial
Sugar plant, in Gramercy, Louisiana. They found 1/4- to 2-inch
accumulations of dust on electrical wiring and machinery. They found as
much as 48-inch accumulations on workroom floors.
Imperial Sugar obviously knew of the conditions in its plants. It had
in fact taken some measures to clean up operations prior to the
explosion. The company brought in a new vice president to clean up
operations in November 2007, and he took some important measures to
improve conditions. But it wasn't enough. The vice president told a
Congressional committee that top-level management had told him to tone
down his demands for immediate action.
The old Philip Morris no longer exists. In March, the company formally
divided itself into two separate entities: Philip Morris USA, which
remains a part of the parent company Altria, and Philip Morris
International. Philip Morris USA sells Marlboro and other cigarettes in
the United States. Philip Morris International tramples the rest of the
world.
Philip Morris International has already signaled its initial plans to
subvert the most important policies to reduce smoking and the toll from
tobacco-related disease (now at 5 million lives a year). The company
has announced plans to inflict on the world an array of new products,
packages and marketing efforts. These are designed to undermine
smoke-free workplace rules, defeat tobacco taxes, segment markets with
specially flavored products, offer flavored cigarettes sure to appeal
to youth and overcome marketing restrictions.
The Swiss company Roche makes a range of HIV-related drugs. One of them
is enfuvirtid, sold under the brand-name Fuzeon. Fuzeon brought in $266
million to Roche in 2007, though sales are declining.
Roche charges $25,000 a year for Fuzeon. It does not offer a discount price for developing countries.
Like most industrialized countries, Korea maintains a form of price
controls -- the national health insurance program sets prices for
medicines. The Ministry of Health, Welfare and Family Affairs listed
Fuzeon at $18,000 a year. Korea's per capita income is roughly half
that of the United States. Instead of providing Fuzeon, for a profit,
at Korea's listed level, Roche refuses to make the drug available in
Korea.
Korean activists report that the head of Roche Korea told them, "We are
not in business to save lives, but to make money. Saving lives is not
our business."
It was only a few years ago that a group of offshore outsourcing
companies based in India seemed poised to take over a large portion of
the U.S. economy. Business propagandists insisted that work ranging
from low-level data input to skilled professional work such as
financial analysis could be done faster and much cheaper by workers
hunched over computer terminals in cities such as Bangalore. The New York Times once described one of these offshoring companies as “a maquiladora of the mind.”
Among the most aggressive of the Indian firms was Satyam Computer
Services Ltd., which signed up blue-chip clients such as Ford Motor,
Merrill Lynch, Texas Instruments and Yahoo. In a 2004 report
I wrote for the U.S. high-tech workers organization WashTech, I found
that Satyam was also among the offshoring companies that were doing
work for state government agencies. It was hired, for example, as a
subcontractor by the U.S. company Healthaxis to develop a system for
handling applications for medical insurance services provided by the
Washington State Health Care Authority. As it turned out, Healthaxis’s
contract was terminated, allegedly because of late delivery and poor
quality in the work done by Satyam.
The Washington State fiasco may have been an early omen of things to come. Satyam has just admitted that for years it cooked its books and engaged in widespread financial wrongdoing. The revelation came in a letter
sent to the company’s board of directors by Satyam founder and chairman
B. Ramalinga Raju (photo), who simultaneously tendered his resignation.
Raju wrote that what started as “a marginal gap between actual
operating profit and the one reflected in the books” eventually
“attained unmanageable proportions” as the company grew. The fictitious
cash balance grew to more than US$1 billion. “It was like riding a
tiger,” Raju colorfully wrote, “not knowing how to get off without
being eaten.”
While admitting that he engaged in very creative accounting, Raju
insisted he did not personally benefit from the fraud, denying for
instance that he had sold any of his shares in the company. I guess it
is meant to be some consolation that among his sins Raju is not guilty
of insider trading.
Apart from Raju, the party most on the hot seat is the company’s
auditor, PriceWaterhouseCoopers, whose Indian unit gave Satyam’s
financial reports a clean bill of health.
The Satyam scandal is being called India’s Enron. It should probably
also be called India’s Arthur Andersen as this seems to be another case
in which an auditor was either oblivious to widespread accounting
misconduct by one of its clients or complicit in it.
Some soul-searching is probably also in order for the many large
U.S. corporations that have not hesitated to take jobs away from
American workers and ship the work off to Indian companies such as
Satyam. The revelation that much of the work has been going to a
crooked company is all the more galling.
More than 800
representatives from organizations throughout the Americas made their
way to the northern city of La Esperanza, Honduras to take a strong
stand against the militarization of their nations and communities.
Following three days of workshops, the participants read their final
declaration in front of the gates of the U.S. Army Base at Palmerola,
Honduras, just hours from the conferencesite. The first demand on the list was to close down this and all U.S.
military bases in Latin America and the Caribbean. By the end of the
demonstration, the walls of the base sported hundreds of spray-painted
messages and demands that contrasted sharply with their prison-like
austerity.
Palmerola,
formally called the Soto Cano Air Base, brought back some very bad
memories among the hundreds of Central American participants. The U.S.
government installed the base in 1981 and used it to launch the illegal
contra operations against the Nicaraguan government. The base was also
used to airlift support to counterinsurgency operations in Guatemala and El Salvador and train U.S. forces
in counterinsurgency techniques during the dirty wars that left over
100,000 dead, and is now used as a base for the U.S.-sponsored "war on
drugs."
The demilitarization conference also called for an immediate halt to the recently launched "Merida Initiative,"
the Bush administration's new Trojan horse for remilitarization of the
region. The resolution asserts that the measure "expands U.S. military
intervention and contributes to the militarization of our countries"
and representatives from the Central American nations and Mexico
included in the military aid package committed to a process of
monitoring the funds and defeating further appropriations.
The Merida Initiative was announced by President Bush
as a "counter-narcotics, counter-terrorism, and border security"
cooperation initiative in October 2007. The model extends the Bush
administration's infamous national security strategy of 2002 to impose
it as the U.S.-led security model for the hemisphere. The approach
relies on huge defense contracts to U.S. corporations, and military and
police deployment to deal with issues ranging from drug trafficking to
illegal immigration and seeks to extend U.S. military hegemony in
foreign lands. It has been proven in Colombia
and other areas where it has been applied to have the effect of
increasing violence, failing to decrease drug flows, and leading to
extensive human rights violations.
Among the 14
resolutions of the conference, three others reject aspects of the
Initiative: the repeal of anti-terrorist laws that criminalize social
protest and are a direct result of U.S. pressure to impose the
disastrous Bush counter-terrorism paradigm; the demand to replace the
militarized "war on drugs" model with measures of citizen
participation, community heath, etc.; and the demand for full respect
for the rights of migrants.
Although on the
surface, Latin America is experiencing a period of relative calm after
the brutality of the military dictatorships and the dirty wars,
grassroots movement leaders from all over the continent described a
context of increasing aggression. The indigenous and farm organizations
that occupy territories coveted by transnational corporations have
become targets of forced displacement. Social movements that protest
privatization and free trade agreements have been dubbed terrorists and
attacked and imprisoned under new anti-terrorist laws that are a poor
legal facade for outright repression. The use of the military troops in
counter-narcotic activities has become commonplace and often hides
other agendas of the powerful. Police forces have come to deal with
youth as if being young itself were a crime.
In viewing the
threats of militarization in their societies, participants use a
broader definition than just the presence of army bases and troops.
"Militarism," states the Campaign for Demilitarization of the Americas,
is " the daily presence of the military logic in our society, in our
economic forms, in our social links, and in the logic of gender
domination and the supposed natural superiority of men over women."
Using this concept, the conference covered the profound need to change
the educational system and social norms, to work from within
communities, as well as making demands for changes in the external
conditions that affect them.
Despite days of
testimonies that sometimes included tears and anger, delegates to the
conference expressed hope above all else. Ecuador's new constitution
and decision to kick out the U.S. army base at Manta was cited as proof
of progress.
Both concrete
plans for action and an encouraging consensus emerged: the breadth of
the challenge can be overwhelming but the dream of lasting peace
provides an irresistible light at the end of the tunnel.
The declaration
concludes on this note: "... through these campaigns and actions on the
grassroots level, organized within each nation and throughout the
continent, we can reach a day not long from now when we fulfill the
dream of living free of violence, exclusion, and war."
Why would "criminals" set fire to millions worth in mine equipment?
How was it that these "intruders" had an estimated 3,000 - 4,000 people backing them up?
In what appears to be a spontaneous civilian movement against Barrick Gold, the world's largest gold miner, thousands of people invaded Barrick`s
North Mara Gold Mine this week in Tarime District and destroyed equipment worth
$15 million. Locals say that the uprising was sparked by the killing of a local, identified as Mang'weina Mwita Mang'weina. According to a Barrick Public Relations officer (as reported by the Tanzanian Guardian newspaper), "the intruders stoned the security personnel relentlessly until they
overpowered them. The guards abandoned their posts and retreated to
safety."
While
Barrick implies that "high levels of crime" are the cause of this
recent outbreak, recent reports suggest a different picture.
Allan Cedillo Lissner, a photojournalist who recently documented mine life near the North Mara mine, explains:
Ongoing conflict between the mine
and local communities has created a climate of fear for those who live
nearby. Since the mine opened in 2002, the Mwita family say that they
live in a state of constant anxiety because they have been repeatedly
harassed and intimidated by the mine's private security forces and by
government police. There have been several deadly confrontations in
the area and every time there are problems at the mine, the Mwita
family say their compound is the first place the police come looking.
During police operations the family scatters in fear to hide in the
bush, "like fugitives," for weeks at a time waiting for the situation
to calm down. They used to farm and raise livestock, "but now there are
no pastures because the mine has almost taken the whole land ... we
have no sources of income and we are living only through God's wishes.
... We had never experienced poverty before the mine came here." They
say they would like to be relocated, but the application process has
been complicated, and they feel the amount of compensation they have
been offered is "candy."
Evans Rubara, an investigative journalist from
Tanzania, blames this action on angry locals from the North Mara area
who are opposed to Barrick's presence there. "This comes one week after
Barrick threatened to leave the country based on claims that they
weren't making profit," comments Evans after explaining that Barrick
does not report profit to avoid taxes in the country. "This is a sign
to both the government of Tanzania and the International community
(especially Canada) that poor and marginalized people also get tired of
oppression, and that they would like Barrick to leave."
Only one week prior, Barrick's African Region Vice President, Gareth Taylor threatened
to leave Tanzania due to high operating costs, claiming that the company did not make profits there. Barrick's Toronto office
quickly denied this report, stating that "the company will work with
the government to ensure
the country's legislation remains 'competitive with other
jurisdictions so that Tanzanians can continue to benefit from
mining.'"
Interestingly, Taylors threat came shortly after he attended a workshop to launch the Extractive Industries Transparency Initiative (EITI) in Dar es Salaam.
One thing is clear, though; these reports of hundreds, backed by thousands, of villagers attacking mine infrastructure reflects a resentment that goes beyond mere criminal
action. And this surge in violence should be examined in the context of
the on-going exploitation and repressive environment surrounding the
mine.
Back in the good old days of the Cold War, everybody’s favorite secret agent, James Bond, fought villains like Dr. No, an evil scientist out to sabotage U.S. missile tests, and Mr. Big, a Soviet agent using pirate treasure to finance espionage in America. But as Bond’s friend Mathis tells him in Quantum of Solace, released this month, “When one is young, it’s easy to tell the difference between right and wrong. As one gets older, the villains and heroes get all mixed up.”
The reference is to a shady new Bond villain, agent of the Quantum organization – one Dominic Greene. In public, Greene is a leading environmentalist whose organization, Greene Planet, buys up large tracts of land for ecological preserves. But behind the scenes, Greene has another agenda. As he says to his co-conspirators, “This is the most valuable resource in the world and we need to control as much of it as we can.”
The film makes a number of plays on the assumption that the resource in question is oil – but oil is so…twentieth century.
By the time Bond has pursued Greene from Italy to Haiti, from Haiti to Austria, and crash-landed his plane in a sinkhole in the high, barren desert of Bolivia, we make the discovery that this vital resource is – surprise! – water.
Colluding with Greene is a cast of evil characters taken straight from the history books. We have General Medrano, the ex-dictator of Bolivia, to whom Greene says, “You want your country back? My organization can give it to you.” We have the U.S. Ambassador, myopically sticking to the familiar program: “Okay, we do nothing to stop a coup, and you give us a lease to any oil you find.” And we have the British foreign office, continually wrangling with M15, Bond’s spy agency. When Bond’s boss, M, tells him that Greene is not an environmentalist but a villain, the Foreign Minister says, “If we refused to do business with villains, we’d have almost no one to trade with.” Ain’t it the truth.
The fact that Quantum of Solace makes water the villain’s object of greed, replacing oil, gold, diamonds, and mutually assured destruction, is telling of the point we’ve reached. More telling still is the fact that our villain’s cover has him acting as an environmentalist, the ultimate corporate greenwasher. The fact that the action winds up in Bolivia – the country where, in real life, both Bechtel and Suez have tried and failed to take control of community water resources during and shortly after the reign of former-dictator-turned-neoliberal President Hugo Banzer – brings the plot frighteningly close to reality. The privatization of water in Bolivia back in 2000, and the massive popular response that turned out rural water stewards and urban ratepayers to riot for months until the multinational transgressor was ousted, was the spark that set social movements worldwide on red alert. Since then, numerous private water companies have been refused contracts on the grounds that popular movements, and, increasingly, governments, recognize the need to treat water as a human right and a public good – not a commodity.
If only the water movement had a few organizers with the physique, the gadgets, and the, er, style of Bond.
While we have many great documentaries telling the story of the global water wars, including this year’s Flow and Blue Gold, one is forced to wonder if 007 does a greater service to the water movement than even our most highly talented documentarians. After all, who better than Hollywood to characterize the greenwashing corporate water profiteers as straight up evil, sans the need to justify the hyperbole?
Matieu Amalric, the actor who played Dominic Greene, wanted to wear make-up for the role, but director Marc Forster “wanted Greene not to look grotesque, but to symbolize the hidden evils in society.” Similarly, the original screenplay had Greene having some “hidden power.” But in the final cut, the director seems to have decided that corporate power was power enough.
One wonders if Dominic Greene – had he not died drinking motor oil to quench his thirst in the Bolivian desert – might give the keynote speech at the upcoming World Water Forum in Istanbul (WWF). After all, the World Water Council (WWC) that puts on the forum is presided over by Loïc Fauchon, a former executive at one of the French subsidiaries of Suez, the world’s largest private water corporation.
As we learn from the WWF website, “One of the benefits of joining the WWC is the Council's ability to influence decisions related to world water management that affect organizations, business, and communities.” Perhaps their secret meetings will also be attended by executives of the Worldwide Fund for Nature, whose recent partnership with Coca-Cola aims to help the global soft-drink giant become “the most efficient company in the world in terms of water use,” with “every drop of water it uses…returned to the earth or compensated for through conservation and recycling programs.” And, with this blending of fact and fiction, it would hardly be surprising to find Greene’s signature on the CEO Water Mandate, which has companies with such devastating environmental track records as Dow Chemical, Shell Oil, Unilever, and Nestlé pledging to “help address the water challenge faced by the world today.”
When M, Bond’s overweening boss at M15, finds out about Quantum, she demands, “What the hell is this organization, Bond? How can they be everywhere and we know nothing about them?”
Well, my darling M, the answer is simple: like transnational corporations, and like the large NGO’s that work with the private sector to reform its practices and green its reputation, and like the International Finance Institutions whose interests are increasingly endangering the United Nations’ mandate to defend and protect human rights, they can be everywhere because their particular form of villainy works best when hidden in plain sight.
Thankfully, the world’s water is safe, because, behind the scenes, secret agent 007 is on the job.
Well, not true. But countless people and organizations worldwide, from the Red Vida to the African Water Network, from the People’s Health Movement to the Reclaiming Public Water Network, are vigilant in the defense of the human right to water. With the recent placement of water warrior Father Miguel D’Escoto, a Nicaraguan liberation theologian, in the presidential seat at the UN General Assembly, and his selection of Maude Barlow as a senior advisor on water, we are witnessing a tidal change in the highest levels of international cooperation.
They may not have the brutal take-no-prisoners attitude or the classy cocktail swagger of Mister Bond, but they represent a lot of people, and they’re on the right side.
So, corporate evil-doers, and your greenwashing NGO henchmen, beware. The forces of good are on the loose.
There's no question that this morning's announcement from the Treasury
Department, Federal Reserve and Federal Deposit Insurance Corporation
(FDIC) is remarkable.
It was also necessary.
Over the next several months, we're going to see a lot more moves like
this. Government interventions in the economy that seemed unfathomable
a few months ago are going to become the norm, as it quickly becomes
apparent that, as Margaret Thatcher once said in a very different
context, there is no alternative.
That's
because the U.S. and global economic problems are deep and pervasive.
The American worker may be strong, as John McCain would have it, but
the "fundamentals" of the U.S. and world economy are not. The
underlying problem is a deflating U.S. housing market that still has
much more to go. And underlying that problem are the intertwined
problems of U.S. consumer over-reliance on debt, national and global
wealth inequality of historic proportions, and massive global trade
imbalances.
Although it was enabled by deregulation, the financial meltdown merely
reflects these more profound underlying problems. It is, one might say,
"derivative."
Nonetheless, the financial crisis was -- and conceivably still might be -- by itself enough to crash the global economy.
Today, following the lead of the Great Britain, the United States has announced
what has emerged as the consensus favored financial proposal among
economists of diverse political ideologies. The United States will buy
$250 billion in new shares in banks (the so-called "equity injection").
This is aimed at boosting confidence in the banks, and giving them new
capital to loan. The new equity will enable them to loan roughly 10
times more than would the Treasury's earlier (and still developing)
plan to buy up troubled assets. The FDIC will offer new insurance
programs for bank small business and other bank deposits, to stem bank
runs. The FDIC will provide new, temporary insurance for interbank
loans, intended to overcome the crisis of confidence between banks.
And, the Federal Reserve will if necessary purchase commercial paper
from business -- the 3-month loans they use to finance day-to-day
operations. This move is intended to overcome the unwillingness of
money market funds and others to extend credit.
But while aggressive by the standards of two months ago, the most
high-profile of these moves -- government acquisition of shares in the
private banking system -- is a strange kind of "partial
nationalization," if it should be called that at all.
Treasury Secretary Henry Paulson effectively compelled the leading U.S.
banks to accept participation in the program. And, at first blush, he
may have done an OK job of protecting taxpayer monetary interests. The
U.S. government will buy preferred shares in the banks, paying a 5
percent dividend for the first three years, and 9 percent thereafter.
The government also obtains warrants, giving it the right to purchase
shares in the future, if the banks' share price increase.
But the Treasury proposal specifies
that the government shares in the banks will be non-voting. And there
appear to be only the most minimal requirements imposed on
participating banks.
So, the government may be obtaining a modest ownership stake in the banks, but no control over their operations.
In keeping with the terms of the $700 billion bailout legislation,
under which the bank share purchase plan is being carried out, the
Treasury Department has announced guidelines
for executive compensation for participating banks. These are
laughable. The most important rule prohibits incentive compensation
arrangements that "encourage unnecessary and excessive risks that
threaten the value of the financial institution." Gosh, do we need to
throw $250 billion at the banks to persuade executives not to adopt
incentive schemes that threaten their own institutions?
The banks reportedly will not be able to increase dividends, but will
be able to maintain them at current levels. Really? The banks are
bleeding hundreds of billions of dollars -- with more to come -- and
they are taking money out to pay shareholders? The banks are not obligated to lend with the money they are getting. The banks are not obligated to re-negotiate mortgage terms with borrowers -- even though a staggering one in six homeowners owe more than the value of their homes.
"The government's role will be limited and temporary," President Bush said in announcing today's package. "These measures are not intended to take over the free market, but to preserve it."
But it makes no sense to talk about the free market in such
circumstances. And these measures are almost certain to be followed by
more in the financial sector -- not to mention the rest of economy --
because the banks still have huge and growing losses for which they
have not accounted.
If the U.S. and other governments are to take expanded roles in the
world economy -- as they must, and will -- then the public must demand
something more than efforts to preserve the current system. The current
system brought on the financial meltdown and the worsening global
recession. As the government intervenes in the economy on behalf of the
public, it must reshape economic institutions to advance broad public
objectives, not the parochial concerns of the Wall Street and corporate
elite.
There's mounting talk on Capitol
Hill that a Wall Street bailout will include some limits on executive
compensation, as well as contradictory reports about whether a deal on
controlling executive pay has already been reached.
Four days ago, such a move seemed very unlikely. But the pushback from
Congress -- from both Democrats and Republicans -- has been
surprisingly robust, thanks in considerable part to a surge of outrage
from the public.
Will restrictions on CEO pay just be a symbolic retribution, as some have charged?
The answer is, it depends.
Meaningful limits not just on CEO pay, but also on the Wall Street
bonus culture, could significantly affect the way the financial sector
does business. Some CEO pay proposals, by contrast, would extract a
pound of flesh from some executives but have little impact on incentive
structures.
There are at least five reasons why it is important to address executive compensation as part of the bailout legislation.
First, there should be some penalty for executives who led their
companies -- and the global financial system -- to the brink of ruin.
You shouldn't be rewarded for failure. And while reducing pay packages
to seven digits may feel really nasty given Wall Street's culture of
preposterous excess, in the real world, a couple million bucks is still
a lot of money to make in a year.
Second, if the public is going to subsidize Wall Street to the tune of
hundreds of billions of dollars, the point is to keep the financial
system going -- not to keep Wall Street going the way it was. Funneling
public funds for exorbitant executive compensation would be a criminal
appropriation of public funds.
Third, the Wall Street salary structure has helped set the standard for
CEO pay across the economy, and helped establish a culture where
executives consider outlandish pay packages the norm. This culture, in
turn, has contributed to staggering wealth and income inequality, at
great cost to the nation. We need, it might be said, an end to the
culture of hyper-wealth.
Fourth, as Dean Baker of the Center for Economic and Policy Research
says, the bailout package must be, to some extent, "punitive." If the
financial firms and their executives do not have to give something up
for the bailout, then there's no disincentive to engage in unreasonably
risky behavior in the future. This is what is meant by "moral hazard."
If Wall Street says the financial system is on the brink of collapse,
and the government must step in with what may be the biggest taxpayer
bailout in history, says Baker, then Wall Street leaders have to show
they mean it. If they are not willing to cut their pay for a few years
to a couple of million dollars an annum, how serious do they really
think the problem is?
Finally, and most importantly, financial sector compensation systems
need to be changed so they don't incentivize risky, short-term behavior.
There are two ways to think about how the financial sector let itself
develop such a huge exposure to a transparently bubble housing market.
One is that the financial wizards actually believed all the hype they
were spreading. They believed new financial instruments eliminated
risk, or spread it so effectively that downside risks were minimal; and
they believed the idea that something had fundamentally changed in the
housing market, and skyrocketing home prices would never return to
earth.
Another way to think about it is: Wall Street players knew they were
speculating in a bubble economy. But the riches to be made while the
bubble was growing were extraordinary. No one could know for sure when
the bubble would pop. And Wall Street bonuses are paid on a yearly
basis. If your firm does well, and you did well for the firm, you get
an extravagant bonus. This is not an extra few thousand dollars to buy
fancy Christmas gifts. Wall Street bonuses
can be 10 or 20 times base salary, and commonly represent as much as
four fifths of employees' pay. In this context, it makes sense to take huge risks. The payoffs from benefiting from a bubble are dramatic, and there's no reward for staying out.
Both of these explanations may be true to some degree, but the
compensation incentives explanation is almost certainly a significant
part of the story.
Different ideas about how to limit executive pay would address the
multiple rationales for compensation reforms to varying degrees.
A two-year cap on executive salaries would help achieve the first four
objectives, but by itself wouldn't get to the crucial issue of
incentives.
One idea in particular to be wary of is "say on pay" proposals,
which would afford shareholders the right to a non-binding vote on CEO
pay compensation packages. These proposals would go some way to address
the disconnect between executive and shareholder interests, reducing
the ability of top executives to rely on crony boards of directors and
conflicted compensation consultants to implement outrageous pay
packages. But while they might increase executive accountability to
shareholders, they wouldn't direct executives away from market-driven
short-term decision making. Shareholders tend to be forgiving of
outlandish salaries so long as they are making money, too, and -- worse
-- they actually tend to have more of a short-term mentality than the
executives. So "say on pay" is not a good way to address the multiple
executive compensation-related goals that should be met in the bailout
legislation.
The ideal provisions on executive compensation would set tough limits
on top pay, but would also insist on long-term changes in the bonus
culture for executives and traders. Not only should bonuses be more
modest, they should be linked to long-term, not year-long, performance.
That would completely change the incentive to knowingly participate in
a financial bubble (or, more generously, take on excessive risk),
because you would know that the eventual popping of the bubble would
wipe out your bonus.
Four days ago, forcing Wall Street to change its incentive structure
seemed pie in the sky. Today, thanks to the public uproar, it seems
eminently achievable -- if Members of Congress seize the opportunity.
Originally posted at Dirt Digger's Digest on September 23, 2008 -- A number of leading Democrats and Republicans expressed strong
misgivings last Monday about the autocratic plan for bailing out Wall
Street that Treasury Secretary Henry Paulson wants to ram through
Congress. It remains to be seen whether this is mere posturing or
serious opposition.
Critics are focusing on vital issues such as cost and oversight, but
a lot less attention is being paid to the mechanics of Paulson’s
proposal – specifically, the question of who would carry out the
federal government’s purchase of $700 billion in “troubled” securities
from banks. As I noted in my post a week ago Sunday, the draft legislation
circulated over the weekend includes a provision that seems to allow
Treasury to contract out the process. Treasury then put out a fact sheet
making it quite clear it intends to use private asset managers to
manage and dispose of the assets it acquires, though the document does
not specifically allude to the purchasing. Paulson himself referred to the use of “professional asset managers” during an appearance on one of the Sunday morning talk shows.
It amazes me that there is not more outrage over this aspect of the
plan. Paulson seems to be leaving open the possibility that the same
firms that are being bailed out could be hired to run the bailout. This
would mean that institutions receiving a monumental giveaway of
taxpayer money could turn around and earn yet more by acting as the
government’s brokers. Aside from the unseemliness of this arrangement,
this would be an egregious conflict of interest.
The alternative proposal
floated by Senator Chris Dodd, which accepts Paulson’s language on
contracting out, includes a section on conflict of interest. But rather
than stating what the rules should be, the draft leaves it up to the
Treasury Secretary to do so. There were reports last Monday night that Treasury would go along with the inclusion of a conflict-of-interest provision.
Paulson’s approach to the Big Bailout, particularly the insistence
that there be no punitive measures for the banks, shows he is not the
right party to oversee ethical issues. Paulson apparently can’t help
himself. He still has the mindset of a man who spent more than 30 years
working on Wall Street, at Goldman Sachs. He is a living example of the
perils of the reverse revolving door: the appointment of a
private-sector figure to a key policymaking position affecting his or
her former industry.
The weak conflict-of-interest provisions Paulson is likely to impose
would probably not address the inherent contradiction in having
for-profit money managers running the bailout program. Even if Treasury
chooses managers whose firms are not getting bailed out, there is still
the danger that they will use their inside knowledge to benefit their
non-governmental clients (and themselves) or will collude with buyers
to the detriment of the public.
A Reuters story of last Monday reported that a leading contender for a federal
money management role is Laurence Fink and his firm BlackRock, which
was involved in managing the portfolio of Bear Stearns when that firm
was sold to JPMorgan Chase as part of an earlier bailout. Last March,
BlackRock, which is 49-percent owned by Merrill Lynch (now part of Bank
of America), announced
it was forming a venture to “acquire and restructure distressed
residential mortgage loans.” Will Paulson see that as a conflict of
interest – or more likely as a credential?
Letting financial firms that have profited from the mortgage crisis
manage the bailout gives the impression that we are permanently in the
grip of Big Money. To Paulson’s way of thinking, that’s not a problem,
but it could make a bad plan much worse.
As the Federal Reserve and
Treasury Department careen from one financial meltdown to another,
desperately trying to hold together the financial system -- and with
it, the U.S. and global economy -- there are few voices denying that
Wall Street has suffered from "excesses" over the past several years.
The current crisis is the culmination of a quarter century's
deregulation. Even as the Fed and Treasury scramble to contain the
damage, there must be a simultaneous effort to reconstruct a regulatory
system to prevent future disasters.
There is more urgency to such an effort than immediately apparent. If
the Fed and Treasury succeed in controlling the situation and avoiding
a collapse of the global financial system, then it is a near certainty
that Big Finance -- albeit a financial sector that will look very
different than it appeared a year ago -- will rally itself to oppose
new regulatory standards. And the longer the lag between the end (or
tailing off) of the financial crisis and the imposition of new
legislative and regulatory rules, the harder it will be to impose
meaningful rules on the financial titans.
The
hyper-complexity of the existing financial system makes it hard to get
a handle on how to reform the financial sector. (And, by the way,
beware of generic calls for "reform" -- for Wall Street itself taken up
this banner over the past couple years. For the financial mavens,
"reform" still means removing the few regulatory and legal requirements they currently face.)
But the complexity of the system also itself suggests the most
important reform efforts: require better disclosure about what's going
on, make it harder to engage in complicated transactions, prohibit some
financial innovations altogether, and require that financial
institutions properly fulfill their core responsibilities of providing
credit to individuals and communities.
(For more detailed discussion of these issues -- all in plain, easy-to-understand language, see these comments from Damon Silvers of the AFL-CIO, The American Prospect editor Robert Kuttner, author of the The Squandering of America and Obama's Challenge, and Richard Bookstaber, author of A Demon of Our Own Design: Markets, Hedge Funds, and the Perils of Financial Innovation.)
Here are a dozen steps to restrain and redirect Wall Street and Big Finance:
1. Expand the scope of financial regulation. Investment banks and hedge
funds have been able to escape the minimal regulatory standards imposed
on other financial institutions. Especially with the government safety
net -- including access to Federal Reserve funds -- extended beyond the
traditional banking sector, this regulatory black hole must be
eliminated.
2. Impose much more robust standards for disclosure and transparency.
Hedge funds, investment banks and the off-the-books affiliates of
traditional banks have engaged in complicated and intertwined
transactions, such that no one can track who owes what, to whom.
Without this transparency, it is impossible to understand what is going
on, and where intervention is necessary before things spin out of
control.
3. Prohibit off-the-books transactions. What's the purpose of
accounting standards, or banking controls, if you can evade them by
simply by creating off-the-books entities?
4. Impose regulatory standards to limit the use of leverage (borrowed
money) in investments. High flyers like leveraged investments because
they offer the possibility of very high returns. But they also enable
extremely risky investments -- since they can vastly exceed an
investor's actual assets -- that can threaten not just the investor
but, if replicated sufficiently, the entire financial system.
5. Prohibit entire categories of exotic new financial instruments.
So-called financial "innovation" has vastly outstripped the ability of
regulators or even market participants to track what is going on, let
alone control it. Internal company controls routinely fail to take into
account the possibility of overall system failure -- i.e., that other
firms will suffer the same worst case scenario -- and thus do not
recognize the extent of the risks inherent in new instruments.
6. Subject commodities trading to much more extensive regulation.
Commodities trading has become progressively deregulated. As
speculators have flooded into the commodities markets, the trading
markets have become increasingly divorced from the movement of actual
commodities, and from their proper role in helping farmers and other
commodities producers hedge against future price fluctuations.
7. Tax rules should be changed so as to remove the benefits to
corporate reliance on debt. "Payments on corporate debt are tax
deductible, whereas payments to equity are not," explains Damon Silvers
of the AFL-CIO. "This means that, once you take the tax effect into
account, any given company can support much more debt than it can
equity." This tax arrangement has fueled the growth of private equity
firms that rely on borrowed money to buy corporations. Many are now
going bankrupt.
8. Impose a financial transactions tax.
A small financial transactions tax would curb the turbulence in the
markets, and, generally, slow things down. It would give real-economy
businesses more space to operate without worrying about how today's
decisions will affect their stock price tomorrow, or the next hour. And
it would be a steeply progressive tax that could raise substantial sums
for useful public purposes.
9. Impose restraints on executive and top-level compensation. The top
pay for financial impresarios is more than obscene. Executive pay and
bonus schedules tied to short-term performance played an important role in driving the worst abuses on Wall Street.
10. Revive competition policy. The repeal of the Glass-Steagall Act,
separating traditional banks from investment banks, was the culmination
of a progressive deregulation of the banking sector. In the current
environment, banks are gobbling up the investment banks. But this
arrangement is paving the way for future problems. When the investment
banks return to high-risk activity at scale (and over time they will,
unless prohibited by regulators), they will directly endanger the banks
of which they are a part. Meanwhile, further financial conglomeration
worsens the "too big to fail" problem -- with the possible failure of
the largest institutions viewed as too dangerous to the financial
system to be tolerated -- that Treasury Secretary Hank Paulson cannot
now avoid despite his best efforts. In this time of crisis, it may not
be obvious how to respect and extend competition principles. But it is
a safe bet that concentration and conglomeration will pose new problems
in the future.
11. Adopt a financial consumer protection agenda that cracks down on abusive lending practices.
Macroeconomic conditions made banks interested in predatory subprime
loans, but it was regulatory failures that permitted them to occur. And
it's not just mortgage and home equity loans. Credit card and student
loan companies have engaged in very similar practices -- pushing
unsustainable debt on unreasonable terms, with crushing effect on
individuals, and ticking timebomb effects on lenders.
12. Support governmental, nonprofit, and community institutions to
provide basic financial services. The effective governmental takeover
of Fannie Mae, Freddie Mac and AIG means the U.S. government is going
to have a massive, direct stake in the global financial system for some
time to come. What needs to be emphasized as a policy measure, though,
is a back-to-basics approach. There is a role for the government in
helping families get mortgages on reasonable terms, and it should make
sure Fannie and Freddie, and other agencies, serve this function.
Government student loan services offer a much better deal than private
lender alternatives. Credit unions can deliver the basic banking
services that people need, but they need back-up institutional support
to spread and flourish.
What is needed, in short, is to reverse the financial deregulatory wave
of the last quarter century. As Big Finance mutated and escaped from
the modest public controls to which it had been subjected, it demanded
that the economy serve the financial sector. Now it's time to make sure
the equation is reversed.
When you go to the Securities and Exchange Commission website these days, the first thing you see is an animation that looks like something out of The Matrix films or the TV show Numb3rs.
It seems the agency’s accountants and lawyers are trying to look cool
as they move toward the creation of a new system for distributing
public-company financial information on the web.
Recently SEC Chairman Christopher Cox (photo) unveiled
Interactive Data Electronic Applications (IDEA, for short), the
successor to the EDGAR system that corporate researchers have relied on
since the mid-1990s for easy access to 10-Ks, proxy statements and the
like. The big selling point of IDEA is tagging. Companies (and mutual
funds) will be required to prepare their filings so that key pieces of
information are electronically labeled—using a system called XBRL—and
thus can be easily retrieved and compared to corresponding data from
other companies. The first interactive filings are expected to be
available through IDEA late this year. EDGAR will stick around
indefinitely as an archive for pre-interactive filings.
“With IDEA,” the SEC press release
gushes, “investors will be able to instantly collate information from
thousands of companies and forms, and create reports and analysis on
the fly, in any way they choose.”
I just finished watching the webcast
of Cox’s press conference earlier this week and came away with mixed
feelings about IDEA. In one respect, it will be great to be able to
readily extract specific nuggets of information. My concern is the
emphasis being placed on disclosure as simply a collection of pieces of
data. This may serve the needs of financial analysts and investors, but
as a corporate researcher, I find that some of the most valuable
portions of SEC filings are narratives rather than
numbers—for example, the descriptions of a company’s operations, its
competitive position and its legal problems that appear in 10-Ks.
As Cox finally mentioned about an hour into the press conference,
tagging can be applied to text as well as numbers. Yet I can’t help
worry that the direction the SEC is going in will tend to reduce
narratives to bite-size portions that serve to diminish the full scope
of disclosure. It was not comforting to hear William Lutz, the outside
academic who is advising the SEC on a complete overhaul
of its entire disclosure system, suggest during the press conference
that the forms (10-K, 10-Q, etc.) companies are currently required to
file will be phased out. Perhaps it was unintentional, but the
impression Lutz and Cox gave is that future disclosure will be mainly
quantitative.
This shift in focus from text to numbers would, I believe, increase
the risk that company reporting on social and environmental matters,
already inadequate, will be scaled back. That may not mean much for
short-sighted investors, but it would be a major setback for corporate
accountability.
The 2008 Beijing Olympic Games
have been referred to as the “People’s Games,” the “High Tech Games”
and the “Green Games,” but they could be more aptly described as the
Commercial Games.
Commercialism is overrunning the Olympics. It is undermining the
professed ideals of the Olympic Games, and subverting the Olympics'
veneration of sport with omnipresent commercial messaging and branding.
The Olympics have auctioned off virtually every aspect of the Games to
the highest bidder. In addition to multimillion-dollar sponsorship
deals between the International Olympic Committee and international
companies, smaller firms are paying for designations from “official
home and industrial flooring supplier” to the “frozen dumplings
exclusive supplier” of the Beijing 2008 Olympic Games.
Corporate sponsors are showering money on each tier of the Olympic
organizational committees: the International Olympic Committee, the
Beijing Organizing Committee of the Olympic Games (BOCOG) and the
International Federations governing each individual sport, to each
country’s National Organizing Committees. Corporations are sponsoring
many Olympic teams and national governing bodies for particular sports
-- including virtually every national governing body in the United
States -- and individual athletes themselves.
The scope of commercialism at the Olympics and the consequences of commercialization are detailed in "The Commercial Games," a new report from Multinational Monitor magazine and Commercial Alert (both of which I'm associated with).
To its credit, the Olympics do prohibit advertising in sports stadia or
other venues. The Olympics also prohibit advertisements on uniforms
(other than uniform maker logos).
Everywhere else, Olympic spectators, viewers and athletes, and the
citizens of Beijing should expect to be overwhelmed with
Olympics-related advertising.
A record 63 companies have become sponsors or partners of the Beijing
Olympics, and Olympics-related advertising in China alone could reach
$4 billion to $6 billion this year, according to CSM, a Beijing
marketing research firm.
The Olympic Partners (TOP) program,
run and managed by the International Olympic Committee (IOC) since
1985, includes 12 companies for the Beijing Olympics. These 12
companies -- among them, Coca-Cola, GE, Johnson & Johnson, Lenovo,
Panasonic and Visa -- have paid $866 million to the International
Olympic Committee.
The U.S. Olympic system is awash in corporate sponsor money. Well over
100 corporations are sponsoring the U.S. Olympic Committee or U.S.
national teams.
Besides celebrating sport, there is an official ideology of the Olympics, called "Olympism." It aims to promote a pure blend of sport, culture and education.
Sports, of course, remain at the center of the Olympics, but
commercialism has overwhelmed whatever other values the Olympics hope
to embody. The overwhelming cultural influence at the Olympics is now
commercial culture; and the overwhelming informational message is: buy,
buy, buy.
Commercial relations interfere with proper functioning of the Olympics.
In at least one notable case, commercial entanglements have called into
question the integrity of a national sports governing body. A lawsuit
and accusations around the activities of USA Swimming and the national
team coach -- both sponsored by swimwear maker Speedo -- charge Speedo,
the national team and the coach with antitrust violations. The lawsuit,
filed by Tyr, a Speedo competitor, alleges the coach has trumpeted the
benefits of LZR Racer, a new, high-profile Speedo suit, because of his
financial ties to the company. Tyr says its Tracer Rise swimsuit,
introduced weeks before the LZR Racer, is comparable to the Speedo
product.
The Olympic race for corporate sponsors has also put the Olympics in unhealthy -- and sometimes quite unpleasant -- company.
+ The International Olympic Committee will not partner with hard liquor
companies, but the IOC tolerates sponsorships by beer and wine
companies. Anheuser-Busch says it is a sponsor of 25 national Olympic
Committees, including those of China, Japan, Great Britain and the
United States. A tequila maker, Jose Cuervo, is a sponsor of the U.S.
Soccer Federation.
+ Notwithstanding the fundamental principles of "Olympism," which
celebrate healthful living, two of the 12 Olympic TOP sponsors run
businesses centered around the sales of unhealthy food: Coca-Cola and
McDonald's. Snickers, the candy bar made by Mars, is an official BOCOG
supplier. Hershey's is a sponsor of the USOC. Coca-Cola is a sponsor of
FIFA, the international soccer federation. McDonald's and Sprite are
sponsors of USA Basketball. McDonald's and Sierra Mist are sponsors of
the U.S. Soccer Federation. Coca-Cola is a sponsor of USA Softball.
Hershey's is a sponsor of USA Track & Field.
+ Many of the sports apparel and equipment makers partnered with the Olympics and official Olympic bodies -- among them Adidas, Nike and Speedo -- source their products from sweatshop factories. In a very disturbing development just before the start of the Olympics, Adidas reportedly announced it was transferring large amounts of its production out of China because wages set by the government were "too high" (!).
+ At least two major Olympic partners, the China National Petroleum Corporation (CNPC) and Sinopec, have been linked to gross human rights violations in Sudan. Both companies are sponsors of the Beijing Organizing Committee of the Olympic Games.
There is no doubt that the horse is out of the barn on Olympic
sponsorships, and the world is unlikely to see a commercial-free Games
anytime soon.
Nonetheless, the most egregious problems with the Olympics' pervasive sponsorship arrangements can and should be addressed.
The IOC, National Olympic Committees, and international and national
sports governing bodies can and should scale back the number of
corporate sponsorships.
They can and should develop safeguards to ensure apparel and equipment
sponsorships do not compromise sports governing bodies' decisions.
Coaches of national teams should be prohibited from serving as paid
spokespeople or consultants for apparel and equipment makers.
They can and should refuse to accept sponsorships from any alcohol
company, including beer and wine companies. This recommendation does
not reflect a prohibitionist impulse. It merely extends the insight in
the present IOC ban on hard liquor sponsorships: promoting more alcohol
consumption is unhealthful, and inappropriate for an event with
enormous appeal to children.
They can and should end partnerships and sponsorship arrangements with
junk food, soda and fast food companies. These companies' operations
are incompatible with Olympic ideals of promoting fitness and healthful
living, and the companies use the association with the Olympics to
remove some of the tarnish of their unhealthy products.
They can and should insist that official, sponsoring apparel and
equipment makers disclose where their products are manufactured, and
ensure that their products are manufactured in a fashion that respects
core labor standards.
They can and should refuse to enter into sponsorship arrangements with
companies connected to gross human rights abuses. This is a simple
ethical standard, and one required by the Olympic commitment to
demonstrate "respect for universal fundamental ethical principles."
Will the IOC and other committees move in these directions? They
refused to respond to repeated requests for comment. It may be,
however, that it will be the corporate sector driving reduced
commercialization of the Olympics. The opportunity to project a
high-profile in China's fast-growing market has made the Beijing
Olympics uniquely attractive; but already leading sponsors
have indicated they do not intend to continue paying for the right to
besiege the planet with Olympics-related marketing in connection with
future Games.
The recent decision by the U.S. Supreme Court to slash the damage
award in the Exxon Valdez oil spill case and the indictment of Sen. Ted
Stevens on corruption charges are not the only controversies roiling
Alaska these days. The Last Frontier is also witnessing a dispute over
a proposal to open a giant copper and gold mine by Bristol Bay, the
headwaters of the world’s largest wild sockeye salmon fishery. Given
the popularity of salmon among the health-conscious, even non-Alaskans
may want to pay attention to the issue.
The Pebble mine project
has been developed by Vancouver-based Northern Dynasty Ltd., but the
real work would be carried out by its joint venture partner Anglo
American PLC, one of the world’s largest mining companies. Concerned
about the project and unfamiliar with Anglo American, two Alaska
organizations—the Renewable Resources Coalition
and Nunamta Aulukestai (Caretakers of the Land)—commissioned a
background report on the company, which has just been released and is
available for download on a website called Eye on Pebble Mine (or at this direct PDF link). I wrote the report as a freelance project.
Anglo American—which is best known as the company that long
dominated gold mining in apartheid South Africa as well as diamond
mining/marketing through its affiliate DeBeers—has assured Alaskans it
will take care to protect the environment and otherwise act responsibly
in the course of constructing and operating the Pebble mine. The
purpose of the report is to put that promise in the context of the
company’s track record in mining operations elsewhere in the world.
The report concludes that Alaskans have reason to be concerned about
Anglo American. Reviewing the company’s own worldwide operations and
those of its spinoff AngloGold in the sectors most relevant to the
Pebble project—gold, base metals and platinum—the report finds a
troubling series of problems in three areas: adverse environmental
impacts, allegations of human rights abuses and a high level of
workplace accidents and fatalities.
The environmental problems include numerous spills and accidental
discharges at Anglo American’s platinum operations in South Africa and
AngloGold’s mines in Ghana. Waterway degradation occurred at Anglo
American’s Lisheen lead and zinc mine in Ireland, while children living
near the company’s Black Mountain zinc/lead/copper mine in South Africa
were found to be struggling in school because of elevated levels of
lead in their blood.
The main human rights controversies have taken place in Ghana, where
subsistence farmers have been displaced by AngloGold’s operations and
have not been given new land, and in the Limpopo area of South Africa,
where villagers were similarly displaced by Anglo American’s platinum
operations.
High levels of fatalities in the mines of Anglo American and
AngloGold—more than 200 in the last five years—have become a major
scandal in South Africa, where miners staged a national strike over the
issue late last year.
Overall, the report finds that Anglo American’s claims of social
responsibility appear to be more rhetoric than reality. Salmon eaters
beware.
Big business is talking more these days about the need to reduce
greenhouse gas (GHG) emissions. Even long-time global warming denier
Exxon Mobil feels the need to publicize
what it is doing in this regard. Claims of reductions in GHG are not,
however, meaningful unless those emissions are being estimated
consistently to begin with.
A study issued yesterday by the Ethical Corporation Institute raises
questions about how much we really know about the volume of GHG being
generated by large corporations. According to a press release about the report
(which is available only to those willing to fork over more than 1,000
euros), there are “staggering inconsistencies in how companies
calculate and verify their greenhouse gas emissions.” The report found,
for instance, that companies responding to the fifth annual Carbon Disclosure Project
questionnaire used more than 30 different protocols or guidelines in
preparing their emissions estimates. The report, it appears, surveys
this potpourri of measurement techniques but does not attempt to
resolve the differences.
The absence of consistency has not prevented the Carbon Disclosure
Project from trying to use current reporting to understand the larger
framework of GHG trends. In May, the Project issued the first results of its Supply Chain Leadership Collaboration,
an initiative in which large companies such as Nestlé, Procter &
Gamble and Unilever urge their suppliers to report on their own carbon
footprint. It is unclear how much effort is made to ensure these
results are reported in a uniform manner.
Along with the need for improved GHG reporting, there are growing calls for companies to disclose the liability risks
(and opportunities, if any) associated with those emissions. Recently,
a broad coalition of institutional investors and major environmental
groups once again urged
the U.S. Securities and Exchange Commission to clarify the obligations
of publicly traded companies to assess and fully disclose the legal and
financial consequences of climate change. The statement was aimed at
reinforcing a petition filed with the SEC last year on climate-change
disclosure.
Climate-change liability risks no longer exist just in the realm of the theoretical. Lawsuits
have been filed against the major oil companies for conspiring to
deceive the public about climate change—including one brought in the
name of Eskimo villagers in Alaska who are being forced to relocate
their homes because of flooding said to be caused by global warming.
Famed climate scientist James Hansen recently declared
at a Capitol Hill event that oil and coal company executives could be
guilty of “crimes against humanity.” If that isn’t a risk worth
reporting, what is?
Almost twelve years ago, when a group of us started CorpWatch, we did so because it seemed then that a few hundred transnational companies were intent on remaking the earth in their image. As we saw it, the corporate version of globalization undermined community, ecology and democracy. At that moment the Internet had just appeared on the scene, and it seemed to us, and to many others, a vehicle through which to build an alternative – a form of grassroots globalization that fostered human rights and environmental rights, and that helped hold corporations accountable across the globe. Thus CorpWatch was born.
In the ensuing dozen years, the corporate encirclement of the earth has only
grown – as has the grassroots response to it in every corner of the planet.
The Internet has boomed and become on the one hand, more corporatized than we might once have imagined and yet also an increasingly powerful tool for building democratic participation and communication (and I’m very proud that CorpWatch is still part of it). This dual nature of the Internet embodies a fundamental paradox of globalization. While globalization seems to concentrate power in the hands of a few in most every realm it touches, it also increasingly interconnects us, interweaving universal values into a multinational tapestry of cultures and politics.
I see this here in Argentina, where I’ve had the good fortune to live for the past year. As numerous people here will tell you, once, this country was so isolated from the rest of the world that a lot of folks were not aware of the magnitude of the horrors unleashed by the military dictatorship between 1976 and 1983. People knew enough and saw enough and felt enough to be afraid, and tens of thousands felt the direct impact as they or their loved ones were arrested, tortured, “disappeared.” But the truth was hard to come by; there was heavy local censorship, and there was no Internet. People abroad knew more about what was going on in Argentina, than many here did.
Today, the country, like most of the rest of the world, is dialed-in, networked to the hilt, totally online. It seems almost unthinkable that something similar could happen here again. There is a strong consciousness of and commitment to human rights, and an understanding of the connection between what Argentina went through, and similar histories and battles elsewhere in the Latin American region and the world. Argentina pulled itself out of the horrors of dictatorship, and as it has re-evolved as a nation, it has benefited in this way from globalization.
At the same time, the country is suffering many of the attendant ills. I asked my twelve year-old daughter what she had learned about the United States from spending a year outside of the country. Her reply was quick and clear – I’ve learned that the US controls the media in the rest of the world. From the mouths of babes...but after all, she learned to speak Spanish, in part, by watching American sitcoms dubbed into Spanish on the local TV. Meanwhile, although the country has reaped significant economic benefit from its agricultural prowess as a giant in the world soy market – the control of this commodity is increasingly in the hands of a few transnational corporations: Cargill, ADM and others. And the country’s forests are suffering as more and more trees are felled to make room for more and more soybeans. These facts will remain true, no matter the outcome of the current conflict between President Kirchner and the country’s farmers.
Finally, globalization and all its contradictions hits home directly for me here in the Buenos Aires neighborhood I’m living in. Once a zone of automechanics and warehouses, Palermo Viejo is today one of the hippest and most popular destinations in this wonderful city. Now known as Palermo Hollywood, it is a barrio in the midst of a vast transformation. Many of our neighbors have lived here for forty or more years – they are old-school butchers, bakers, antique dealers, bar owners. Yet they are increasingly surrounded by trendy boutiques and fashionable restaurants. Many are being squeezed out by big corporate real estate that has entered the scene and is speculating on a series of high-end apartment towers that will forever change the face of this low-slung old time neighborhood. In the midst of it all are a throng of artists, ex pats, and activists organizing for the soul of the barrio.
Don’t get me wrong; it ain’t all bad. To be honest, all the paradoxes and contradictions of the gentrification of this globalizing hub make it an exciting and wonderful place to live (for the moment). I decided to try and document the intersection – the convergence and contradiction – of these various separate realities-the old and the new of Palermo Viejo. You can check out my photo essay on the subject at http://www.palermobuenosaires.blogspot.com.
Josh Karliner is Founder and a board member of CorpWatch.
Tim Shorrock, a veteran investigative journalist and a longtime subscriber to the Dirt Diggers Digest, has just come out with a book called Spies for Hire: The Secret World of Intelligence Outsourcing.
Shorrock describes how an activity that used to be handled by spooks on
the federal payroll has been steadily transformed into a $50 billion
Intelligence-Industrial Complex.
Thanks to the contracting scandals surrounding Halliburton and its
former subsidiary Kellogg, Brown & Root, the public learned of the
extent to which the Pentagon has turned over routine functions to
private military companies. The outrageous behavior of Blackwater has
highlighted the use of mercenaries to protect U.S. diplomats and other
VIPs in Iraq.
Shorrock shines a light on another group of corporations that are
carrying out a more sensitive function that most people have no idea is
being handed over to the private sector. Careful readers of the
revelations concerning abuses at the U.S.-run Abu Ghraib prison in Iraq
would have learned that interrogators alleged to have abused detainees
included civilians employed by a company called CACI. But that is only
the tip of a lucrative iceberg, Shorrock shows.
For example, he writes, more than half the people working at the
super-secret National Counterterrorism Center in Virginia are employees
of companies such as Science Applications International Corporation
(SAIC), BAE Systems and Lockheed Martin. The Center’s terrorist
database is maintained by The Analysis Corporation, which subcontracted collection activities to CACI.
Since 9/11, Shorrock says, the Central Intelligence Agency has been
spending 50-60 percent of its budget (or about $2.5 billion a year) on
contractors—both individuals and companies. At the CIA and its sister
spook agencies: “Tasks that are now outsourced include running spy
networks out of embassies, intelligence analysis, signals intelligence
(SIGINT) collection, covert operations, and the interrogation of enemy
prisoners.”
Shorrock devotes an entire chapter to Booz Allen Hamilton, known to
most people as a management consultant for large corporations but which
pioneered the intelligence outsourcing industry (though it recently
agreed to sell its federal business to the Carlyle Group). When Mike
McConnell, a former Booz Allen executive, was named by President Bush
as Director of National Intelligence, it was the first time, Shorrock
notes, that a contractor was put in charge of the country’s entire spy
apparatus.
Spies for Hire has much more to offer that cannot be
adequately summarized here. I recommend that you read it in full. But
let me let also note that profiles of some of the intelligence
contractors discussed by Shorrock—such as CACI and ManTech International—can be found on the Crocodyl wiki to which I contribute. Also note that the updated edition of Jeremy Scahill’s valuable book Blackwater,
recently issued in paperback, has a discussion (p.453 forward) on the
mercenary company’s move into another form of privatized intelligence—a
product called Total Intelligence Solutions that is designed to bring
“CIA-style” services to Fortune 500 companies.
The U.S. Department of National Intelligence (the body that oversees spy agencies like the Central Intelligence Agency and the National Security Agency) recently decided it wanted to know what Iranian students were taught in school these days.
Most people might have considered the obvious: pick up the phone and ask an Iranian student or perhaps their parents, who have already had to spend many days and probably nights reading the books.
But fortunately for the DNI, such a treasonous act was not necessary.
Instead they hired SAIC, a major CIA and NSA contractor, to do the job. On December 31st, 2007, the company published the results: a 17 page report on 85 Iranian textbooks that the company downloaded off the Internet from the Iranian government's website. The final report was not made public, but Secrecy News, an excellent electronic newsletter written by Steven Aftergood and published by the Federation of American Scientists, obtained a copy.
The textbooks that are used in Iranian schools "reveal a clear emphasis on Islam, as it has been interpreted by the leadership of the Islamic Republic of Iran," is one of "the most important conclusions" of the study and they "provide a distorted view of Shia Islam as the only true path in Islam, and among religions."
Beyond this shocking headline, SAIC can also reveal that the Iranian government may be censoring detailed news of discrimination: While page 74-77 of the sociology textbook for the third year of high school makes reference to discrimination, there are no specific cases of discrimination in Iran mentioned, according to the company's analysts.
The CIA will be delighted to learn that, in accordance with popular belief, the textbooks do spread hate against the U.S. Page 64 of the Islamic Teaching textbook for the fifth grade contains a quote from Ayatollah Khomeini that reads: "The Muslims must use the power of the Islamic Republic of Iran for crushing the teeth of this oppressive government [the USA] in its mouth."
Although SAIC says it studied Iranian mathematics and chemistry textbooks, the geeks at the NSA will be disappointed that they contained no smoking guns or secret equations.
The question CorpWatch wants to know - how much did the government pay for this study? For any of our readers out there with access to the spy budget, here's a clue: it is contract number: 2003*N443600*022
Ironically the cargo plane crashed the day before “Memorial Day,” a major U.S. federal holiday that commemorates U.S. men and women who die while in military service.
Kalitta first entered the freight business in 1967 when he started ferrying car parts in a Cessna 310. In November 2000, Kalitta Air, started running domestic and international scheduled or on-demand cargo service and support for the Pentagon’s Air Mobility Command based at Scott Air Force Base in Illinois.
On Sunday, a 25 year old Boeing 747 Kalitta jet, N704CK, crashed on take-off from Brussels airport. The specific plane is one of four of the company’s 747-200F’s and it regularly flies on Kalitta’s European cargo service to New York and Chicago, according to the company’s web schedule.
The plane broke in half and Belgian firefighters, who rushed to the scene, coated the wings of the plane with special fire retardant foam as a precaution because the plane was still full of jet fuel. The five people on board were slightly injured although none were killed. The plane was carrying 76 tonnes of cargo, half of which Belgian media reported to be mail. Details of the remaining cargo were not revealed.
Back in the U.S., the Wilmington News-Journal reported that the company planes were awaiting Monday’s commemoration ceremonies. “Along Delaware 1 near a busy Dover Air Force Base, travelers could catch glimpses in the distance of the original reason for Memorial Day. White, corporate-size jets owned by Kalitta Air waited in the sun to ferry home fallen troops whose final journey passes through the large military mortuary at Dover.”
(The company also leased one of its 747s to a Columbia Pictures film named “Air Force One,” a 1997 suspense thriller about the hijacking of the U.S. president's plane. The film starred Harrison Ford, Gary Oldman and Glenn Close.)
Last week, a Congressional committee properly raked Big Pharma over the coals for misleading advertising of pharmaceuticals.
A hearing of the House Energy and Commerce Committee's oversight subcommittee focused on advertising campaigns for three drugs, including the remarkable case of Robert Jarvik. Jarvik is featured in endlessly re-run ads for Pfizer's blockbuster cholesterol drug Lipitor. Known as the inventor of the Jarvik artificial heart, he is not a cardiologist, not a licensed medical doctor and not authorized to prescribe pharmaceuticals. He's shown in the ads engaged in vigorous rowing activity, but in fact he doesn't row. Pfizer pulled the ads in February after controversy started brewing.
Among industrialized countries, only the United States and New Zealand permit drug companies to market directly to consumers. It's a bad idea, it drives bad medicine, and it should be banned.
But although it has the highest profile, direct-to-consumer advertising is a small part of Pharma's marketing machine.
Researchers Marc-André Gagnon and Joel Lexchin conclude in a recent issue of the journal PLOS Medicine that direct-to-consumer ads make up less than a tenth of industry marketing expenditures ($4 billion of $57.5 billion in 2004). And Gagnon and Lexchin's estimate of $57.5 billion on marketing excludes many industry expenditures that are really driven by marketing, including clinical trials conducted for marketing purposes.
The bulk of the industry marketing effort -- more than 70 percent by Gagnon and Lexchin's calculation -- is directed at doctors.
Why?
Because it works.
The companies spend huge amounts paying firms that carefully track what doctors prescribe, and then they use the information to tailor messages to doctors, distribute samples and develop continuing medical education programs.
Gagnon and Lexchin report that Pharma spends more than $20 billion a year on "detailers" -- the pharma reps that knock on doctor doors, ply the staff with free coffee and lunches, distribute samples ($16 billion worth), and prod docs to prescribe their drugs.
This is complemented by a host of tactics that in other circumstances might be called bribes.
Petersen says she "had no idea this was so extensive until one day I was writing a story about Celebrex and Vioxx -- this was before Vioxx was taken off the market. The story was about the marketing battle between these two pain drugs. I called one of the large societies of rheumatologists and asked for an expert on arthritis. I specifically said I needed an expert who was not being paid as a consultant to one of the manufacturers of these drugs. A staff person said, 'We have lots of people you can talk to, but all of these doctors are consultants to one or both of the drug companies.'"
Drug companies hire doctors to give lectures, and they hire other doctors as "consultants" to go to fancy dinners and listen to the lectures. "There are more than 500,000 of these dinners or events in America every year," Petersen says.
The drug companies weave these diverse strategems into an elaborate tapestry -- not infrequently to push drugs for inappropriate purposes. One eye-opening case that Petersen details in Our Daily Meds concerns Neurontin, a mediocre drug for epilepsy that Warner-Lambert illegally peddled as an unapproved treatment for bipolar disorder, migraines, attention deficit disorder in children and other conditions. The drug does not work for most of these conditions. Many persons were injured by taking excessive doses of Neurontin, and many others wasted money and emotional energy on hopeless Neurontin treatment strategies. Warner-Lambert ultimately paid $430 million to settle criminal and civil charges related to Neurontin marketing, but Petersen says that, even so, the illegal marketing scheme was clearly profitable for Warner-Lambert (and Pfizer, which acquired Warner-Lambert in 2000).
Petersen's account of the Neurontin nightmare draws heavily on a whistleblower, David Franklin. She summarizes the central theme of the story Franklin revealed: "The company got doctors to prescribe the drug for all these experimental uses by paying them. They paid physicians to give speeches to other physicians at restaurants or hotels or resorts. The doctors not only enjoyed a nice meal or a weekend vacation, they often also received a $500 check for attending. The physicians giving lectures at these parties were often trained by the drug company’s ad firm to describe how Neurontin could work for conditions like bipolar. … The company tracked the doctors’ prescriptions before and after these dinners or weekend retreats. The executives saw how well it worked."
Which raises an interesting question: How is that industry can so effectively manipulate highly trained doctors?
Answers Adriane Fugh-Berman, a doctor and Georgetown University professor who runs PharmedOut, a project that focuses on how pharmaceutical companies influence prescribing decisions and encourages physicians to educate themselves from non-industry sources: "Physicians are trained in medicine, not psychological manipulation. Every bit of flattery, friendship and information offered by reps is aimed at selling drugs."
There is no simple solution to these problems, though ending patent-based marketing monopolies would transform pharmaceutical marketing practices and likely eliminate most abuses.
In the meantime, a ban on Pharma gifts to doctors would be a modest step forward. In the United States, notes Petersen, "radio disc jockeys can’t take cash from music companies. But when it comes to something like medicines -- which mean life or death for people -- doctors can take as much money as they want from the drug companies. We need a law to stop that."
Note: Rob Weissman serve as managing director for Commercial Alert, which advocates for elimination of direct-to-consumer pharmaceutical advertising.
Wal-Mart Stores has put out a press release
patting itself on the back for promising the equivalent of about
$430,000 for disaster relief and reconstruction for the area of China
hit by a massive earthquake this week. The gesture was laudable but the
amount was less than impressive.
After all, the giant retailer would be nowhere today without the
countless Chinese workers who toil in sweatshops so that American
consumers can be offered the cheap goods that are at the core of the
company’s business model. Last year those largely Chinese-made goods
brought Wal-Mart profits of $12.7 billion, or about $1.4 million every
hour of every day. The $430,000 contribution thus represents less than
20 minutes of profit.
Wal-Mart also profits from Chinese consumers. The company operates more than 200 stores in
China (through joint ventures and minority-owned subsidiaries), several
of which have been shut down because of the tremblor. Wal-Mart was so
eager to operate stores in China that it agreed to let its employees
there be represented by unions (though of the government-dominated
variety).
Wal-Mart has a history
of using relatively inexpensive amounts of disaster relief to boost its
reputation. After Hurricane Katrina hit the U.S. Gulf Coast in 2005,
Wal-Mart maneuvered to get maximum exposure for its prompt delivery
of relief supplies. A fairly routine operation for a company possessing
the most advanced logistics infrastructure was seen as nearly
miraculous, given the ineptitude of federal and state public officials.
The company made an initial faux pas (quickly reversed) in
announcing that employees at its stores shut down by the storm would be
paid for only three days.
It also started out offering a measly $2 million in relief but soon
overcame its parsimonious instincts and upped the figure by $15 million, thereby winning wide praise. The wave of favorable coverage went on for several months, thanks at least in part to the efforts of
its army of p.r. operatives from Edelman and a conservative blogger who
was paid to tout Wal-Mart’s hurricane work in the blogosphere.
Wal-Mart may have to part with more than $430,000 to get a similar public relations bonanza from China’s suffering.
Kellogg, Brown and Root (KBR), the former
subsidiary of Halliburton, announced today that it was buying
Alabama-based BE&K for $500 million. For David Nash, the president
of BE&K, and the man who was in charge of handing out
reconstruction contracts in Iraq shortly after the U.S. invasion in
March 2003, there must be a sense of deja vu to now be employed by
one of the biggest building companies working in Iraq.
David Nash spent over 33 years in the U.S.
Navy, beginning in Vietnam and ending as the top engineer (he was Chief of Civil Engineers and Commander of Naval
Facilities Engineering Command). In late 2003, he
was put in charge of the Iraq Program Management
Office, most of
whose contracts were disastrous failures either because of poor
planning, supervision or because they were destroyed by insurgents.
Much has been written about the failure of these projects by
the Special Inspector General for Iraq Reconstruction (SIGIR) and
in Blood Money,
an excellent book by T. Christian Miller of the
Los Angeles Times. The
reports are still coming out; a report on Perini's power
projects was published at the end of April 2008, which sadly cost the
life of one of the auditors who was sent to find out why the project
failed.
BE&K is no stranger to KBR: indeed BE&K was sub-contracted to build a temporary tent
city after Hurricane Katrina to house 7,000 military personnel and
others assisting in the disaster response. Both KBR and
BE&K came under scrutiny for firing dozens
of unionized electricians, many of them local residents who had their
homes destroyed during Hurricane Katrina, in favor of lower-wage
migrant workers.
CorpWatch attended KBR's annual meeting today at the Houstonian
hotel and met with William Utt, the company CEO, to ask him about the
company's policy on the exploitation of migrant workers, particularly
in Iraq, where the many sub-contractors employ at least 35,000 Third
Country Nationals (largely from South and South East
Asia)
Indeed these are the people who are
responsible for KBR's boast that it has
"served over 500 million meals, delivered 272 million pounds of
mail, produced more than 7.5 billion gallons of potable water,
transported more than 3.5 billion gallons of fuel, hosted more than 87
million patrons at MWR (Morale, Welfare and Recreation) facilities,
logged nearly 3.7 million miles transporting supplies and equipment
for the military, and laundered 32 million bundles of laundry for the
troops." And this work is set to continue far into the
future - KBR has just been awarded a big chunk of the mammoth new $150
billion troop support contract in Iraq.
Utt told CorpWatch that his
company followed the Federal Acquisition
Regulations and paid their staff "world-scale wages". When we
noted to the assembled shareholders and the board of director that
these wages were as low as $9 a day for cleaners and $20 a day for
short-order cooks at the dining facilities we visited in April 2008,
and that many of these workers paid as much as $4,000 to get these
jobs in the first place, he acknowledged that he was aware of the
problem.
But our question still remains, what are
companies like KBR and BE&K going to actually do about their
workers wages other than react and investigate?
We invite Utt and Nash to learn more about the
labor conditions of workers in Iraq by reading some of our coverage of
this matter on the last few years. Our trip to Iraq in April 2008
suggests that very little has changed for the men and women who cook
the food and clean the toilets for the U.S, soldiers living in Iraq on
contract to KBR, its competitors, and their
sub-contractors.
A funny thing happened on the way to exercising my presumed right, as a shareholder, to attend yesterday’s annual shareholder meeting
of private military contractor
L-3 Communications, held at the Ritz-Carlton Hotel in
Manhattan’s financial district.
I was one of a group including a translator, Marwan Mawiri, who worked for
a year and ½ for Titan, now an L-3 subsidiary, in
Iraq. Marwan has witnessed first-hand numerous problems with the way
interrogation and translation contracting is being handled in Iraq – a
practice that may be putting at substantial risk the national security and
lives of the Iraqi people, of U.S. and multinational troops, officials
and contractors, and of the United States itself.
The problem is clear: inadequate and downright bad vetting and hiring practices for analysts, interrogators and linguists. Indeed, the U.S. military has recently cancelled Titan’s translation contract due to poor practices along with waste, fraud and abuse.
What is also crystal clear is that the war in Iraq can neither be won,
effectively prosecuted, nor competently withdrawn from until these
problems are solved and until proper oversight is in place.
If people hired to translate in critical battlefield and other situations
are not even fluent in at least Arabic and English; if screeners
monitoring the entry and exit of people to U.S. military bases at times
have no more qualification and training than having been a baggage
screener at a U.S. airline (see CorpWatch’s new report [note: updated December 2008] "Outsourcing Intelligence in Iraq":); if
interrogators are not qualified, experienced and trained to the highest
standards possible, how can we ensure that we avoid future travesties due
to bad intelligence? Such as the bad intelligence around the supposed
Iraqi weapons of mass destruction program (which was, of course, Bush/Cheney and neocon-driven, not L-3-driven), that got the U.S. into this war
in the first place? (And remember, even when U.S. soldiers start coming
home from Iraq, large numbers of private contractors will stay, making proper
oversight all the more crucial.)
It turned out that L-3’s management wasn’t so happy to see us, and that my co-worker, Pratap Chatterjee and I, were supposed to have received a
certain admission ticket to attend the meeting. The same went for our companions from the Iraq Campaign 2008 – a major coalition to oppose the war, which is now taking on private military contractors as part of their broader campaign on the high cost U.S. taxpayers are paying for the war in Iraq – and Foreign Policy in Focus, who were holding proxies. Funny that.
Looking out at the Statue of Liberty from the hotel lobby downstairs, where we gathered to figure out how to proceed, I pondered the damage this
war has done to the liberties of so many Iraqi people, and to so many
U.S. liberties and values that I hold dear. Like respect for human
rights, compliance with the Geneva Conventions around torture, appropriate
security that is handled with skill and integrity. I wasn’t surprised that
L-3/Titan didn’t want to hear our message; though I sincerely hope some of the shareholders, managers, directors, staff and financial analysts do
take the time to read our report and to talk to current and former contractors like Marwan. We didn’t go in malice.
We went in genuine concern over business operations that, while they may
be earning a pretty profit for large shareholders, pose a genuine
reputational risk to the company for future liability. And are causing harm on the ground, to real people. We challenge L-3 Communications
to become a truly ethical leader in business
practices, not just in products and sales. Surely the sixth-largest U.S. defense industry company (according to their website) has the intelligence to recognize bad
practices and the ability to change them for the better.
Or are we simply destined for years more, as Huffington Post blogger
Charlie Cray put it, of companies and investors milking a “Baghdad Bubble
as a result of the Bush administration's refusal to hold them accountable”?
As the meeting ended, and the muckety-mucks began leaving the Ritz-Carlton
to be chauffered away in their Lincoln Town cars and limousines, we gave
these decision makers another opportunity to take a copy of CorpWatch’s
report, or even to talk to us directly. The vast majority kept their
blinders on and marched resolutely past.
Suddenly we saw General Carl Vuono
(ret.). Vuono is former chief of staff of the U.S. Army, and long-time president of private military
consulting firm MPRI, which is now
also an L-3 subsidiary. Pratap and Marwan rushed to try and speak with him, while a reporter and cameraman from Al-Jazeera English filmed and stood at the ready for the general’s reply. The general didn’t want to
talk, but you can see some of the footage on YouTube. You can also watch Pratap and Marwan describe their experiences on Democracy Now!, where they were interviewed live this morning.
Pratap gave the general a copy of “Outsourcing Intelligence In Iraq” – maybe
he’ll decide to have one of his staffers give it a read. We’d love to
talk, and welcome any dialogue with officials of L-3.
There’s something peculiar in the report on
financial market regulation issued March 31 by Treasury Secretary Henry
Paulson. The plan, touted by some as a bold expansion of federal
control over capital markets and dismissed by others as a mere
rearranging of the deck chairs on the financial Titanic, includes an
incongruous section on the insurance industry.
While insurance is a financial service, it hasn’t been at the center
of the implosion of the housing market or (aside from the bond
insurance crisis) linked to the instability on Wall Street. The Paulson
plan, nonetheless, provides a resounding endorsement of a “reform” that
key players in the insurance industry have been seeking for at least 15
years—allowing large national carriers to do an end run around the
current state-based insurance regulatory system. Such carriers would be
permitted to adopt an “optional federal charter” and thereby put
themselves under the supervision of a federal regulatory agency that
does not yet exist.
Big Insurance has not sought federal oversight because it wants more regulation.
After all, this is the industry that pioneered offshoring when some
carriers moved their official headquarters to tax havens such as
Bermuda. While it is true that many state regulators have been
toothless watchdogs, other states have been aggressive in protecting
the interests of policy holders and the public.
In fact, the Paulson proposal comes just a couple of weeks after
insurers were celebrating the downfall of New York Gov. Eliot Spitzer
in a prostitution scandal. During his time as New York’s attorney
general, Spitzer pursued major insurance companies such as Marsh &
McLennan and American International Group for offenses such as bid
rigging. Marsh ended up settling for $850 million in 2005, and AIG paid
a whopping $1.6 billion the following year. While it is true that
Spitzer went after the industry as a prosecutor rather than a
regulator, he did so in the overall context of state oversight.
The insurance industry swears that it supports the optional federal
charter in the name of modernization (as does the Paulson report), but
it is significant that the reform has been supported by groups such as
the Competitive Enterprise Institute and the American Enterprise Institute that
are no friends of regulation (some Democrats in Congress are also in
favor). When word of Paulson’s insurance proposal leaked out over the
weekend, the American Insurance Association rushed out a press release
hailing it, saying that the optional federal charter “will be more
efficient, effective and rational given the ‘increasing tension’ a
state-based regulatory system creates.”
Throughout its history, the insurance industry has avoided “tension”
by trying to minimize government interference in its affairs. In 1945
the industry supported the McCarran-Ferguson Act, which responded to a
Supreme Court ruling by affirming the regulatory role of the states. In
recent times, the industry has wanted the option of federal oversight
on the assumption that it would be less onerous. I’ll let the legal
scholars decide whether state or federal regulation is inherently more
appropriate. The issue is whether an industry not known for generous
treatment of its customers (think of Katrina victims denied coverage)
is going to be subjected to some strict oversight somewhere.
My hunch from last night was correct: Stanley Inc.
(also known by the name of its subsidiary Stanley Associates) is one of
the employers of contract workers who improperly viewed the passport
file of Sen. Barack Obama. It now seems that the files of Senators
McCain and Clinton were violated as well, so perhaps the speculation
about political skulduggery is unfounded.
Yet that still leaves a host of questions related to the growing
reliance of the State Department and other federal agencies on
contractors such as Stanley, which until today was far from a household
name. Yet it’s been around for more than three decades, making its
money—like the scores of other Beltway Bandits that populate the office
buildings of the Washington, DC area—from the federal spigot.
Stanley started as a maritime consultant and now provides “information technology services and solutions.” In its most recent 10-K filing,
Stanley reported getting 65% of its revenue from the Pentagon and 35%
from more than three dozen civilian agencies, most notably the State
Department.
Stanley used to be a pretty small operator, but over the past decade
it has grown at the remarkable rate of 33% a year, reaching more than
$400 million. Although the company is publicly traded, it is
majority-owned by officers, directors and employees (the latter through
an employee stock ownership plan).
While the passport contract is the one in the news, Stanley is
largely a military contractor. It brags that some 53% of its 2,700
employees have Secret or Top Secret security clearances. CEO Philip
Nolan is ex-Navy, and his board includes retired generals from the Army
and the Marine Corps. Stanley doesn’t produce weapons—it provides the
systems engineering, operational logistics and other services that keep
the high-tech war machine running.
In the 10-K filing, where it is addressing investors rather than the
public, the company is blunt about why it expects continuing growth:
“increased spending on national defense, intelligence and homeland
security” and “increased federal government reliance on outsourcing.”
In other words, its business strategy is fundamentally based on the
continuation of the “War on Terror” and the steady hollowing out of the
federal workforce.
The company goes on to list the specific risk factors that might
affect the value of its shares. Here’s one of particular interest (see
pp.20-21):
Security breaches in sensitive government systems could result in the loss of customers and negative publicity.
Many of the systems we develop, integrate and maintain involve
managing and protecting information involved in intelligence, national
security and other sensitive or classified government functions. A
security breach in one of these systems could cause serious harm to our
business, damage our reputation and prevent us from being eligible for
further work on sensitive or classified systems for federal government
customers. We could incur losses from such a security breach that could
exceed the policy limits under our professional liability insurance
program. Damage to our reputation or limitations on our eligibility for
additional work resulting from a security breach in one of the systems
we develop, install and maintain could materially reduce our revenues.
It will be interesting to see if the passport scandal has this
negative effect, or if the federal government protects Stanley from its
operational shortcomings.
Note: It’s just been reported that another company–Analysis Corporation–is also involved in the passport scandal. More on them later.
You might have heard the story about General Motors Vice Chairman Bob Lutz. At a recent closed-door meeting with reporters, the 76-year-old, who’s in charge of product development said he thinks global warming theory is “a total crock of sh*t” and that hybrid cars “make no economic sense.”
As you might expect, the people who cover both the auto industry and the environment went nuts. Mr. Lutz eventually responded to the uproar with a post on GM’s blog site (or at least a 26-year-old administrative assistant posted a response for him).
In the blog, Mr. Lutz called his remarks “an offhand comment.” “But I think that the people making a big deal out of it are missing the real point,” he wrote. “My beliefs are mine and I have a right to them, just as you have a right to yours.”
I don’t think anyone’s questioning Mr. Lutz’s right to have an opinion. I think, instead, when Mr. Lutz was kind enough to treat the world to his unvarnished thoughts, we all had an “Aha!” moment explaining why Toyota is overtaking GM as the world’s largest automaker.
Hybrid vehicles “make no economic sense” to Mr. Lutz, who undoubtedly basks in a bloated bath of cash thanks to his salary ($8 million per year), bonus and perks, but the for rest of us poor schmucks, trying to pony up what will soon be four dollars per gallon at the pump, hybrid cars make a world of economic sense and again, explains why Toyota is eating Mr. Lutz’s lunch.
“Instead of simply assailing me for expressing what I think, they should be looking at the big picture,” Mr. Lutz wrote. “What they should be doing, in earnest, is forming opinions not about me but about GM, and what this company is doing that is — and will continue to be — hugely beneficial to the very causes they so enthusiastically claim to support.”
Really? As fate would have it, I’ve driven three rental cars in the past week. One was a Hyundai Sonata, one a Dodge Avenger and one a Chevrolet Cobalt, from Mr. Lutz’s beloved GM.
The Cobalt was – to paraphrase Bob Lutz – a total piece of sh*t. It was cramped, handled poorly; the interior was made of such cheap plastic that I was afraid I’d a) die from off-gas fumes or b) snap off the handle when I went to open the door. The icing on this cake of deficiency was the fact that the little monster sucked down gas like a fleet of overloaded semis. Yet another wonderful product from GM, polluting the atmosphere and making people poor and miserable while it careens toward an early grave in the junkyard. Thanks, Bob.
My favorite – by far – was the Hyundai. It was comfortable, roomy, responsive and got decent gas mileage. The Dodge fell somewhere in between.
Mr. Lutz wrote, “My opinions on the subject [of global warming] — like anyone’s — are immaterial. Really.”
Really? GM pays you eight million dollars a year and doesn’t give a sh*t (I hate to keep using this word, but you brought it up, Bob) what you think?
And, really? Everyone’s opinion on global warming is immaterial? Perhaps that’s true. No one’s opinion counts except that of the decider, George W. Bush and he’s decided we need to keep pumping oil and mining coal.
Bob Lutz is a walking embodiment of what’s wrong with America’s industrial policy. He’s got his head so far up his own ass that everything looks like a crock of sh*t to him. Someone find this bozo a gold watch and let’s get on with trying to save ourselves from the internal combustion engine.
For anyone who has private photos on MySpace there is a good chance that their intimate moments are now being laughed at by pimple-faced teenage boys around the world. Rupert Murdoch's News Corp, owner of MySpace, neglected to repair a security vulnerability that made 77,000 "MySpaces" into "OurSpaces" in late 2007. Around 500,000 private photos were extracted from the site and uploaded to a popular file sharing website called the Pirate Bay. Over the course of three months MySpace was notified multiple times about the glitch, but it was only fixed after Wired News reported the story in late January.
Well, what if the scheme that troublemakers used to embarrass amateur photographers was used to publish secret material in the public interest (such as evidence of product failures or toxic waste dumping), and then distributed far and wide for free, so that anyone could access it in a manner that the rich and powerful had no way to prevent it?
One recent event has tipped the scales in favor of corporate accountability. A website called WikiLeaks recently released information on an offshore bank named the Julius Baer Group that exposed a scandal involving Cayman Island tax havens, money laundering and tax evasion. WikiLeaks allows whistleblowers to leak documents to the site anonymously, and has a community of editors and users who vet the information and rate the credibility of submissions. Julius Baer Group asked a U.S. court to issue a gag order against WikiLeaks and had their domain name revoked by court order for a short period of time.
Instantly other organizations sprang to the defense of the public interest, the ACLU, EFF and Public Citizen all recognized the need for whistleblower websites, and as a failsafe WikiLeaks had kept multiple mirror sites, so all of their information stayed online. Eventually more people saw the data than if the bank had ignored the matter, so the Julius Baer Group gave up the fight.
Sites like WikiLeaks provide a good venue for otherwise difficult to find information to be made publicly available. This type of information is crucial for holding corporations accountable, and is not always easy to find. If you have information on any corporate malfeasance, and would like to share it anonymously, please visit our corporate malfeasance wiki, Crocodyl.
The news this week is deeply ironic: the main
building of the New York Public Library at Fifth Avenue and 42nd Street will be engraved with the name of Stephen A. Schwarzman, while the periodicals inside may sadly chronicle Eliot Spitzer, the
governor of New York state, as Client Number 9 of a prostitution ring. Both men made their name on Wall Street:
Schwarzman rose from his first job in investment banking at Lehman
Brothers to run the Blackstone Group, a private equity firm, that has
allowed him to stash away an estimated $4 billion today, while Spitzer
got corporations from Samsung to investment bankers like Lehman
Brothers to return almost the same amount to the public
trust.
The Wall Street financier is now giving $100
million to support a worthy cause that taxpayers cannot afford: a new library to lend books, wireless Internet access
and new rooms for children and teenagers, to attract as many as three
million new users, most of whom are expected to be from low-income
minority groups. It will be financed by the profits that Schwarzman
made at Blackstone by exploiting tax loopholes to cut his tax rate
from 35 percent to 15 percent, costing the U.S. taxpayer tens of millions
of dollars.
Doubtless one of the books
that will be available at the new library will be the play Julius Ceasar, where Mark Anthony is quoted as
saying: "The evil that men do lives after
them; the good is oft interred with their bones." Yet
Schwarzman, like many wealthy people before him, will be able to escape
the curse of history, by buying fame at a public auction.
Spitzer may not escape the curse. The name
"Mr. Clean" may never be applied to him again. But for those
of us that track corporate fraud, who can forget his shining moments?
For example, in 2002 when ten Wall Street
banks from Bear Sterns to UBS Warburg were forced to pay $1.4 billion to settle
charges of "spinning" stock prices to make millions for
wealthy investors? Or in 2003, when his office uncovered how mutual fund brokers allowed select clients
privileges deprived to ordinary customers? Another billion dollars was
paid back to the small investor. How about the $50 million in royalties that his office
discovered that record companies hid from musicians in a
2004 investigation? And let's not forget the
$730 million in fines paid out in 2006 when his office discovered
price-fixing among computer chip manufacturers.
When Spitzer offered his apologies for his
private folly, he asked that the media remember that politics should
not be about individuals but about ideas and the public good. That surely is also the role of
libraries -- ideas and the public good -- not about celebrating the
titans of greed and excess. Perhaps if Wall Street were to pay its
fair share of tax dollars to spend on libraries, then there would be
no need to name the Central Library after one of the men who robbed
the public purse.
Will children who pass through those two stone
lions to enter the library notice that their names are Patience and
Fortitude? Or will they hope that one day they become as rich and
famous as the man after whom the building is named?
I hope that when they look through the shelves
of the New York public library, they will find books and magazines
that remind generations of New Yorkers to come of Eliot Spitzer's
true legacy: of an honest man -- human and fallible no doubt -- who
spoke truth to power.
(And for those on Wall Street who are crowing
about Spitzer's misfortune, shame on
you; your turn may be next to lose your job in
the reckoning over the real scandal on Wall Street: the sub-prime mortgage crisis that threatens to leave many a poor family without a
home of their own.)
The New York Times gave a boost today to Wal-Mart’s effort to raise its coolness quotient. Its account of a new blog
that the giant retailer is allowing some of its merchandise buyers to
produce was filled with references to “candor,” “speak[ing] frankly,”
and “uncensored rambling.” Much is made of the fact that the posters
have made unflattering comments about some of the offerings of
Wal-Mart’s suppliers. Wal-Mart is said to have learned its lesson from
earlier disasters with blogs created in the name of bogus front groups.
This new initiative, the Times assures us, is the real thing.
It is indeed the case that the site allows reader comments that are critical of certain company practices. For example, a posting
by an “associate” named Alex saying he might use spend his federal
economic stimulus check to purchase a TV or a laptop was followed by
comments on how that would do more to help the foreign economies where
such products are made. One person asked: “what happened to the
campaign WalMart used to run advertising its commitment to support
American manufacturers?”
Yet, it appears that the Times was hoodwinked by Wal-Mart.
The appearance of authenticity and candor is just another technique
used by advertising agencies and public relations consultants to win
over skeptical audiences.
As for those critical comments, it’s significant that “Alex” thanked
all those who had corrected a spelling error in his post but had
nothing to say about the company’s sourcing practices. In fact, that
the only real topic covered in the posts apart from product assessments
is “sustainability.”
Those items are posted in the name of Rand Waddoups,
who is no lowly buyer but rather the company’s senior director of
business strategy and sustainability. His part of the blog, at least,
fits in neatly with the company’s dubious campaign to depict itself as
the environmental leader of the corporate world.
As I have previously noted,
Wal-Mart’s green crusade places all the burdens on its suppliers, while
the moves taken by the retailer itself (improving energy efficiency,
etc.) are in fact nothing more than cost-cutting measures that boost
its bottom line. Until Wal-Mart makes some hard choices itself—such as
paying all its workers a living wage—nothing it does in the blogosphere
or elsewhere is going to be very authentic.
Fast food giant McDonald's was just forced to withdraw a controversial program to sponsor report cards in Seminole County, central Florida, in exchange for a Happy Meal coupon on the cover that features an image of Ronald McDonald. (Children with A and B grades, with two or fewer absences or who exhibit good behavior were entitled to pick up a free Happy Meal at their local McDonald's, as long as they presented their report cards. The company paid the $1,600 cost of printing the report cards.)
The promotional campaign by the Illinois-based company was defeated by a small, but feisty, activist coalition named the Campaign For A Commercial-Free Childhood, which is based out of the Judge Baker Children's Center in Boston.
In early December last year, CCFC launched a campaign against McDonald's when outraged parents contacted them. "My daughter worked so hard to get good grades this term and now she believes she is entitled to a prize from McDonald's," Susan Pagan, an Orlando parent, told CCFC. "And now I'm the "bad guy" because I had to explain that our family does not eat at fast food chains. I'm outraged that McDonald's is trying to exploit my daughter's achievement -- and that the Seminole County School Board would help facilitate this exploitation."
It's not the first time that McDonald's has tried to directly influence the eating habits of young children (nor, probably the last, unfortunately). Three years ago the company dropped a national campaign in the UK of providing educational material and teaching assistants to primary schools after a public backlash against the program by groups like McLibel.
And in the 1990s there was a hue and cry by groups like UNPLUG! of Oakland, California, after McDonald's and other companies provided "sponsored educational materials" on subjects like nutrition to teachers to supplement or take the place of approved curriculum in the U.S. The company was also protested for sponsoring McTeacher's Night in southern California, which involved teachers working at local McDonald's restaurants to raise funds for schools by selling burgers to their own students!
Yet perhaps the most devastating blow to McDonald's advertising to school-children was done by documentarian Morgan Spurlock with his film: SuperSize Me (the entire film can be watched for free online at http://freedocumentaries.org/film.php?id=98 ). In the film, Spurlock documents the impact of dining exclusively on McDonald's products for a 30-day time period. The film also explores the fast food industry's corporate influence, including how it encourages poor nutrition for its own profit. (An edited DVD version of the film designed to be integrated into a high school health curriculum is available from Arts Allliance America.)
NB: Full disclosure: This writer is a former fast food food industry employee with almost two years experience working fulltime in the business including stints at Burger King, McDonald's and Pizza Hut which allowed him to finance a diploma course in journalism school.
Many of today's new dot-com corporations, like Facebook and LinkedIn, make money by building "walled gardens" and programs that conduct "data mining" to take advantage of casual users surfing the web who are signing up in their millions for the numerous popular "free" social network sites. (Facebook refuses to reveal its profits but is rumored to be worth $15 billion.)
(A walled garden refers to a media strategy that compels users to one stay on their service. Data mining is the practice of collecting large amounts of personal information on website users by the site itself.)
While Apple's iPhone unabashedly locks users into using AT&T cell phone service, sometimes the strategies are more subtle. FaceBook, the popular social network site, restricts the functionality of their site so that it is easy to remain on facebook.com, while making external linking and emailing difficult. LinkedIn, another social network site, doesn't allow users to delete their profile without contacting customer service.
All of these tactics seek to make it easier for companies to collect information on individuals, with the sole purpose of creating consumer profiles for targeted advertising. The reason is simple: they make their money from the advertisers who will pay to get a captive audience (the kind they were once guaranteed on newspapers and TV) who might buy their products.
It is possible that these companies will soon sell their inventions for vast profits in the same way that YouTube and MySpace did, by taking advantage of ordinary people who would probably not pay for their services unless they were completely free. But activists say that the the Web has enormous potential to be a digital commons, if we assert our rights to use it for purposes other than buying and selling.
An activist group named Freespeech.org has put together a video that they are using to promote their "It's Our Web" campaign. The video, which spoofs the Transformers, is pretty entertaining, and manages to fit some complicated ideas about Internet user freedom into an accessible format. The underlying message of the video is a good one: the Internet is a medium that is best if it remains free. Restricting access to information is a taboo among Wikipedians, Slashdotters, bloggers and Gnubies alike because the free flow of information is what has driven the collective production responsible for the Web as we know it.
Philip Mattera is director of The Corporate Research Project,
an affiliate of Good Jobs First. The Project is a non-profit center that assists
community, environmental and labor organizations in researching and
analyzing companies and industries. Philip is also author of The Corporate Research E-Letter, and this blog is a re-posting of the November-December 2007 edition.
Chevron has recently been spending heavily on a public relations campaign titled “the Power of Human Energy” to depict itself as a leader in environmental and social responsibility. This image-burnishing effort faced a setback last month when the company was forced to pay $30 million to settle federal charges that it made illegal kickback payments to prewar Iraq in connection with crude oil purchases under the United Nations Oil-for-Food Program.
Chevron is just one of dozens of corporations that have been caught up in a move by the Securities and Exchange Commission and the Department of Justice to step up enforcement of a law prohibiting overseas bribery by U.S.-based corporations. The law—the Foreign Corrupt Practices Act or FCPA—can also be applied to foreign companies with a substantial presence in the United States. There have been reports that electronic and engineering giant Siemens, which recently paid a fine of around $300 million in a global bribery investigation by a German court, may soon be hit with FCPA charges as well.
The rise in FCPA enforcement emerged just as the prosecution of the wave of accounting scandals starting with Enron was winding down. In fact, the limited reforms enacted in response to those scandals—especially the Sarbanes-Oxley Act—have helped bring to light much of the information on which the recent FCPA cases are based. Business apologists who hoped that the public was forgetting about corporate crime now have to deal with new reminders of the sleazy aspects of commerce.
THE “BUSINESS WATERGATE”
It is often forgotten that the Watergate scandal of the 1970s was not only about the misdeeds of the Nixon Administration. Investigations by the Senate and the Watergate Special Prosecutor forced companies such as 3M, American Airlines and Goodyear Tire & Rubber to admit that they or their executives had made illegal contributions to the infamous Committee to Re-Elect the President.
Subsequent inquiries into illegal payments of all kinds led to revelations that companies such as Lockheed, Northrop and Gulf Oil had engaged in widespread foreign bribery. Under pressure from the SEC, more than 150 publicly traded companies admitted that they had been involved in questionable overseas payments or outright bribes to obtain contracts from foreign governments. A 1976 tally by the Council on Economic Priorities found that more than $300 million in such payments had been disclosed in what some were calling “the Business Watergate.”
While some observers insisted that a certain amount of baksheesh was necessary to making deals in many parts of the world, Congress responded to the revelations by enacting the FCPA in late 1977. For the first time, bribery of foreign government officials was a criminal offense under U.S. law, with fines up to $1 million and prison sentences of up to five years.
The ink was barely dry on the FCPA when U.S. corporations began to complain that it was putting them at a competitive disadvantage. The Carter Administration’s Justice Department responded by signaling that it would not be enforcing the FCPA too vigorously. That was one Carter policy that the Reagan Administration was willing to adopt. In fact, Reagan’s trade representative Bill Brock led an effort to get Congress to weaken the law, but the initiative failed.
The Clinton Administration took a different approach—trying to get other countries to adopt rules similar to the FCPA. In 1997 the industrial countries belonging to the Organization for Economic Cooperation and Development reached agreement on an anti-bribery convention. In subsequent years, the number of FCPA cases remained at a miniscule level—only a handful a year. Optimists were claiming this was because the law was having a remarkable deterrent effect. Skeptics said that companies were being more careful to conceal their bribes, and prosecutors were focused elsewhere.
Any illusion that commercial bribery was a rarity was dispelled in 2005, when former Federal Reserve Chairman Paul Volcker released the final results of the investigation he had been asked to conduct of the Oil-for-Food Program. Volcker’s group found that more than half of the 4,500 companies participating in the program—which was supposed to ease the impact of Western sanctions on Iraq—had paid illegal surcharges and kickbacks to the government of Saddam Hussein. Among those companies were Siemens, DaimlerChrysler and the French bank BNP Paribas.
THE REBIRTH OF FCPA PROSECUTIONS
The Volcker investigation, the OECD convention, the Sarbanes-Oxley law and other factors together breathed new life into FCPA enforcement. Stricter internal controls mandated by Sarbanes-Oxley have made it more difficult for improper payments to be concealed, prompting numerous companies to self-report FCPA violations in the hope of receiving more lenient treatment.
In 2005 the number of FCPA prosecutions started to pick up and reached double digits the following year. This year the number of investigations has reportedly been in the dozens, and the resolved cases have gained higher visibility. Among these have been the following:
* Three subsidiaries of British oil services company Vetco International pleaded guilty to FCPA violations in Nigeria and agreed to pay a total of $26 million in criminal fines. This was the largest criminal penalty the Justice Department had ever obtained in an FCPA case.
* Oil & gas distributor El Paso Corporation settled FCPA charges in connection with the Oil-for-Food Program and agreed to disgorge $5.5 million in profits and pay a civil penalty of $2.2 million.
* Dow Chemical paid a $325,000 civil penalty to settle FCPA charges relating to improper payments made by an Indian subsidiary in the late 1990s.
* A subsidiary of oil services company Baker Hughes pleaded guilty to FCPA charges involving bribery in Kazakhstan and paid a criminal fine of $11 million. In related SEC charges, Baker Hughes agreed to pay more than $44 million in criminal fines, civil penalties and disgorgement of profits. This became the new record for FCPA-related penalties.
* Textron Inc. paid more than $3.5 million to settle FCPA charges relating to kickback payments made by a subsidiary to obtain contracts for the sale of humanitarian goods to Iraq under the Oil-for-Food Program.
* Industrial equipment company Ingersoll-Rand agreed to pay more than $4.2 million to settle FCPA charges that four of its subsidiaries made kickback payments in connection with the Oil-for-Food Program sale of humanitarian goods.
FOREIGN COMPANIES IN THE FCPA NET
While the recent rash of FCPA cases has drawn little attention in the United States, the Siemens case has generated a major scandal in Europe. Last year, more than 200 police officers participated in a raid of company offices and homes of managers. Prosecutors in Italy and Switzerland joined in the investigation, which focused on suspicious transactions at the company’s telecommunications equipment unit reportedly totaling more than $2 billion.
The outcry over the bribery charges (and separate controversies over matters such as price-fixing) forced both the chief executive of Siemens and the chairman of its supervisory board to announce their resignation. In October the company agreed to a $300 million fine, hoping that the controversy would die down. But in November the Wall Street Journal gained access to the unpublished court ruling in the case, which provided embarrassing details about the payment of bribes in Nigeria, Libya and Russia. Subsequently, Business Week Online reported that FCPA charges in the United States could generate penalties for Siemens much harsher than what it experienced at home.
Siemens is not the only European company whose bribery problems are becoming an issue in the United States. Earlier this year there were reports that U.S. prosecutors have been investigating improper payments by major military contractor BAE Systems (formerly British Aerospace), including some reportedly involving Prince Bandar bin Sultan, former Saudi ambassador to the United States and a close ally of the Bush Administration, as well as other members of the Saudi royal family.
A quarter century after the Watergate investigation revealed a culture of corruption in the foreign dealings of major corporations, the new wave of FCPA prosecutions suggests that little has changed. There is one difference, however. Whereas the bribery revelations of the 1970s elicited a public outcry, the recent cases have generated little comment in the United States. Companies like Chevron pay their fine and go right on using their ad campaigns to present themselves as paragons of virtue. It took years for the reputation of Richard Nixon to recover from the taint of Watergate in the eyes of mainstream observers. Corporate America seems to be able to purchase instantaneous redemption.
Listen to this as you read . . . "Air Force Ones" by rappers Nelly, Murphy Lee, Ali, and Kyjuan, 2002
According to a recent article in the Wall Street Journal, Nike is tapping into the sway of cultural “influencers” to attract new types of consumers. Traditionally, celebrity athletes have worn Nike shoes in return for lucrative endorsement deals. However, recent charges brought against famous Nike-sporting athletes like NFL star and criminal dog-fighter, Michael Vick, and more recently, track heroine and self-admitted steroid user, Marion Jones, have dirtied this image of the hard-working athlete and further urged Nike to look beyond the sweat-drenched athlete for culturally influential people to wear their shoes. While still focusing on the athlete as the main consumer, Nike is turning to “under the radar” influencers for inspiration. In many cases, this leads to Nike’s white sneaker being painted, embroidered or dyed the colors of a Latin American flag or taking on “cultural signifiers,” often stereotyped symbols meant to represent a certain heritage or ethnicity.
Nike’s most stylistic shoe, the Air Force 1, provides an excellent case in point. A new series of the shoe, called the “Cultura” collection consists of shoes like The Los Angeles Cortez, inspired by “the traditional images of LA street life,” the Handball Aztec Cortez designed to capture “our Aztec heritage,” and the green, white and red Mexican Airforce, which “pays homage to the Motherland.” Nike designers hired well-known graffiti and tattoo artists to create each shoe’s aesthetic appeal. Each year, Nike releases a new Chinese New Year AF1 (check out the Year of the Dog here). And, in previous years, Nike has introduced a series of West Indies Air Force 1s in time for West Indies Pride Days in New York City. Each shoe has the flag of a different West Indies country on its insole. There are also Jamaica, Philippines, and Puerto Rico Air Force 1s. Deemed “ethnic pride sneakers” by bloggers, these shoes bring up interesting issues about identity and consumerism. Through these shoes Nike present a pre-packaged narrative of identity. They tell consumers that it is possible to express ethnic pride by wearing Nike tennis shoes. Effectively, commodifying ethnicity has become a sales strategy for Nike.
However, according to Nike, developing shoes for certain ethnicities is not only about ethnic pride, but also about promoting health. Earlier this year, Nike introduced the Air Native N7, a shoe designed specifically for Native Americans. In addition to its signature swoosh, the shoe features “heritage callouts,” including sunrise and sunset patterns on the tongue and heel, arrowheads and feathers. Nike claims the new shoe is “an effort aiming at promoting physical fitness in a population with high obesity rates.” As one self-described Native American blogger, David Yeagley, summarizes, “American Indians are fat and have funny-shaped feet.” He continues: “Our own Nikes! What an achievement!” and asks, “A shoe designed especially for Indians is going to make us walk more? A national company name lent to Indians is going to inspire us to better health?” Another critic, Sherman Alexie, a Spokane/Coeur d’Alene Indian had the following to say, “The day it was announced, I thought: ‘Are they going to have dream catchers on them? Are they going to be beaded? Will they have native bumper stickers on them that say, ‘Custer had it coming’?”
Apparently the idea behind these specialized shoes is that they will create a buzz that will spread to consumers closer to the mainstream. That's right, Nike is attempting to attract attention from "under the radar" consumers in order to appeal to the mainstream. Buying "ethnic pride" sneakers from Nike might allow someone to feel like they're expressing their ties to a certain culture or identity, but in the end, they're still just products designed to make profits for the biggest footwear company in the world.
One has to wonder if Nike's switch from risky celebrity endorsements to ethnic pride, is really just about creating a positive spin on its image, which has historically also been sullied by accusations of worker abuse in poor country sweatshops.
Stolen Without a Gun reads like an Anarchist's Cookbook of Corporate Crime and illustrates well how an international money laundering scheme works (including how to nest embezzled funds in a series of quasi-legal Cayman Island bank accounts) while telling the personal tale of Walter Pavlo, Jr., a convicted white-collar criminal who was busted for embezzling $6 million while working at MCI Telecommunications in the mid-1990s.
Pavlo, who served his time in jail and now gives lectures and advice on the subject of ethics and white-collar crime, is portrayed in the book as an everyman, without any particular bent to stealing money.
The narrative gives an inside perspective of how a business person could get wrangled into a high stakes game of money laundering. Pavlo, good at his job, notices the graft and corruption all around him and sees people hiding debt in accounts that he knows will never be repaid. Millions of dollars are being thrown away all around him. All the myths that he learned in business school, "The corporation as a community run by thoughtful innovators striving to do good while doing well," are shattered before him. As he is being groomed by his superiors in the company and his rise to power begins, he realizes the upper limits of just how much money he will make in his career at MCI. And it isn't enough. Plus, his company is being ripped off by delinquent customers everyday and he is the one responsible when they don't pay up. They are all getting away with it, why can't he?
The entire scheme is viewed by the perpetrators as nothing more than a college prank, they justify it by telling themselves that no one will miss the money, and for a while no one does. They get increasingly bold and sloppy with their methods and start to go after larger customers with higher levels of oversight. It is fun to watch the dizzying high come crashing down as Pavlo realizes that he cannot keep control of all of the accounts he has been siphoning, and he is running out of shells to shuffle money under.
The book does a good job of giving a frank perspective on how the culture of graft and corruption works. The demands to collect money from his clients are so unrealistically high that Pavlo has no choice but to bend the rules to make his quota. Corporate won't tell him explicitly to shirk regulations, but it is understood. Once he sees how easy it is to break the rules, and that everyone is doing it, there isn't much ground to cover for him and his buddies to come to the realization that he could be making money for himself instead of chucking it away into delinquent accounts.
Stolen Without a Gun is a "How-To" guide for students of the U.S Racketeer Influenced and Corrupt Organizations Act (RICO) and shows that too often a white collar criminal pushes externalities on their families and friends; Pavlo loses his wife and two children and his coworkers end up in jail. In the end the protagonist goes to jail, as the cover suggests, and presumably has a change of heart about his life of crime. But a quote from the last pages of the book suggests otherwise, "Bottom line, we are...getting what we deserve. We had our eyes wide open. Our only real regret is that we got caught. Case closed."
In a recent decision reported in the Guardian, a federal appeals court ruled that Caterpillar Inc. could not be sued over the death of an American peace activist who was crushed under bulldozers sold to the Israeli Defense Force (IDF). The story of Rachel Corrie, the activist who was crushed by a 60-ton Caterpillar D9 Bulldozer in Rafah, Gaza in 2003 while trying to prevent the razing of a Palestinian home by the Israeli army, achieved widespread media attention. Reports of the IDF’s razing of homes in Rafah were issued by numerous human rights watchdog organizations, including Human Rights Watch. Corrie’s family, along with four Palestinian families of victims killed while their houses were bulldozed, began legal proceedings against Caterpillar in 2005 for selling machines to Israel. Lawyers arguing for the families insisted that the company sold the bulldozers to the Israeli government on a commercial basis and knew, or should have known, that they would be used to demolish homes and kill innocent victims in violation of international law.
Explaining its decision, the court claimed that it could not rule in favor of the bereaved families "without implicitly questioning, and even condemning, United States foreign policy towards Israel." Of course, this is not the first time that U.S. companies have been implicated in mass human rights abuse and not had to answer for their participation. Indeed, U.S. companies have been intimately connected to the human rights abuses of regimes throughout modern history. Near the turn of the millennium, pressure from Jewish organizations finally forced the U.S. to begin looking at the use of slave labor by U.S. corporations (and their subsidiaries) in Nazi Germany.
A court case brought against Ford Motor Co. was dismissed, but Ford admitted that its German subsidiary, Ford-Werke AG, used labor at the Buchenwald concentration camp to build vehicles. Other major U.S. corporations that continued to operate in Nazi-occupied Europe and used slave labor include General Motors, Chase Manhattan Bank and JP Morgan. ''There are things that have to be faced up to,'' alleged Elan Steinberg, World Jewish Congress executive director, ''American companies were collaborating with Nazi Germany at a time when we were at war, because there was an ethos that demanded huge profits at the expense of everything else.''
Modern history is peppered with examples of corporations seeking profit during periods of mass human rights abuse: In the 1970s, the U.S. manufacturing giant, ITT, and others helped overthrow democracy and install the Pinochet dictatorship in Chile (to listen to the Nixon Whitehouse tape that acknowledges this relationship visit GWU’s website, The National SecurityArchive). Numerous companies supported South African apartheid, including U.S. giants IBM, General Motors, ExxonMobil, J.P Morgan Chase, Citigroup, Caltex Petroleum Corporation, Ford Motor Company and the Fluor Corporation. In 2002 a group of South Africansunsuccessfully sued 20 banks and corporations that did business in South Africa during apartheid. The list goes on and on.
Even if these corporations are not held accountable for their role in mass human rights abuse and economic activities are allowed to take legal precedence over human rights, it is of vital importance to recognize the role that corporations play in this abuse. It appears to be the responsibility of the public to put pressure on corporations to consider where they do business and with whom.
The world of global accounting is girding up for a trans-Atlantic battle. Last month L'Oreal, Royal Dutch Shell, and Unilever, all gigantic companies, asked the U.S. Securities and Exchange Commission (SEC) to allow them to choose which accounting standards they want to use. (The companies belong to the European Association of Listed Companies, who delivered the letter.)
The reason is that U.S. Generally Accepted Accounting Principles (GAAP) is 25,000 pages long (which are based on very specific rules) and they don't like it. By comparison, the International Financial Reporting Standards (IFRS), is just one tenth the length (which are based on principles which can be more open to interpretation).
There are other good arguments for using the global rules - there are now more than 100 countries either using or adopting international financial reporting standards, or IFRS, including the members of the European Union, China, India and Canada.
But L'Oreal, Royal Dutch Shell, and Unilever, don't just want the easier rules, they want to choose which version of IFRS they can use - a European Commission version that allows them to choose how they value certain assets.
Financial Week, an industry magazine, in New York is up in arms.
" Imagine signing a contract and not having to hold up your end of the bargain. Or being able to say "I do" at the altar when you might sometimes mean "I don't." Having it both ways in such matters sure provides flexibility, to put it charitably. Yet that's exactly what a group of European companies want when it comes to accounting standards for global companies tapping the U.S. capital markets," editors of Financial Week, wrote earlier this month. (see "Converging on Chaos")
Another industry magazine, Accountancy Age in London, has also been critical of companies that use the more flexible European Commission rules. A couple of years ago, Taking Stock, the magazine's blog, asked Rudy Markham, the finance director of Unilver, why he was using flexible IFRS rules in reporting for the company, but he refused to comment, leading them to poke fun at him:
" TS understands that the biggest accounting change for a generation can be a complete turn off. We assume the numbers involved didn't mean that much to Markham anyway - a billion off the top line there, a billion on the bottom line there. He did, after all, personally take home just over £1.1 million last year. Money, money, money, as Abba used to sing... "
Today the International Accounting Standard Board, which drew up the IFRS, appointed a new chairman, Gerrit Zalm, a former Dutch finance minister, who has already announced that he would try to prevent local variations of the global rules: "One of my first priorities will be no new carve-outs in Europe and trying to get rid of the existing carve-out, because if Europe is doing this, other countries could get the same inspiration and then all the advantages of the one programme fade away," Zalm told the Financial Times. "The fragmentation of standards is costly for the enterprise sector and it doesn't help in creating clarity for investors."
We look forward to his efforts to create a single global standard. Stronger global rules are always welcome, especially if they are easier to follow, but weaker ones that cater to nationalistic interests are not.
Transit riders switching trains at the Montgomery BART subway station in downtown San Francisco will find it difficult to miss the new ads covering the walls, the floor and even the stairs with pictures of Sudanese refugees. The advertisements' message is attention catching: "Are you invested in genocide?" As part of the Save Darfur Coalition's Divest for Darfur campaign, the ads urge transit users to visit their website, where they are asked to demand that investment firms - specifically JP Morgan, Franklin Templeton, Fidelity Investments, Capital Group (American Funds), and Vanguard - withdraw investments from companies like the Chinese National Petroleum Corporation (CNPC), which are, according to the website, "filling the coffers of the Sudanese government and helping fund the government's actions in Darfur." (As a side note, the use of the term "genocide" by groups like Save Darfur to describe the conflict in Sudan is highly controversial. For more information, read the transcript of Professor Mahmood Mandani's June 4th interview with Amy Goodman on Democracy Now!, titled "The Politics of Naming: Genocide, Civil War, Insurgency."
The CNPC has been heavily censured for continuing to do business in Sudan, despite the ongoing conflict there. Attempting to place pressure on firms invested in the state-owned CNPC, rather than on the CNPC itself, is a way for activists to circumvent the "no strings attached" stance of the Chinese government toward investment in Africa and other parts of the world. China prides itself on having a different approach to investment than western lending organizations like the World Bank or IMF, which have numerous development and human rights stipulations attached to investments. In Sudan, this means that the government doesn't have to bend to international pressure to, say, allow UN troops into Darfur. Many African governments welcome Chinese investment specifically because of this hands-off approach. In a recent article in the New York Times, Lydia Polgreen comments on the increasing presence of Chinese companies in Africa, especially in the rich natural resources and mining sector. Manganese mines in South Africa, uranium pits in Nigeria and cobalt mines in the Congo are all areas of investment for state-owned Chinese companies, like the Nonferrous Metals Corporation.
African citizens view Chinese investment with ambivalence. Some see economic relationships with China as a source of much needed income and a step up from paternalistic relationships with the West. "Let the Chinese come," said Mahamat Hassan Abakar, a lawyer in Chad. "What Africa needs is investment. It needs partners. All of these years we have been tied to France. Look what it has brought us." Others are more critical, seeing China as just another country robbing Africa of its resources and in the process enriching local elites, bolstering repressive governments and perpetuating Africa's secondary economic status. Cheap Chinese goods flooding Africa inhibit local manufacturing and the jobs that accompany it. Unsafe working conditions lead to industrial accidents like the 2005 blast at a Chinese-owned explosives factory in Chambishi, Zambia, which killed 51 people.
The investment of Chinese state-owned companies in Africa is hardly a win-win situation, but it is easy to recognize the attraction for African governments doing business with Chinese companies. In judging if China is a partner or colonizer in Africa, the answer is probably, a little of both.
Posted by Robert Young Pelton on October 2nd, 2007
Robert Young Pelton is the author of "Licensed to
Kill: Hired Guns in the War
on Terror " and the "Guide to the World's Most
Dangerous Places." He is also co-founder of
http://www.iraqslogger.com . This blog item is about his
experiences attending the Congressional hearing into the Blackwater
shootings in Iraq written on October 2nd, 2007.
Standing in line to get into Tuesday's hearing, I found myself in a
strange position. In front of me, dark-suited and staid Blackwater
executives stood waiting to show moral support for their boss, Erik
Prince, while the colorful and animated Pink Ladies behind me ticked
off reasons he and his industry should be feared.
The two extremes represent the bookends of public debate on the
private security industry. The former military men who run Blackwater
view their supporting role in the war on terror as both necessary and
good, while human rights activists believe there is something deeply
wrong with authorizing private citizens to kill other private
citizens.
One of the women waiting in line asked me, "How can we find out what
these people are doing?" I suggested she could go to any
neighborhood in Baghdad and just ask the locals.
Or better yet--spend a week driving through Baghdad in an unmarked car
to see how often convoys blast through intersections, guns bristling
from every door, pointed directly at you, giving you mere seconds to
get out of the way before the bullets start flying. Feel your own
pulse racing as you realize how easily you could have been killed if
you'd had your radio a little louder, or hadn't noticed their
approach, or hadn't swerved to a stop fast enough.
Companies like Blackwater wield a life-and-death power in Iraq,
creating an arrogant misuse of force the United States has put into
civilians hands.
I spent time in Sadr City and other areas interviewing the victims of
Blackwater and other security companies. Terrified Iraqis, many who
did not want to be identified or publicly quoted, told of sudden
unexpected encounters with fast moving convoys of SUVs--then death,
destruction, or permanent life change as family members were crushed,
maimed, killed, or traumatized.
During the time I spent researching my book Licensed to Kill, I
realized there were thousands of stories waiting to be heard about
excessive force being used on civilians in the name of "security".
Not surprisingly, many victims look to a militia to seek some revenge
for the transgression in the form of an ambush or IED.
Security companies are reviled; the Iraqis that work for these
companies have to cover their faces because they know militias or
their neighbors will kill them and or their families.
Military commanders understand that a non-state actor on the
battlefield is a wild card--whether death squad, militia or security
company. Iraqis know that the undermanned military must rely on
contractors to deliver 16 flavors of ice cream, frozen lobster and
bullets to the war effort.
The normally timid State Dept, known more for issuing warnings and
shutting down embassies when things get rough, has decided that its
people must travel the mean streets of Baghdad rather than give in to
intimidation. Security contractors are literally the grease that makes
our forward-leaning foreign policy in Iraq work.
So when Prince pretends like he is defending the US--justifying
violent acts by categorizing it as fighting bad guys--he does it with
the support of the State Department, though to the direct detriment of
the Iraqi civilians those actions terrify and kill.
When Prince testified that his people "acted appropriately at all
times," it made me wonder how many killings he investigated from
the Iraqi viewpoint. He has a blind spot towards the damage he causes
if he thinks that firing a contractor who just murdered someone
somehow fixes the problem. "Window or Aisle" instead of "guilty
or not guilty" does not enforce any accountability
It is no coincidence that BW has been involved in shootouts with the
Iraqi police. They too have seen the destructive force Blackwater has
been authorized to unleash on their citizens.
When Prince rattles off the various legal umbrellas he operates under,
he conveniently ignores that none of his hired guns have been brought
up on any charges for anything-despite clear incidents of
malfeasance. Blackwater itself faces no ill consequence for deploying
unstable men into the war zone.
"Anytime a contractor is abroad, he can be brought up on
charges," is the equivalent of saying speeding is illegal while
cars whip by at 80 mph without a cop in sight.
Blackwater is the personification of war as a business, violence as a
service, and chaos as a product. Prince recognized the lack of
sufficient available US troops and provided a privatized solution. He
cannot be faulted for that.
Any corporate master would take the position, like Prince did in front
of Congress Tuesday, that his people are perfect, his conduct
perfect.
Exposed deceit or corruption at most companies would lead to its own
downfall. If it's a monster like Enron, it could conceivably flutter
Wall Street for a few days.
But the conduct of companies like Blackwater directly impacts US
strategic interests.
The obvious polarization of politicians addressing Prince during the
hearing indicates that Republicans are willing to bless the use of
lethal force by a private individual against the people they are
trying to pacify, while Democrats have yet to quite capture what it is
about the industry that makes people so nervous.
I say again: Go to Iraq. Talk to the people. Drive in an unmarked
car. When an armed convoy pushes you off the road with guns
drawn, you'll understand the naked fear that Blackwater sells.
Posted by Pratap Chatterjee on September 27th, 2007
Which are the world's worst multinationals? Which are the best? These are questions CorpWatch gets asked practically everyday. Just to clarify, we do not rank good corporations or endorse any of them, for several reasons: today's idols sometimes turn out to have feet of clay. And we see our job as investigators of malfeasance. For those who want to do the opposite, there are plenty of groups out there who promote "socially responsible" businesses, and we encourage you to look them up. (We don't have a list of these groups for the aforementioned reasons, but we do have a guide to the principles that we believe good businesses should follow -- and we leave it to you, our gentle readers, to apply this criteria to evaluate corporations.)
(We strongly believe that it is very important not to take corporate claims at face value, because sometimes these companies are not telling the whole truth. This is known as "greenwash" and to see a history of this phenomenon, we urge you to check out our short history of the subject, in this handy guide written by Josh Karliner, the founder of CorpWatch.)
Today, there is an opportunity for you to get your favorite (or maybe, least favorite) multinational nominated for an award for corporate malfeasance -- the Berne Declaration and Friends of the Earth Switzerland are holding its fourth annual award ceremony in January 2008, to coincide with the annual gathering of Fortune 500 chieftains in Davos. You can take part in this contest by clicking here.
(Previous winners from 2005, 2006 and 2007 are available online.)
If you have questions, contact Oliver Classen who is coordinating the awards ceremony.
In case you are wondering, how do you find out whether companies are telling the truth? Well, here's a tip -- there's a group in the Netherlands that collects these reports: the Global Reporting Intitiative. You can even search their database to look up your favorite/least favorite company. GRI is about to launch a tool on October 1st, 2007 that will allow you to rank these reports -- if you are so inclined.
Read the reports, search our website and that of Multinational Monitor, and then contact groups on the ground to see if these companies are telling the truth or not.
Remember the deadline to nominate a company for the Public Eye on Davos award is September 30th, 2007!
Ken Sandler of the Defense Information Systems Agency (DISA), a
division of U.S. Central Command, will play the drums with Jim
Ittenbach, a Verizon engineer under contract with DISA. The pair
belong to a band called Troubled Spirit. They play songs like Rolling Stones'
Sympathy For The Devil and REM's End Of The World As We Know
It.
For the October 18th event, Troubled Spirit has renamed itself the
DISA-Peering Act, after the agency that they both work at. Our
question is will they play one of their classic covers: the Rolling
Stones Can't Always Get What You Want or will it be the
Beatles Come Together?
Then there is an all contractor band composed of a vocalist from
Perot Systems and a guitarist from AT&T. Songs on their previous play lists
include The Clash's I Fought the Law and English Beat's Save
it for Later.
CorpWatch asked a former senior government official how ethical this
was. (Sorry, we can't tell you who, but he goes way to the top) His
response: "There is an Office of Government Ethics regulations at 5
CFR 2635 that talks about "impartiality" in performing a
Federal employee's duties, but that was about the closest thing I
could find. I suppose that one could argue that a Federal
employee participating in this sort of thing loses his/her
"impartiality", but that's about it."
The event, which is being held
at the State Theater in Falls Church, Virginia, is a benefit for the
United Service Organizations (USO) that provides charity to the United
States Armed Forces personnel and their families. Iraqis waiting for
handouts may just have to suffer in silence while Tacocat belts out
REM's Fables of the Reconstruction.
Hazardous imports have been the top story on the evening news for weeks now. But the poor quality of some foreign-made products is only half the story. Before we ever see those products, manufacturing plants in the countries of origin can pose an even greater danger to human and ecological health.
Take India, which is now our biggest foreign source of pharmaceuticals. A just-published study by Sweden's Goteborg University shows that, whatever the quality of the drugs being shipped out of India, they are leaving behind a toxic mess. Even after days in a water-treatment plant, effluents discharged into streams and rivers in one Indian region show concentrations of antibiotics and other drugs at 100 to 30,000 times the levels considered safe.
In a 2005 visit to villages in that area near Patancheru, in the state of Andhra Pradesh, I spoke with people who’d broken out in rashes from bathing in water from their own wells; farmers who’d left rice paddies unsown because their irrigation water was ruined; and herders whose water buffalo had dropped dead while grazing -- damage they attributed to pollution from the 90 or more bulk-drug factories in the vicinity. Health surveys have shown higher rates of cancer and other illnesses in villages around Patancheru’s "special economic zone" than in more distant villages.
State law says that the factories must haul their toxic wastes to an effluent treatment plant run by Patancheru Enviro Tech, Ltd. (PETL) on a tributary of the Nakkavagu rivulet. The treatment plant’s outflow into the Nakkavagu (which waters a valley dotted with 14 villages) has often been found to carry industrial pollutants at many times the statutory limits.
Now the Swedish study, recently published online by the Journal of Hazardous Materials (abstract here free) has found record-breaking concentrations of eleven drugs – antibiotics and treatments for high blood pressure, ulcers and allergies – in wastes flowing from the PETL plant.
Noting that "to the best of our knowledge, the concentrations of these 11 drugs were all above the previously highest values [ever] reported in any sewage effluent", the authors singled out the antibiotic Ciprofloxacin (Cipro), which flows out of the plant at the rate of 100 pounds of active ingredient per day. That, say the authors, "is equivalent to the total amount consumed in Sweden (population nine million) over an average 5-day period"! Concentrations of five other antibiotics were found at levels that are toxic to plants, blue-green algae, and a range of bacteria. And before it leaves the facility, the stew of drugs is mixed with human sewage, creating perfect conditions for breeding dangerous, antibiotic-resistant bacteria.
In June, a front-page story by Washington Post reporter Marc Kaufman revealed that there are virtually no controls on the quality of drugs being imported from India. He wrote that India and China together supply as much as 20 percent of the US market for generic and over-the-counter drugs and 40 percent of all bulk drugs used here and that the two nations' share may rise to 80 percent by 2022. India’s share of the US market in 2006 was $800 million, exceeding China’s.
According to Kaufmann, the FDA conducted 1222 quality-assurance inspections of domestic drug-manufacturing plants in 2006. That same year, the agency carried out only 32 inspections of Indian drug plants, mostly to check on new import applications, not for quality control by existing suppliers. And "on-the-ground inspections of Indian and Chinese plants remain rare and relatively brief and are always scheduled in advance, unlike the surprise visits that FDA inspectors pay to domestic manufacturers." There is no indication that FDA inspectors pay any attention to environmental impacts of the plants.
The Swedish researchers calculated that if the quantities of pharmaceuticals they detected being released from the Patancheru treatment facility in a single 24-hour period could be collected and sold in Sweden, they would fetch an amount approaching $200,000, even in generic form. But, they wrote, because the production costs are so much lower than the eventual retail price, it is cheaper for companies to waste the drugs than to invest in pollution control.
When I returned to India earlier this year and checked on the current state of pollution in Patancheru, I was told that burgeoning export-drug production is putting more pressure than ever on the system. Meteorologist Dr. S. Jeevananda Reddy -- a former chief technical advisor to the United Nations and now a campaigner for tougher policies on pollution in the Patancheru area -- told me that the sheer quantity of drugs that plants are producing means that they pump out far more waste water than the treatment plant can handle.
The state permits each company to dispose of only a certain amount of water per day, and if its chemical concentration is too high, the company is fined. But, said Dr. Reddy, "The fines are peanuts to them." And, of course, the effluent is not even tested for presence of pharmaceuticals. The bulk-drug plants are often producing at two, three, sometimes ten times the permitted capacity. Reddy has watched as tanker trucks full of effluent from drug factories are turned away by the water treatment plant because their company's daily quota has been exceeded. He says that rather than returning to the factory, the trucks will often head out into the countryside to dump their load. Those wastes would contain, if anything, higher concentrations of pharmaceuticals than seen in the Swedish study.
So when the alarm is raised over hazardous toys, food, and drugs imported from China, India, or other countries, it may be that people living and working downstream or downwind from the foreign factories who could well be paying the highest price of all for our insatiable demand.
Posted by Pratap Chatterjee on September 18th, 2007
Blackwater is back in the news again -- TIME Magazine's Adam Zagorin and Brian Bennett have copies of a document that show that the North Carolina private security company's employees shot and killed eight Iraqis in a firefight.
"The skirmish occurred at 12:08 p.m. on Sunday when, "the motorcade was engaged with small arms fire from several locations" as it moved through a neighborhood of west Baghdad. "The team returned fire to several identified targets" before leaving the area. One vehicle engine was hit and disabled by bullets and had to be towed away. A separate convoy arriving to help was "blocked/surrounded by several Iraqi police and Iraqi national guard vehicles and armed personnel," the report says. Then an American helicopter hovered over the traffic circle, as the U.S. convoy departed without casualties. Some reports have said the helicopter also opened fire on Iraqis, but a Blackwater official told TIME that no shots were fired from the air."
The Iraqi government says it has revoked Blackwater's license to operate in Iraq, although CorpWatch understands from knowledgable insiders that the company's license (issued by the Ministry of Interior) had expired a while ago. Although the Ministry has issued licenses to a number of private security contractors, many companies do not bother to get licenses because they know that there is no enforcement mechanism against them. Indeed, Paul Bremer of the Coalition Provisional Authority issued an executive order that specifically gave private contractors in Iraq immunity from prosecution.
Erica Razook of Amnesty International's Business and Human Rights Program has provided an excellent summary of the legal issues around this thorny matter of human rights violations by private security contractors, which can be downloaded here. You can also see her testifying before U.S. Congress on the implications of this legal vaccum, in which she noted that the contractors operate in a "culture of impunity" with "virtually no control or oversight." "A contractor can shoot an Iraqi civilian in the street and face no consequences," she said.
A few months ago, we listed a number of similar incidents in which private contractors were involved in violent clashes in Iraq, which we reprint below:
The admission by Blackwater that one of their security guards shot dead an Iraqi man confirms worries that armed contractors working directly or indirectly for the U.S. government have been involved in killing Iraqi civilians and that they have escaped the rule of law in Iraq or in the United States.
An article in the Washington Post in September 2005 quoted Brigadier General Karl R. Horst, deputy commander of the 3rd Infantry Division, which is responsible for security in and around Baghdad. "These guys run loose in this country and do stupid stuff. There's no authority over them, so you can't come down on them hard when they escalate force. They shoot people, and someone else has to deal with the aftermath. It happens all over the place."
The article described the shooting of an Iraqi man named Ali Ismael in Erbil, Northern Iraq by unamed U.S. private security contractors.
Nor is Blackwater the only company to have been accused of shooting at Iraqi civilians with an intent to kill.
Shane B. Schmidt, a former Marine Corps sniper, and Charles L. Sheppard III, a former Army Ranger, have sued the company, which they say fired them after they filed a report on July 8 that their shift leader fired deliberately and unnecessarily at Iraqi vehicles and civilians in two incidents while their team was driving in Baghdad.
Schmidt and Sheppard's lawsuit claims that the Triple Canopy employee announced that he was ''going to kill someone today,'' stepped from his vehicle and fired several shots from his M4 assault rifle into the windshield of a stopped white truck. The men claim that the truck was not an evident threat and that their team was not in danger. The men say in the suit that the shift leader then returned to their truck and said, ''That didn't happen, understand.'' Later that day, the suit says, the shift leader said, ''I've never shot anyone with my pistol before,'' and then opened the vehicle door and fired seven or eight shots into the windshield of a taxi.
* Custer Battles, another U.S. security company, was accused of shooting at Iraqis in February 2005, in an investigative report by NBC News. Titled "U.S. Contractors in Iraq Allege Abuses." The report quotes four former U.S. soldiers.
"[He] sighted down his AK-47 and started firing," says (Corporal Ernest) Colling. "It went through the window. As far as I could see, it hit a passenger. And they didn't even know we were there."
Later, the convoy came upon two teenagers by the road. One allegedly was gunned down.
"The rear gunner in my vehicle shot him," says Colling. "Unarmed, walking kids."
In another traffic jam, they claim a Ford 350 pickup truck smashed into, then rolled up and over the back of a small sedan full of Iraqis.
"The front of the truck came down," says (Captain Bill) Craun. "I could see two children sitting in the back seat of that car with their eyes looking up at the axle as it came down and pulverized the back."
* CorpWatch's David Phinney was among one of the first reporters to chronicle the infamous "Trophy Video" in Novermber 2005, in which security contractors for Aegis, a British company, in Iraq, were seen shooting at Iraqi civilians.
Posted by Pratap Chatterjee on September 14th, 2007
The U.S. Securities and Exchange Commission (SEC) brought charges against 69 accountants for failing to register with the Public Company Accounting Board (PCAB) earlier this week. This somewhat obscure action is the latest ripple in the wave of crackdowns that followed the Enron accounting scandals in 2001 -- to break up the all too cozy relationship between auditors and the multinationals that they are supposed to be policing.
Governments allow companies to close their financial books at the end of the fiscal year, if a qualified accountant has signed off on it. The problem is that both the companies and the auditors are private entities whose ultimate motive is to make a profit, so there is potential for one or both of the two not to report any cooking of the books, unless they know that a regulator might catch them and discipline them. And in the last two decades, as favored accountants have been rewarded with multi-million dollar non auditing consulting gigs (such as tax planning or management consulting), the worry was that they were looking the other way in order to win more business.
Following the Enron scandal, which showed that Arthur Andersen, the company's auditor, had failed in its public duty, the U.S. Congress passed the Sarbanes-Oxley law in 2002 that replaced the accounting industry's own regulators with the Public Company Accounting Board with subpoena and disciplinary powers. Auditors are supposed to register with the board, but clearly not everyone took this seriously.
The SEC's enforcement director, Linda Chatman Thomsen, said that Thursday's action showed that the agency "is committed to ensuring compliance with the regulatory framework Congress established for auditors of public companies." A total of 50 of the errant accountants settled the charges with the federal agency the very same day.
This action is an important warning shot across the bows to let the auditors know that the SEC is checking up on them. But the jury is still out as to whether the SEC will go one step further and prosecute auditors who fail to report companies that are cooking their books.
In related news, a new study from the University of Nebraska suggests the whistle-blowers who report violations of the Sarbanes-Oxley Act to agencies like the PCAB are not properly protected. The study looked at 700 cases where employees experienced retaliation from companies for whistle-blowing and found that a mere 3.6 per cent of cases were won by employees.
Richard Moberly, the study's author, argues the findings "challenge the hope of scholars and whistle-blower advocates that Sarbanes-Oxley's legal boundaries and burden of proof would often result in favourable outcomes for whistle-blowers."
The Financial Times reports that Louis Clark, president of the Government Accountability Project, a non-profit organization that lobbies for whistle-blowers, calls the law "a disaster." Jason Zuckerman, a lawyer at the Employment Law Group, a law firm that represents Sarbanes-Oxley whistle-blowers, says: "Part of the problem is that investigators misunderstand the relevant legal standards and believe that a complainant must have a smoking gun -- that is, unequivocal evidence proving retaliation."
The debate is still on
over whether Sarbanes-Oxley is effective five years after the law was
passed, although all appear to agree it was a step in the right
direction. The proof of the pudding, they say, will be in the eating,
so we eagerly await the day that SEC puts errant accountants behind
bars.
In the next few days Pope Benedict plans to issue his second encyclical – the most authoritative statement a pope can issue – which apparently will focus on social and economic inequity in a globalized economy. In the statement, he is expected to denounce the use of tax havens as socially-unjust and immoral in cheating the greater well-being of society.
According to the Times (UK) newspaper, the statement may have been inspired by a recent request to the Vatican by Romano Prodi, the Italian prime minister, who urged church leaders to speak out on tax evasion.
Prodi’s government plans to seek taxes on undeclared earnings of €60 million ($84 million) by Valentino Rossi, the world motorcycling champion. How about also asking Gucci and Prada, some of Italy’s best known fashion designers, to move their tax headquarters back to home turf (from the tax-saving Netherlands, see below) and contribute to Italy’s budget deficit?
As global capital has progressively unbound itself from traditional national constraints, excessive off-shore wealth seemingly knows no shame, with wealthy individuals and corporations setting up front companies abroad to avoid paying taxes, supported by a new class of financial services specialists.
While Caribbean island resorts are often assumed to be the places where the wealthy stash their money away for retirement, some European countries (and I don't mean Lichtenstein) have also newly seen the light.
A favored location is the Netherlands -- check out the November 2006 report by Dutch-based SOMO, "The Netherlands: A Tax Haven?" The report is the first comprehensive analysis of the complex system of double tax treaties, tax incentives, the relationship with the Netherlands Antilles and the now 20,000 and counting mailbox corporations operating within the borders of this small European nation. According to SOMO, "examples of companies with tax-induced headquarters in the Netherlands are Volkswagen, IKEA, Gucci, Pirelli, Prada, Fujitsu-Siemens, Mittal Steel, and Trafigura."
The issue has been in the news, mostly because big name musical artists (like Bono and Mick Jagger) and famous athletes (think David Beckham) have also been getting in on the act. When it comes to evading taxes on lucrative licensing and royalties, the Netherlands is fast emerging as the hip tax haven of choice because Holland levies no tax on earnings royalties.
In an article titled “Gimme Tax Shelter”, the New York Times reported on this in February 2007 as newly public documentation surrounding the assets and wealth-transfer plans of the Rolling Stones demonstrated that the wily rockers have paid a mere 1.5% (as opposed to the British tax rate of 40%), or $7.2. million, on $450 million in earnings routed through the land of tulips with the help of their company Promogroup.
"The Caribbeans are thinking about trading profits, not royalties, so the smaller European countries like Holland have had to be creative, tax-wise,'' David Pullman, an investment banker in New York who caters to entertainers and athletes told the New York Times. ''They are going for the high-end stuff and don't want to be seen as shady like some Caribbean haven.''
More scandalous was the 2006 revelation that super-rockers U2 had transferred their song-publishing catalog from Ireland to Holland's Promogroup, in order to avoid a change in Irish tax law introducing taxes on royalties earned in excess of 250,000 Euros per year. Much ado was made of Bono's unwillingness to pony up his share of the tax obligation in service of the global debt relief and poverty eradication for which he so famously advocates.
Another European country that has figured they can make money out of tax evasion is Ireland -- whose “Celtic Tiger” growth is largely the product of charming huge corporations like Dell, Google, Microsoft and Sun Systems to move much of their intellectual property patents over to subsidiaries in the land of Eire -- where the corporate tax rate is 12.5%, but no taxes are charged on royalties.
Microsoft has been a major beneficiary of this scheme for the last four or so years -- it slashed billions in tax receipts to the U.S. Treasury -- by setting up subsidiaries Round Island One and Flat Island Company in Dublin. Recently Microsoft took things a step further by re-registering the two patent-holding entities as unlimited liability companies which have no obligation to file their accounts publicly.
Indeed, the Sunday Independent (Ireland) reports that Ireland was the most profitable location for U.S. multinationals between 1998-2002, during which the “the profits of US companies with Irish facilities doubled.”
The Irish law exempting patent income from taxes also provides a sweet loophole for corporate executive pay. In November 2005 it was reported that Dell Ireland’s top executives were reaping the fruits of sumptuous pay, and saving the company taxes: between them the senior management shared nearly $3.8 million in tax-free dividends since 2003.
These corporate tax breaks have earned Ireland the distinction of being hailed “the world’s 7th freest economy” in 2007 by the conservative, DC-based Heritage Foundation, which says that “Ireland’s economy is 81.3 percent free.”
Most of this tax evasion, is sadly, quite legal. But ordinary citizens around the world who think that Microsoft and Mick Jagger should pay taxes, can take heart from the fact that some members of the global elite have been punished -- take the recent conviction of media mogul Conrad Black of Hollinger International. In July, Canadian and U.S. press reported on the lawsuits, corporate and civil, that are following his conviction for obstruction of justice and mail fraud, seeking remuneration from assets, including purported millions stashed in the Caribbean:
…"Not satisfied with receiving $20 to $40 million a year in excessive management fees, Black and the Ravelston insiders then directed significant portions of those fees to Moffat Management and Black-Amiel Management, which were empty shell companies registered in Barbados," a special report from Hollinger’s board stated.
"Even though these entities did nothing to earn fees, and did not have either employees or real operations, paying management fees to them on the pretense that they performed services allowed the recipients the prospect of transforming a portion of the enormous management fees that would otherwise most likely have been taxable in Canada (where the payments were received), or possibly the U.S. (where services were largely performed), into dividends received in Barbados (where nothing occurred)," the report stated.
NOTE: For more good examples of what tax journalist Lucy Komisar calls the “corporate bag of tricks called profit laundering,” check out the Tax Justice Network, and the Komisar Scoop -- who just revealed where did Rupert Murdoch get $5 billion to buy up the Wall St. Journal? (Answer: A collection of 800 offshore companies that helped him cut corporate taxes to 6%!)
We're gratified to see that the U.S. Congress and the mainstream media are picking up on some of the issues that CorpWatch has been digging into over the last couple of years. For example, there was a hearing on July 26th, 2007 in Representive Waxman's committee (the House Oversight and Government Reform Committee) on a topic that CorpWatch broke a year ago February: the use of trafficked Asian labor to build the US Embassy in Baghdad.
Our original story can be seen here:
Baghdad Embassy Bonanza Kuwait Company's Secret Contract & Low-Wage Labor
by David Phinney, Special to CorpWatch
February 12th, 2006
The two witnesses who testified yesterday were first featured in an extensive CorpWatch article in October 2006.
See A U.S. Fortress Rises in Baghdad:
Asian Workers Trafficked to Build World's Largest Embassy
by David Phinney, Special to CorpWatch
October 17th, 2006
To read the article from today's Washington Post about yesterday's hearing, go here:
But one thing: we'd like to note that SIGIR only looked at the second phase of Bechtel's work, what about the first phase? We ran a story on this some 40 months ago:
Back on the U.S. home front we are also glad to see that the New York Times is following the story of the Sithe Global Power's proposed coal-fired power plant at Desert Rock in New Mexico on Diné lands:
Billy Rautenbach, a South African mining kingpin, was deported from Lubumbashi airport in the Democratic Republic of Congo (DRC) on July 18th. “He was accused of fraud, theft, corruption and violating commercial law [the expulsion document] said. He was persona non grata. He would have to leave,” writes Ben Laurence in the Sunday Times (UK).
Best known in South Africa and Botswana for his activities in assembling Hyundai cars, Rautenbach faces hundreds of charges of fraud, corruption and other crimes in his home country of South Africa (the reasons cited in the documents prepared for his deportation last week). South Africa is currently considering asking Zimbabwe to extradite him to stand trial.
But Rautenbach was also once a powerful man in the DRC. He ran Gecamines, the DRC’s state-owned copper mining company, from 1998 to 2000. At the time he was accused of under-reporting exports of sales of huge quantities of DRC cobalt when he was in charge – and diverting the profits to a company he controlled in the British Virgin Islands.
Although Rautenbach lost his job, he continues to play an important role in the mining sector, as he also happens to be a major shareholder of Central African Mining & Exploration Company (CAMEC), which won major contracts in the DRC a couple of years later.
CAMEC’s contracts were the result of an investor-friendly mining code introduced by the World Bank in July 2002. (An informative analysis of this code was done by the Bank Information Center.) While the code calls for a much-needed regulatory framework and environmental protection, it hands the responsibility for mining development to private companies.
However, it is doubtful that the Congolese public institutions charged with regulating the mining sector have the resources to carry through with it, and the World Bank certainly has not been successful in providing oversight. A memo leaked to the Financial Times in November 2006 details the World Bank’s failure to provide sufficient oversight in three major contracts made between Gecamines and international mining groups like CAMEC. Worth billions of dollars, these contracts reportedly gave these groups control over 75% of Gecamines mineral reserves. (In May 2007, the Financial Times also revealed that the World Bank withheld the findings of an inquiry into alleged mismanagement of funds in the Democratic Republic of Congo.)
More details on the business dealings of Rautenbach and CAMEC may emerge from a DRC commission that recently began a three-month review of mining contracts signed in the last decade. The commission is the first attempt of a new “democratically elected” government to investigate ongoing corruption in the DRC’s valuable mining sector. The new commission follows a string of attempts by previous governments and international financial institutions to investigate the exploitation of natural resources in the DRC.
If the commission hopes to be successful it must take a look at whose interests are being promoted/protected in the Congo and how. This would include an investigation into local elites, regional influences, international financial institutions and the powers they represent, and international corporations along with the relationships between these different actors.
History has shown that the more resources a nation or region possess, the more conflict and poverty the people of that nation are forced to endure. The DRC is the third largest country in Africa and is rich in natural resources, particularly cobalt, copper, diamonds and gold. It is home to one third of the world’s cassiterite, the most important source of the metallic element tin and holds 64-80% of the world’s coltan reserves, an ore that is the source of the metal tantalum, which is used in cell phones and other devices.
In an article for Alternet, Stan Cox quotes a miner responsible for digging the valuable cassiterite: "As you crawl through the tiny hole, using your arms and fingers to scratch, there's not enough space to dig properly and you get badly grazed all over. And then, when you do finally come back out with the cassiterite, the soldiers are waiting to grab it at gunpoint. Which means you have nothing to buy food with. So we're always hungry."
This cassiterite will inevitably end up in cheap cell phones and laptops laying abandoned in American landfills.
Despite (or indeed because of) its abundance of resources, the DRC has been plagued by conflict, famine and political instability since its independence in the 1960s. Following the end of the 30-year dictatorship of Mobutu Sese Seko (who was brought to power by the U.S. in the 1960s), the greed of neighboring countries for natural resources forced the DRC into the center of what organizations like Human Rights Watch have deemed, “Africa’s first world war.” The war resulted in the death of three to five million people, many from famine, exposure and disease.
A cease-fire ended the war in 1999, but the DRC has continued to suffer the extraction of resources and wealth through corrupt deals between local elites and international companies. A 2006 report from the London-based watchdog organization, Global Witness, describes how copper and cobalt are mined informally and illicitly exported, robbing the Congolese people of any opportunity to reduce poverty.
The new commission’s plan to revisit mining contracts between the state and private companies is a response to years of domestic and international pressure. Hopefully, once the review is completed (assuming that it is a transparent and non-corrupt process), the international companies involved will be willing to re-negotiate contracts in a way that is more beneficial to the Congolese state and its citizens. An interesting precedent was established last year in Liberia when Mittal Steel, the world’s largest steel company, agreed to step down from an unbalanced concessionary agreement made with a corrupt transitional government once a democratically elected government was in place.
Boycotts and sanctions are two key tools that activists and governments use to target corporations who do business with "unsavory" regimes. There is a long history of progressive activists calling for boycotts, for example, against companies doing business in South Africa in the 1980s, Burma and Nigeria in the 1990s, and most recently Sudan in an attempt to topple or change regimes with a history of human rights abuse.
In the old days, activists created boycott flyers to target companies that were wheat-pasted on walls, they picketed stores that sold goods from the offending companies, and most recently many activist groups have created websites created to encourage consumers to vote with their dollars: such as Ethical Consumer in the UK or tools to track companies in specific countries such as the Sudan Divestment Network.
The U.S. government has followed a similar but more heavy-handed tactic to enforce its anger against other governments, by passing laws forbidding companies from doing business in countries ranging from Cuba in the 1960s, South Africa in the 1980s, Iraq in the 1990s and most recently in Syria. (A State Department official suggest that sanctions have been imposed on foreign countries well over 100 times since the First World War.) Of course, unlike activists, the U.S. government has the power to prosecute companies who fail to comply.
Some of the targets of boycotts and sanctions have been one and the same: South Africa being a notable example.
How successful have these boycotts and sanctions been? Activists argue that the South African apartheid regime was felled by such pressure, undertaken in solidarity with local movements, although one might argue that anti-apartheid protests within South Africa itself played an even more significant role. A variety of think-tanks (mostly conservative) have argued that sanctions don't work.
In May, Christopher Dodd, a Democrat from Connecticut and the chairman of the Senate Banking Committee, called on the U.S. Securities and Exchange Commission (SEC) to make it easier for "shareholders to access reliable information regarding publicly traded companies' business transactions involving Iran and Sudan."
In June, the SEC decided to copy activist tactics by putting up a Web tool that tracks corporations with investments in countries considered by the U.S. to sponsor terrorism -- specifically Cuba, Iran, North Korea, Sudan and Syria. "No investor should ever have to wonder whether his or her investments or retirement savings are indirectly subsidizing a terrorist haven or genocidal state," Christopher Cox, the SEC chairman, said. In three weeks the site got "exceptional public interest," with more than 150,000 hits.
The tool generated some odd results: Reuters, the media company, had reported news-gathering activities in Cuba, Iran and Syria, so it made all three lists!
Not surprisingly, the Web tool provoked a storm of protest. "The list was fraught with distortions that could have actually harmed investors instead of informing them," Todd Malan, the president of the Organization for International Investment, which represents such companies, told reporters. "It was basically just a word search with no context, scale or reference."
Barney Frank, a Democrat from Massachusetts, called the list "unfair and perhaps counterproductive." He said some companies "apparently have investments that are so negligible they could not be considered material either to investors or the economy of the terrorist-financing state."
"Our role is to make that information readily accessible to the investing public, and we will continue to work to find better ways to accomplish that objective," says the SEC. We await the results eagerly -- will the SEC try picketing the listed companies or dropping protest banners? If so, we just might know some folks who might be able to help.
Many of these products are made in China – which is probably the leading exporter to the U.S. But not many know that the reason for this is that the country also is a major importer of U.S. electronic waste, despite the fact that the country's laws essentially ban imports of such waste.
Reporter Gordon Fairclough writes: “For lead, the trip to China from the U.S. typically goes something like this: U.S. consumers and businesses send their old electronics to recycling firms -- often by way of innocuous recycling drives. Some of those firms then sell the electronics to dealers in the U.S., who sell them to dealers in China. Chinese companies buy the e-waste and strip lead and other re-sellable materials from it -- often discarding harmful materials along the way, adding to local pollution. The lead makes its way -- sometimes at toxic levels -- into trinkets sold to consumers in the U.S.”
The article is based on studies by Jeffrey Weidenhamer and Michael Clement, chemists at Ashland University in Ohio, who examined the composition of children's highly leaded jewelry and key chains and determined that some also contained levels of copper and tin that suggested the source was lead solder used in electronic circuit boards. Other jewelry samples were also found to contain antimony, a toxic metalloid element used to harden lead used in batteries.
Says Jim Puckett, coordinator of BAN. “In a globalized world, pollution knows no borders so the US government’s policy of allowing a free trade in hazardous waste has come back to haunt and hurt us.”
None of this should be legal. Under the Basel convention, as of 1 January 1998, all forms of hazardous waste exports from the 29 wealthiest most industrialized countries of the Organization of Economic Cooperation and Development (OECD) to all non-OECD countries. Unfortunately although China has ratified the treaty, the United States has not, so the trade continues.
The European Union is way ahead of the U.S. here – it requires companies to cover the costs of recovery and recycling under the Waste Electrical and Electronic Equipment (WEEE) Directive. Last week, Britain become the latest country to enforce that law. For another fun way to learn about this issue, check out the WEEE man: a huge robotic figure made of scrap electrical and electronic equipment. It weighs 3.3 tonnes and stands seven meters tall – representing the average amount of e-products every single British citizen throws away over a lifetime.
In the business world these days, it appears that
just about everything is for sale.
Multi-billion-dollar deals are commonplace, and even
venerable institutions such as the Wall Street
Journal find themselves put into play. Yet
companies are not the only things being acquired.
This may turn out to be the year that big business
bought a substantial part of the environmental
movement.
That’s one way of interpreting the remarkable level
of cooperation that is emerging between some
prominent environmental groups and some of the
world’s largest corporations. What was once an arena
of fierce antagonism has become a veritable love
fest as companies profess to be going green and get
lavishly honored for doing so. Earlier this year,
for instance, the World Resources Institute gave one
of its “Courage to Lead” awards to the chief
executive of General Electric.
Many of the new initiatives are being pursued in
direct collaboration with environmental groups.
Wal-Mart is working closely with Conservation
International on its efforts to cut energy usage and
switch to renewable sources of power. McDonald’s has
teamed up with Greenpeace to discourage
deforestation caused by the growth of soybean
farming in Brazil. When buyout firms Texas Pacific
Group and KKR were negotiating the takeover of
utility company TXU earlier this year, they asked
Environmental Defense to join the talks so that the
deal, which ended up including a rollback of plans
for 11 new coal-fired plants, could be assured a
green seal of approval.
Observing this trend, Business Week detects
“a remarkable evolution in the dynamic between
corporate executives and activists. Once fractious
and antagonistic, it has moved toward accommodation
and even mutual dependence.” The question is: who is
accommodating whom? Are these developments a sign
that environmental campaigns have prevailed and are
setting the corporate agenda? Or have enviros been
duped into endorsing what my be little more than a
new wave of corporate greenwash? An Epiphany About The Environment?
The first thing to keep in mind is that Corporate
America’s purported embrace of environmental
principles is nothing new. Something very similar
happened, for example, in early 1990 around the time
of the 20th anniversary of Earth Day.
Fortune announced then that “trend spotters and
forward thinkers agree that the Nineties will be the
Earth Decade and that environmentalism will be a
movement of massive worldwide force.” Business
Week published a story titled “The Greening of
Corporate America.”
The magazines cited a slew of large companies that
were said to be embarking on significant green
initiatives, among them DuPont, General Electric,
McDonald’s, 3M, Union Carbide and Procter & Gamble.
Corporations such as these put on their own Earth
Tech environmental technology fair on the National
Mall and endorsed Earth Day events and promotions.
A
difference between then and now is that there was a
lot more skepticism about Corporate America’s claim
of having had an epiphany about the environment. It
was obvious to many that business was trying to undo
the damage caused by environmental disasters such as
Union Carbide’s deadly Bhopal chemical leak, the
Exxon Valdez oil spill in Alaska and the
deterioration of the ozone layer. Activist groups
charged that corporations were engaging in a bogus
public relations effort which they branded “greenwash.”
Greenpeace staged a protest at DuPont’s Earth Tech
exhibit, leading to a number of arrests.
Misgivings about corporate environmentalism grew as
it was discovered that many of the claims about
green products were misleading, false or irrelevant.
Mobil Chemical, for instance, was challenged for
calling its new Hefty trash bags biodegradable,
since that required extended exposure to light
rather than their usual fate of being buried in
landfills. Procter & Gamble was taken to task for
labeling its Pampers and Luvs disposable diapers
“compostable” when only a handful of facilities in
the entire country were equipped to do such
processing. Various companies bragged that their
products in aerosol cans were now safe for the
environment when all they had done was comply with a
ban on the use of chlorofluorocarbons. Some of the
self-proclaimed green producers found themselves
being investigated by state attorneys general for
false advertising and other offenses against the
consumer.
The insistence that companies actually substantiate
their claims put a damper on the entire green
product movement. Yet some companies continued to
see advantages in being associated with
environmental principles. In one of the more brazen
moves, DuPont ran TV ads in the late 1990s depicting
sea lions applauding a passing oil tanker
(accompanied by Beethoven’s “Ode to Joy”) to take
credit for the fact that its Conoco subsidiary had
begun using double hulls in its ships, conveniently
failing to mention that it was one of the last oil
companies to take that step.
At the same time, some companies began to infiltrate
the environmental movement itself by contributing to
the more moderate groups and getting spots on their
boards. They also joined organizations such as
CERES, which encourages green groups and
corporations to endorse a common set of principles.
By the early 2000s, some companies sought to depict
themselves as being not merely in step with the
environmental movement but at the forefront of a
green transformation. British Petroleum started
publicizing its investments in renewable energy and
saying that its initials really stood for Beyond
Petroleum—all despite the fact that its operations
continued to be dominated by fossil fuels.
This paved the way for General Electric’s
“ecomagination” public relations blitz, which it pursued even
while dragging its feet in the cleanup of PCB
contamination in New York’s Hudson River. GE was
followed by Wal-Mart, which in October 2005 sought
to transform its image as a leading cause of
pollution-generating sprawl by announcing a program
to move toward zero waste and maximum use of
renewable energy. In recent months the floodgates
have opened, with more and more large companies
calling for federal caps on greenhouse gas
emissions. In January ten major
corporations—including Alcoa, Caterpillar, DuPont
and General Electric—joined with the Natural
Resources Defense Council and other enviro groups in
forming the U.S. Climate Action Partnership. A few
months later, General Motors, arguably one of the
companies that has done the most to exacerbate
global warming, signed on as well.
A Cause for Celebration or Dismay?
Today the term “greenwash” is rarely uttered, and
differences in positions between corporate giants
and mainstream environmental groups are increasingly
difficult to discern. Everywhere one looks, enviros
and executives have locked arms and are marching
together to save the planet. Is this a cause for
celebration or dismay?
Answering this question begins with the recognition
that companies do not all enter the environmental
fold in the same way. Here are some of their
different paths:
Defeat. Some companies did not embrace green
principles on their own—they were forced to do so
after being successfully targeted by aggressive
environmental campaigns. Home Depot abandoned the
sale of lumber harvested in old-growth forests
several years ago after being pummeled by groups
such as Rainforest Action Network. Responding to
similar campaign pressure, Boise Cascade also agreed
to stop sourcing from endangered forests and J.P.
Morgan Chase agreed to take environmental impacts
into account in its international lending
activities. Dell started taking computer recycling
seriously only after it was pressed to do so by
groups such as the Silicon Valley Toxics Coalition.
Diversion. It is apparent that Wal-Mart is
using its newfound green consciousness as a means of
diverting public attention away from its dismal
record in other areas, especially the treatment of
workers. In doing so, it hopes to peel
environmentalists away from the broad anti-Wal-Mart
movement. BP’s emphasis on the environment was no
doubt made more urgent by the need to repair an
image damaged by allegations that a 2005 refinery
fire in Texas that killed 15 people was the fault of
management. To varying degrees, many other companies
that have jumped on the green bandwagon have sins
they want to public to forget.
Opportunism. There is so much hype these days
about protecting the environment that many companies
are going green simply to earn more green. There are
some market moves, such as Toyota’s push on hybrids,
that also appear to have some environmental
legitimacy. Yet there are also instances of sheer
opportunism, such as the effort by Nuclear Energy
Institute to depict nukes as an environmentally
desirable alternative to fossil fuels. Not to
mention surreal cases such as the decision by
Britain’s BAE Systems to develop environmentally
friendly munitions, including low-toxin rockets and
lead-free bullets.
In other words, the suggestion that the new business
environmentalism flows simply from a heightened
concern for the planet is far from the truth.
Corporations always act in their own self-interest
and one way or another are always seeking to
maximize profits. It used to be that they had to
hide that fact. Today they flaunt it, because there
is a widespread notion that eco-friendly policies
are totally consistent with cutting costs and
fattening the bottom line.
When GE’s
“ecomagination” campaign was launched, CEO Jeffrey
Immelt insisted “it’s no longer a zero-sum
game—things that are good for the environment are
also good for business.” This was echoed by Wal-Mart
CEO Lee Scott, who said in a speech announcing his
company’s green initiative that “being a good
steward of the environment and in our communities,
and being an efficient and profitable business, are
not mutually exclusive. In fact they are one in the
same.” That’s probably because Scott sees
environmentalism as merely an extension of the
company’s legendary penny-pinching, as glorified
efficiency measures.
Chevron Wants to Lead
Many environmental
activists seem to welcome the notion of a
convergence of business interests and green
interests, but it all seems too good to be true. If
eco-friendly policies are entirely “win-win,” then
why did corporations resist them for so long? It is
hard to believe that the conflict between profit
maximization and environmental protection, which
characterized the entire history of the ecological
movement, has suddenly evaporated.
Either corporations
are fooling themselves, in which case they will
eventually realize there is no environmental free
lunch and renege on their green promises. Or they
are fooling us and are perpetrating a massive public
relations hoax. A third interpretation is that
companies are taking voluntary steps that are
genuine but inadequate to solve the problems at hand
and are mainly meant to prevent stricter,
enforceable regulation.
In any event, it would
behoove enviros to be more skeptical of corporate
green claims and less eager to jump into bed with
business. It certainly makes sense to seek specific
concessions from corporations and to offer moderate
praise when they comply, but activists should
maintain an arm’s-length relationship to business
and not see themselves as partners. After all, the
real purpose of the environmental movement is not
simply to make technical adjustments to the way
business operates (that’s the job of consultants)
but rather to push for fundamental and systemic
changes.
Moreover, there is a
risk that the heightened level of collaboration will
undermine the justification for an independent
environmental movement. Why pay dues to a green
group if its agenda is virtually identical to that
of GE and DuPont? Already there are hints that
business views itself, not activist groups, as the
real green vanguard. Chevron, for instance, has been
running a series of environmental ads with the
tagline “Will you join us?”
Join them?
Wasn’t it Chevron and the other oil giants that
played a major role in creating global warming?
Wasn’t it Chevron that used the repressive regime in
Nigeria to protect its environmentally destructive
operations in the Niger Delta? Wasn’t it Chevron’s
Texaco unit that dumped more than 18 billion gallons
of toxic waste in Ecuador? And wasn’t it Chevron
that was accused of systematically underpaying
royalties to the federal government for natural gas
extracted from the Gulf of Mexico? That is not the
kind of track record that confers the mantle of
environmental leadership.
In fact, we shouldn’t
be joining any company’s environmental initiative.
Human activists should be leading the effort to
clean up the planet, and corporations should be made
to follow our lead.
Alcan, a Canadian company, has decided to sell its 45 percent stake in Utkal Alumina International Limited, a company aiming to produce alumina in the state of Orissa in India. Alcan had been under pressure for years to withdraw or at least ensure the project had obtained the free prior and informed consent of local communities.
Community members, mostly "scheduled tribes" Adivasis, have opposed the Utkal project, to protect their right to control local resources and avoid environmental damage. The project, which is in its "engineering phase" has already started to displace the 200 or so families living on the site of the future alumina plant. Herders and others would also be affected by the mining operation. It is unclear how many people would be affected but some critics have estimated that over 10,000 people would suffer. At least 23 villages would be affected by the project.
In December, 2000, police in Kashipur opened fire on protesters opposed to the Utkal mine and smelter, killing three people. One of the partner at that time, Norsk Hydro of Norway, immediately pulled out and sold its share to Alcan.
Activists from Alcan't in India, a solidarity group based in Montreal, Quebec, Canada, are pressuring Alcan to compensate people whose "lives have been ruined through jailings, beatings, displacement, and even death due to Alcan’s involvement."
Last year, Alcan promised it would provide an answer to shareholder activists by March 2007 on its involvement in the project. Shareholders had filed a proposal (see 'Tis the Season for Shareholder Activism) asking for an independent study on the consent of the community, a proposal that received a surprisingly high 37 percent. (Similar resolutions typically get between zero and ten percent. Any resolution that scores in the higher end of that range is taken seriously by management)
The Indian partner in the Utkal project, Hindalco, the industrial division of the Indian conglomerate Aditya Birla group, which owns 55% of the project, has not given any indication that it will change its plans.
Alcan, on the other hand, invests a lot of money in public relations to promote its sustainability strategy, has portrayed itself as a minority partner that does not participate in the real decision making around this project.
“We have carefully weighed the opportunity and risk presented by the Utkal Project, and, given constraints within the governance structure that limit Alcan's ability to participate in key decisions, believe that we have acted in the best interests of all our stakeholders,” Jacynthe Côté, president and chief executive officer of Alcan Bauxite and Alumina, said in a statement.
Alcan says it will keep a commercial interest in the project by continuing to "benefit from an Alcan technology supply agreement", according to the Alcan press release, but it does not give further details.
Editor's note: The decision of Alcan to pull out of the Utkal smelter reflects similar dissatisfaction over aluminum smelters around the world. Sujatha Fernandes reported for us from Trinidad on a similar project in the Chatham/Cap-de-Ville area (see “Smelter Struggle: Trinidad Fishing Community Fights Aluminum Project") that was canceled in January 2007 although the Alcoa is now hoping to get permission to relocate the project to Otaheite Bay, which also serves as a nesting ground for the scarlet ibis, one of Trinidad and Tobago's national birds, as well as 36 other avian species.
And communities in Iceland have also been battling a proposed Alcoa smelter, for which the gigantic $3 billion Karahnjukar dam, north of Vatnajokull, Europe's biggest glacier, is being built. The Guardian did a great story ("Power Driven") on this in 2003, and the New York Times recently did a feature on what it called the angriest and most divisive battle in recent Icelandic history. Updates can be found at the Saving Iceland website.
Continuing our film recommendations from last
week, we'd like to mention "Total Denial" - a new
documentary on corporate-financed human rights abuses in Burma. The film was
made by Bulgarian-born Milena Kaneva.
The Austin-Chronicle newspaper in Texas called the film:
"heart-wrenching and utterly
disturbing."
"Total Denial"
chronicles a major human rights lawsuit brought by EarthRights
International and villagers from Burma against oil giant Unocal, a
company based right here in California, as well as a French
multinational named Total. A number of screenings are coming up
in the next few weeks here in the U.S.
If you live in the Bay area, do check it out on Thursday, in
Los Angeles on March 27th or in Washington DC on April
11th.
The lawsuit was brought by 11 Burmese peasants who suffered a variety of human
rights violations at the hands of Burmese army units that were
securing the pipeline route. These abuses included forced relocation,
forced labor, rape, torture, and murder.
The case was spearheaded by Ka Hsaw Wa, the executive
director of Earth Rights International, an organization based in
Washington DC. Of the Karen indigenous minority in Burma, he was one of the student leaders in the 1988
nation-wide student uprising for democracy and freedom, and has been a
human rights activist since he fled Burma in 1988. He was helped by
Paul Hoffman of the Center for Constitutional Rights, Hadsell &
Stormer, and Judith Brown Chomsky.
Almost a decade after the case was brought,
the court decided that:
"Unocal knew
that the military had a record of committing human rights abuses; that
the Project hired the military to provide security for the Project, a
military that forced villagers to work and entire villages to relocate
for the benefit of the Project; that the military, while forcing
villagers to work and relocate, committed numerous acts of violence;
and that Unocal knew or should have known that the military did
commit, was committing and would continue to commit these tortious
acts."
The legal basis for the case was a laws called
the Alien Tort Claims Act (a 1789 law intended to curb piracy on the high seas by extending U.S. jurisdiction to cover breaches of international law outside its borders), which has been used
primarily to sue international human rights abuses in U.S. courts. In recent
years a number of plaintiffs have sued multinational corporations for
abuses outside the U.S. under this law. While many of these cases are
now in court, Unocal decided to settle out of court and
compensate the victims in January 2006.
Earth Rights International are using the same
law to pursue another major oil company here in California (Chevron)
with some success for abuses in Nigeria.
The case is based on two
incidents: the shooting of peaceful protestors at Chevron's Parabe
offshore platform and the destruction of two villages by soldiers in
Chevron helicopters and boats.
Last week U.S. District Judge
Susan Illston in San Francisco agreed
that the Nigerian plaintiffs: "have presented
evidence of a link between the conduct of Chevron in the United States
and the attacks in Nigeria at issue" as well as evidence that the corporation had
substantial control over its Nigerian unit, that it
"designed and adjusted the general security policies and
procedures" of its subsidiary and approved payments from the
subsidiary to the Nigerian government security
forces.
The particular abuses at issue
are the November 10, 1995 hangings of Ken Saro-Wiwa and John Kpuinen,
two leaders of MOSOP (Movement for the Survival of the Ogoni People),
the torture and detention of Owens Wiwa, and the shooting of a woman
who was peacefully protesting the bulldozing of her crops in
preparation for a Shell pipeline by Nigerian troops called in by
Shell.
There's a constant stream of good films coming out about corporate malfeasance and we'll try to keep you updated on this blog about some of our favorite ones.
"Shadow Company" opens tonight at the Roxie movie theater in San Francisco. This documentary follows the tale of James Ashcroft, a college friend of film maker Nick Bicanic, who quits his job in a British law firm to take a job with a private security company in Baghdad, whom many human rights activists consider to be "mercenaries," or soldiers for hire made famous by Blackwater in Fallujah.
It's simple math: you have a given individual who has the prospect of risking his life as part of a member of a nation-state military for X amount of dollars or doing virtually the exact same level of risk and almost the exact same job for roughly three to five times the money for a private company. The proof is in the pudding. A very large number of U.S. and U.K. Special Forces are asking for early retirement, and it's a serious problem.
Like any good documentary, "Shadow Company" has no shortage of "talking heads" � expert human rights activists and academics alike � but it also has quite a few fun little graphics, historical footage, and lots of action to explain the history of private military companies.
What sets this film apart from the classic military channel films or even your typical Amnesty fare, is that it chooses not to take sides, but allow the characters to argue the case for and against private military work in their own words. There's Cobus Classens, a South African mercenary who worked for Executive Outcomes; there's Robert Young Pelton, author of the "The Guide to the World's Most Dangerous Places;" and there's a professor of ethics and a lobbyist for the "International Peace Operations Association" (yes, there is an industry association, believe it or not).
There could have been voices of Iraqis who are rightly angry that men in plainclothes and assault weaponry have taken over their cities and obey no laws. (Yes, there are clips from the classic Al Qaeda videos, but that's not the same as interviews with the citizenry.) All in all, it is very educational and a good introduction to this emerging business and the potential threats to human rights.
"Shadow Company" only discusses the gun-carrying contractors. Another excellent (though one-sided) film that explains other contractors like Halliburton who do military logistics is "Iraq for Sale."
"Iraq for Sale" also discusses contractors like CACI, which used to provide interrogators at Abu Ghraib and other prisons. (David Phinney wrote an excellent article for us about CACI. If you want to learn who has since taken over the contract, read our article about L-3) .
Greenwald's films are produced quickly and distributed widely by his supporters. He is one of the most successful grassroots film-makers in history � he made "Uncovered: The War on Iraq," "Outfoxed: Rupert Murdoch's War on Journalism" and his most recent, "Wal-Mart: The High Cost of Low Price."
His fans applaud his work; his detractors, such as Fox's Bill O'Reilly, call him "a radical progressive who blames America first," as well as "a liar and an idiot." He calls it "People Powered Film." It could be the start of something.
Greenwald's films cover very important issues, but they would benefit from interviewing some of the promoters of military contracting, if only to learn why this business is so profitable. More movies on corporate malfeasance next week.
This week's CorpWatch feature highlights the plight of indigenous people in Papua New Guinea, where landowners feel that they are cheated out of their resources, livelihoods, and just compensation by the world's largest gold producer, Barrick Gold.
We depend on our land. You depend on money. Money is not need, it is only a want, but it is need in western society. I live on land, which is my stomach. I grow food from this land and then I survive. But now, where can I get food?
Also, the fact that mineral deposits, including oil, copper, and gold, account for two-thirds of PNG's export earnings leaves them susceptible to the Dutch Disease, or the phenomenon wherein resource exports raise the exchange rate for a country's currency, thereby making their labor less desirable. While this only accounts for a tiny part of the negative consequences of mining, it does illustrate that even within an economic paradigm, mining carries negative consequences for 'development', especially open pit mines because they require less human labor. Large mineral exports also make countries more susceptible to corruption because of the negotiating power held with government gatekeepers.
This is similar to Mali, where gold makes up 65 percent of its exports, dwarfing its former economic bedrock cotton. Some 64 mining companies have active mining and exploration projects in this landlocked African country, but despite a surge in gold prices, Mali's development indicators have stagnated. A recent Oxfam report 'Hidden treasure: in search of Mali's gold mining revenues',
concluded that:
"There is not sufficient disclosure in an
understandable form for citizens or civic groups to determine whether
they are indeed benefiting as they should according to current law in
Mali."
The fact that gold is a largely useless metal (that is already hoarded and unused in large quantities) makes the destruction caused by it's extraction all the more tragic. According the No Dirty Gold Campaign, 80% of the gold is used by the jewelry industry. On average, the production of one gold wedding ring produces 20 tons of waste.
Metal prices are booming, and Canadian mining companies are taking advantage of the same prejudicial conditions to expand into all corners of the globe, manipulating, slandering, abusing, and even killing those who dare to oppose them, displacing Indigenous and non-Indigenous communities alike, supporting repressive governments and taking advantage of weak ones, and contaminating and destroying sensitive ecosystems.
Barrick's plans to "relocate" three glaciers - 816,000 cubic meters of ice - by means of bulldozers and controlled blasting, is seen by mine-opponents as symbolic of the company's utter insensitivity to the environment. As headwaters for a water basin in an arid region receiving very little rainfall, many opponents are gravely concerned for the ice. They say the mechanical action involved in moving the glaciers will irreversibly melt much of it, jeopardizing a delicate ecological balance further downstream.
While Barrick originally planned to "relocate" three glaciers to another area, since being denied their original plan, the project now aims to build an open-pit mine next to the glaciers. However, most alarmingly, since construction has started on the mine, the glaciers have been depleted an estimated 50-70 percent, according to Chilean General Office of Waters (DGA). Barrick attempted to blame global warming for the melting, but those claims have been disproven.
Mining in the U.S.
In the U.S., Western Shoshone lands now account for the majority of gold produced within the United States and almost 10 percent of world production. The scale of development is unprecedented and will leave a legacy of environmental impacts for centuries into the future.
Posted by Pratap Chatterjee on February 17th, 2007
US car makers and the US oil industry appear to be speeding in opposite directions in what may seem like a complete paradox. Just as companies like Chevron, Exxon and Shell announce the highest profits of any company in history, Chrysler, Ford and General Motors sales are in free fall. Is the oil industry in Houston is smarter than the car industry in Detroit?
Ford announced a global loss of $12.7 billion last year. The company plans to close 16 plants and cut up to 45,000 jobs in North America. Chrysler made a $1.5 billion loss last year and just announced it will cut 13,000 jobs. General Motors cut 35,000 production jobs last year but is suggesting it might have turned a profit after losing $10.6 billion in 2005. (The company "found" $200 million in earnings previously unaccounted for between 2002 and 2006, according to a Friday filing with the Securities and Exchange Commission. But given that it has restated its results seven times in the last two years, the numbers maybe rather meaningless.)
That adds up to $82 billion, three times greater than the losses of the Big Three car companies!
What's the difference between the two industries? Those of us that live in North America know exactly why: the price of gasoline has soared since the invasion of Iraq, and the oil companies have taken advantage of the high prices to cut themselves a bigger piece of the pie. Consumers don't have a choice as the oil industry is an oligopoly.
On the other hand the car industry is much more competitive, so consumers do have some choice.
Instead of buying giant cars that consume more gasoline than the original Model T Ford made in 1908 (the energy efficiency of a Ford Explorer is 16 miles per gallon versus the 25 miles per gallon of the signature Ford car), US consumers have made the cheaper choice and bought Japanese-made cars.
Japanese car maker profits are in stark contrast with the Big Three. Toyota is expecting a $13.4 billion profit for the fiscal year ending next month while Honda is predicting 2006 profits to come in close to $5 billion.
Ten years ago, General Motors controlled about a third of the U.S. market while Toyota's share was closer to eight percent. As General Motors has lost about eight percent of the market, Toyota has gained about the same.
(Another major difference between the two companies: General Motors expects to pay $50 billion in health care costs for its retired workers, while Toyota's Japanese workers are covered by a government health care system.)
Simple, isn't it? Energy conscious vehicles could turn around the US car makers and government provided health care for workers could cut Detroit's losses.
Yet, that would not solve all our problems. Even if the Big Three are losing market share, U.S. citizens are still buying cars that emit greenhouses gases and contribute to global warming. The latest figures show that U.S. greenhouse gas emissions during 2004 increased by 1.7 percent from the previous year, according to the U.S. Environmental Protection Agency (EPA), which released the figures last April. This was the largest annual amount ever produced by any country on record.
Perhaps the price of gasoline is still far too low? If doubling the price of gas has crushed the once mighty U.S. car industry, what if prices were to double again? People might start shopping close by, taking buses and trains to work. New jobs would be created by small local businesses for all those Wal-Mart employees and out-of-work Big Three employees.
Toyota and Honda might have to give way to a bus system or railways! Gasp! How archaic! How could the U.S. pay for a new mass transit system? Well, I heard some folks in Houston just found $82 billion... and the Japanese car makers have another $17 billion. that could pay for a lot. (That's not their money, its money taken out of the pockets of consumers who had no choice)
The U.S. needs mass transportation - and it needs to stop sprawl - lessons on how to do this can be found anyway outside the borders of this country when people live, work and shop in communities and take bicycles, buses and trains to work.
If commuters in the U.S. were to stop driving altogether, we could slash global fossil fuel emissions by 25 percent. Now that would be a revolution, and it would reverberate through history. How America saved the world it might even surpass Superman as a story for ages to come! If not, there won't be much more history to write. But that final page in human history might record that the U.S. failed to act.
The Paris tribunal will examine the 1999 Erika tanker disaster that poured 20,000 tonnes of oil into the sea, polluted 250 miles of coastline and caused $1.3 billion in damage. At least 150,000 seabirds were found dead on the coast and up to 10 times as many were probably lost in the oil-blackened seas. Observers say this may also turn into a trial of the "globalized" international shipping system as the Erika was crewed by Indians, sailing under a Maltese flag, chartered by a shipping company registered in the Bahamas for a French oil company.
Meanwhile, a lawsuit between the state of New York against Exxon and four other companies has recently been announced. This suit addresses an oil spill from the 1950's that was several times the size of the Exxon Valdez oil leak in Alaska, but lay undiscovered until 1978. According to New York state attorney Andrew Cuomo, Exxon has been slow to clean up, with an estimated eight million gallons of oil and petroleum byproducts still underground and toxic vapors from the ground threatening neighborhood health.
"There are people who live above this that still don't know about it,'' said Basil Seggos, chief investigator for Riverkeeper, an environmental group that sued in 2004 to try to force Exxon Mobil to clean up the creek. Others in Greenpoint have become spill experts, according to Seggos, and they say the fumes that rise from basements and sewers are especially bad when the barometer drops before a storm. "The locals tell you they know when it's going to rain because they can smell the oil.''
In other oil spill news, Lagos' Vanguard newspaper reported today that ten Ijaw communities had been displaced and 500 made homeless by a Chevron Nigeria oil spill.
The report quotes Gbabor Okrika, the councilor representing the affected communities:
"Chevron is not bothered about the health of the people they are only concerned about their operations and they have now started a process that can only divide the people and create further division among them."
Also, last month's massive leak in the Chad Cameroon Pipeline caused a storm of criticism regarding the environmental safety of this project. This Exxon-managed pipeline extends from landlocked Chad through Cameroon and extends 11 kilometers off the coast into the Atlantic. This project, which is overseen by the World Bank, has already received much criticism due to money from this project fueling conflict in Chad.
IRIN News quoted Kribi Mayor Gregoire Mba Mba:
"Our town lives on fishing and tourism. If more incidents like this or worse occur it is the economic future of the town that is threatened."
Environmental groups are warning that a similar spill could happen in the Baku-Ceyhan pipeline operated by BP that transports crude 1750 kilometers from the Caspian to the Mediterranean Sea. On Monday, a coalition of Azeri, British and US watchdog groups leaked a report from the U.S. Overseas Private Investment Corporation, which says that cracks and leakages in the coating of the pipeline will need to be monitored closely.
Posted by Pratap Chatterjee on February 12th, 2007
Technology consultants Booz Allen Hamilton may not be on the top of everyone's lists for conflicts of interest, but Congressman Henry Waxman revealed some rather interesting information about this McLean, Virginia, company at last week's hearing on contracting abuse.
Waxman told the hearing that Booz Allen had $97 million in contracts with the Department of Homeland Security in 2005. One job that Booz Allen staff were hired to do was to help plan, award and manage the federal government's SBI-Net program, a high technology security fence between the U.S. and Mexico (Joe Richey wrote us an article on this program - see Border for Sale)
Of the 98 personnel assigned to the SBI-Net project office as of December 2006, 60 work for contractors like Booz Allen. The company that these personnel are overseeing for SBI-Net is Boeing.
What Waxman finds worrying is the fact that Booz Allen has had an ongoing relationship with Boeing since 1993 to assist Boeing in maintaining its market share in the airplane industry, and other extensive relationships with the aircraft manufacturer since 1970.
The question is an important one: how can you be an impartial supervisor over someone who also pays your bills?
Booz Allen is no stranger to the inner workings of government, though. They happen to be one of the largest contractors to the Central Intelligence Agency and the National Security Agency. Tim Shorrock has done some digging into this subject, which you can read in his Mother Jones article: The Spy Who Billed Me.
Contractors supervising their own business partners is fashionable in Washinton DC these days, so we are glad to see that Scott Shane of the New York Times has started a regular series on this subject which he calls "The Fourth Branch of Government". In the first article about this phenomenon he wrote:
In June, short of people to process cases of incompetence and fraud by federal contractors, officials at the General Services Administration responded with what has become the government's reflexive answer to almost every problem.
They hired another contractor.
It did not matter that the company they chose, CACI International, had itself recently avoided a suspension from federal contracting; or that the work, delving into investigative files on other contractors, appeared to pose a conflict of interest; or that each person supplied by the company would cost taxpayers $104 an hour.
... CACI had itself been reviewed in 2004 for possible suspension in connection with supplying interrogators to the Abu Ghraib prison in Iraq.
The use of private interrogators at Abu Ghraib another matter we've been tracking, to read more about that, see David Phinney's article: "Prison Interrogation for Profit". To be fair, CACI is no longer in the interrogation business. To find out more about who has this lucrative work, do read "Intelligence in Iraq: L-3 Supplies Spy Support"
Tina Ballard, deputy assistant secretary for policy and procurement for the U.S. Army, told the same hearing that they had taken back $19.6 million from Halliburton for employing private security guards in Iraq, because their contract specifically stated that they could only use U.S. military for security. "We removed the money yesterday," said Ballard (on February 6th, 2007)
Halliburton, a Houston, Texas-based company, has been paid over $20 billion to provide logistical support to U.S. troops occupying Iraq such as building bases, cooking food and cleaning toilets.
Although Halliburton director of security, George Seagle, acknowledged that the company had used Blackwater and other private security sub-contractors in Iraq, he denied that the company was working for them in Fallujah, the day that the four Blackwater men were killed in Fallujah in March 2004, as related earlier. He also told the Congressmen that he did not know what company provided security for their convoys because that was the responsibility of the sub-contractor.
"You should know who you hired, who you sub-contracted to," scolded Republican Congressman Christopher Shays. "You can't be Pontius Pilate and wash your hands of the matter."
Seagle's statement contradicts a 2004 investigation by the Raleigh News-Observer, which unearthed documents that suggest that Blackwater was working indirectly for Halliburton via a complex pyramid of sub-contracting.
An email dated June 3, 2004, produced by Congressman Waxman at the hearing, quotes James Ray, a Halliburton contract administrator, warning the company that they could get into trouble for using Blackwater. "We should not attempt to effect a material change in our contract with the government by hiring a company that we know uses armed contracts. That company is an agent of KBR (Halliburton) and if anything happens KBR is in the pot with them. Even with lipstick, a pig is a pig. Dancing around it will only weaken out position with the government."
Blackwater counsel Andrew Howell says that the men who were killed in Fallujah, were providing security for a company in Kuwait named Regency Hotel, which in turn was employed by a company named ESS in Germany.
Throwing fresh doubt on this matter, was Steve Murray, the director of contracting for ESS, who was also at the hearing says that the four men who were killed that day were actually protecting another major U.S. engineering company named Fluor on that particular day.
But Tom Flores, the director of security for Fluor, who also testified at the hearing, says he was unaware that the Fallujah convoy was protecting his company.
"This tells me that we are not going to have good quality work if neither the government or the contractors can tell us who the subcontractors are," said an exasperated Shays.
Lawyers for Blackwater, the private security company, today publicly acknowledged that one of their security guards shot dead an Iraqi man whom he worked with. "He was off-duty that day," said Andrew Howell, the company's general counsel told a Congressional hearing today. "We brought him back to the States the next day and took him off the contract."
The story of the killing, which took place on December 24, 2006, was first broken by Bill Sizemore of the Virginian Pilot less than a month ago.
The admission by Blackwater's lawyer came at a hearing that was convened by U.S. Congressman Henry Waxman at the House Government Reform Committee.
Blackwater, a North Carolina company, became famous when four of their contractors were shot and killed in Fallujah in March 2003, sparking a massive U.S. military assault on the city in which hundreds were killed. (Excellent accounts of this incident can be found in Robert Young Pelton's new book: "Licensed to Kill" and Jeremy Scahill's forthcoming book: “Blackwater: The Rise of the World's Most Powerful Mercenary Army.” out later this month from Nation Books) The company was back in the news ten days ago when five of their employees were shot down as they accompanied U.S. embassy employees in Baghdad.
The admission by Blackwater confirms worries that armed contractors working directly or indirectly for the U.S. government have been involved in killing Iraqi civilians and that they have escaped the rule of law in Iraq or in the United States.
An article in the Washington Post in September 2005 quoted Brigadier General Karl R. Horst, deputy commander of the 3rd Infantry Division, which is responsible for security in and around Baghdad. "These guys run loose in this country and do stupid stuff. There's no authority over them, so you can't come down on them hard when they escalate force. They shoot people, and someone else has to deal with the aftermath. It happens all over the place."
The article described the shooting of an Iraqi man named Ali Ismael in Erbil, Northern Iraq by unamed U.S. private security contractors.
Nor is Blackwater the only company to have been accused of shooting at Iraqi civilians with an intent to kill.
* In July 2006, two security contractors working for Triple Canopy in Iraq witnessed their boss shoot at Iraqi civilians.
Shane B. Schmidt, a former Marine Corps sniper, and Charles L. Sheppard III, a former Army Ranger, have sued the company, which they say fired them after they filed a report on July 8 that their shift leader fired deliberately and unnecessarily at Iraqi vehicles and civilians in two incidents while their team was driving in Baghdad.
Schmidt and Sheppard's lawsuit claims that the Triple Canopy employee announced that he was ''going to kill someone today,'' stepped from his vehicle and fired several shots from his M4 assault rifle into the windshield of a stopped white truck. The men claim that the truck was not an evident threat and that their team was not in danger. The men say in the suit that the shift leader then returned to their truck and said, ''That didn't happen, understand.'' Later that day, the suit says, the shift leader said, ''I've never shot anyone with my pistol before,'' and then opened the vehicle door and fired seven or eight shots into the windshield of a taxi.
* Custer Battles, another U.S. security company, was accused of shooting at Iraqis in February 2005, in an investigative report by NBC News. Titled "U.S. Contractors in Iraq Allege Abuses." The report quotes four former U.S. soldiers.
"[He] sighted down his AK-47 and started firing," says (Corporal Ernest) Colling. "It went through the window. As far as I could see, it hit a passenger. And they didn't even know we were there."
Later, the convoy came upon two teenagers by the road. One allegedly was gunned down.
"The rear gunner in my vehicle shot him," says Colling. "Unarmed, walking kids."
In another traffic jam, they claim a Ford 350 pickup truck smashed into, then rolled up and over the back of a small sedan full of Iraqis.
"The front of the truck came down," says (Captain Bill) Craun. "I could see two children sitting in the back seat of that car with their eyes looking up at the axle as it came down and pulverized the back."
* CorpWatch's David Phinney was among one of the first reporters to chronicle the infamous "Trophy Video" in Novermber 2005, in which security contractors for Aegis, a British company, in Iraq, were seen shooting at Iraqi civilians.
David Phinney also broke the story of another North Carolina company named Zapata, whose security guards allegedly fired at U.S. Marines in Fallujah in May 2005.
Paul Bremer, the U.S. envoy who ran Iraq for over a year, will testify before the U.S. Congress on Tuesday, February 6th, 2007. This rare opportunity to see what the man we call the Wizard of Oz is rare, so CorpWatch plans to attend. Why do we call him the "Wizard of Oz", you may ask? Well, for those of you who remember the children's book by L. Frank Baum, the man who ran the land of the Munchkins, was protected from his subjects by special soldiers in the Emerald City.
And "Imperial Life in the Emerald City" is the title of a simply incredible book, that every member of Congress and the public at large, should first read to understand why Iraq is such a mess today. Rajiv Chandrasekaran, the bureau chief of the Washington Post in Baghdad for almost two years, published an account of the so-called Green Zone, the six square miles that the new rulers of Iraq have lived in ever since they occupied the country in April 2003.
This books lays out in hilarious detail the adventures of Paul Bremer, protected by his private security detail from Blackwater, and two of the three other men who testify on Tuesday: Tim Carney and David Oliver.
Tim Carney has just been appointed by Condoleeza Rice to oversee U.S. reconstruction and development projects in the country. Chandrasekaran tells us that Carney, who was in charge of the ministry of industry and minerals, was also a big game hunter who has hunted elephants, cape buffalo, giraffes, warthogs and two species of zebra, but sadly had no experience in either industry or minerals. (He was however a personal friend and ex-deputy to Paul Wolfowitz) In "Emerald City" we learn about his disastrous attempts to privatize Iraq's industries.
David Oliver, was Bremer's budget chief in the Emerald City. He first drew up a plan to fix Iraq that would have cost $60 billion. Bremer asked him to cut it to $18 billion and Oliver obligingly slashed the budget to ribbons.
Chandrasekaran's book is easily the funniest in what is now a library of books on the U.S. in Iraq, although ultimately it tells a tragic tale. The stories he tells reveal an incompetent and ideological group of inexperienced people. He lets us know that the nickname for the first group of advisors - Office of Reconstruction and Humanitarian Assistance or ORHA - was the "Office of Really Hapless Americans" and that the organization that Bremer ran - the Coalition Provisional Authority or CPA - was also known as "Can't Produce Anything."
Some gems from his book:
An exchange between, Bernard Kerik, the New York cop who was put in charge of the Iraq police, in conversation with Robert Gifford, his predecessor, about a group of Iraqi judges who came to visit him.
"Bob, who are these people? Who the fuck are these people?" "Oh, those are Iraqis" "What are they doing here?" "Bernie, that's the reason we are here.
John Agresto, the director of St John's College in Santa Fe, New Mexico, who was a friend of both Donald Rumsfeld and Dick Cheney's wife, was put in charge of Iraq's university system.
He left the country after saying to Chandrasekaran what must be one of the most compelling confessions of failure by a Bush supporter: "I'm a neoconservative who has been mugged by reality."
And Chandrasekaran has a wonderful description of life inside the Emerald City aka the Green Zone, catered by Halliburton.
"You could dine at the cafetaria in the Republican palace for six months and never eat hummus, flatbread or a lamb kebab. The fare was always American, often with a southern flavor. A buffet featured grits, cornbread and a bottomless barrel of pork, sausage for breakfast, hot dogs for lunch, pork chops for dinner. There were bacon cheeseburgers, grilled bacon-and-cheese sandwiches and bacon omelets."
"Hundreds of Iraqi secretaries and translators who worked for the occupation authority had to eat in the dining hall. Most of them were Muslims, and many were offended by the presence of pork. But the Americans running the kitchen kept serving it. The cafeteria was all about meeting American needs for high-calorie, high-fat comfort food."
Chandrasekaran, who had first hand access to Paul Bremer, provides a delightful antidote to the more ponderous and self-important book by his chief subject: "My Year in Iraq" (Simon and Schuster, 2006). Although it should be said that Bremer's book is an important insight into why the U.S. failed in Iraq, chronicling in minute detail how he worked to manipulate Iraq's politics by creating the Iraqi Governing Council.
But read Bremer's book only after you read Chandrasekaran, and another book that I also heartily recommend: "Babylon by Bus" (Penguin, 2006) by two young volunteers from the United States named Ray Lemoine and Jeff Neumann, who worked under Bremer, who were put in charge of non-governmental organizations in Iraq.
The book, which is a modern day equivalent of Jack Kerouac's "On the Road" consists of them boasting about their complete lack of qualifications for the job and the chaos that they took advantage of by getting stoned on Valium, drive around rip-roaring drunk, helped soldiers get illegal steroids. The book, which is alternately funny and horrifying, explains that they did what they thought was best under the circumstances but admitted freely that they had no idea what they were doing.
"Babylon by Bus" concludes with the person that they selected to take over their job being targeted and killed in June 2004 and an apology to the people of Iraq:
"(W)e apologize for the reckless, unplanned, understaffed, corrupt, and wasteful way in which our country occupied and failed at rebuilding your shattered nation. For every innocent (person) who was killed, tortured, or injured by our country, we extend our deepest sympathy."
Blood Money
But back to the hearing on February 7th, 2007, in Washington DC. The fourth man that will testify is also a staunch friend of the administration: Stuart Bowen. There the similarity between the four men ends, because Bowen is honest and competent, and has dedicated his last three years to uncovering fraud in Iraq.
To learn about his work you need to check out the website of the Special Inspector General for Iraq Reconstruction (SIGIR) although I dare say that you will find it rather dry reading, being composed of serious audit reports and project assessments.
If that does not draw your fancy, check out a sobering and well written book by T Christian Miller, titled "Blood Money" (Little, Brown 2006) that portrays Bowen, a former fund raiser for George Bush in Texas, as a man who is a mix of "professor, political junkie and prosecutor." And also read a series of articles by Ed Harriman of the London Review of Books, who has been following SIGIR's work in detail. Another journalist who has tracked the work of SIGIR practically daily is James Glanz of the New York Times.
Back to Miller. Some more gems from his excellent book, which members of Congress and the public really should read, to get an adequate picture of what went wrong in Iraq's reconstruction.
"A nation-building process crafted with the care of a sand castle."
"The rebuilding process was like an enormous bulldozer with a cinder block on the gas pedal, grinding blindly forward but accomplishing little." " Achievements were tallied like body counts: another 100 schools painted, another clinic opened, another 1000 Iraqis employed - statistics that said little about the reality on the ground. It was rebuilding without a foreman or blueprints"
(Miller is perhaps one of the best investigative journalists who has tracked infrastructure and corruption projects until the Los Angeles Times put him on the environment beat. His work is as relentless as Chandrasekaran's is humorous, although both do an excellent job of explaining why the U.S is failing so badly, with their intimate portraits of the real heart of the occupation.)
He interviews Douglas Feith, the under secretary of defense for policy, at his home in Washington about the infamous Halliburton no-bid contracts and Dick Cheney. He tracks down the failure of Halliburton to fix Iraq's oil fields and restore the natural gas supply, perhaps one of the few detailed accounts available in print on what has really happened to Iraq's main source of revenue.
Miller visits Parsons engineering at the company headquarters in Pasadena, California, and at the Green Zone in Baghdad, and tells how they botched the job of fixing Iraq's infrastructure. "Fear and confusion were better reasons than greed for explaining the way that the company acted the way it did." The company was "caught in a crossfire between customer satisfaction, profit and death."
The book tells the sad tale of Colonel Ted Westhusing, who reportedly committed suicide (a matter of some dispute) soon after discovering allegations of fraud by a Carlyle Group subsidiary that was training Iraqi commandos.
And lastly, but not least, it also has excellent descriptions of how David Oliver and Paul Bremer botched the plan for Iraq's reconstruction.
Our next posting, hopefully, will come from the inside the Throne Room, where Henry Waxman, playing the role of Dorothy Gale, will attempt to uncover the real story behind the Throne of the Wizard of Oz.
John Kenney, a former advertising guy, wrote an op-ed entitled "Beyond Propaganda" last week in the The New York Times about his disillusionment upon finally accepting that the new company name and identity for BP he helped create – "Beyond Petroleum" to replace "British Petroleum"– has turned out to be just so much bunkum designed to make a dirty oil company look environmentally friendly on TV, while it's busy drilling for ever more petroleum and spilling billions of gallons all over Alaska.
Its nice to know there are (or were) still idealists in the ad business, people who believe their job can be something noble instead of public deceipt and manipulation. And kind of sad he was so naive.
We at CorpWatch, however, have always been cynical enough to see through obvious rebranding. Way back in 200, we wrote this about BP's new image: "British Petroleum: Beyond Pompous, Beyond Protest,
Beyond Pretension, Beyond Preposterous, Beyond Platitudes, Beyond
Posturing, Beyond Presumptuous, Beyond Propaganda... Beyond Belief."
The Times-Picayune has followed up on an issue that CorpWatch broke back in May, namely, how the people barely scraping by in New Orleans are being asked to foot the bill for the private utility's recovery from Katrina. Now it seems ratepayers, who are dealing with higher rents and fewer jobs to begin with, will be paying electricity bills 50% higher than before Katrina. Not because Entergy can't afford to fix its own infrastructure, but because doing so would bite into profits.
Rita J. King, author of our report "Big, Easy Money: Disaster Profiteering on the American Gulf Coast," noted four months ago that Entergy's corporate structure deliberately shields it from most risk associated with doing business in Hurricane Alley. Although Entergy New Orleans is a wholly-owned subsidiary, it is fiscally independent of its massive parent. Therefore, the larger Entergy doesn't have to make up its losses in case of, say, a major natural disaster. What Entergy N.O.'s insurance didn't cover it is demanding from the state government in the form of a block grant. The rest will come out of the pockets of it's customers, many of whom will be unable to pay, and therefore unable to stay.
This is a evilly clever arrangement. Entergy has New Orleans over a barrel. Ratepayers will complain to their lawmakers, who will be motivated to favor directing a massive public grant to a private corporation in order to keep rates down and taxpayers and voters happy and, more importantly, in Louisiana at all.
The Times-Picayune notes that the latest proposed hike is being justified as a "fuel adjustment charge." Which is a time-honored and now again fashionable way to raise prices for just about anything without looking greedy.
It is Katrina anniversary week, and news outlets are abuzz with stories probing why, 12 months after the worst natural disaster in American history, so little progress semms to be made. USA Today notes that the price tag for recovery and reconstruction stands at $122 billion, and shows no signs of slowing its ascent.
Chipotle
is getting burned by the very scheme it cooked up as what it thought
was a great public relations opportunity - sponsoring free screenings
of Food, Inc. - is becoming a PR fiasco.
I
can’t bring myself to jump on Wal-Mart’s bandwagon. If I want product
ratings I will turn not to Mike Duke but rather to someone like Dara
O’Rourke, who founded a website called 
