Stop Dumping Hazards
The Front
Features
The 10 Worst Corporations of 1992
By Russell Mokhiber, Julie Gozan & Holley Knaus
Government Records on Corporate Abuses
By Jim Donahue
Environment
The World Bank in India
By Patrick McCully
Interview
A Healthy Drug Policy for the Third World
An Interview with Dr. Kumariah Balasubramaniam
Labor
Korean Investment in Guatemala
By Kurt Petersen
Thank you for the helpful profile of British Petroleum (BP) in the November issue . I requested a BP profile with my first subscription to Multinational Monitor two years ago. At that time, the Ohio Student Environmental Action Coalition (Ohio SEAC) was just beginning its Campaign for Corporate Accountability at BP.
In Ohio, hundreds of students have participated in direct action and education aimed at changing BP�s horrid behavior, and more importantly, changing this fossil fuel-addicted society. In December 1990, after sending a letter to then-BP America President and CEO James Ross and sponsoring a demonstration in front of BP headquarters in Cleveland, SEAC was granted a two-hour meeting with Ross. Representatives from Ohio SEAC, Ohio Citizen Action and Allen County Citizens for the Environment issued requests for better air monitoring at Lima, where BP�s refinery and chemical plant are by far the worst polluters in Ohio. Ross refused to give any of the information requested or consider continuous air monitoring. Despite our willingness to engage in discussion with BP, it was clear to me, after hearing Ross say "My job is to make money ..." that the only thing that would change BP is a long-term boycott. In April 1992, Ohio SEAC officially kicked off its state-wide boycott after a second attempt to negotiate with BP in March.
Those of us organizing the BP boycott in Ohio are disgusted at BP�s support of apartheid, its abuse of workers in Ireland and elsewhere, its ties to governments and militaries around the world, its mining and deforestation and its effective veto power (through the Ohio Chamber of Commerce and the powerful chemical lobby) over any meaningful pollution prevention laws in the Ohio legislature or on the ballot. By expanding the issues we address and by joining with the anti-apartheid and workers� movements, SEAC plans to spread the BP boycott to communities where BP operates worldwide. The SEAC boycott will begin on the national level on November 10, "Toxic Tuesday," when 30 SEAC groups in 11 states will picket BP gas stations.
The uncontrolled and destructive role played by multinationals, especially oil giants like BP, is a problem that cannot be ignored by those who care about ecology, social justice and the fate of future generations. Despite the ability of large corporations to manipulate government, citizens have the power to take a stand against pollution and oppression by voting economically and refusing to buy certain products. Boycott BP!
Matthew Bennett
Former SEAC
BP Campaign Coordinator
Athens, OH
To the editor:
I read with interest Dr. Bruce Chabner�s letter to the editor in the July/August issue of the Multinational Monitor, defending the National Cancer Institute (NCI) agreement with Bristol-Meyers Squibb (BMS) to commercialize the cancer drug taxol, which had been criticized in an article in the May 1992 Multinational Monitor by Dan Newman. His letter addressed a number of different points, and they deserve a response.
Dr. Chabner correctly says that BMS received its exclusive contract to develop taxol through a competitive process, but he does not offer a convincing case for the use of an exclusive agreement in the first place. Dr. Chabner simply says that he has "serious doubts" that any company would have proceeded on a non-exclusive basis, given "the high costs of development and risk." In fact, NCI never made a finding that an exclusive contract was necessary for the development of taxol, and he greatly exaggerates the costs and risks faced by BMS.
The government�s role in the discovery and development of taxol has been enormous. Government funded researchers discovered taxol, developed its manufacturing processes, carried out all pre-clinical research, and completed testing Phase I and Phase II clinical trials on humans, before BMS even entered the picture. BMS got involved in taxol very late in the game, after the government had greatly reduced the costs and risks of developing the drug.
A number of studies have analyzed the risks and costs of developing new drugs. Among the best known is an industry-sponsored Tufts University study that claims the cost of developing a new drug is $231 million. However, in order to get to this figure, the study assumes the company develops the drug from scratch, over a period of more than 10 years, facing large risks of failure. About two-thirds of the total cost of drug development is assigned to the pre-clinical research, which of course, the government had done for taxol. By the time a drug enters FDA phase III trials the risks have fallen dramatically - nearly two out of three drugs are successful - and the expected costs of development (including the risk of failure) drop to less than $12 million, or less than 16 percent of the total estimated cost. Moreover, in the case of taxol, the government continues to finance the testing of the drug, including ongoing Phase III trials. And, consider the fact that BMS is expected to receive FDA marketing approval for taxol less than two years after it signed the NCI/BMS taxol agreement.
BMS has incurred some costs and some risks, but nothing like that which Dr. Chabner has suggested. He asserts that BMS spent more than $100 million on the scale-up of the production of the drug. But I asked BMS about this figure and was told that it did not apply to its costs of developing the natural form of taxol from the Pacific Yew tree, which is the subject of the NCI/BMS agreement, but rather the amount of money the company claims it will spend to develop new sources for taxol or taxol analogues, which will likely be subject to patents. Any new source of taxol, including synthetic methods of producing taxol, will be considered a new product by the FDA. Furthermore, BMS�s investments in new sources of taxol are occurring in a competitive market - further evidence that there was no need to give any company a monopoly to market the natural source taxol from the Pacific Yew, that the government had discovered and developed at tax payer expense.
Dr. Chabner praises BMS for its restraint in pricing the new AIDS drug ddI. He fails to mention that ddI was also developed by the government, and that BMS was given a ten- year exclusive license to market this taxpayer-financed drug. The fact that ddI is priced below AZT is nice, but since when was AZT considered a benchmark for reasonable pricing? Moreover, NCI refuses to even consider any requests that it provide information on the costs of manufacturing or marketing ddI, to determine if the ddI price is indeed reasonable.
As to the price that BMS pays the government for the bark from the Pacific Yew tree, how can he justify the extremely low prices the government has been receiving? What pricing model does NCI use to determine what the monopoly rights on this bark should be worth?
I�m pleased that Dr. Chabner has come to the defense of Dr. Robert Wittes, the NCI official who worked on taxol with the government and then allegedly helped BMS put together its taxol proposal. I�m sure he�s a fine doctor, but why won�t Dr. Wittes answer any question from the public or the news media about his role in all this?
NCI has played an enormously important role in the development of drugs like taxol and ddI, just to mention a few, but it needs to do a better job of protecting the interests of taxpayers and consumers.
Jamie Love
Director, Tax Payer Assets Project
Philadelphia, PA
On October 28, the Confederation of Indigenous Nationalities of Ecuador (CONAIE) went to Maxus headquarters in Quito to demand that the company call a moratorium on the exploration of oil and road construction on Huaorani land and to assert their right to autonomous management of Huaorani territory. Maxus officials refused to meet with CONAIE and instead called the police to force the representatives to leave.
A statement released by CONAIE makes a public appeal for support: "We desire that our lives be respected. We desire to stay in our territory the way we have always lived; we are protecting the environment for the good of all Ecuadorians and the world. We hope that our demands will be addressed. We ask for the solidarity of the Ecuadorian people in our just cause, because in demanding our rights, we are demanding the rights of all Ecuadorians."
Linda Covington, manager of public relations at Maxus, responds, "We understand the concerns that have arisen from both an environmental and an Indian rights point of view. Maxus has an environmental plan that has been approved by the Ecuadorian government," she says, adding that the company has "agreed to move the families that live too close to the road."
An October 23 CCR letter to Amoco President H. Laurence Fuller charges that in order to provide protection and "other logistical support" to Amoco�s operations, the Burmese military has instituted a "campaign of terror" in which villages have been destroyed and Burmese people have been killed, tortured, raped, kidnapped and forced to work as porters and manual laborers. The letter asserts that "investigators familiar with conditions in the region [in which Amoco operates] state that these human rights abuses are a direct and foreseeable result" of Amoco�s commercial activities in Burma.
CCR attorney Beth Stephens explains that the company would be liable whether or not it had "specifically paid for or otherwise ordered the abuses." According to Stephens, if Amoco�s "contract with the Burmese military government contributes in a reasonable way to ongoing human rights abuses and those abuses are reasonably foreseeable," then the company is liable to the victims and their families.
Amoco Media Relations Director Jim Fair responds, "The suggestion that Amoco is involved in human rights abuses in Burma is absolutely absurd. We simply don�t do that kind of business." Fair claims to have "no knowledge" of repressive practices committed by the military dictatorship.
Despite earning substantial profits, Diamond has demanded far-reaching concessions from its more than 500 employees. The workers, represented by Teamsters Local 601, accepted pay cuts as high as 40 percent when the company�s profits were down in 1985. Since then, the Fortune 500 company has returned to profitability, generating over $129 million in sales last year. When the workers� contract expired in 1991, the union tried to negotiate for pay raises and benefits. Instead, the union says that the company demanded cuts in health benefits from workers earning as little as $4.25 an hour.
Since Diamond replaced the experienced workers, walnuts containing worms and contaminated with mold, dirt, oil and debris have been shipped from its processing plant to retail outlets, the AFL-CIO alleges. Sandra McBride, Diamond�s communication manager, characterizes the charge as "simply untrue." In August, however, a General Mills plant in Lodi, California had to shut down its brownie production line because of contamination by insect-infected Diamond walnuts.
McBride says that the company "has made every effort to negotiate fairly with the union in order to avoid a situation like this," and claims that the workers were offered a package that included pay increases and a comprehensive health plan.
-Julie Gozan
As president, Bill Clinton has the opportunity by simply signing an executive order to reverse a policy which is based on the appalling hypocrisy that products deemed too hazardous for use in the United States are still "good enough" for sale in the Third World.
The Carter policy was formulated in the wake of massive exports of the pesticide leptophos and of children�s sleepware containing TRIS (2,3-dibromoprophyl), a cancer- causing chemical used as a fire retardant. Leptophos was never registered for use in the United States, and has been shown to produce lasting damage to the human nervous system. From 1971 to 1976, however, the chemical was sold to countries including Colombia, Egypt and Indonesia; in Egypt, the pesticide was blamed for the death of several farmers and over 1,200 water buffalo. Clothing treated with TRIS was banned in the United States in 1977, but exports continued abroad for over a year, eventually totalling 2.4 million garments.
Carter�s order applied across the board to hazardous pharmaceuticals, pesticides, industrial chemicals, medical devices and consumer products. The order required that importing governments be notified, through the State Department, of all U.S. regulatory actions on a substance they seek to import, with all proven hazards spelled out. Products deemed "extremely hazardous" were to be placed on the State Department�s commodity control list, and the Commerce Department would only grant export licenses if the importing country, when fully informed, had no objection to the product. Carter also called for the publication of an annual summary of all U.S. regulatory actions that banned or restricted a product, and for an intensified effort toward international hazard labeling, notification and alert systems.
Throughout the Reagan and Bush administrations, U.S. corporations have been allowed to export products considered too dangerous to sell in the United States. Most of these products - with pesticide and pharmaceutical companies leading the way in this vicious trade - have been dumped on people in Third World countries, where information on their effects is scarce and consumer protections are often weak or nonexistent.
No law prohibits the export of pesticides that are banned or restricted in the United States. According to Greenpeace, U.S. corporations annually produce approximately $1 billion worth of banned and unregistered pesticides for export overseas. The results of such regulatory lapses are well-documented and devastating. Recent World Health Organization reports estimate that over 25 million cases of pesticide poisoning occur among agricultural workers in the Third World every year; many of these workers lack protective clothing and are unaware of the dangers associated with the chemicals.
Pharmaceutical manufacturers have a tougher time than pesticide companies in dumping unsafe products. U.S. drug companies are barred from exporting drugs that are banned or not registered in the United States. In 1986, however, the law was weakened to allow the export of drugs not yet approved for use in the United States to 21 countries that have regulatory agencies to review the safety and efficacy of pharmaceuticals. And companies that want greater leeway have managed to get around the degraded law in a variety of ways. Upjohn, for example, manufactured the contraceptive Depo-Provera through its Belgium subsidiary and exported it to over 80 countries. Until October, Depo- Provera was banned in the United States because it has been shown to cause cancer in test animals.
Carter, under intense pressure from chemical and pharmaceutical manufacturers, could only be convinced by health and safety advocates to sign the executive order five days before he left office, leaving it wide open to a Reagan revocation.
A Clinton order banning hazardous exports could prod Congress into passing similar legislation (such as the Circle of Poison Prevention Act, introduced in 1991 by Senator Patrick Leahy, D-Vermont, and Representative Mike Synar, D-Oklahoma, and killed by pressure from the chemical manufacturers� lobby). At the very least, the order would offer four years of global protection from U.S. industrial profiteering - and ensure that substances banned as health or safety hazards in the United States will not be dumped in the Third World.
The trend towards rising income inequality in the United States has been well- documented. According to a 1992 report released by the Congressional Budget Office, the top 1 percent of income recipients in the United States accounted for 77 percent of the before-tax income growth of U.S. families between 1977 and 1989 and 60 percent of the after-tax income gains. The author of the EPI report, economist Edward Wolff, finds that a similar trend occurred in household wealth.
Wolff�s report, The Rich Get Increasingly Richer, shows a dramatic growth in wealth inequality over the past decade based on a comparison of the federal reserve board�s 1983 and 1989 survey of consumer finances (SCF). According to Wolff, the 1989 SCF data, which is the most recent available, provides the first opportunity for a comprehensive examination of trends in household wealth from the beginning to the end of the economic recovery during the 1980s. The study presents a number of significant findings:
o The average wealth of the lower-middle and bottom wealth classes declined from $10,000 to $7,000 for the lower-middle wealth class and from -$2,000 to -$14,000 (taking debts into account) for the bottom wealth class, accounting for a loss of $256 billion of wealth by the poorest two-fifths of the U.S. population.
o The indebtedness of U.S. households surged during the 1980s economic "boom" so that the number of U.S. households with more debts than assets actually increased, from 25 percent in 1985 to 29 percent in 1989. In 1989, therefore, a substantial proportion of U.S. households found themselves extremely vulnerable to hard economic times.
"Growing indebtedness has been a primary factor in the increased financial stress for U.S. families that has been accentuated over the last decade," says Wolff. "As income has fallen, families have attempted to maintain their standard of living and therefore have [fallen] deeper in debt. No savings are available. Last year, one million personal bankruptcies were declared in the United States. If a temporary set-back is suffered by the family, like a lay-off or an illness, no funds are there for the proverbial rainy day. The U. S. population has become very fragile and unstable financially."
o The relative wealth holdings of people of color deteriorated significantly over the decade, with holdings averaging only 19 percent that of white families in 1989 compared to 24 percent in 1983.
"The deteriorating economic position of black families is one factor underlying the Los Angeles riots," asserts Wolff. "Race plays a role over and above class in the decreasing wealth of black people in the United States. First of all because blacks have a harder time than whites getting bank loans, particularly for home mortgages. Secondly, because wealth accumulation, unlike income, depends to a large extent on inheritance and bequests. So although income parity has been for the most part achieved by blacks since 1979, lower wealth holding reflect previous generations of unequal pay for black workers."
o U.S. wealth concentration in 1989 was more extreme than in any other time since 1929. Between 1983 and 1989, the share of wealth held by the top half of 1 percent of the richest families increased by an almost unprecedented 4.6 percentage points, reversing a trend toward greater equality between 1962 and 1976.
o During the 1983 to 1989 period, 70 percent of growth in wealth was attributable to the appreciation of existing wealth and 30 percent to personal savings. The report finds that "most of the increase of wealth is not due to the thriftiness of the wealthy, but to the capital gains of their assets." Wolff reports that capital gains increases were led by rapid gains in stocks, financial securities and liquid assets.
Wolff finds that owner-occupied housing is the main asset of the middle class, whereas stocks are owned almost exclusively by the rich. As a result, an increase in stock prices will increase the concentration of household wealth and an increase in housing prices will cause wealth to be more equally distributed.
The ramifications of these findings for the lower and middle classes in the United States are not only financial but political. The Rich Get Increasingly Richer concludes with the observation that the tremendous wealth increase among the "super- rich" may portend an even more unbalanced polity in the future. "Because financial wealth can confer enormous political power on a family," says the report, "the tremendous wealth holdings of the super rich and the very rich may exacerbate the tilt of political power toward these groups. The increasing shift of wealth toward the upper wealth groups may further disenfranchise the middle and lower classes from the political process."
"The influence of lobbying groups has increased over the past 15 or 20 years," says Wolff. "Ross Perot was an extreme example of how wealth can be translated into political power. Fairly severe campaign reforms are needed to make the political system more democratic."
-Julie Gozan
WHEN RONALD REAGAN was elected president of the United States in 1980, he sent a clear signal to the big business community that law enforcers at the federal level would turn a blind eye to corporate wrongdoing. A recent report by the Environmental Crimes Project of George Washington University�s National Law Center details, for example, how the Reagan/Bush Justice Department discouraged and often prevented federal investigators from prosecuting environmental crimes. Predictably, rates for corporate crime - including procurement fraud, pollution, occupational safety and health violations, public corruption, securities fraud, labor law and antitrust violations - went off the chart.
Now, a new administration will take office in Washington. During the campaign, president-elect Bill Clinton failed to address the generic problem of corporate crime and violence. And he surrounded himself with corporate lobbyists who are following him to Washington. It is a safe bet that corporate and white-collar criminals and their lobbyists in Washington are quietly celebrating - they got their man in the White House once again.
Case in point: tobacco. According to a recent report released by the Advocacy Institute and Public Citizen, the Clinton advisors have close ties to the tobacco industry, perhaps the most criminogenic industry in the world. Tobacco is the nation�s number one cause of premature death and illness, claiming 434,000 lives a year in the United States alone from direct smoking and another 53,000 U.S. deaths a year from the effects of involuntary, or passive, smoking. Tobacco use also costs the U.S. economy approximately $52 billion a year in health care costs and lost productivity.
In 1987, Clinton�s campaign chair, Mickey Kantor, represented a group in Los Angeles organized by the Tobacco Institute to successfully oppose an ordinance making all restaurants smoke-free. In 1990, Kantor was active on behalf of a Los Angeles group that received money and support from tobacco manufacturer Philip Morris and the Tobacco Institute in successfully fighting adoption of another smoke-free ordinance. Kantor�s law firm, Manatt, Phelps, Rothenberg and Phillips , represents Philip Morris in Washington, D.C.
Vernon Jordan, recently chosen to head Clinton�s transition team, is a long time member of the board of tobacco manufacturer R.J. Reynolds . The Washington, D.C. consulting firm of Clinton�s campaign policy advisors, Scott Pastrick and Thomas Hoog, also lobbies for tobacco industry clients.
So don�t expect help from this administration in combating corporate crime and violence. Let there be no illusions: once again, citizens will have to rely on their own initiative to dig out and publicize the facts, inform their neighbors, build citizen power, force companies to clean up their messes, demand and secure justice, make the companies pay and create alternative law-abiding economies.
Anything else is just a pipe dream.
With that in mind, we present the Ten Worst Corporations of 1992.
TEN PERCENT OF U.S. CITIZENS are alcoholics. Nearly 50 percent of automobile fatalities are linked to alcohol. Alcohol abuse costs society $100 billion a year.
The public is constantly barraged with ads from alcohol manufacturers seeking to induce more and more alcohol consumption and profits. A teenager sees 100,000 alcohol ads before reaching legal drinking age. Absolut Vodka, the Swedish Vodka giant, is perhaps the most persistent abuser of alcohol advertising, seeking to impress young people with colorful and attractive ads.
Earlier this year, The Media Foundation, a Vancouver, British Columbia-based public interest group that is concerned about overcommercialization in North America, launched a media campaign against Absolut Vodka advertising.
The recent issue of the Foundation�s Adbuster Quarterly magazine ran a satirical Absolut Vodka ad titled "Absolut Nonsense."
The ad looks like an Absolut Vodka ad, but the copy reads, "Any suggestion that our advertising campaign has contributed to alcoholism, drunk driving or wife and child beating is absolute nonsense. No one pays any attention to advertising."
The Foundation claims that the ad represents fair comment on an issue of profound social concern. "Absolut profits greatly from the association of its product with pleasure, parties, Christmas and a host of other appealing, upscale cultural icons, but what about the negative associations?" asks the Foundation�s Kalle Lasn.
In response to the Foundation�s spoof ad, Absolut Vodka went ballistic. The company claimed that the ad had caused "irreparable damage" to its reputation and threatened legal action against the Foundation unless the media organization surrendered the remaining copies of the magazine, published a retraction and agreed never again to publish similar material.
"The impact of this advertising is undeniable, as is the right of our publication to comment on it," Lasn said. "We believe that there is an important underlying issue at stake here - the ability of large private corporations to censor and control public debate, to stifle free expression and to dominate our mental and cultural environments with their marketing and public relations agendas."
The Foundation did not back down under Absolut�s threat of legal action but instead issued a press release titled "Absolut Vodka Tries to Censor Magazine." The company "quickly lost its fighting spirit and beat a hasty retreat," according to Lasn. Absolut�s executives are "terrified of taking us on in a public debate about alcohol advertising and its impact on society," she says. "They�re worried that their multibillion dollar campaign might suddenly backfire."
In the following issue of Adbusters Quarterly, the Foundation ran another ad titled "Absolute Silence." The ad featured a coffin in place of the bottle. Keith McIntyre, national advertising manager for Absolut Vodka Canada advised Adbusters not to run the advertisement. "If you want Absolut to play hardball, then Absolut will play hardball," he warned.
Adbusters will be sending the Absolute Silence ad as a Public Service Announcement to over 100 magazines around the continent. "The alcohol industry�s $2- billion a year disinformation lobby should not be the only voice out there," says Lasn.
CATERPILLAR, THE PEORIA, ILLINOIS-BASED manufacturer of bright yellow crawler-tractors and earthmoving and off-highway construction machinery, earns itself a place among the Top Ten for attempts to intimidate its workforce into accepting unreasonable working conditions.
Caterpillar employees, represented by the United Auto Workers (UAW), struck the company from November 1991 to April 1992 in response to its demands for wage, health care and job security concessions. The strikers returned to work after Caterpillar threatened to permanently replace them with scabs.
Seventeen thousand Caterpillar employees have been working without a contract since the UAW ended the strike in April. The company has refused to bargain collectively with its workers, imposing portions of its "final" contract offer - which led to the strike in the first place - and insisting on takeaway demands. Newly hired Caterpillar warehouse workers are now paid $7 per hour - according to UAW spokesperson Roger Kerson, less than half of 1990�s starting wage - forcing some Caterpillar workers with families beneath federal poverty standards.
Caterpillar officials have repeatedly claimed that the company�s labor costs - which account for only 6.1 percent of its total costs - are excessive and preventing it from being "globally competitive." Therefore, while Caterpillar Chief Executive Officer Donald Fites received an 18 percent pay raise last year, the company has frozen wages for more than 20 percent of its workers and offered average increases of just over 1 percent per year for others.
Caterpillar has slashed traditional health care protections, installing an inferior health "network" which denies workers a choice of providers and offers no mechanism for insuring quality of care.
In September, the National Labor Relations Board (NLRB) issued an unfair labor practice complaint against Caterpillar for firing and harassing a worker at the corporation�s York, Pennsylvania plant. The company fired Kenneth Myers on April 9 for wearing a t-shirt printed with the words "Permanently Replace Fites." Although Caterpillar rescinded the firing the same day, the NLRB found that management subsequently harassed Myers by twice singling him out for a "time-study" of his on-the- job performance.
Meanwhile, Caterpillar is attempting to overturn five years of federal Occupational Safety and Health Administration (OSHA) citations in court. Caterpillar�s citations, which are awaiting a ruling before a federal commission, stem from investigations of its plants in Mapleton and Aurora, Illinois, where OSHA inspectors found that Caterpillar was covering up workplace hazards by not properly recording injuries such as burns, fractions and lacerations. OSHA has hit Caterpillar with $181,000 in fines.
Since the strike ended, the union members have kept up an "inside strategy" of resistance against the company. The industry newsletter Stark�s Off-highway Ledger reports that production at Caterpillar is down by as much as 40 percent, a result, according to union officials, of the UAW�s promotion of a "work-to-rule" campaign in which workers follow orders precisely but take absolutely no initiative on the job.
In the Decatur, Illinois Caterpillar plant workers are observing red t-shirt days once a week and wearing protest armbands. At the plant in Aurora, up to 400 workers have been wearing army helmets as a symbol that they are at war with the company.
CHEVRON CORPORATION REAPED $1.2 billion in profits on $37 billion in revenues in 1991. An integrated petroleum company with production activities in the United States, Canada , Angola , Australia , Indonesia and the United Kingdom , Chevron is no benevolent giant. This year, law enforcement officials and citizen activists began to catch up with this huge corporate criminal.
In June, community activists in San Francisco initiated proceedings for a class- action lawsuit against Chevron for health and property damage allegedly caused by toxic dust released from a Chevron refinery in Richmond, California in December 1991. The West County Toxics Coalition (WCTC) charges that the release blew at least 40 tons of toxic dust, containing the heavy metal vanadium and cancer-causing nickel, into a 16- square mile area of residential neighborhoods.
"This is only one of a continuing slew of accidents from the plant," says Michael Stein of the Pesticide Action Network. "Every couple of months there�s another accident there, usually involving the release of airborne toxics into the surrounding community."
"People were dusted, their property was dusted, lawn furniture was affected," says Michael Leedie of Citizens for a Better Environment. "It fell in their gardens and it fell in their soil." According to Leedie, local citizens have suffered various health effects as a result of the accident, including skin rashes, difficulty with breathing, the taste of metal in their mouths and redness in their eyes. "These are typical symptoms of nickel exposure," Leedie says.
According to Leedie, Chevron was forced to release the dust to relieve pressure and prevent a larger accident when a valve in the fluid catalytic cracking unit failed to open. Local community groups are trying to build a group tort case against Chevron. So far, over 7,000 people have signed up for the class-action lawsuit.
Environmentalists have criticized Chevron�s advertising campaign, which portrays the company as environmentally responsible. "Chevron spends millions of dollars advertising itself as an environmentally responsible company when it comes to butterflies, eagles and foxes," WCTC wrote in a letter to Chevron. "But when it comes to the company�s damage to human beings, who are your neighbors, you have ignored your responsibilities. Many people were sick as a result of the accident and deserve to have their health costs paid."
This year, Chevron has continued to prove that it is one of the dirtiest of the giant oil companies.
In August, Chevron entered a guilty plea to 65 Clean Water Act violations, and was ordered to pay $6.5 million in criminal fines and $1.5 million in civil fines. Chevron committed the crimes on Platform Grace, an oil drilling platform in the Pacific Ocean off the coast of Los Angeles.
Chevron admitted to a pattern of unlawfully discharging oil and grease into the ocean in excess of its permit limit. Some of the violations involved releases of substances in amounts as high as three to four times above the discharge limits. Chevron also admitted that on some days, it bypassed its wastewater treatment facility, allowing wastewater to enter the ocean untreated.
Chevron�s record overseas is no better than in the United States.
Anti-apartheid activists have long denounced the company for maintaining operations in South Africa despite calls for disinvestment by citizen leaders.
In Papua New Guinea , Chevron is developing two oil fields which the company expects will yield 130,000 barrels a day. Local leaders are "totally disillusioned with Chevron," according to the Rainforest Action Network, because Chevron is not delivering promised infrastructure services, such as health clinics and water. Island residents are also concerned about environmental issues associated with Chevron�s operations and whether those operations will threaten their culture. [See Chevron: The Big Oil Boys," Multinational Monitor, April 1992 and Assault on Papua New Guinea," Multinational Monitor, June 1992 ].
FOOD LION IS THE FASTEST GROWING food chain store in the United States. The chain owns and operates 1,000 stores throughout the South and has a profit margin three times the industry average.
How does Food Lion do it? According to the federal government, investigative reporters and union officials, Food Lion cheats.
In November 1992, ABC News "Prime Time" ran a startling expose on unsanitary food handling practices at Food Lion stores. Two undercover "Prime Time" producers with hidden cameras gained employment at Food Lion stores and videotaped unsanitary conditions and practices at the retail food chain. "Prime Time" also spoke with 70 former and current Food Lion employees, many of whom charged the company with unsanitary practices.
The employee whistleblowers charged Food Lion with:
o adding Clorox bleach to old fish to remove the spoiled smell, then putting the repackaged fish out for sale;
o pouring barbecue sauce on old chicken, repackaging it and selling it;
o altering the expiration dates on perishable dairy products and meats;
o refreezing poultry that had thawed while sitting on a loading dock;
o grinding dirty and spoiled beef to re-sell as hamburger;
o sending employees into dumpsters to pick out thrown-away food to re-sell.
Employees complained that they were forced to comply with these unsafe and unsanitary practices in order to keep their jobs.
Food Lion officials deny the charges made by "Prime Time" and say that ABC has misrepresented the facts about sanitation at Food Lion. Food Lion claims that the story is based primarily on evidence supplied by pro-union workers.
In September, Food Lion brought a lawsuit against Capital Cities ABC and one of the "Prime Time" producers, Lynn Litt. In the lawsuit, Food Lion alleges that Litt fraudulently obtained employment with Food Lion by using false and misleading information on employment applications, making false and misleading statements to Food Lion management and, once hired, engaging in deceitful and illegal activities.
The lawsuit alleges that Litt failed to perform her duties as an employee in an effective and responsible manner, giving her the opportunity to concoct news about the operations and practices in the stores in which she worked. ABC denies the charges.
Food Lion charges that ABC�s interest in the company is an outgrowth of an ongoing and "completely unsuccessful corporation campaign by the United Food and Commercial Workers Union to unionize Food Lion workers or economically damage Food Lion by attempting to bring various kinds of pressure on Food Lion management."
Former employees of Food Lion testified at April 1992 congressional hearings on the company�s labor practices. The employees said that they were forced to work "off the clock" - meaning without pay - by Food Lion. The workers testified that they usually worked 15 to 30 hours a week off the clock to meet the work requirements of the company.
Food Lion�s official policy is that employees found working off the clock are verbally reprimanded for the first offense, issued a constructive advice memo for the second and suspended from work for a week for the third. The fourth offense officially results in termination.
But workers at Food Lion say that the policy is not enforced.
"The concept of supermarket employees voluntarily and secretly working overtime as many as 25 extra hours a week is mindboggling," says Representative Tom Lantos, D- California, who chaired the Congressional hearings.
"Working off the clock is a way of life at Food Lion and, in my opinion, for the company to deny any knowledge of its occurrence is outrageous," says Kim Caudill, a meat cutter at Food Lion.
Food Lion has also been the subject of a six-year Department of Labor investigation into allegations that the company has violated federal law by not paying workers for overtime hours worked.
In 1989, the Labor Department found that Food Lion had committed hundreds of overtime violations, and that employees were owed more than $1.2 million for working unpaid overtime. The Department settled the case with Food Lion for $300,000, and Food Lion signed a nationwide compliance agreement.
In September of this year, Labor Department officials testified before a Congressional committee that Food Lion had substantial violations of both federal overtime and child labor laws. The Department is expected to issue civil fines after its investigation is completed.
"You don�t have to be a brain surgeon to figure out that this company has some kind of scam going on," says Lou Ulsch, assistant to the international director of organizing of the United Food and Commercial Workers Union.
GENERAL ELECTRIC (GE) once again makes the Ten Worst list, as it continues to build weapons of mass destruction at the expense of the environment and the health of workers and communities surrounding its facilities.
What has GE been up to this year? In October, the Department of Energy (DOE) began transporting high level radioactive waste by rail from GE�s Knolls Atomic Power Lab (KAPL) in Schenectady, New York to the Idaho Engineering Lab in southeastern Idaho. The shipment places unsuspecting communities along a 2,500-mile rail route at risk.
As GE ships out spent fuel from former projects, it is clearing the way for construction of the Seawolf submarine core. Elaine Lamy, executive director of INFACT, a Boston-based public interest group that is calling for a boycott of all GE products, says, "The Cold War is over, but nuclear weapons industry leaders like General Electric are pushing ahead, shipping out radioactive spent fuel from the previous generation of submarines to make room for this year�s prototype." INFACT reports that the company took in $300 million for its work at Knolls in 1991. "Companies like GE have a clear profit incentive to keep nuclear weapons alive," says Lamy.
GE has a long and dirty history at KAPL. The company built the facility in 1946 to develop nuclear reactors to power submarines and ships. INFACT says that over the past 45 years, residue from radioactive and toxic materials used at KAPL have built up in the soil, in the nearby Mohawk River and in laboratory buildings. GE�s activities at KAPL have exposed thousands of its workers and Navy personnel to radiation. No one outside of GE and the DOE has access to information needed to fully determine the threat KAPL poses to workplace and community health and safety.
Still, enough is known to establish that KAPL is a serious regional hazard. According to INFACT:
o In the early 1950s, GE routinely dumped water contaminated with cesium-137, strontium-90, uranium and plutonium into the Mohawk River. GE claims to have stopped dumping into the river in 1964. Trace amounts of plutonium were still detectable in the river in 1989, according to tests conducted by the State of New York.
o Information on cooling systems for KAPL reactors is classified. However, anti- nuclear activists claim that three of the four reactors appear to have no emergency core cooling system, meaning that there is no back-up system to cool down the reactor core to prevent a runaway meltdown. All four reactors have either an inadequate or no public emergency disaster plan, although the government requires such plans for all commercial reactors.
o A June 1988 investigation revealed an employee parking lot had been built on a site with a radioactive contamination level many times higher than the state safety level. Although GE knew of the contamination, the company allowed employees to park there without any warning for over 20 years. In March 1988, GE sold the parking lot to the U.S. government, effectively removing the jurisdiction of the State of New York over the property and placing the clean-up bill in the hands of U.S. taxpayers. Other waste disposal sites include a hillside contaminated by spilled radioactive waste, and drums of radioactive waste stored on site. In all, there are 39 sites contaminated with radioactive waste at KAPL.
In 1988, after information about KAPL�s dangerous operations appeared in the media, GE cracked down with a "gag order." A KAPL security newsletter threatened present and former KAPL employees with job loss, a $100,000 fine and life imprisonment if they talked publicly about KAPL.
GE�s threats carry a lot of weight because the company has punished whistleblowers at its Knolls labs in the past.
Health physicist Frank Bordell had worked at KAPL for 20 years when he reported to GE his concerns about radiation exposure and inadequate reporting to the Department of Energy in 1988. When the company failed to act on his report, Bordell contacted the DOE�s Office of Inspector General. He was fired six weeks later. Jack Shannon, formerly manager of industrial safety and hygiene at the Knolls Kesselring Site, had a similar experience in November 1985,when he reported severe safety problems concerning asbestos and fire at the facility to GE officials. He was demoted, harassed and put on "permanent disability."
INFACT is hard at work spreading the truth about GE. The organization is showing its Academy Award-winning documentary Deadly Deception: General Electric, Nuclear Weapons & Our Environment to high school and college students throughout the United States. The film�s producer was even able to urge the one billion viewers of the Academy Award ceremony to "Boycott GE!"
GENERAL MOTORS (GM) IS IN DEEP TROUBLE. Its share of the world automobile market continues to drop. In an effort to stave off disaster, institutional shareholders have forced out older executives and replaced them with younger ones.
It can only be hoped that one lesson this new, younger management will learn is that no corporation can succeed for long if it holds its fellow citizens - workers, consumers, neighbors - in contempt.
General Motors has a dirty track record in this regard. From its conviction in 1949 of a criminal conspiracy to destroy the nation�s mass transit system, to its marketing of hazardous automobiles such as the Corvair, to its unsuccessful public campaign to beat down support for the life-saving air bag, to its venal destruction of the Poletown neighborhood of Detroit, Michigan, GM has ensured a permanent place for itself in any Corporate Hall of Shame.
Recently unearthed documents reveal a new episode in GM history that auto safety experts are calling the "Pinto of the 90s." The Center for Auto Safety charged earlier this year that GM manufactured and marketed pickup trucks with hazardous gas tanks which have led to over 300 deaths - a death rate 10 times higher than that of the infamous Ford Pinto. The Center claims that GM then covered up the exploding gas tank problem and the company�s decision not to install safety liners which would have reduced crash fires in the vehicles.
The defect stems from GM�s decision to install side-mounted fuel tanks outside of the frame rails on all "C" and "K" style pickup trucks manufactured between 1972 and 1987. The design exposes the tanks to direct hits and resulting ruptures from impacting vehicles in side collisions. Other manufacturers placed their pickup truck fuel tanks inside protective frame rail structures during the same model years.
A number of consumer groups and newspapers in Texas asked a court in Fort Worth, Texas to require GM to release crash test films and other documents showing the company�s long-standing knowledge of the defect and its failure to remedy it. The documents had been produced by GM in a subsequently-settled burn death case - Zelenuck v. GM - but were shielded from public view by a protective order imposed earlier at GM�s request.
Moments before the court began an open hearing on the documents, GM withdrew its objections to their release, apparently to avoid protracted publicity about its efforts to keep the documents secret.
The Center for Auto Safety obtained a 67-page index to the collected papers of Ronald E. Elwell, which the Center calls "a roadmap to GM�s coverup of exploding gas tanks." Elwell worked for GM for 30 years and was designated by GM in numerous trials as its employee most knowledgeable about fuel tank safety in 1973-1987 GM pickups.
The index reveals that GM�s former president, James McDonald, rejected a 1978 company task force proposal to install an inexpensive safety liner in the fuel tanks. Installing the liners in the tanks would have sharply reduced the fire deaths and injuries, auto safety experts charge. Had GM put the liners in the pickups, "about 185 of the 248 people burned to death in side impacts of the GM vehicles could have survived, judging from death rates for such vehicles during the 1981-1986 period," says Ben Kelley, president of the Institute for Injury Reduction.
The Center for Auto Safety has called on the National Highway Traffic Administration to order GM to recall the pickups and fix the problem. "GM knew about this deadly defect for 20 years and rejected a $10 fix recommended by its own top fuel tank experts," says the Center�s Clarence Ditlow. "Access to these documents could save hundreds of people from horrible burn injuries and death by showing these vehicles could be recalled and repaired by installing tanks with safety liners that GM�s former President James McDonald rejected."
Ditlow points out that GM modified its Chevrolet Corvette to include a bladder in the gas tank after the Corvette was involved in numerous low-speed fire crashes in which the tank ruptured much like the tanks in the C/K series pickups. Even if the tank ruptures in a crash, the bladder remains intact and retains gasoline, thus preventing an explosive crash fire, Ditlow says. Tests of the 1975 Corvette showed that its bladder would withstand 41.1 mph rear crashes with no fuel leakage, meeting a crash standard almost twice as stringent as required by federal law.
DEFENSE CONTRACTOR MARTIN MARIETTA is among the Monitor�s Ten Worst this year for punishing an employee who voiced concern about health and safety issues at a company-run facility. In February, the U.S. Labor Department found that Martin Marietta Energy Systems, contracted by the Department of Energy to operate the Oak Ridge National Laboratory in Tennessee, retaliated against an employee whistleblower by ordering him to sit in a room filled with toxic and radioactive chemicals and do useless work. The Labor Department said that the company had violated the Clean Air Act, the Safe Drinking Water Act and the Toxic Substances Control Act by punishing Charles Varnadore for raising safety issues.
Varnadore, a technician at Oak Ridge since 1974, publicized lax health and safety conditions at the facility, once appearing on a CBS evening news segment about elevated cancer rates among Oak Ridge personnel. The CBS report was based on a study conducted by a North Carolina epidemiologist which found excess cancers among facility employees over the last 40 years.
After Varnadore appeared on CBS in March 1991, he was transferred into a room filled with drums of toxic and radioactive waste where he was instructed to test, identify and weigh 717 chemicals. In September 1991, Varnadore was moved to another waste storage room containing mercury, radioactive materials and asbestos. Marietta moved Varnadore out of the second room after his lawyers complained in November 1991. Varnadore himself underwent surgery for colon cancer in 1989.
"It�s one of the most horrid forms of repression and retaliation that I have ever seen," Edward A. Slavin, Jr. of the Government Accountability Project, a Washington, D.C.-based group that works to protect whistleblowers, told Multinational Monitor.
In February, Clyde Hopkins, president of Martin Marietta Energy Systems, told a congressional committee that for purposes of "national security," references to uranium were deleted from documents accompanying waste that was shipped from Oak Ridge to disposal facilities not licensed to handle radioactive material. In Deer Park, Texas, waste shipments containing radioactive material from Oak Ridge have been incinerated over the past 11 years.
Martin Marietta and the DOE have also been busy wasting taxpayer money. A study released in August by the General Accounting Office found that the DOE and the company had spent nearly $500,000 on alcohol, golf, dinners and other entertainment between 1986 and 1991 in connection with the sale of government-owned uranium to foreign customers.
THE TENTACLES of the Japanese-based Mitsubishi Group extend into multinational trading, banking, electric, industrial, communications, nuclear and fossil fuel and auto manufacturing operations. Mitsubishi is a major target of many Southeast Asian and European environmental organizations and the San Francisco-based Rainforest Action Network because of the role of its general trading arm, the Mitsubishi Corporation, in importing large quantities of tropical rainforest timber.
Mitsubishi is among the top five Japanese importers of timber from Sarawak, Malaysia, a state on Borneo island. For the past 15 years, Mitsubishi�s subsidiary, Daiya Malaysia, has been clear-cutting huge areas of tropical rainforest in Sarawak to supply the Japanese market. Aided by floodlights, Daiya Malaysia logs the forest 24 hours a day. But now its area of operation is nearly depleted, and the company is looking for new logging concessions in Sarawak. At current logging rates, Borneo�s forests will be completely destroyed by the turn of the century, displacing thousands of indigenous people from their homes and traditional ways of life in the process.
Mitsubishi is now turning its attention to Western hemisphere forests in anticipation of Southeast Asian rainforests being logged out. The London-based Survival International�s 1992 report Indians of the Americas cites Mitsubishi for violating indigenous people�s rights in Canada . Mitsubishi�s subsidiary Alberta Pacific is clear-cutting vast areas of northeast and north- central Alberta, heavily impacting many Dene and Cree people.
In Ecuador , the Mitsubishi subsidiary Bishi Metals is preparing to open a huge mine in the Cordillera de Toisan, a coastal area of Andean tropical forest. The Cordillera de Toisan - the last large area of Ecuadorian coastal rainforest - is the home of the Awa Indian nation and the Cotacachi-Cayapas Ecological Reserve, which is identified as Ecuador�s highest area of priority for biodiversity conservation by the U.S. Agency for International Development. The Ecuador goverment awarded Mitsubishi its concession for the Cordillera de Toisan as part of a bilateral agreement with the Japanese government. Controversial new Ecuadorian mining laws drastically reduce taxes for foreign companies in their first five years of operation, thereby encouraging rapid resource-stripping and large-scale capital-intensive mineral exploitation at the expense of small local mining cooperatives.
Mitsubishi has gone to impressive lengths to defend its forest-destroying operations. In March 1992, the Japanese Ministry of Education banned from school distribution a cartoon book entitled Mitsubishi Shoji which details the exploits of "Mitsubishi Man" and includes a defense of Mitsubishi�s rainforest activities in which a character explains that accusations of rainforest destruction "consist of misunderstanding and obvious distortions by the mass media." The Education Ministry stated that the 216- page comic book constituted "propaganda."
In July 1992, a Malaysian High Court found that a joint venture factory of yet another Mitsubishi subsidiary, Mitsubishi Kasei Corporation, was releasing radioactive waste which was endangering its surrounding community of Ipoh, and ordered the facility to shut down. Residents claim that the factory, known as ARE, has been dumping radioactive chemical wastes into a nearby pond and river. Judge Peh Swee Chin said that he found sufficient evidence of increased leukemia, congenital disease, infant deaths and higher levels of lead in village children since the plant�s opening in 1982 to justify closing it down.
STONE CONTAINER, the Chicago-based producer of paper bags and packages, makes the Monitor�s Ten Worst list for the first time this year. The company�s record includes contaminating the environment and working to destroy forests around the world, while recklessly endangering the lives of its workers in the United States.
On March 13, 42-year-old John Odom, a general mechanic with the company�s Jonesboro, Louisiana Hodge paper mill since 1968, was crushed to death by a paper machine while doing routine upkeep work. The accident was caused by the company�s failure to lock out the machine so that it could not be turned on during maintenance.
Odom�s death was the third fatality at Hodge since 1991 and the third death resulting from lock-out failures. Stone mechanics Durwood Aldy and Charles Malone were killed while doing routine maintenance on another paperwinder in the same plant. Because the machine was not locked-out, as federal safety rules require, a paper roller fell on them and crushed them between other rollers.
OSHA has cited the company for repeat violations of worker safety regulations at Hodge. Stone paid OSHA $12,075 in September 1991 in connection with the deaths of Aldy and Malone and $42,000 in September 1992 in penalties for safety violations related to Odom�s death. In the past six years, Stone Container has paid $167,063 in OSHA fines for 706 violations at plants throughout the United States, 12 of which were classified as "willful." At the company�s Missoula, Montana mill, a boiler explosion killed an employee and injured two others in June 1991.
Internationally, Stone is becoming notorious for its hideous environmental record. The company, which fills its annual report with headlines like, "There Will Always Be Trees," nonetheless cemented a reputation for forest destruction when it contracted with the U.S. Forest Service to log 5.7 million board feet of timber from the Middle Sandbench area of the San Juan National Forest in Colorado in June 1991. The sale of over 700 acres of the forest and Stone�s building of a 2.5 mile road into the stand is contributing to the demise of one of the last remaining U.S. old-growth forest areas.
According to a report on Stone�s environmental practices written by Robert Rubovitz of the Council on Economic Priorities (CEP), Stone is not participating in the Environmental Protection Agency�s (EPA�s) industrial toxics project which aims to reduce the release of 17 target chemicals from 600 industrial companies. The uncooperative company declined to take part in the effort because "participation in this program could result in potential conflicts with regulations in other program areas." Stone also refuses to join the EPA�s "green lights" program, which aims to increase energy efficiency through conversion to fluorescent lamps "to the extent that they are profitable and do not compromise lighting quality," while cutting carbon dioxide and sulfur dioxide emissions.
According to the most recent available Environmental Protection Agency�s toxic release inventory data, Stone released more than 23 million pounds of the toxic chemicals methanol, acetone, hydrochloric acid, sulfuric acid and chloroform into the environment in 1989.
Stone did suffer a significant defeat early this year. In February, the Honduran government rejected a widely opposed contract with the company which would have given Stone a virtual free hand in harvesting what is left of Honduras �s pine forests. Under the terms of the contract, Stone would have been granted rights to harvest between one and 2.5 million acres of virgin pine forest. Honduras still has the largest standing pine forests in Central America, although there has been considerable deforestation in the country over the past 10 years. The efforts of an unprecedented coalition of indigneous people, environmentalists, business people and labor organizers who came together to protest the deal played a large role in killing the contract.
THE $7 BILLION MERGER of media giants Time, Inc. and Warner Communications in early 1990 marks a significant and dangerous stage in the drive toward increasing concentration of the media.
Time Warner now owns and controls mass circulation magazines such as Time and Fortune; publishing houses including Time-Life Books, Warner Books, Little Brown and the Book-of-the-Month Club; two of the largest pay-television services in the United States, HBO and Cinemax; two of the largest cable-operating companies in the United States; music publishing companies including Warner Brothers, Atlantic and Elektra; and Warner Brothers Studios in the film industry.
Time Warner owns a 22 percent interest in the Turner Broadcasting System, the parent company of CNN. The company has also recently begun testing a mammoth cable system in Queens, New York to provide a record 150 channels of programming and interactive services such as electronic banking. The huge company is entering into joint agreements around the world to produce movies, open movie theaters, manufacture and market compact discs and videos, even to develop cable television in Hungary.
The merger of the two companies had the usual effect on the staff: in September 1991, Time Warner laid off 600 magazine employees, including 19 of 75 correspondants at Time magazine, according to the New York-based media watchdog group Fairness and Accuracy in Reporting (FAIR). At the same time, Warner chair Steve Ross was the most highly compensated chief executive in the United States, with a salary and stock option package worth more than $78 million in 1990.
FAIR executive director Jeff Cohen questions about the ability of Time Warner employees to report fairly on business in the wake of the merger and the layoffs. He says, "You can�t expect reporters working at Time Warner - no matter how valiant - to give working people the information they need about the dangers of mergers and business monopolies when they�re working for one and they�ve just seen their collegues laid off." Cohen also notes that as a result of the merger, the company now both owns cable stations and distributors and produces the product that will get on the air; Time Warner also owns magazines that review movies and televisions shows that it produces. Cohen cites a Time cover story on author Scott Turow which ran just as Warner released a movie based on a Turow novel.
Critics of media concentration have more profound concerns about the mergers of huge companies like Time and Warner, charging that corporate giants will control the international flow of information to reflect and promote their own interests, and exist only to exploit information for profit."Concentrated power to persuade and influence is dangerous," says Cohen. "That�s a given."
Time Warner has already thrown its muscle behind a particularly disturbing enterprise to push a noxious mixture of media, education and commercialism. In 1992, Time Warner became majority owner of Whittle Communications, with an option to buy an additional 20 percent of Christopher Whittle�s communications company. Whittle is the most blatant and well-known of the new breed of classroom hucksters, companies that view elementary and high school students as prime targets for marketing schemes.
Whittle produces Channel One, a television news program beamed daily via satellite to 6.6 million teenagers in classrooms in over 9,000 high schools. In exchange for receiving free satellite dishes, video equipment and televisions from Whittle, schools agree to air the 12-minute program, two minutes of which consists of commercials hawking products such as Skittles candy and Nike sneakers.
In January 1991, the National Parents and Teachers Association (PTA) approved a set of principles to guide state and local education agencies in their relationships with corporations. The principles, based on the recognition that "compulsory education confers on educators an obligation to protect the welfare of their students and the integrity of the learning environment," challenged schools� acceptance of Channel One: "Selling or providing access to a captive audience in the classroom for commercial purposes is exploitation and a violation of the public trust."
Whittle, backed by Time Warner, is currently planning a much more profound and insidious assault on public schools. The company�s "Edison Project" is scheming to set up a system of 200 private for-profit schools by 1996. Whittle has managed to lure former Yale University president Benno Schmidt to lead the project, lending it dangerous credibility.
Karen Brown of the Washington, D.C.-based Center for the Study of Commercialism says, "We are very wary of a money-making corporation deciding the curriculum for children. Clearly, the bottom line for a company like Whittle may not serve the best interest of U.S. children."
Whittle�s current "educational" methods certainly do not bode well for the type of education the Edison Project may offer. As Peggy Charren, president of Action for Children�s Television, told the Monitor, if the Edison Project goes through, classrooms may exist "just to give the kids a place to sit" while they watch Whittle television. The Edison Project may represent "the beginning of the downfall of education in America," says Charren.
by Jim Donahue
THE DAILY MEDIA CONTINUALLY report on private lawsuits or government actions seeking redress against fraud, pollution, personal injury and other consequences of anti-social corporate behavior. Administrative, civil or criminal actions brought against corporations often expose behaviors that generally result in far more significant personal and monetary damages than is inflicted by street criminals. Preventable corporate negligence frequently results in violent injury or loss of life, and estimates of the economic cost of corporate criminogenic behavior range as high as $200 billion per year. In comparison, estimates of the cost of all street crime range from $3 billion to $4 billion.
Despite its social significance, illegal, negligent and injurious behaviors of corporations remains a little-studied phenomenon. Amitai Etzioni of George Washington University and corporate criminologist Marshal Clinard have conducted two of the few in- depth studies of corporate crime. Etzioni found that, between 1975 and 1984, 62 percent of Fortune 500 companies were "involved in one or more incidents of corrupt behavior, including price fixing, bribery, violation of environmental regulations, and tax fraud." A 1979 study by Clinard concluded that 45 percent of the 582 largest corporations in the United States had been charged with at least one moderate or serious violation in 1975 and 1976.
Information on individuals who commit criminal offenses is easily accessible to law enforcement agencies through the National Crime Information Center of the Federal Bureau of Investigation. The Center maintains a national database that is used by local, state and federal law enforcement officials to track criminals and is available to police officers in patrol cars. The computer system contains criminal histories and soon will be upgraded to contain on-line fingerprints and photographs. Unfortunately, a similar database on corporations does not exist. Public records pertaining to a corporation�s record of negligent or illegal misconduct are either unavailable or incomplete.
No freedom of information
In order to obtain a comprehensive picture of anti-social corporate behavior, Essential Information, the publisher of Multinational Monitor, filed Freedom of Information Act (FOIA) requests with 20 federal agencies to obtain data on completed enforcement actions against the largest 50 corporations in the 1990 Fortune 500. The survey period extended from January 1, 1977 to May 1, 1990. Under FOIA, government agencies are required to disclose all requested government records and documents, subject to certain exemptions.
A simple request to the government for a list of enforcement actions often turns into a bureaucratic nightmare. One agency initially refused to provide enforcement information without an explanation for why it was sought; another agency simply refused to comply with the request and said that information could be obtained only if a researcher traveled to several state-wide offices in Wyoming; one agency mistakenly provided incomplete data which falsely indicated that many corporations had not violated regulations; many agencies provided data over a shorter time span than requested under the FOIA; and some agencies provided only the number of charges filed against each corporation without indicating the final action taken.
The least responsive and most bureaucratic agencies contacted during the study included the Federal Aviation Administration (FAA), the Department of Energy (DOE), the U.S. Customs Service and the Federal Bureau of Investigations (FBI).
Essential Information�s experience with the FAA raises serious questions about agencies responding to FOIA requests with misleading or false information. The FAA initially failed to disclose 23 fines imposed against Boeing totaling $493,500; four fines against General Electric totaling $16,900; one fine against Mobil Chemical for $2,500; one fine against Chevron totaling $40,000; one fine against Texaco Chemical for $2,000; three fines against United Technologies for $42,000; two fines against McDonnell Douglas for $181,700; two fines against Rockwell International for $30,400; two fines against Johnson & Johnson for $20,000; one fine against Lockheed for $2,000; and one fine against Goodyear Tire and Rubber for $7,500. Essential Information discovered the FAA�s error by comparing a similar FOIA response from four years earlier which contained these violations. The agency said the mistake occurred because its computer was not programmed to retrieve all data sought in Essential Information�s FOIA request.
The Department of Energy�s response to Essential Information�s FOIA request provides another example of how corporate misconduct is often hidden beneath bureaucratic procedures in a way that makes it difficult for the average citizen to obtain data. The agency responded to the FOIA request by directing Essential Information to the agency�s public library. The DOE�s library, however, is inadequate and incomplete. For example, a Notice of Probable Violation issued by the DOE to a corporation details the allegations of the notice, but does not indicate the final enforcement action taken against the corporation. Although the company�s response in defense of the allegations is included in the files, no information is available to indicate the final decision in the enforcement process and whether any penalties were imposed. Bob Perrygo of the DOE�s Office of Economic Regulatory Administration says that a citizen would "probably never be able to determine the final disposition" of a DOE enforcement action, because different stages of enforcement actions are handled by various agencies within and outside the DOE. Perrygo says that the process is basically a "huge headache."
The U.S. Customs Service initially responded to Essential Information�s FOIA request by citing a federal regulation which requires the agency to respond by providing the name of corporate violators and the penalty. Nevertheless, the agency subsequently claimed that its initial response was inaccurate. It also claimed that, in order to obtain a fee waiver - which the FOIA allows for information disclosed for purposes that benefit the public interest - citizens must first demonstrate their "expertise" in the area of customs law and regulation. However, there is no requirement under the FOIA that calls for substantiating expertise in any subject matter to obtain fee waivers.
The Federal Bureau of Investigation (FBI) responded to the FOIA request by suggesting that a search of corporate crime data would be time-consuming and difficult because the information is listed on computer by individuals� names, not by corporate names. Four months later, the FBI�s FOIA officer Linda Kloss telephoned to say that she found data on three of the 50 corporations in the survey. Kloss insisted that the information be provided over the telephone rather than through the mail. Although the information was available for conveyance by telephone, Kloss said it would take "several months" to send it through the mail.
Essential Information�s experience demonstrates that data from the government concerning corporate crime is either unavailable, inadequate or incomplete. This problem is due not only to indifferent or obstructive bureaucrats, but also to the fact that many agencies have not yet computerized enforcement data. As the computer age pushes forward, procedural and research difficulties arising from the "paper" bureaucracy can no longer serve as valid excuses to withhold government information on corporate malfeasance.
Setting the record straight
Essential Information�s upcoming report on corporate crime calls for federal legislation to establish a central databank to which publicly-traded corporations would report the outcome of all cases in which liability for damages or remedial action is ordered through administrative, civil or criminal proceedings and the outcome of all out-of-court settlements in which corporations were required to make restitution.
Government investigatory agencies are not currently required to report information on administrative and civil offenses (which comprise nearly all of the enforcement actions against corporations) to a central location. Thus, citizens must make separate inquiries from every federal agency to obtain information on nearly all government enforcement actions against corporations.
Congress has passed legislation requiring central reporting locations in the past. Under the Hate Crime Statistics Act, enacted in 1990, the U.S. attorney general is required to maintain a central location on "crimes that manifest evidence of prejudice based on race, religion, sexual orientation, or ethnicity." Publicly traded corporations are required by law to disclose results of financial activity, as well as legal proceedings that may significantly affect their financial condition, to the Securities and Exchange Commission. Another law, the Community Right-to-Know Act of 1986, requires manufacturing plants to report the annual amount of toxic pollutants discharged into the environment to the Environmental Protection Agency.
In enacting the financial reporting requirements, Congress affirmed that the millions of shareholders who provide essential capital to corporations are entitled access to vital financial information to protect their investments. Similarly, in enacting the Community Right-to-Know law, Congress affirmed that citizens have the right to know which chemicals are being emitted into the environment by neighboring factories. Access to all information on corporate misconduct is even more vital to the public�s interest because it pertains not only to shareholder rights and public health, but to all aspects of life, including fair pricing, product safety, equal employment opportunity and safe workplaces.
Sidebar
Essential Data on Corporate
Abuses
A NEW STUDY being conducted by Essential Information contains a compilation of data on
anti-social corporate behavior obtained by surveying news stories. The study includes only
those stories that reported findings of guilt, liability or negligence in a court of law;
penalties or remedial orders imposed by government agencies; and out-of-court
settlements in which corporations were required to make payment or other forms of
remedy.
The study tracks news reports on the largest 25 corporations in the 1990 Fortune 500. Among the sources used to compile the data are the Associated Press, the Business Wire, Multinational Monitor, States News Service, United Press International and the Wall Street Journal. The stories surveyed are from January 1, 1977 through 1990.
The data do not represent a scientific sample of all alleged or confirmed wrongdoing or anti-social corporate behavior; news organizations tend to report only those situations that result in the harshest penalties or largest monetary settlements. There are, for example, thousands of unreported notices of probable violations issued by state environmental agencies every month. In addition, it is virtually impossible for the media to report all results of the vast number of settlements. Many of the corporations in the survey contested the accuracy of the information. Nevertheless, even the very small number of cases reported in the media demonstrate the profound effect of anti-social corporate behavior on society and the public costs incurred as a result.
From 1977 through 1990, news stories reported that the 25 surveyed corporations were found guilty of wrongdoing, fined or required to make payment to correct past behavior at administrative, civil or criminal proceedings on 858 separate occasions.
Table 1 shows that 56.5 percent of the stories involved allegations in which the corporations or their executives were either found guilty of violating the law, fined by an administrative agency or a court or held liable for compensatory damages. The remaining 43.5 percent of the stories reported settlement of civil complaints out-of-court. Government action to remedy an alleged or confirmed violation of regulations were involved in 56.3 percent of the news stories, while 43.7 percent involved private action.
-J.D.
Table 1. Private and government action resulting in findings of guilt, liability and/or fines and settlement.
Guilt/Liability/Fines Settlement Total
Private 174 (20.3%) 201 (23.4%) 375 (43.7%)
Government 311 (36.2%) 172 (20.0%) 483 (56.3%)
Total 485 (56.5%) 373 (43.5%) 858
Table 2. Subject matter of reported lawsuits or complaints.
Environmental 271 (31.6%)
Product Liability 175 (20.4%)
Unfair Business Practices 158 (18.4%)
Labor/Worker Safety 97 (11.3%)
Consumer 83 (9.7%)
Discrimination 47 (5.5%)
Other 27 (3.1%)
Total 858
THE WORLD BANK may come to regret ever getting involved in the Sardar Sarovar dam on the Narmada River in western India . The Bank�s determination to continue financing the project in spite of massive local opposition and fierce criticism from an independent review team established by the Bank itself has activated a threat from hundreds of citizens� groups worldwide to lobby governments to cut the Bank�s funds. This is the first time that activists from around the world have united to demand a cut in the budget of a major aid agency.
The decision to ratchet up the pressure on the Bank was not taken lightly. Activists within India and abroad have been campaigning for years against the massive Sardar Sarovar dam in Gujarat state, the centerpiece of a water supply, irrigation and electricity- generation project described by the World Bank as "one of the most ambitious water resource development projects ever attempted." After seven years� construction, the dam has now reached around a quarter of its planned full height of 455 feet.
The World Bank approved a loan to the Indian government of $450 million toward the $6 billion project in 1985. A further loan of $475 million is currently being considered by the Bank. The importance of the Bank�s contribution is much greater than would appear from its percentage of the final cost; the Bank�s involvement represents an economic seal of approval for the project, making it easier for the Indian authorities to obtain finance from other sources.
The lands and homes of about 150,000 villagers would be inundated by the 200 kilometer-long Sardar Sarovar reservoir, and 24,000 farming families would lose over a quarter of their land to the 75,000 kilometers of irrigation canals. A planned nature sanctuary intended to compensate for the wildlife drowned by the reservoir could forcibly displace a further 30,000 to 40,000 people. Thousands more stand to be affected by "secondary displacement" - they will lose land and livelihood due to the resettlement sites needed for the people to be moved from the submergence zone.
Indian authorities and the World Bank argue that the staggering potential benefits of Sardar Sarovar far outweigh any human costs. The World Bank claims that the projects will irrigate about two million hectares, help feed as many as 20 million people, provide drinking water for at least 30 million people, supply electric power for agriculture and industry, generate employment for about one million people and control floods. The dam promoters also argue that most of the people to be displaced will be resettled with compensation and helped to improve upon their previous standard of living.
Opponents of the project deride such claims, pointing to the dismal economic, social and ecological record of the 1,500 large dams built in India since the 1950s. "No one who has studied these projects can seriously believe the claims of the dam promoters," says Nicholas Hildyard, co-author of a recently-completed three volume study of the social and environmental effects of large dams. "Like all the other major dam projects in India I have studied, Sardar Sarovar has a history of grossly exaggerated benefits and downplayed costs. The cost-benefit analyses used to justify the project are totally fraudulent. The forces driving its construction are powerful political and corporate vested interests, not the needs of the people of India."
Ashvin Shah, a civil engineer from Gujarat who is evaluating alternatives to the Sardar Sarovar project, calls the 40-year-old Sardar Sarovar design poor and outdated, and says it "leaves unresolved the fundamental problems of the degradation of the river basin and the poverty of its people, and the water scarcity of the state of Gujarat." Shah thinks that small-scale decentralized solutions such as rainwater harvesting, soil and moisture conservation and the better use of water from existing reservoirs will be a cheaper, quicker and more equitable solution to Gujarat�s water problems.
An International Human Rights Panel which visited the Narmada Valley this August to assess the resettlement situation concluded that there was no possibility that the vast majority of those to be displaced would regain their previous standard of living. Resettlement policies and practice were leading to the "violations of the rights of tens of thousands of people," the panel found.
Citizen opposition
The opposition to the Sardar Sarovar project has been led by the Narmada Bachao Andolan (NBA, or Save the Narmada Movement), a coalition of non-governmental organizations (NGOs) and individuals which includes local people and social and environmental activists and scientists from around India. The NBA has built up a mass movement against the dam over the last five years using Gandhian non-violent resistance tactics such as rallies, marches, hunger strikes and refusal to cooperate with the authorities.
The "strongest foundation of the struggle," says NBA activist Shripad Dharmadhikary, "is that the villagers will not move." Tens of thousands of people from throughout the Sardar Sarovar submergence zone have vowed that they will let the water rise and drown them before they leave their homes and land. During the 1992 monsoon season, "Save or Drown Squads" of activists and people from submergence villages showed their determination to face the rising waters by staying in the first two villages behind the partially-built dam.
Medha Patkar, the best known of the NBA activists, was among the 11 people in the lowest house on the night in August when the waters reached their highest point this year. Just before midnight, at a time when it was expected the waters would continue rising to the level of the house and beyond, Patkar wrote a letter to supporters describing the atmosphere in the house as "calm and quiet." The farmers and activists, Patkar wrote, "were ready in every way for whatever may have come." Fortunately, the waters began to recede after having come within a meter of the floor-level of the wood, bamboo and mud house.
The NBA has proved itself a formidable opponent to the authorities, who have resorted to intimidation and violence to try and break the movement. A report in April 1992 by the human rights group Asia Watch concluded that those opposing Sardar Sarovar have been subjected to "arbitrary arrest, illegal detention, beatings and other forms of physical abuse." In July 1992, a tribal women was shot dead by police in an attempt to force villagers to leave land which was slated for the resettlement of people from the submergence zone. So far these abuses have only served to strengthen the resolve of the dam opposition movement.
Denouncing the dam
The controversy surrounding Sardar Sarovar led the World Bank in 1991 to set up an unprecedented independent review to look at the resettlement and environmental aspects of the project (although not the economic aspects or the alternatives to the dam). The review team, led by former United Nations Development Program chief Bradford Morse and his deputy, the Canadian human rights lawyer Thomas Berger, traveled extensively throughout the Narmada valley and met with villagers, pro- and anti-dam NGOs, and state and central government officials. They interviewed World Bank staff and were given unimpeded access to Bank files.
The Bank and the Indian authorities were horrified by the independent review�s conclusions. In a letter to Bank President Lewis Preston published at the beginning of their report, Morse and Berger state that "the Sardar Sarovar Projects as they stand are flawed, resettlement and rehabilitation of all those displaced ... is not possible under prevailing circumstances ... [and] the environmental impacts of the Projects have not been properly considered or adequately addressed. Moreover, we believe that the Bank shares responsibility with the borrower for the situation that has developed." The Morse Report accused the Bank of consistently breaking its own guidelines and its legally-binding agreements with the Indian states.
The independent review team was asked by the Bank to recommend improvements in project implementation. "If essential data were available, if impacts were known, if basic steps had been taken," Morse and Berger wrote to Preston, "it would be possible to know what recommendations to make. But we cannot put together a list of recommendations ... when in so many areas no adequate measures are being taken on the ground or are even under consideration."
The wisest course for the Bank, in the opinion of Morse and Berger, would be for it to "step back from the Projects and consider them afresh," implying that the Bank should suspend its loans to the Indian government pending a reassessment of the human and environmental impacts of the Sardar Sarovar project.
On June 18, the day the report was released, Preston put out a short statement claiming that "continued support for the Narmada projects is justified." A few days later a more detailed response was issued by the Bank management justifying the Bank�s determination to continue with the project with the announcement of vague "remedial measures" and the dispatch to India of yet another mission to review the work of the independent review.
The complacency of the Bank�s reaction to the Morse Report sparked off attacks from both citizens groups and donor governments. A letter endorsed by 11 U.S. environmental groups including the Environment Defense Fund (EDF), the National Wildlife Federation, the Sierra Club and Friends of the Earth declared that the organizations were "alarmed and disturbed" by the Bank�s response. The environmentalists warned the Bank that as long as it continued to fund projects such as Sardar Sarovar they could not support the U.S. contribution to the $18 billion replenishment of the International Development Association (IDA), the division of the World Bank which lends to low income countries. The groups also warned that they would oppose U.S. support of the "Earth Increment," a vague concept endorsed at the Earth Summit as an extra donation to IDA so that it can increase its "environmental" lending.
The U.S. Senate Committee on Appropriations wrote to Preston at the same time to express its "surprise and dismay" at the Bank�s behavior. Meanwhile, the Swedish Finance Ministry issued a press release calling the Bank�s response to the Morse Report "inadequate;" the Dutch Minister for Development Cooperation stated that construction of Sardar Sarovar should be suspended; and the European Parliament passed a motion calling for the Bank to withdraw from the project and pay compensation to those who have suffered from it.
Pressure in the press
During August this year, pressure on the World Bank was stepped up by international environmental groups in preparation for a meeting of the Bank�s Executive Directors (EDs) to discuss the Bank�s response to the Morse Report. At the beginning of September, the English journal The Ecologist published as an editorial an open letter to Lewis Preston warning the Bank president that if even one person drowned as a result of filling the reservoir behind Sardar Sarovar, he would be held personally responsible. If the Bank did not withdraw from the "criminal enterprise," The Ecologist editors threatened "to call upon NGOs and activists from both North and South to put their weight behind a campaign to close down the World Bank once and for all."
Later that month during the World Bank�s annual meeting in Washington, D.C., a shorter open letter to Preston was published as a full- page advertisement in the international edition of the Financial Times. The text of the letter, which was signed by 250 environmental, human rights and development groups, networks and coalitions from 37 countries, representing 676 additional groups, warned the Bank that its position was risking a worldwide campaign "to cut off funding to the Bank," which would start by the groups opposing the replenishment of IDA. Other full-page advertisements in the New York Times and the Washington Post made similar threats. Behind the scenes, environmental groups in Europe, North America and Japan intensely lobbied their governments to instruct their EDs to vote against the project.
A "dishonest" Action Plan
On September 11, the Bank management produced an "Action Plan" drawn up by the Indian authorities and Bank staff. The Bank management hailed the plan to put resettlement and rehabilitation "on the right track" as "very constructive and encouraging." The implementation of the Action Plan would be monitored and subject to yet another review to be completed by the end of March 1993. If the review found that the Action Plan had not been implemented as agreed, the Bank would then suspend further funding.
The Action Plan is "callous and dishonest," in the opinion of Shripad Dharmadhikary. "After years of non-compliance and non-implementation, and a long history of broken promises," Dharmadhikary wrote in a letter to the EDs, "the belief that the project authorities will suddenly change overnight is naive at best, and a deliberate misrepresentation of reality at worst."
One of the key arguments used by the Bank to justify its position is that if it pulled out the project would go ahead anyway, with fewer social and environmental safeguards. The NBA, however, does not believe that it will be possible for the Gujarat government to obtain the necessary financing to finish the dam if the Bank pulls out. Dharmadhikary also says that "the continued Bank support to the project is being interpreted by the Indian government as a carte blanche to go ahead and do whatever it pleases."
"By continuing in the project," Dharmadhikary says, "the Bank is sending a clear message that it is condoning a long-standing pattern of gross violation of policies and agreements." Dharmadhikary claims that the Indian authorities do not take seriously threats from the Bank to suspend funding: since 1988 the Bank has threatened to suspend credit at least six times if certain conditions were not met. In almost all cases the conditions were not met, yet the funding continues.
An "unjustifiable decision"
The planned meeting between the Bank management and the EDs to discuss the Bank�s response to the Morse Report was postponed from early September to the beginning of October due to delays in negotiating the Action Plan with the Indian government. It was then postponed again to October 15 to give the EDs more time to consult with their governments and with the Morse team about the Action Plan. Bradford Morse had been seriously ill for some time and neither the EDs nor the anti-dam campaigners were aware of his opinion of the Action Plan.
On October 13, Morse and his deputy, Thomas Berger, dropped a bombshell. In a furious letter to Preston, Morse and Berger announced their "deep concern" over the way in which the Bank memo introducing the Action Plan "ignores or misrepresents the main findings of our Review." The letter attacks virtually every section of the memo - on resettlement, on the people affected by the canal and on the environmental aspects of the project.
The letter shook the Bank and delighted campaigners. "It proves that the India Operations Department has simply been telling lies in an effort to keep the project going," says Lori Udall, an EDF attorney who has co-ordinated the international campaign to get the Bank to pull out of Sardar Sarovar. The meeting of the Bank Board was delayed for yet another week so that Preston could respond to the letter and the Executive Directors could meet with the complete independent review team.
When the Board finally met on October 23, the anti-dam lobby�s hopes were dashed: the EDs calling for suspension - the United States, Japan, Germany, Canada, the Nordic countries and Australia - represented just under 42 per cent of shareholders votes. Although a blow to campaigners, the meeting was far from a smooth ride for the Bank. Internal sources say that U.S. Executive Director Patrick Coady told the Board that continuing with the project "will signal that, no matter how flawed the project, no matter how many policies are violated and no matter how clear the remedies prescribed, the Bank will go forward on its own terms.��
EDs accused the management of being "reluctant and defensive," of suppressing information and of misleading the Board. Two of the EDs warned that the Bank�s performance could affect donors� willingness to replenish IDA. Coady and the Norwegian ED Jorunn Maehlum reportedly implied that the board might regret its decision when environmental groups put pressure on donor governments to withhold Bank funding.
After calling for the project to continue, the British ED David Peretz issued an extraordinary four-page press release which a furious editorial in The Ecologist described as "a hopeless attempt to justify at length an unjustifiable decision." The press statement, headlined "Britain Puts World Bank on Notice," said that the Board should "give Narmada one last chance." Several of the EDs are thought to have emphasized strongly that if a set of "performance benchmarks" to evaluate the Indian authorities� progress in implementing the Action Plan were not met by March 1993, then funding should be suspended immediately.
The Narmada and geopolitics
Behind the politics of the dam project itself, there were other powerful reasons to explain the determination of the highest levels of Bank management and of some Western governments to keep Sardar Sarovar going. The Indian government, which is by far the Bank�s biggest client, is in the process of implementing a World Bank-led package of economic reforms.
Like most similar "structural adjustment" packages, the Indian program is widely unpopular, and Prime Minister Narasimha Rao�s minority government is in a relatively weak position. The Bank therefore has a strong interest in supporting the government and encouraging it to stay the difficult course of economic liberalization. Bank management and several EDs made repeated references in the weeks leading up to the Board vote to the "impressive commitment" of the "new" Indian administration. Yet Rao�s government has been in power for over a year, in which time the human rights situation in the Narmada Valley has markedly deteriorated.
Last minute lobbying by Bank staff and Indian officials is reported to have been intense. Prime Minister Rao is reported to have telephoned Preston and several heads of state including Germany�s Chancellor Kohl to stress the importance of the Narmada project for his government; senior Bank staff are reported to have bypassed normal channels within the U.S. Treasury and spoken directly to senior officials to try and enlist support for the management position.
Dam opponents greeted the board decision by announcing that they would immediately begin their campaign against IDA and the Earth Increment. "We do not now believe that the Bank can be trusted to help the poor and the environment," Udall declared to the press. "Along with our counterparts in borrower and donor countries we are launching a worldwide campaign to reduce funding to the World Bank."
Udall also referred to the recent internal report by a top Bank official, the "Wapenhans Report," which found that the percentage of Bank projects which were considered "unsatisfactory�� by Bank auditors had risen from 15 percent in 1981 to nearly 40 percent in 1991. The Wapenhans Report revealed poor appraisal practices, a failure to properly monitor and implement projects and the violation of almost 80 percent of its lending agreements. "While Morse describes the failures of a single set of projects," Udall says, "Wapenhans shows that such failures are widespread."
The NBA also called for a cut in IDA funding. The Indian activists are demanding that dam construction and all other irreversible project work be halted while the authorities attempt to implement their Action Plan, and that an independent team be appointed to evaluate whether or not the benchmarks are met in March 1993. "A Bank mission alone is not acceptable," an NBA spokesperson says.
Three weeks after the Bank Board meeting, Preston visited India. While staying in Bombay he agreed to meet NBA activists but, according to the Andolan, at the last moment he sent a message to the anti-dam delegation saying that he would not be able to meet them because he wanted to attend a fashion show with his wife. The activists protested Preston�s actions by blocking the road outside the luxury hotel in downtown Bombay where Preston was staying. Within minutes they were set upon by police, beaten with sticks, dragged by the hair into waiting police vans and taken into custody. All charges against the 25 protesters arrested were dropped the following day.
The "police rampage," as a Bombay newspaper described it, is a telling indication of the genuineness of the "new" Indian governments� commitment to improving its human rights record on the Narmada. Similarly, Preston�s behavior suggests that a Bank assurance of "improved consultation practices" with NGOs is no more meaningful than any of its previous broken promises on participation and consultation detailed in the Morse Report. The Indian government and the Bank are on course to fail their "one last chance."
Dr. Kumariah Balasubramaniam graduated in medicine from the University of Sri Lanka and continued post-graduate studies at the University of Manchester, U.K., obtaining a degree in Clinical Pharmacology and a Ph.D. in Pharmacology. In Sri Lanka, he taught pharmacology at the National University. He joined the United Nations Conference on Trade and Development in September 1978 as a senior pharmaceutical advisor. In April 1983, he joined the Caribbean Community Secretariat. In November 1986, Dr. Balasubramaniam accepted his present assignment as the pharmaceutical advisor to the International Organization of Consumers Unions in Penang, Malaysia. He is also one of the international coordinators for Health Action International.
Multinational Monitor: What are some examples of harmful dumping of pharmaceuticals on the Third World?
Kumariah Balasubramaniam: In a civilized world, "dumping" has become a very dirty word like "slavery" and "colonization." Classical "dumping" does not take place anymore. It has taken a new form - double standards in marketing practices.
Dr. Andrew Herxheimer, a clinical pharmacologist, describes the double standards by saying, "Multinational pharmaceutical companies usually take the view that if it is legal to sell a drug in a particular country, then it is proper to sell it there, preferably in large quantities. In their country of origin many potentially hazardous drugs may be promoted only for a restricted range of uses, and with certain mandatory warnings. If an importing country has no such requirements, the company can omit the warnings and can promote many more uses, no doubt sincerely believing that the local regulatory authority must surely know what is right for the country, and that it is not for the company to usurp its function."
Hoechst �s Baralgan and Organon�s Durabolin are examples of harmful drugs which are promoted in the Third World. Hoechst withdrew Baralgan in its home country, West Germany , in 1987 because of the drug�s potential toxicity. However, Hoescht markets it in several Third World countries. In India , Baralgan is the ninth top selling brand-name drug. The sale of Barlagan, which is made by Indians and marketed in India cannot be termed "dumping!"
The indications for Organon �s Durabolin in the British National Formulary are osteoporosis in post-menopausal women and aplastic anaemia. In Pakistan , however, Durabolin is indicated for loss of weight, poor weight gain and malnutrition in children. Malnutrition and poor weight gain are due to poverty. What is needed is food and not Durabolin, which may produce precocious puberty.
There are also drugs which are marketed in the Third World for irrational, but not necessarily harmful, uses. Cyproheptadine is an antihistamine used in the treatment of allergies and migraines. Merck , Sharpe & Dohme markets Cyproheptadine as Periactin in the United Kingdom for allergies and migraines. In Pakistan , the company markets Periactin as an appetite stimulant. According to the British National Formulary, it is not recommended as an appetite stimulant. Weight gain is mentioned as a possible side-effect.
Sandoz markets another antihistamine, pizotifen, as Sanomigran in the United Kingdom for the prevention of migraines. In Pakistan, it markets pizotifen as Mosgor and lists the indications as lack of appetite and marked lack of weight gain of a mental or nervous origin.
Another example of deceptive marketing is Merck�s promotion of Encephabol as a brain tonic for babies in Pakistan and Sri Lanka . The indications for this drug include: disorders of speech development, behavior disturbance, low drive, poor concentration, difficulties in learning at normal intelligence and specific developmental disorders such as dyslexia and dyscalculia. As far as I am aware, this drug is not marketed in advanced industrialized countries for any of these indications.
MM: What are some means of combating inappropriate marketing of pharmaceuticals?
Balasubramaniam: An enormous amount of work is being done by the Medical Lobby for Appropriate Marketing (MaLAM), an organization based in Adelaide, Australia . Since the mid-1980s, the Secretary of MaLAM has sent out monthly letters addressed to drug company executives about their marketing of certain drugs.
MaLAM is concerned about inappropriate indications, unjustified claims of efficacy, inadequate warning of adverse effects and unnecessary expense. Priority is given to misleading advertising in Africa, Asia and Latin America, where the practice is more common, more extreme and more dangerous.
The letters compare advertising claims with the scientific literature. They are checked by an international editorial board before distribution to MaLAM subscribers in over 30 countries. If subscribers agree that the questions in the letter should be asked, they sign the letter and post it to the company under scrutiny.
Every month during the past eight years, MaLAM has written to multinational drug companies to demand that they either justify their marketing practices or improve them. Many companies respond. Some have changed their advertising. But evidence indicates that misleading marketing practices continue.
MM: Can you describe the history and purpose of essential drugs programs, and discuss the success or failure countries have had in implementing these programs?
Balasubramaniam: The World Health Organization (WHO) started the Essential Drugs Programme (EDP) in 1981 with the aim of strengthening the national capabilities of developing countries in the field of selection and proper use of essential drugs to meet the real needs of people in those countries. Another aim of the program is to promote and facilitate local production and quality control, where feasible, of such drugs.
WHO defined essential drugs as those that "are of utmost importance and are basic, indispensable and necessary for the health needs of the people." In short, essential drugs programs are a means by which countries with limited resources can make essential drugs of good quality available at affordable prices to all their people. EDP was set up to enable WHO to assist developing countries in setting up their own national essential drugs programs.
A progress report by the Director-General of WHO to the World Health Assembly in May 1992 reviewed the world drug situation. The progress report, "Implementation of WHO�s Revised Drug Strategy: Action Programme on Essential Drugs" stated, among other things, "Approximately half the world�s population still lacks regular access to the most needed essential drugs. Moreover, it is estimated that perhaps over 60 percent of the developing world does not have regular access - and socioeconomic deterioration in the developing world over the past decade has made progress difficult. This disturbing estimate for the developing world reflects a drug situation where poorly coordinated policies and strategies, inefficient procurement, uneven distribution, inadequate assurance of quality, unaffordable prices and improper drug utilization are often more the norm than the exception."
"It has become increasingly clear that the current level of cooperation is not sufficient to counter the socioeconomic decline in developing countries. The Director- General emphasizes that Member States will need to increase their efforts significantly to make the most of the present political will and momentum in the development of national drug policies and in the implementation of national essential drugs programmes."
It would, therefore, appear that little success has been achieved since EDP was launched 10 years ago.
MM: What is the basis of the pharmaceutical industry�s opposition to essential drugs programs?
Balasubramaniam: The industry�s fear of the EDP concerns growth of the generic market, possible breakdown of the patent system and interference with the marketing of drugs. Perhaps the greatest fear is the possibility that developed countries may consider adopting EDP. The United Kingdom, for example, introduced a limited list in 1985.
When the WHO published its first list of essential drugs in 1977, the multinational pharmaceutical industry strongly opposed it. The International Federation of Pharmaceutical Manufacturers Associations (IFPMA) critiqued the WHO list of essential drugs, and stated that the underlying argument for developing an essential drugs list is faulty in both its medical and economic reasoning. The IFPMA claimed that adoption of the report�s recommendations would result in sub-standard rather than improved medical care.
Subsequently the industry changed its position. A very interesting industry response was IFPMA�s 1982 offer to the WHO to supply needed drugs to the poorest countries at very low prices. The WHO rejected this offer because the set-up would not have afforded price transparency.
At present, the industry is willing to support WHO�s EDP but strongly insists that the program apply only to the public sector in developing countries. It is well known, however, that in almost all developing countries, the private sector controls a major share of the pharmaceutical market. Any EDP which concentrates only on the public sector and leaves the private sector to be controlled by the drug industry will never achieve the objective of EDP, namely to enable a country with limited resources to make available essential drugs of good quality and affordable prices to all its people.
MM: Why do you think the United States is working so hard to impose U.S.- style patent laws on the Third World?
Balasubramaniam: It is only the pharmaceutical industry that has been trying to force the entire world to adopt U.S.-style patent laws. No other industry has entered the debate. The Pharmaceutical Manufacturers Association (PMA) of the United States appealed successfully to the U.S. government to take retaliatory trade measures against Third World countries which did not change existing national legislation that provided no protection to pharmaceutical products. The PMA has insisted on these countries offering strong patent protections to pharmaceutical products. The General Agreement on Tariffs and Trade (GATT ) negotiations are still at a deadlock but the PMA has already been successful in getting several Third World countries including Brazil , Chile , Indonesia , Korea , Mexico , Thailand and Venezuela to change their patent laws. The industry argument is that strong patent protection is essential for R& D and new drug development. I do not agree with this.
The period from the mid-1940s to the mid-1970s saw the creation of several innovative new drugs based on high-technology R& D. This was a period of weak patent protection. Industrialized countries which are the homes of several well-established multinational drug firms did not provide for protection of pharmaceutical patents in their national legislation. These countries included France , Italy , Japan , Switzerland and West Germany . Italy, France and Switzerland introduced patent protection for pharmaceuticals as late as the 1970s.
The argument put forward by these countries at the time was that their pharmaceutical industries could not develop to an internationally competitive level if patent protection was granted to pharmaceuticals. This argument was accepted by the world community.
However, when Third World countries voice the same argument now, they are accused of "pirating." The counter charge by Third World countries that the multinational drug industry has "pirated" several billions worth of intellectual property in the form of plant-based traditional remedies from Africa, Asia and Latin America, has yet to be answered. And that "pirating" continues.
It is important to reiterate that the Paris Convention, an international agreement adopted in 1883 and revised six times and still in force, clearly states that non-protection of pharmaceutical patents is perfectly acceptable.
The other argument that patent protection is needed to provide conditions necessary to more drugs being available to the Third World cannot be accepted. The industry�s research is funded by the profits on drug sales, and the level of research spending is calculated when companies fix their prices. In other words, the price of every medicine includes a company-imposed research tax. The most generous estimate - this is the WHO�s calculation - of the amount of the total research budget devoted to specific disease conditions in the Third World is 4 percent. If Third World countries are purchasing about 20 percent of drugs produced by the multinational drug industry, they are in effect contributing 20 percent of the R& D budget and getting back only 4 percent. The Third World is therefore subsidizing R& D for the First World.
The industry also claims that strong patent protection is essential for foreign investment. But there is no empirical evidence of this. In the United States, for example, the national Industrial Conference Board undertook a survey of 107 U.S. companies which had very significant foreign investments to determine barriers to foreign investment. A series of obstacles were identified, but in the 382 pages of the Board�s report neither patent protection nor the lack of it was ever mentioned as affecting the decisions on foreign investment.
This is an old study. But as far as I am aware, no subsequent studies have shown evidence to refute its findings. Furthermore, it is well known that multinational drug firms invested heavily in Brazil and Italy at a time when both these countries had no patent protection.
MM: What impact would the imposition of U.S.-style patent laws have on public health in Third World countries?
Balasubramaniam: U.S.-style patent laws will deprive Third World people of innovative drugs at cheaper prices. AZT is a drug used to treat AIDS patients. This drug, developed by Burroughs Wellcome, has been at the center of controversy in the United States over the issue of patents and the drug�s very high price.
Indian patent law, which protects pharmaceutical patents but not processes, has enabled Indian scientists to develop an alternate process for the production of AZT. The Indian Institute of Chemical Technology (IICT), which developed the process, has licensed it free of cost to three Indian drug firms. According to the director of IICT, the Indian-made AZT will cost a quarter or less of the current Burroughs Wellcome price. Indian companies are exploring foreign markets in Africa and other countries where Burroughs Wellcome has no patent for its AZT.
U.S.-style patent law and the price charged by Burroughs Wellcome mean that AIDS victims in the Third World will be deprived of AZT. Indian scientists have made a breakthrough enabling thousands of AIDS sufferers access to it. I do not consider this "pirating."
The Third World pharmaceutical industry will certainly be adversely affected [by the adoption of U.S.-style patent laws]. Several of the smaller firms will close down. The bigger ones may consider mergers with a view to capturing the generic market. Prices of drugs will escalate and a vast majority of Third World people will not be able to afford even a few basic essential drugs.
MM: What are the effects of the debt and structural adjustment policies on the health of people in Third World countries?
Balasubramaniam: The indebted countries are caught in a vice. To maintain their fragile economies, to import basic essential needs such as food, fuel and pharmaceuticals, they need loans. And loans are available only under conditions of structural adjustment laid out by the World Bank and International Monetary Fund (IMF).
The structural adjustment policies usually demanded by these two institutions which have an adverse impact on health and pharmaceuticals include: currency devaluation - so that prices of imported goods such as pharmaceuticals go up; cuts in government spending - meaning that health subsidies are reduced or taken away altogether; removal of trade and exchange controls - resulting in the limited foreign exchange available being used up by the rich for importing luxury items and the disappearance of low-priced essential generic drugs from the market; and privatization of public sector enterprises, including health care.
The per capita GNP of the bottom 20 percent of the people in Nepal , for example, is U.S.$25. If health subsidies are cut and prices of essential food grains go up by even a few cents, these people have to go without health care and food.
Structural adjustments have destroyed the health of poor and underprivileged people. The group most affected is made up of infants and young children. In 1982, UNICEF reported that more than 40,000 young children died every day from malnutrition and infection. In 1992, according to UNICEF, 250,000 of the world�s young children are dying every week, and millions more are living in malnutrition and almost permanent ill- health. Infants and young children continue to die in equal numbers in 1992 as in 1982. And several millions continue to survive in utter misery in 1992, as they did in 1982. Structural adjustments policies have denied these children resources that should have gone into guaranteeing their welfare.
MM: What are some elements that make up a rational health care plan for Third World countries, and what barriers exist to the implementation of this type of plan?
Balasubramaniam: The health care policies for all Third World countries should be based on the concept of primary health care (PHC) which was outlined at the International Conference in Alma Ata in September 1978. The World Community unanimously accepted that PHC was the key to "Health for All" in the year 2000.
Unfortunately, no country has adopted a national health policy based on PHC. In the early 1980s, PHC was abandoned in favor of disease-specific technology packages. These "vertical interventions" were very expensive both in terms of technology and implementing costs. Several countries have been unable to maintain these programs which were initiated by international agencies.
We now seem to have come full circle. The 89th session of the WHO Executive Board in January 1992 reiterated that PHC is the key to achieving "Health for All" and advised Third World countries to formulate and implement national health policies based on PHC.
Lack of political will by governments and opposition from the medical establishment are the two chief factors which have prevented Third World countries from implementing a rational health policy based on PHC. In December 1990, the Government of Bangladesh introduced a national health policy based on PHC. The Bangladesh Medical Association vehemently opposed the new policy; medical doctors went on strike. Some months later a new government came to power. The new health policy was withdrawn.
Sidebar
Prescription for the Third
World
The International Organization of Consumers Unions Regional Office for Asia and the
Pacific in collaboration with the School of Pharmaceutical Sciences and the Social
Research Institute of Chulalongkorn University convened a seminar on pharmaceutical
patents in April 1987. The participants at the seminar unanimously adopted the following
statement on pharmaceutical patents as a model which could be adopted by the Third
World.
Statement on Patents and Pharmaceuticals
1. The goal to achieve the health of people and communities must be met by a commitment to another developmental paradigm based on self-reliance and comprehensive Rational Drug Policies.
2. A rational drug policy must be based on drugs satisfying the five principles of:
a. meeting real medical needs;
b. having significant therapeutic value;
c. being acceptably safe;
d. offering satisfactory value for the money; and
e. availability and accessibility.
3. The role of patents in contributing to such rational drug policies is at best a very limited one. On the contrary, patents can become instruments for promoting private monopolies at the expense of the public interest, contribute to creating dependency and hinder the real development of rational drug policies.
4. International and regional organizations, including WIPO, UNCTAD, UNIDO, WHO, ESCAP, the Non-Aligned Movement and the Group of 77 have expressed many and various legitimate concerns of developing countries. The following three principles have emerged and are widely accepted:
a. national legislation on patents should assist in national economic, commercial, technological and social development and have special regard for the needs of developing countries.
b. the public interest should always prevail; and
c. patents should not become an obstacle to legitimate international trade.
5. In the present global context, taking into account the legitimate needs of developing countries and, in particular, their health requirements, the aim should be to work towards a patent-free environment for pharmaceuticals.
6. Any patent law should explicitly exclude both pharmaceutical products (all kinds of drugs or combinations of them) and processes (the method of techniques of making such drugs combinations). Instead, as an alternative, laws on intellectual property should provide for a system of protection through inventors� certificates to encourage and stimulate real technical innovation in developing countries.
7. If patent protection is granted to all, it should be limited to process patents only and not be granted to products. It is important to provide adequate safeguards aimed at ensuring satisfactory working of the patented invention. These safeguards must include the following:
a. protection granted to a process is not extended to products so that "product by process" is not applicable.
b. provision that importation does not constitute working of the patent;
c. a clear definition of the terms "exploitation," and "working" of the patent;
d. shorter duration of patent, and use it to ensure working of the patented invention;
e. an expeditious system of compulsory licensing;
f. ensuring the fullest use of locally available resources in working the patent; and
g. forfeiture or revocation of the patent on specific grounds.
8. Wherever intellectual property protection laws exist, there should be a mandatory multi- sectoral National Commission to review policies and practices at fixed regular periods. Citizens� groups must have a right to participate fully in such reviews and their involvement should be ensured.
9. Policies on intellectual property protection must be seen in conjunction with and subject to a comprehensive Rational Drug Policy. The impact on any patent policy on health, economic, social and technological development must be properly determined, particularly through indigenous research, prior to the granting of any patents.
10. Developing countries and citizens� groups involved in the health and development issues, both in the North and in the South, have the responsibility to work in solidarity to insure that intellectual property protection policies respond to the real health needs of society.
GUATEMALA CITY - Some 40 kilometers northwest of Guatemala City, along the highway to Chimaltenango, a weathered sign reads, "Korean Free Trade Zone." The 90 square kilometers of plowed-under, barren land behind the sign were designated to be a massive industrial park, housing 30 factories, including Lucky-Goldstar �s television production facility, and employing 10,000 Guatemalans.
The empty industrial park symbolizes the failure of South Korea �s recent attempt to industrialize Guatemala based on the Korean development experience. Korean corporations have stopped investing in Guatemala.
The investment suspension marks a sudden change in Korean business policy. As recently as 1990, then-Korean Ambassador to Guatemala Key-Sung Cho confidently stated, "We would like to start an economic revolution in Guatemala during my term to demonstrate our model of economic cooperation - industrialization based on Korean cooperation and investment - so that other countries in Latin America might follow."
Korea�s commitment to Guatemala was not just rhetorical. Between 1988 and 1991, 50 Korean maquilas - foreign-owned factories which produce for export - started operations in Guatemala. Together, they exported more than $150 million worth of goods a year, accounting for more than half of the Guatemalan apparel industry�s earnings. Guatemala became home to more than 20 percent of all foreign Korean apparel assembly factories.
Today, Korean investment in Guatemala remains substantial, but new investments have stalled in the wake of U.S. State Department pressure on the Guatemalan government to crack down on the widespread labor abuse in Korean factories. State Department concern for Guatemalan workers began in 1990, when it became apparent that Korea was taking leadership of the Guatemalan apparel industry. In the mid-to-late 1980s, the United States Agency for International Development (U.S. AID) had worked with the World Bank to impose structural adjustment policies on Guatemala, including the devaluation of Guatemalan currency and the release of price controls on Guatemalan products. These changes created an extremely favorable investment climate in the country. However, it was South Korean firms, rather than U.S. investors, that took advantage of the incentives and protections offered by Guatemala.
Clearing a path for investment
Guatemala�s maquila industry exploded in the 1980s. In 1984, a half dozen factories employing 2,000 people assembled $6 million worth of clothing for export. Seven years later, more than 250 factories with a workforce of 60,000 exported more than $350 million of assembled garments to be sold in U.S. retail outlets.
While the maquila sector in the rest of the Caribbean and Central America is dominated by U.S. investors, Guatemala�s maquila industry is driven by South Korean capital and owners. A wide range of Korean corporations have opened maquila operations in Guatemala. About three-fourths of the factories are owned by small- to medium-sized Korean businesses. Korean transnational corporations (or chaebols) such as Samsung and Sam Phoong, which own five and three factories respectively, administer at least 12 of the largest and most sophisticated factories. Sam Phoong owns the largest maquila factory, one of the three largest industrial plants in Guatemala, which employs nearly 1,000 workers.
The South Korean interest in Guatemala can be traced to a combination of labor unrest which rocked Korea in the late 1980s and trade quotas limiting its apparel exports. Searching for a new export platform, Korea selected Guatemala as its major investment focus in the Americas for a number of reasons: long-standing diplomatic ties between the two countries; what the Koreans viewed as an opportunity to dominate an undeveloped industry; Guatemala�s proximity to the United States; and the country�s low production and labor costs. During Guatemala�s international isolation from 1977 to 1985, the Republic of Korea was one of the few countries, along with Taiwan and Israel, which sustained amiable diplomatic relations with the country. Sharing both an anticommunist ideology and a military-dominated government, Korea empathized with the Guatemalan government in its battle against a guerrilla insurgency.
These ties formed the foundation of the relationship between the Guatemalan and South Korean governments, in which Korea offered massive investments in exchange for implicit assurances against government intervention and labor disruption. Guatemala�s motives for such an agreement are self-evident. The country, like many of its neighbors, is in desperate economic straits. "The facts are simple. We need jobs, foreign exchange and capital," explains a representative from the Economy Ministry. "We are not in a position to discriminate against investors. If the Koreans or the North Americans want to invest, we have no leverage to refuse or negotiate their offers."
Thus, from about 1988 to 1991, Korean factories opened and operated as if in Korea, their operations carefully coordinated and controlled by the Korean embassy. The embassy is, in the words of a former U.S. Embassy trade attache, "the self-proclaimed headquarters for all Korean investors." A list of the phone numbers of the Korean maquila factories hanging in the receptionist�s carrel at the Korean Embassy suggests the close contacts the embassy maintains with the maquilas. The Korean Embassy staff act as advocates, spokespersons, mediators and consultants for individual Korean factories, which are all connected in a grand scheme to establish a Korean production structure in Guatemala.
For its part, the Guatemalan government did everything possible to smooth the way for Korean investors. The Economy Ministry has never rejected the application or revoked the license of any Korean maquila factory. Hundreds of Korean personnel administered factories without proper work permits or visas. The Labor Ministry instructed its inspectors to ignore violations of the Labor Code at Korean factories. The then-Labor Minister refused to comment publicly on the mounting outcry against Korean managers and supervisors, merely referring to Korean labor practices as "distinct." In fact, up to the end of the administration�s term, Christian Democrat officials remained silent about the notoriously harsh treatment of workers in Korean factories. The role of the embassy is so dominant that few of the administrators arrive in Guatemala with even a rudimentary understanding of Spanish. "Besides the ambassadors, they [Korean managers] never speak with anyone outside of the factory," says a U.S. Embassy official. "With the embassy as their voice, they really don�t need to learn Spanish."
The United States steps in
The right-wing, pro-business MLM regime of Jorge Serrano took power in January 1991, as the Korean-Guatemalan alliance strained to the breaking point.
At the prompting of the U.S. State Department, the Guatemalan government shifted its policy toward Korean investment, suddenly subjecting Korean operations to unprecedented scrutiny. Prompted by U.S. Ambassador Thomas Strook, in March 1991, the newly elected Guatemalan Congress, as one of its first acts, formed a committee to investigate and recommend ways to counter deplorable labor conditions and wages in maquila factories. More significantly, the Labor Ministry - aided by the U.S. labor attache, who called the abuse of Guatemalan workers "a very, very serious problem in Korean factories" - began a highly publicized crusade against worker abuse in Korean- managed maquila factories. The Ministry issued a report concluding that the Korean maquila factories were guilty of egregious labor abuses and called for new labor legislation directed specifically at eliminating these violations. In response, Korean investors backed away from Guatemala.
Most unionists and labor rights advocates, however, doubt the sincerity of both the State Department�s and the Guatemalan government�s newfound criticism of the maquilas.
As late as March 1989, they note, the U.S. Embassy was praising Korean investment in Guatemala. An unclassified memo reported that "[t]he Koreans also provide clean, well-lighted working conditions and a variety of non-cash benefits ranging from sports programs to housing improvements." Commenting on Korean labor practices, the memo continued approvingly, "Management is openly seeking to develop a spirit of worker identification with the company and to discourage union organizing."
Critics also point out that throughout its campaign the new Guatemalan government has focused exclusively on Korean companies, without mentioning labor violations - including forced labor, poor health and safety conditions and paltry wages - rampant in Guatemalan or North American factories. Also ignored is the intense exploitation of farm workers on Guatemalan plantations, where wages are often even lower and the toil much more difficult than in the maquila factories. And the new administration, like its predecessor, has assisted maquila companies in fighting off unionization; most recently, the government delayed, without explanation, processing the application of workers at Phillips-Van Heusen factories for a union [see "Made in Guatemala: Union Busting in the Maquiladoras," Multinational Monitor, November 1991].
The matter of the Korean maquila factories is, in the words of one political analyst, "the perfect political issue." The abuse is flagrant. The victims are young girls and minors. The abusers are recently arrived foreign intruders (who happen not to be North American); and, most important, they are intruding on the turf of wealthy Guatemalans. Most elements of the domestic private business sector want the Korean investment to stall, so that the Koreans do not swallow up the entire apparel industry. "The government comes off as the courageous hero, rebuking the foreign invaders and saving the young women," comments a Guatemalan journalist. "To make things perfect, the private sector is applauding its efforts."
An unanswered question is whether the Guatemalan government, which seems intent on continuing to pursue the World Bank - U.S. AID model of export-oriented development, can afford a split with Korean entrepreneurs. The Korean firms have brought a significant influx of jobs and capital into the teetering Guatemalan economy. Whether U.S. investors will step in and fill the void remains to be seen.
Sidebar
The South Korean Model of Labor
Repression
THE KOREAN INVESTMENT drive in Guatemala is based on a brutal system of labor control
which closely resembles the repressive industrial relations found in Korea. Korean
managers claim their repressive management techniques are necessary to teach
Guatemalan workers - the majority of whom are young women - the "work habits" of
Korean employees. A Korean official explains, "They [Guatemalan workers] have their
own work habits but we have Korean habits and discipline. For example, Guatemalan
workers must learn to show up on time, work as long as necessary and be obedient to
their superiors. The job of Korean technicians is to train Guatemalan workers in Korean
habits and discipline. Soon, most Guatemalan workers will be working according to our
discipline and work habits."
A manager of Korean-owned Ace International in Guatemala City claims that the worker behavior which most troubles his staff is the excessive time employees spend in factory bathrooms. He attributes these visits to irresponsible behavior and laziness, adding, "I don�t understand why they would want to use them [the bathrooms] anyway. They smell so bad. I am disgusted by them." A Guatemalan supervisor at the factory offers some insight into why the workers spend time in the bathrooms: "After a Korean supervisor scolds and humiliates a worker, she runs to the bathroom to cry and regain her composure."
Disobedience, broadly defined as any divergence from management�s dictates, is categorically prohibited in Korean factories. For Korean managers, regimentation depends on total conformity; every command, no matter how trivial, must be followed to sustain the system. A Guatemalan manager at the Korean-owned Modas Del Este garment assembly factory points to the rigidity of this policy: "We even lose good workers because of disobedient behavior. If a worker fails to follow a supervisor�s command, she will go, no matter how productive."
Conformity is achieved through progressive punishment and extreme pressure to produce. The severity of punishment generally increases with the cost and/or frequency of the offense. If a worker turns to speak to a neighbor, a Korean supervisor may yell at her to return to her proper position. Or, if nearby, the supervisor may place his hands on the worker�s shoulder and roughly guide her back into place. Some supervisors routinely rap workers� heads with their hands and knuckles for such minor acts of misconduct. The line between these relatively innocuous punishments and more violent and humiliating ones is easily and often breached.
"Misconduct" that is often met with more serious punishment includes eating at the work station, repeated talking or movement, or a sewing mistake. Most frequently, supervisors scream at the offender, calling her stupid or slow. In most Korean factories, each day at least one or two operators endure a supervisor�s wrath while her peers look on. "When a supervisor yells at a worker, they do it at her worktable," says a worker. "The rest of us just pray we are not the next one."
Korean supervisors and managers also regularly practice corporeal punishment against workers. While physical punishment is most commonly reserved for the most serious offenses, it is not unusual for supervisors to strike workers for routine errors. For example, some workers report that supervisors grab or shake an employee�s neck or hair if she is caught talking for a second or third time. Other supervisors slam sticks on the workers� hands, or throw pieces of cloth in workers� faces. In one factory, workers report that female Korean supervisors squeeze workers� breasts as punishment.
The Korean system of labor control also involves a relentless pressure to produce. Explains one female worker, "They holler, �Faster, faster!� �Make haste!� They push us. How can I understand their language? I try to explain that I don�t understand their explanations. They just keep yelling, �Faster, faster!� but we are human beings, not robots that simply work faster by pushing a button."
Organized workers pose the only serious threat to Korean-style production. On at least a half dozen occasions, enraged by working conditions and abusive treatment at a Korean factory, workers approached trade unions for representation. However, on each occasion, a union failed to materialize. The Korean Ambassador Wung-Sik Kung openly admits that the Guatemalan government "arranged" the settlement of several of these disputes.
-K.P.
In addition to the charges against Teledyne, federal officials in Los Angeles also charged Thomas L. McDowell, Vice President of Teledyne Relays, a division of Teledyne Industries, with two counts of submitting false statements regarding the testing of electronic relay switches. McDowell pleaded guilty to those charges in October and faces, on each count, a maximum sentence of 5 years in prison and a $250,000 fine.
The civil whistleblower suit alleges that over the past decade, the Teledyne Relays Division sold commercial-grade relay switches to the armed services while certifying that the switches had successfully met more rigorous military testing requirements. The government pays a premium of nearly four times as much for the tested, military version of the switch ($26-$27) as it would for the untested, commercial quality relay ($6-$7) provided by Teledyne.
Electronic relay switches are used in the space shuttle, various military satellites and launching devices and a wide array of weapons systems. Relay failures can lead these systems to operate improperly and cause catastrophic damage, according to the lawsuit.
Accounting for the 300 percent overcharge for the switches, TAF estimates damages to be $250 million. Teledyne's liability could be tripled under the False Claims Act and supplemented by mandatory penalties of $5,000 to $10,000 for each false invoice submitted to the government for payment; the total could easily exceed $1 billion.
"What this case is about is an effort by ... goliath companies to obstruct justice," says John Clifford, an attorney representing Hamel.
Alyeska operates the Trans-Alaska Pipeline System on behalf of pipeline subsidiaries of seven oil companies. The majority interest of Alyeska is held by British Petroleum Pipeline, ARCO Pipeline Company and Exxon Pipeline Company.
The suit alleges that from February 1990 through December 1990, Alyeska pursued an illegal undercover "sting" operation against Charles Hamel, his wife Kathleen and the Management Information Techologies Inc. (MITI). The suit alleges that the operation was designed to obtain information and documents in Hamel�s possession and to prevent Hamel and his sources from reporting serious environmental wrongdoing by Alyeska to the Environmental Protection Agency, Congress and Alaska�s Department of Environmental Conservation. Pipeline employees were feeding information about Alyeska�s environmental and worker safety violations to Hamel through MITI, a company for which Hamel served on the board.
WMI is the largest U.S. hazardous waste company, operating hazardous waste disposal facilities nationwide. WMI paid $8.1 million in fines for alleged environmental violations last year and $5.4 million in 1990. CWM was hired to move 60,000 tons of contaminated garbage and more than 8,500 drums of hazardous waste at the Lackawanna site in 1987. The company began the job in May 1988 and completed it in November 1988.
The government charged that CWM employees knowingly and intentionally crushed numerous drums containing hazardous substances in order to speed up the project. The hazardous substances, including various solvents, paints, thinners, sludges, organic acids and toxic metals, leaked out of the drums into the environment and contributed to the further contamination of the site. CWM failed to report this activity in violation of the Superfund law.
"Unfortunate mistakes were made by a few of our people while cleaning up the Lackawanna site four years ago," says D.P. Payne, president of CWM. "Mistakes like these are costly and cannot be tolerated by the company." CWM fired three of the employees involved and has suspended three others.
- Ben Lilliston
Correction
In October�s Multinational Monitor, the last paragraph of the "The NAFTA Nightmare" was printed as follows: "The U.S. Trade Representative (USTR) ... estimates that between 600,000 and one million new jobs will be created by exports to Mexico." In fact, the USTR believes that trade with Mexico to date has created 600,000 jobs, and that NAFTA will create approximately 400,000 new jobs.
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