Bulletin #191


25 June 2005

Grenoble, France

Dear Colleagues and Friends of CEIMSA,

The continued imperialist violence in Iraq , and the repressive domestic policies of Euro-American civilization have led to a manifestation of profound discontents among those social classes which find themselves under the boot of neo-liberal dogma, in both Europe and America . These revolts have occasionally provoked institutional crises in those locations where remnants of traditional democratic values still exist, where employees are failing to accommodate the new "neo-liberal" (a.k.a. "neo-conservative") managerial techniques of harassment and intimidation.

Fragmentation, isolation, alienation are hallmarks of societies in an economic crisis. Today in the 21st Century, more than ever before, these crises are managed by professionals. With almost mathematical precision, social relationships are manipulated into predictable behavior, more often than not; routines of "quite desperation" take many of us on our miserable paths toward nowhere. . . .

On the other hand, a few men and women equipped with metaphoric "flashlights" occasionally dispel the shadows and cast enlightenment and understanding on the obstacles in our lives. This does not happen often, but when it does it has to be dealt with, and there are battalions of "Spin Doctors" on alert, ready to intervene and deny these inconvenient facts, or better yet simply bury them in an avalanche of trivia. The lights go out, and we continue on our paths toward nowhere.

Below, we present a series of articles offering some enlightenment on "who is doing what to whom, and why" in the context of our contemporary political economy. Each of the articles below offers readers a rich field of information, from which the authors have drawn useful conclusions. Just how useful these conclusions are is, of course, up to each of us.

Item A. is an essay by James M. Cypher on "The Iron Triangle", which was first published in 2002 by the radical economic journal, Dollars & Sense.

Item B. is an article by Rodolfo F. Acuna which appeared recently in Z Magazine and applies the psychoanalytical concept of 'repressive tolerance" to violence on the Mexican-U.S. border.

Item C. comes from, Multinational Monitor, founded by Ralph Nader, in which the ten worst corporations in 2004 are listed, with graphic descriptions of their crimes against society.

Item D. is another article taken from Multinational Monitor which analyses the significance of the selection of Paul Wolfowitz, former U.S. deputy secretary of defense, to fill the post of President of the World Bank. (Also, for a detailed descriptive study of global income inequality in the 20th Century, see Bob Sutcliff's analysis published in CEIMSA Atelier N°1 Article 19.)

Item E. is an article on the Orwellian phenomenon of "Representation" displacing logic, reason, and even reliable facts essential to human health. Here we learn from Michele Simon how Ronald McDonald has become "a U.S. health ambassador."

Item F. is an article by Andrew Wheat, who describes a new "Rove-Bush strategy" to protect U.S. corporations from lawsuits for damages done to consumers and/or to employees. In February 2003 investigative reporters James Moore and Wayne Slater published a report on Karl Rove, the power behind George W. Bush and the Republican Party. In their book, Bush’s Brain, they wrote that Karl Rove developed a political strategy around "tort reform," which guaranteed generous corporate financial support for Republican candidates in return for which corporatate America receives significant protection from civil law suits. Wheat's article is a commentary and update on this political strategy to win stronger corporate support for the Republican Party.

Meanwhile, we trust, dear friends of CEIMSA, that you will share your views and your own research endeavors with us.  The information and analysis which our research center is receiving seems to be addressing more and more  the concerns of Claude Julian when he wrote in the 1970s his analysis of "the suicide of democracies" --an item which today seems to occupy center stage for immediate consideration in all advanced capitalist societies.


Francis McCollum Feeley

Professor of American Studies/

Director of Research

Université Stendhal

Grenoble, France




from James Cypher

Dollars & Sense

Issue # 239, January-February 2002

Return of the Iron Triangle

The New Military Buildup

by James M. Cypher

The U.S. government’s Commission on National Security/21st Century, convened in October 1998, was a who’s who of industry, government, and militarythat is, of the country’s power elite. Former Senators Gary Hart and Warren Rudman chaired the Commission. Its commissioners included Martin Marietta CEO Norm Augustine and former House Speaker Newt Gingrich. Its 29 "study group members" came from top universities like MIT and Princeton, and think tanks including the RAND Corporation, the Cato Institute, and the Brookings Institution. The Commission also enjoyed the cooperation of the Departments of Defense and State, as well as top intelligence agencies like the CIA and the National Security Agency (NSA). In 1998, the Commission began a major review of U.S. military strategy. Its aim? To redesign the institutional structure of the military for the post-Cold War era.

The Commission’s 1999 report New World Coming: American Security in the 21st Century, outlined a strategy for the United States to "remain the principal military power in the world." In the coming century, the report argued, the United States will become increasingly vulnerable to direct "nontraditional" attacksagainst its information-technology infrastructure, for example. It will have to intervene abroad more frequently to deal with state fragmentation or to ensure an "uninterrupted" supply of oil from the Persian Gulf region or elsewhere. And it will face rivals in its drive to dominate space. The report concluded that to ensure continued U.S. dominance, U.S. military spending will have to rise dramatically.

Big and Heavy, Fast and Light

The Clinton administration, which had overseen a dramatic decline in military spending over the course of the 1990s, basically ignored the Commission’s conclusions. It now looks, however, like U.S. military doctrine will follow many of the recommendations in New World Coming.

The Department of Defense’s latest big picture document, the October 2001 Quadrennial Defense Review, aims both to "restore the defense of the U.S. as the department’s primary mission" and to build forces capable of moving rapidly overseas. Not to be outdone, the Army has produced two major documents outlining plans to retain the military’s heavy aircraft and tank forces while developing lighter, faster units that it can deploy virtually anywhere in the world within 96 hours.

The post-September 11 era of military spending will allow the Pentagon to have its cake and eat it toocontinuing major Cold War-era weapons systems and funding the cyber-age "Revolution in Military Affairs" (RMA). The RMA emphasizes high-tech warfarecommunications networks, satellites, robot observation planes, smart bombs, night-vision instruments, highly mobile "light" armor, and global positioning system (GPS)-equipped soldiersover old-fashioned heavy-weapons systems. Many Pentagon officials and major weapons contractors feared the RMA because it could disrupt the method of military contracting going back to the beginning of the Cold Warbuilding a huge arsenal of ships, planes, tanks, and missiles to confront the Soviet "threat." Military officials had built their careers on that approach, and weapons contractors had made many fortunes from the resulting arms contracts. They feared that the RMA would marginalize them. The novelty of the Army’s approach is to spend enough money to keep everyone happy, funding the "old military" and the "new military" alike.

Balancing the Iron Triangle

The "Iron Triangle" forms the U.S. military establishment’s decision-making structure and includes its major interest groups. One side of the triangle includes the "civilian" agencies that shape U.S. military policythe Office of the President, the National Security Council, the Senate and House Armed Services Committees, and civilian intelligence agencies like the CIA and NSA. A second side includes the military institutionsthe Joint Chiefs of Staff, the top brass of the Air Force, Army, Marines, and Navy, the powerful "proconsul" regional commands (known as "CINCs"), and, in a supporting role, veterans’ organizations like the American Legion and the Veterans of Foreign Wars. At the base of the triangle are the 85,000 private firms that profit from the military contracting system, and that use their sway over millions of defense workers to push for ever-higher military budgets.

Everyone in the Iron Triangle knew that the Bush Administration would increase military spending. The question was whether the increase would be vast enough to fund the old weapons systems, the "Star Wars" National Missile Defense scheme, and the RMA. And if not, who would pay the price? On February 13, 2001, President Bush announced that the United States would be moving beyond the Cold War model and into the RMA. In March 2001, he submitted a 2002 budget that upped military spending by only $14 billion over Clinton’s 2001 budget. Many powerful members of the Iron Triangle, who had staked their careers on the old system, could now foresee their marginalization.

They were not about to go without a fight. Between March and August 2001, they struggled to save outmoded weapons systems like the F-22, the most expensive fighter plane in history, and the plan to build the unreliable V-22 Osprey aircraft, a project that then-Secretary of Defense Dick Cheney nearly killed eleven years before. It was, according to The New York Times, a battle "as intense and intemperate as any in recent memory" within the Iron Triangle.

Even before September 11, Secretary of Defense Donald Rumsfeld advocated a revised military budget with a total spending increase of $52 billion. He still favored, however, reconfiguring the military along RMA lines, reducing military units, cutting bases, and retiring unneeded weapons systems. Even while he proposed the larger spending increase, Rumsfeld’s opponents in the Pentagon succeeded in portraying him as weak, unfocused, and "spiraling down." Legislators fought him on base closures, contractors resisted any reduction in lucrative weapons contracts, the Armed Services fought him on manpower reductions, and Democrats resisted the National Missile Defense program which Rumsfeld had spearheaded. Post-September 11 emergency spending allocated an additional $25.5 billion to military objectives. In all, military spending will rise by at least $58.6 billion over 2001 levels, a 19% increasejust exceeding Rumsfeld’s goal. ("Special Appropriations" will probably push the basic military budget even higher during the current fiscal year.) Now, Rumsfeld will be able to make a down payment on the RMA, while the vested interests will see plenty of funds for the old-style "legacy system" military.

Fighter-plane programs will get an incredible $400 billion in new multi-year contracts. Lockheed Martin will get $225 billion over 12 years to build nearly 3,000 Joint Strike Fighter planes for the Air Force, Marines, and Navy. According to Business Week, Lockheed also stands to make $175 billion in sales to foreign buyers over the next 25 years. Drowning in its record trade deficit, the United States desperately needs the boost to the trade balance provided by arms exports. The Joint Strike Fighter, if it brings in the expected $175 billion in export sales, may go down in history as the largest single boost to the balance of payments ever. Currently the United States controls 50% of the global arms market, with foreign military sales running at $16.5 billion in 1999. That figure will be on the rise as new weapons are delivered to Pakistan , Uzbekistan , Tajikistan , Oman , the United Arab Emirates , and Egypt .

Looking ahead, the RMA’s fantastic weaponryand its enormous costsare only just beginning to emerge. Northrup Grumman, General Atomics, and Boeing are speeding robot airplanes into production. Other contractors are developing thermal imaging sensors to "see" targets through night, distance, fog, and even rock formations. The Navy is promoting a new destroyer-class warship, the DD-21, loaded with cruise missiles and guns capable of hitting targets 100 miles inland. Known as the "stealth bomber for the ocean," the DD-21 is estimated to cost $24 billion. Cost overruns of 300% are common, however, so there’s no telling what taxpayers will ultimately pay.

The Economic Impact

Bush justified his mammoth June 2001 tax cut partially as a measure to reverse the economic downturn that began the previous March. In October 2001, he proposed further tax cuts as an "economic stimulus" package. The two tax cuts combined, however, will likely provide less of a short-term boost than the nearly $60 billion increase in military spending. Most of the June tax cut will go to people with high incomes, who tend to spend a smaller proportion of the additional income they receive from a tax cut. And a large portion of what they do spend, they tend to spend on imported luxury goods, rather than domestic goods.

Most of the proposed "stimulus" program suffers from the same problems, plus a few more. The new proposal also includes a clause allowing businesses a bigger write-off for equipment as it decreases in value. But a corporation can take the write-off while spending on capital depreciation that they would have done anyway. The same is true of the elimination of the corporate "alternative minimum tax," which had set a tax "floor" for corporations no matter how many deductions they could claim. Corporations will use these windfalls to pay off debt or to invest outside of the United States .

Compare this to the $60 billion in new military outlays. Most of this money will go to civilian suppliers who will use it to pay for domestic labor, materials, and equipment. Only a modest portion, 5-10%, will leak out of the United States to military base operations. (Even that may not be as large a "leak" as it might seem, since base employees stationed overseas often buy U.S. exports.) Moreover, because of the new emphasis on the RMA, the military will be buying more newly designed weapons than it has in a long time, and this will have a strong impact on the economy (see box).

But will this counter the current recession? University of Texas economist James K. Galbraith has argued that the United States will need $600 billion in new spending in 2002 to pull out of the recession. However, only about $214 billion will come from increases in emergency and military spending plus the two tax cuts. Reduced interest rates will also stimulate new spending, but probably not on the scale required. If Galbraith is correct, even the massive outlays for the military will fall far short of the sum needed to turn the U.S. economy around.

What about its long-term effects? Some claim that increased military spending will drain U.S. productivity and slow long-term growth. But much of the United States ’ growth during the post-WWII period was stimulated by military spending. As Business Week noted in October 2001:

Defense spending on research and development has sparked much innovation. Microchips, radar, lasers, satellite communications, cell phones, GPS, and the Internet all came out of Defense Dept. funding for basic research at the Massachusetts Institute of Technology, Stanford University and national laboratories. There were breakthroughs at IBM and Bell Laboratories, and all were commercialized by Intel Corp., Motorola Inc., and other corporations.

The same is true of artificial intelligence, supercomputers, high-speed fiber optics, and many other breakthroughs. The bulk of information technologies, in fact, were developed through massive R&D investments in military technology.

The argument that military spending undercuts productivity must be seen in a broader context: Conservative economists have long argued that government spending does not increase investment because it causes an offsetting reduction in private investmentknown as "crowding out." Some liberal economists have appropriated this argument to oppose military spending as a drain on the economy. That argument underestimates the structural importance of military spending and the arms industry to capitalism. The new military buildup is not likely to "crowd out" private investment, but to stimulate investment and technical innovation. The military buildup will definitely "crowd out," however, spending on public needs, such as a viable rapid rail system, public education, and a national health care systemall of which could greatly enhance productivity. More military spending will focus inordinately on information technology and other high-tech systems. More artificial intelligence technologies, global positioning systems, robot planes, and thermal imaging sensors, however, are not going to house, educate, or heal people who lack housing, education, or health care.

Big Visions, Big Plans

The current military buildup is about much more than countering the slide in the high-tech sector, or countering the current economic recession. It is about consolidating the United States ’ position as the only superpower. Continued U.S. dominance requires continued control of the world’s most important traded commodityenergy. The United States imports 52% of the oil, and a growing share of the natural gas, that it consumes. The profits of oil giants like Shell, Exxon/Mobil, and Chevron/Texaco come from their global control of oil and gas resources. Securing this control is one of the major functions of the U.S. military.

U.S. foreign policy will focus increasingly on securing global resources, longtime observer and critic of U.S. military affairs Michael Klare argues in his new book Resource Wars. (This stands in contrast to the Cold War era, when directly economic motives were less important to U.S. foreign policy than the superpower rivalry with the USSR .) The Pentagon and other centers of U.S. power clearly view Middle East energy resources as a "vital interest," warranting massive military outlays and the export of the top-level weapons to client regimes in the region. Between 1990 and 1997, the United States exported $42 billion in arms to the Persian Gulf states, of which $36 billion went to Saudi Arabia .

This focus on the oil-exporting regions will only rise under the Bush administration. Even though the Bushes never really established themselves in the oil industry, their tilt toward "big energy" is unmistakable. George W. Bush’s number-one corporate donor was Houston’s Enron Corporation, the ill-fated energy trader; Vice President Dick Cheney comes fresh from his job as CEO of Dallas’ Halliburton Corporation, the world’s largest oil-well service company; and Condoleezza Rice served as a director of the Chevron Corporation before becoming National Security Advisor.

"Oil runs the world and the Saudis are the linchpin of oil production," a unnamed senior administration official told the New York Times in October 2001. The United States has struggled in the past to reduce its reliance on Middle East oil suppliespressuring Mexico and Venezuela to increase production, hoping for big increases from Colombia ’s rich oilfields, and so on. Since 1990, the United States has reduced OPEC oil from approximately 61% of its total oil imports to 52%so only about 27% of the oil consumed in the United States now comes from OPEC (including Venezuela ). But this is not the whole story: The United States has also assumed the role of military guarantor of oil stability for Europe and Japan . The growing instability of the Persian Gulf states, in spite of the huge sums that they and the United States have committed to military defense, portends even greater U.S. military involvement in the region for the foreseeable future.

Meanwhile, near the Gulf, two alternative sources of oil are becoming increasingly attractivethe Caspian Sea region and the rest of the former USSR . U.S. oil companies are now plunging into Russia . Halliburton has 300 specialists in Western Siberia struggling to revive the Samatlor oilfield, while Shell and Exxon/Mobil are investing in a new field off Shakalin Island. Exxon has committed $5 billion to the effort over the next five years. Russia is now exporting about 3.3 million barrels a day, nearly half what Saudi Arabia exports. But if the oil giants invest in new pipelines, Russian exports could leap to 5.3 million barrels a day by 2004, according to Business Week. Much of this new oil, and huge quantities of natural gasone third of the world’s gas reserves are located in the former Soviet Unionwould come from the Caspian Sea region of Central Asia, the biggest economic prize since the United States took effective control of Saudi oil in February 1945.

This makes Afghanistan , through which a major Caspian pipeline would likely run, a strategic linchpin of the global energy industry and the world economy. U.S. , European, and Russian gas and oil firms have taken a major interest in the Caspian region’s vast oil and gas reserves since the early 1990s. Major pipelines now carry these resources to Turkey , from which they can be shipped to Western Europe, the United States , and the rest of the world. Unocal, Pennzoil, British Petroleum, and Amoco were major participants in the Azerbaijan International Operating Company (AIOC), a large-scale project to build pipelines from the Caspian Basin to Turkey and the Black Sea. Unocal has also proposed a pipeline from Turkmenistan , Uzbekistan , and Kazakhstan through Afghanistan to India and Pakistan , and to the Pakistan coast for export to Chinathough the company now says it has shelved the project.

The U.S. military is now developing a long-term presence in Central Asia, which it will undoubtedly use to secure the rich supply of Caspian oil and gas. The Pentagon has been courting the government of Uzbekistan for years, giving its officers military training in the United States since 1995, and conducting military exercises in Uzbekistan since 1999. In November 2001, the U.S. military began negotiating with the government of Tajikistan to use former Soviet military bases there during the U.S. war in Afghanistan . Considering that a U.S. garrison has been permanently stationed in Saudi Arabia since the Gulf War, it seems unlikely that the U.S. military will leave either Uzbekistan or Tajikistan after the Afghanistan war.

The outcome of this high-stakes struggle remains to be seen. Russia and the Caspian region resemble the Persian Gulf region in their fragile social foundations. So shifting to the former for imported oil and gas will not eliminate the United States ’ reliance for energy on states with huge potential for instability. If an Afghanistan pipeline is ever built, however, it will help give U.S. and Russian oil interests leverage they have not had in decades over the Persian Gulf region, just by making the Gulf’s oil supplies a much smaller part of global production. Moreover, with energy demand in developing Asia predicted to surpass that of North America by 2020, it will give the United States added leverage over these economies. The current U.S. power play in Central Asia, in short, dramatically increases the likelihood that the U.S. military will succeed in achieving the goals articulated by the Commission on National Security/21st Century securing control of the global energy supply, and maintaining the United States ’ position as the world’s only superpower.


James M. Cypher teaches economics at California State University, Fresno.

Resources: U.S. Commission on National Security/21st Century, New World Coming: American Security in the 21st Century, 1999 <www.nssg.gov>. Michael Klare, Resource Wars, Metropolitan Books, 2001. James Galbraith, "The War Economy," Levy Economic Institute, 2001 <www.levy.org>.



from ZMag

20 June 2005

A Tolerance of Violence On the Border

by Rodolfo F. Acuna

In trying to make sense as to why most Americans and even a large number of Latinos are so complacent about so-called minutemen running amok on the border, searching for undocumented people, I recently re-read Herbert Marcuse s 1965 essay on Repressive Tolerance.

Marcuse wrote that [t]olerance is an end in itself and necessary for the preservation of the status quo and the strengthening of the tyranny of the majority... When tolerance is turned into a passive state it promotes laissez-fairez, entrenching the established attitudes and ideas of the right wing. The result is that we passively tolerate ideas and actions that are damaging to man and nature.

The University of California professor argued that there was a difference between true and false tolerance and it was an abuse of tolerance to ignore unjust attitudes and ideas because the truth may antagonize sympathizers.

According to Marcuse, a liberating tolerance was intolerance toward unjust ideas and movements. Marcuse was later to posit that it was the intolerance of students on campuses that removed Dow Chemical and the recruiters off the university campuses.

Marcuse distinguishes the Right from the Left and movements that help people versus those that keep them in their place. These movements are difficult to distinguish because of the historical amnesia of Americans. They believe that the Right and the Left have contributed equally to social legislation that protects the average citizen.

The truth be told, as a historian, I cannot remember a single piece of progressive social legislation sponsored by right wing senators or representatives. Indeed, they opposed the end of slavery, the protection of children s rights, social security, and civil and human rights, for starters.

Society s lack of historical awareness of these facts and the reluctance of liberals to call the Trent Lotts of this world liars perpetuates this false consciousness.

In respect to undocumented workers and immigrants this repressive tolerance has allowed racist nativist to blur reason and sanction border violence. It has allowed the historically illiterate like California Governor Arnold Schwarzenegger to praise Arizona vigilantes. "They've done a terrific job. And they have cut down the crossing of illegal immigrants by a huge percentage." We are conditioned to tolerate this undemocratic behavior and forget that in another time these vigilantes would be wearing white hoods.

Border violence is not an aberration and is as American as apple pie. At least, 597 Mexicans were lynched near or on the border. The majority were not bandits; they were lynched because they were Mexicans. Witness that there has been no similar history on the Canadian border. Why?

What will be the cost of tolerating these vigilantes?

In the summer of 1976, George Hannigan, a Douglas, Arizona, rancher and Dairy Queen owner, and his two sons, Patrick, 22, and Thomas, 17, kidnaped three undocumented workers looking for work. They stripped, stabbed, burned [them] with hot pokers and dragged [them] across the desert. The Hannigans held a mock hanging for one of the Mexicans and shot another with buckshot. Judge Anthony Deddens, a friend of the Hannigans, refused to issue arrest warrants. Finally, an all-white jury acquitted the Hannigans. Activists on both sides of the border protested the verdict and pressured U.S. Attorney General Griffin Bell to indict them. A federal grand jury, in 1979 indicted the Hannigans for violating the Hobbs Act. Interference in interstate commerce. After deadlocks and s retrial a jury found the Hannigans guilty.

Since the Hannigan case, the hate groups have expanded. Historically, extremist groups have preyed on the fears and xenophobia of the American majority. Klansman David Duke organized border patrols in the late 1970's. In the early 1980s Louis Beam and his Texas Knights harassed an immigrant Vietnamese fishermen in Texas.

During the 1980s, these hate groups grew as a product of the Internet where pornography and hate became profitable enterprises.

The idea of sending organized para-military groups to the border remained a right wing affair. The cry of Close our Borders! was the creation of white supremacist groups that are integrated in the ranks of the so-called Minutemen and spearhead their activities.

The agenda of many of these self described patriots goes well beyond the protection of the border, however. The ADL reports that Glenn Spencer of Voices of Citizens Together and the American Patrol has departed sharply from that of legitimate immigration reform groups. Much Spencer s rhetoric and writing did not target immigration so much as he targeted Hispanics, particularly those of Mexican origin, regardless of whether they were immigrants or not. The Anti-Defamation League ADL cites a 1996 letter to the Los Angles Times in which he wrote the Mexican culture is based on deceit.

Spencer s pal Roger Barnett, a rancher from Cochise Country, Arizona, attracted national attention by running around with pistols and assault rifles capturing undocumented brown people and holding them against their will.

Meanwhile, other kooks like Jack Foote, based in Arlington, Texas, have been inspired by Roger Barnett. He formed Ranch Rescue, like the other hate groups, has a Web Site, spreading fear and collecting money.

In March 2003 two of Ranch Rescue s Minutemen were arrested for allegedly detaining two Salvadorans and pistol whipping one of them.

On July 23, 2003, Claudine LoMonaco of the Tucson Citizen reported that "from the start of the fiscal year in October 2002 through Sunday, as many as 171 people have died in Arizona -- 43 percent more than the official Border Patrol figure of 119."

Where is this history of tolerance going end? The Anti-Defamation League (ADL) reports that in October 2002, New Jersey white supremacist radio talk show host Hal Turner told listeners to kill every single one of these invaders.

The violence is not an aberration. It is not going to go away. It is directed at Mexicans and by extension anyone who looks like them.



from Multinational Monitor

December 2004

T H E   T E N   W O R S T   C O R P O R A T I O N S   O F   2 0 0 4

by Russell Mokhiber and Robert Weissman

It is never easy choosing the 10 Worst Corporations of the Year — there are always more deserving nominees than we can possibly recognize.

One of the greatest challenges facing the Multinational Monitor judges is the directive not to select repeat recipients of the 10 Worst designation.

There’s no way we could keep off companies that have ever appeared on the 10 Worst list — what is one to do with the likes of ExxonMobil, Philip Morris or General Electric? — but we do try to stick to the rule of not naming companies to the list who appeared on the previous year’s list.

That’s not so easy.

Last year, for example, Bayer appeared on the list, for, among other things, bilking Medicaid of hundreds of millions of dollars, paying students to consume pesticides as a test, keeping its anti-cholesterol drug Baycol on the market despite reportedly possessing evidence of its hazards, and dumping tainted blood-clotting medicines in developing country markets. This year, as the German group Coalition against Bayer Dangers relentlessly documents, Bayer’s wrongdoing continues: Bayer agreed to pay $66 million to U.S. authorities to settle price-fixing charges related to chemicals used to make rubber, faced demands for compensation from the families of two dozen Peruvian children accidentally poisoned and killed in 1999 by a Bayer pesticide, pushed for import of genetically modified rice into the European Union, polluted water in a South African town with the carcinogen hexavalent chromium, suffered from new accusations and evidence that it concealed dangers of Baycol, and was hit with evidence that its pain medication Aleve (naproxen) increases the risk of heart attack.

Boeing made the 10 worst list in 2003 for the tanker plane scandal — the $27 billion contract it obtained from the Pentagon to lease unneeded 767s that refuel fighter planes in mid-air. In a brazen maneuver, Boeing hired Darleen Druyan — the procurement official who gave the contract to the company — shortly after the deal was consummated. This year, as Druyan pled guilty to conspiring to defraud the federal government — and then supplemented her initial plea with one apparently more truthful — it emerged that the tanker scandal was even worse than it originally appeared. In her supplemental plea, Druyan admitted doing a variety of “favors” for Boeing. In the tanker negotiations, she admitted that she “agreed to a higher price for the aircraft than she believed was appropriate.” This was as a “parting gift” to Boeing, she told government prosecutors. She also provided to Boeing proprietary information from another aircraft manufacturer.

In 2003, we recognized Clear Channel, the radio behemoth, for concentrating private control over the public airwaves and for repeated lawbreaking, including misleading the public and deceptive advertising. This year, Clear Channel managed to stoop to new lows with a “Breast Christmas Ever” contest. Clear Channel stations promised to pay for breast implants for a dozen contest “winners.” Contestants were required to submit essays explaining why they wanted larger breasts. They also, as the National Organization of Women pointed out, were required to “sign a liability release absolving the radio station, plastic surgeon and Clear Channel from any responsibility should they have problems with their implants or require additional medical treatment — problems which, not incidentally, are frequently necessary and very expensive.”

And then there’s Halliburton. Dick Cheney’s former company made the 10 worst list in 2003 for a long list of government contracting scandals. It’s hard to believe things could get worse with Halliburton, but they have. In just the last quarter of 2004:

    * Swiss authorities shut down bank accounts allegedly used by Halliburton for bribing the Nigerian government;

    * A high-level Army whistleblower claimed that Army officials illegally favored Halliburton in contracting decisions — sparking an FBI investigation;

    * Accusations emerged that company officials demanded bribes from subcontractors in Kuwait ;

    * In filings with the Securities and Exchange Commission Halliburton admitted it may have paid bribes in Nigeria ;

    * An audit by the Inspector General for the U.S. occupation authority in Iraq found that Halliburton could not account for over a third of the items it handled in Kuwait while working for the occupation authorities.

And that’s just a partial list of the troubles in which Halliburton was embroiled in the last few months of 2004.

But the no-repeat rule forbids these otherwise-deserving companies from returning to the 10 Worst list in 2004.

Although the judges cringe at being denied the opportunity to put these companies back on 10 Worst list, it does at least help shrink the pool of eligible contenders.

Of the remaining pool of price gougers, polluters, union-busters, dictator-coddlers, fraudsters, poisoners, deceivers and general miscreants, we chose the following — presented in alphabetical order — as . . . the 10 Worst Corporations of 2004 :



Webster’s defines the Yiddish term now incorporated into English slang as: 1. unmitigated effrontery or impudence; gall. 2. audacity; nerve.

In the next edition, they may want to add: 3. See Abbott.

In December 2003, the company raised the U.S. price of its anti-AIDS drug Norvir (generic name ritanovir) by 400 percent. That is, unless the product is used in conjunction with other Abbott products — in which case the price increase is zero.

Norvir has become an increasingly important treatment in recent years. Scientists have discovered that while Norvir is generally too toxic for safe use as a protease inhibitor (one category of anti-AIDS drugs), in lower doses it works well as a booster to increase the efficacy of other protease inhibitors. As a result, Norvir is frequently prescribed along with other protease inhibitors.

The Norvir price increase does not apply when the product is used as a booster with another Abbott protease inhibitor (in the combined product Kaletra). Thus the impact of the Norvir price increase is to make Kaletra far cheaper than rival combinations of Norvir and non-Abbott protease inhibitors.

Norvir is especially important for patients in need of a “salvage therapy” of new and powerful treatments because their virus has become resistant to other medicines.

Lynda Dee, co-chair of the Aids Treatment Activists Coalition’s Drug Development Committee, called the price increase for these patients, who may have no choice as to the medications they need to survive, “pharma terrorism perpetrated against the patients who need new drugs the most.”

Abbott said the price spike was justified by its need to raise money for research and development. “New medicines cost hundreds of millions of dollars to develop,” Jeffrey Leiden, president and chief operating officer of Abbott’s Pharmaceutical Products Group, told a National Institutes of Health meeting in May. “So it’s critical that we capture the value of today’s drugs to allow development of these new therapies in our pipeline as quickly as possible.”

Moreover, Leiden said, the price increase would not deny any patients access to the drug. The price increase does not apply to federal AIDS drug programs, which cover 54 percent of people with HIV/AIDS. Price increases only apply to private insurers and to uninsured individuals, who Abbott says can get the product for free under a special program it operates.

Making the Abbott price jump especially pernicious in the eyes of consumer advocates was that the drug was invented on a grant from the U.S. federal government.

Because of the U.S. government’s financing role, Essential Inventions, Inc., a nonprofit corporation created to distribute affordable public health and other inventions, in January petitioned the government to exercise its “march-in” rights under the federal Bayh-Dole Act and issue an open license to generic firms to produce their own version of Norvir.

“Essential Inventions is asking the Bush Administration to adopt a simple rule — U.S. consumers should not pay more for drugs invented on government grants,” said Essential Inventions President James Love. Following the U.S.-only price increase, Norvir is 5 to 10 times more expensive in the United States than in other high-income countries.

But NIH rejected the Essential Inventions proposal, arguing that companies that obtained licenses to government-funded inventions have a duty only to commercialize the inventions. NIH does not have authority to consider the price at which a product is sold and the impact of the price on access, the agency ruled — even though the Bayh-Dole Act says government-funded inventions should be made “available to the public on reasonable terms.”

“If Secretary Thompson agrees that quadrupling the price of a life-or-death AIDS drug, rigging the market, and discriminating against U.S. consumers is ‘reasonable,’ you can’t help but wonder what the Secretary considers unreasonable,” said Representative Sherrod Brown, D-Ohio, in criticizing the NIH decision.


The nation’s number one corporate crime buster, New York Attorney General Eliot Spitzer, launched his campaign for higher office in December, announcing that he was running for Governor of New York, the next step in his quest for the presidency.

Spitzer is out to prove that projecting a tough cop image against corporate crime pays dividends — as long as you pull your punches when it comes to settlement time.

When Spitzer announced in November that he was opening a new front against the insurance industry, there was the usual quaking in the boots by the Wall Street Journal and the other lead megaphones for big business, charging Spitzer with using his law enforcement powers to force changes in business practices.

And have no doubt — the corporate lobbies would prefer a do-nothing law enforcement agency to an activist one, even a mildly activist one.

That’s why they rail against Spitzer, and even against SEC chair William Donaldson, a former chief executive himself and friend of the Bush family.

Big business now reportedly wants even Donaldson removed from office for his mild activism.

But when push comes to shove, there is no shoving allowed by prosecutors. If you do shove, or push too hard, you will not be allowed to proceed up the political ladder. Period. End of story.

Spitzer sent clear signals when he started his crusade against Merrill Lynch.

Remember the Merrill Lynch analysts who told their customers — trust me, buy this stock, this stock is highly rated?

And then they would turn around and e-mail their buddies — hey, this stock is lousy, why are we recommending this stock to our customers?

Spitzer got his hands on the e-mails, charged Merrill with violating the law and forced them to pay $100 million.

But he got Merrill to pay up only by agreeing not to criminally prosecute the company.

Spitzer later admitted that had he forced Merrill to admit wrongdoing, the firm would have gone kaput.

Just like Arthur Andersen.

In October, 2004 Spitzer moved against a major insurance broker, Marsh & McLennan, alleging that the company steered unsuspecting clients to insurers with whom it had lucrative payoff agreements, and that the firm solicited rigged bids for insurance contracts.

By threatening criminal action, Spitzer forced the company’s CEO to resign — and replaced him with a former work colleague.

Major insurance companies — ACE, American International Group, The Hartford and Munich American Risk Partners — were named in the complaint as participants in steering and bid rigging. Other insurance companies are still under investigation.

Here’s a prediction — Marsh & McLennan will not be convicted of any wrongdoing. Why? Because Spitzer fears, as he feared in the Merrill case, that forcing a company to admit to guilty would push it to the brink — à la Andersen.

Andersen’s conviction sent a powerful message to big business — engage in criminal wrongdoing, and you will be criminally prosecuted to the full extent of the law.

Too powerful, as it turns out.

So, with the Merrill case, Spitzer has started a trend.

Yes, prosecute corporate crime, but don’t force companies to admit guilt.

Thus, when the world’s largest insurer, American International Group Inc. (AIG), was charged by federal prosecutors with crimes in November, it quickly cut a deal with the Justice Department that ended a criminal probe into its finances with a deferred prosecution agreement.

In a deferred prosecution, the corporation accepts responsibility, agrees not to contest the charges, agrees to cooperate, usually pays a fine and implements changes in corporate structure and governance to prevent future wrongdoing.

If the company abides by the agreement for a period of time, then the prosecutors will drop the criminal charges.

In a non-prosecution agreement — like the one secured by Merrill Lynch’s in 2003 with New York Attorney General Eliot Spitzer — prosecutors agree not to bring criminal charges in exchange for corporate fines, cooperation and a change in corporate structure and governance.

“This comprehensive settlement brings finality to the claims raised by the SEC and the Department of Justice,” said AIG Chair M. R. Greenberg. “The role of the independent consultant complements our own transaction review processes. We welcome this enhancement to our overall risk management and control mechanisms.”

“We have always sought to adhere to the highest ethical standards and ensure that we are in compliance with the applicable laws and regulations that govern our businesses around the world. As part of this effort, we regularly review our compliance policies and procedures and take additional action whenever appropriate to enhance them.”

Under the deal with AIG, an AIG subsidiary was charged with a crime for the next 12 months, but then the charge will be dismissed with prejudice — if AIG abides by the deferred prosecution agreement.

As part of the agreement, AIG and two subsidiaries will pay an $80 million penalty, and $46 million into a disgorgement fund maintained by the SEC.

Federal officials in October filed a criminal complaint charging AIG-FP PAGIC Equity Holding Corp., a subsidiary of AIG, with violating the federal securities laws, by aiding and abetting PNC Financial Services Group, Inc. (PNC) in connection with a fraudulent transaction to transfer $750 million in mostly troubled loans and venture capital investments from subsidiaries off of its books.

These transactions were previously the subject of a deferred criminal disposition involving PNC.

Earlier this year, the Department dismissed the criminal complaint against a PNC subsidiary, after the company fulfilled its deferred prosecution agreement obligations.

Merrill, AIG and PNC are three of 10 major corporations that have settled serious criminal charges with deferred prosecution, no prosecution or de facto no prosecution agreements over the last two years. The other seven are Computer Associates, Invision, AmSouth Bancorp, Health South, Banco Popular de Puerto Rico, Canadian Imperial Bank of Commerce and MCI. Bank of New York is currently seeking a similar deal with prosecutors in Brooklyn.

Companies are getting off the criminal hook with these agreements, which were originally intended for minor street crimes.

Now they are being used in very serious corporate crime cases.

If a crime has been committed — and there is little doubt that crimes have been committed by the corporations in these cases — then the companies should plead guilty and pay the penalty.

If prosecutors want to impose change on the corporation, they can do this after securing a conviction through probationary orders.

Right now, corporate lawyers are teaming up with prosecutors to go after individual executives while the company’s record is wiped clean.


Check out KillerCoke.Org. You’ll find a raft of information on Coke and its bottlers’ operations in Colombia . There is extensive documentation of rampant violence committed against Coke’s unionized workforce by paramilitary forces, and powerful claims of the company’s complicity in the violence.

An April 2004 report from a fact-finding delegation headed by New York City Council Member Hiram Monserrate contends:

“To date, there have been a total of 179 major human rights violations of Coca-Cola’s workers, including nine murders. Family members of union activists have been abducted and tortured. Union members have been fired for attending union meetings. The company has pressured workers to resign their union membership and contractual rights, and fired workers who refused to do so.”

“Most troubling to the delegation were the persistent allegations that paramilitary violence against workers was done with the knowledge of and likely under the direction of company managers. The physical access that paramilitaries have had to Coca-Cola bottling plants is impossible without company knowledge and/or tacit approval. Shockingly, company officials admitted to the delegation that they had never investigated the ties between plant managers and paramilitaries. The company’s inaction and its ongoing refusal to take any responsibility for the human rights crisis faced by its workforce in Colombia demonstrates — at best — disregard for the lives of its workers.”

“Coca-Cola’s complicity in the situation is deepened by its repeated pattern of bringing criminal charges against union activists who have spoken out about the company’s collusion with paramilitaries. These charges have been dismissed without merit on several occasions.”

Allegations such as these formed the basis of a lawsuit filed in 2001 by the International Labor Rights Fund and the United Steelworkers of America in U.S. courts against Coke on behalf of a Colombian trade union and union leader victims of violence at Coke bottling facilities in Colombia .

In 2003, a federal court dismissed the claims against Coke, arguing that its relationship with the owners of the Coke bottling plant in Colombia was too attenuated to hold the soft drink multinational responsible for human rights abuses at the plant. The plaintiffs have since refiled their complaint — they argue the original decision was mistaken, but that Coke’s subsequent purchase of the Colombia bottlers means the company is now clearly responsible for the bottlers’ actions.

Strangely, for the response to KillerCoke.org, you can check out CokeKills.org. That site, which is operated by Coke, redirects you to Cokefacts.org.

Here’s what Coke has to say:

Colombia is a dangerous place, but The Coca-Cola Company and its bottling partners will continue to do everything they can to keep employees safe.”

“The pervasive violence in Colombia , and the targeting of union members by its perpetrators, has, unfortunately, touched The Coca-Cola Company in a very personal way. Employees of our Company and bottling partners in Colombia have been threatened, kidnapped, and some have even been murdered. Among them was Isidro Gil, who was on security duty at a bottling facility in Carepa in December 1996 when he was shot at the plant gate. In a lawsuit in Colombia , the court concluded that the bottler not only took proper steps to initiate investigation by the authorities, but went further to enhance its workers’ safety by heightening security at the plant. In the United States , The Coca-Cola Company was dismissed from a lawsuit concerning, among other things, Mr. Gil’s murder.”

“In the midst of the violence plaguing Colombia , The Coca-Cola Company and its bottling partners have instituted special safeguards to protect employees — not just while they’re on the job. For those at greatest risk, the security measures extend beyond the workplace.”

“The Coca-Cola Company and Coca-Cola FEMSA [the Colombia subsidiary] believe that respect for human rights and labor rights are non-negotiable, fundamental values. We operate our businesses in Colombia and throughout the world according to these values.”

The back-and-forth is rather detailed. We find the claims of the advocates for Coke’s Colombian workers most persuasive.

Leave aside for the moment the issue of Coke’s legal liability. The idea that Coke can’t control the behavior of its bottlers is simply implausible. It can control them if it so chooses — just the way that clothing retailers can control the actions of their manufacturers, but even more so.

Instructive in raising questions about Coke’s good-faith concern for its workers is its unwillingness to support an independent investigation into the Colombia allegations — even after the company’s former General Counsel, and the former assistant U.S. attorney general, Deval Patrick, had committed to one. Coke’s refusal to authorize an investigation reportedly contributed to Patrick’s decision to resign from the corporation.

Even more instructive is Coke’s refusal to agree to “Seven Points for Settlement” put forward by the Colombian union and its advocates. These are reasonable points to which the company could agree without accepting blame for the abuses committed at the bottling plants. Completely apart from the litigation and the campaign against Coke, these are points to which the company should agree if it wants to clamp down on violence in the bottling plants. They include:

    * In Colombia , denounce anti-union violence, assert that anti-union violence is bad for business, and indicate the company’s belief that the union is not connected to armed groups in Colombia .

    * Agree to support the creation of an independent committee to which workers can submit complaints about anti-union violence and intimidation at or around any Coca-Cola bottling plant.

    * Investigate connections between local Coke management in Colombia and paramilitaries, and remove any managers with such ties.

    * End criminal harassment charges in Colombia against plaintiffs in the lawsuit and other union leaders.

    * Compensate victims of anti-union violence.


Let’s assume for a second, as the law does, that a corporation is a person.

If a corporation is a person, then how come we don’t see biographies of corporations?

We’re not talking about “official” biographies — those written by people in the pocket of the corporation.

Of course they exist.

By why not warts-and-all biographies of major corporations?

Like “The Life and Times of General Motors?”

Actually, a historian by the name of Brad Snell has been working for years on such a biography about General Motors — warts and all. He says he’s almost finished.

In 1974, Gerard Colby Zilg wrote a book titled DuPont: Behind the Nylon Curtain, which was a biography of DuPont Corporation — warts and all.

Zilg claimed that his publisher, under pressure from DuPont, buried the book — and it went nowhere.

Now comes Jack Doyle.

Doyle is trying to make a career out of writing critical corporate biographies.

In 2002, under contract with the Environmental Health Fund, Doyle wrote his first corporate biography, titled Riding the Dragon: Royal Dutch Shell & The Fossil Fire.

To coincide with the twentieth anniversary of the Bhopal disaster, Doyle came out with Trespass Against Us: Dow Chemical and the Toxic Century.

At midnight on December 2, 1984, 27 tons of lethal gases leaked from Union Carbide’s pesticide factory in Bhopal, India , immediately killing an estimated 8,000 people and poisoning thousands of others.

Today in Bhopal, at least 150,000 people, including children born to parents who survived the disaster, are suffering from exposure-related health effects such as cancer, neurological damage, chaotic menstrual cycles and mental illness.

Over 20,000 people are forced to drink water with unsafe levels of mercury, carbon tetrachloride and other persistent organic pollutants and heavy metals.

Activists from around the world — including human rights, legal, environmental health and other experts — mobilized this year to demand that Dow Chemical, the current owner of Union Carbide, be held accountable.

Twenty years after this disaster, the company responsible for this catastrophe and its former executives are still fugitives from justice. Union Carbide and its former chairman, Warren Andersen, were charged with manslaughter for the deaths at Bhopal, but they refuse to appear before the Indian courts.

Here is Dow’s “complete statement” on Bhopal:

    Twenty years ago on December 3, 1984, one of the most tragic incidents in the history of industry occurred in Bhopal, India . Those of us in industry remember that day well, and the following days, when several thousand people died.

    Although Dow never owned nor operated the plant, we — along with the rest of industry — have learned from this tragic event, and we have tried to do all we can to assure that similar incidents never happen again.

    To that end, the chemical industry learned and grew as a result of Bhopal — creating Responsible Care with its strengthened focus on process safety standards, emergency preparedness, and community awareness. The industry also has worked with governmental regulators to assure that industry best practices are implemented through regulations for the protection of workers and communities.

    While Dow has no responsibility for Bhopal, we have never forgotten the tragic event and have helped to drive global industry performance improvements. This is why Responsible Care was created and why these standards are essential for the protection of our employees and the communities where we live and work. Our pledge and our commitment is the full implementation of Responsible Care everywhere we do business around the world.

    The former Bhopal plant was owned and operated by Union Carbide India, Ltd. (UCIL), an Indian company, with shared ownership by Union Carbide Corporation, the Indian government, and private investors. Union Carbide sold its shares in UCIL in 1994, and UCIL was renamed Eveready Industries India, Ltd., which remains a significant Indian company today.

Dow has no responsibility for Bhopal? The people of Bhopal don’t agree. They say Union Carbide was responsible, and if Union Carbide is now owned by Dow, then Dow’s responsible. They refuse to accept Dow’s corporate shell game.

Doyle took the title of his book, “Trespass Against Us,” from the Lord’s prayer:

Give us this day our daily bread, and forgive us our trespasses as we forgive those who trespass against us.

We asked Doyle if he was urging humanity — those who have been polluted by Dow chemicals — to forgive Dow for its trespass against us.

“Not at all,” Doyle said. “By using the ‘trespass against us’ phrase, I am trying to make visible the invisible — trying to show that there are boundary lines being violated daily by toxic substances. Corporations are making a profit on the invasion of my personal space, my biology. They are not controlling the full costs of their operation, and we are picking up the tab for their externalities in form of disease, illness, lower immunity, altered reproduction, birth defects, cancer. That’s not right. That’s a mortal trespass, an unforgivable transgression that must be stopped. We are certainly not calling on consumers to ask that companies be forgiven — quite the opposite. They need to be prosecuted. Companies like Dow are getting away with biological trespass daily.”

And his book documents this.

Dow says that for most of the past decade it has pursued a “series of ambitious goals to improve Environment, Health, and Safety performance. We did this because we value the safety of our people and neighbors.” The result, according to the company, has been 10,000 injuries averted since 1996.

“Our ‘Vision of Zero’ means we want no injuries, illnesses, accidents, or environmental harm to result from our enterprise,” asserts the company. “It is a lofty goal, but it is also the only acceptable Vision for us to work toward.”

But these words gloss over an odious history.

In honor of the dead and dying in Bhopal, we urge you to buy Doyle’s book. Every time you use common plastic items, think of the destruction. Every time you use Saran Wrap (originally a Dow product), question the consequences.

And in commemoration of the twentieth anniversary of the crime of Bhopal, we present here 20 things to remember about Dow Chemical — the company now responsible for Bhopal and a fugitive from justice.

20. Agent Orange/Napalm — The toxic herbicide and jellied gasoline used in Vietnam created horrors for young and old alike — and an uproar back home that forced Dow to rethink its public relations strategy.

19. Rocky Flats — The top secret Colorado site managed by Dow Chemical from 1952 to 1975 remains an environmental nightmare for the Denver area.

18. Body burden — In March 2001, the Centers for Disease Control reported that most people in the United States carry detectable levels of plastics, pesticides and heavy metals in their blood and urine.

17. 2,4-D — An herbicide produced by Dow Chemical, 2,4-D is still in used for killing lawn weeds, crop weeds and range weeds, and along utility company rights-of way and railroad tracks. One of the key ingredients in Agent Orange, the toxic defoliant used in Vietnam , 2,4-D is the most widely used herbicide in the world.

16. Mercury — In Canada , Dow had been producing chlorine using the mercury cell method since 1947. Much of the mercury was recycled, but significant quantities were discharged into the environment through air emissions, water discharges, waste sludge and in end products. In March 1970, the governments of Ontario and Michigan detected high levels of mercury in the fish in the St. Clair River, Lake St. Clair, the Detroit River and Lake Erie. Dow was sued by state and local officials for mercury pollution.

15. PERC — Perchloroethylene is the hazardous substance used by dry cleaners everywhere. Dow tried to undermine safer alternatives.

14. 2,4,5 T — This is one of the toxic ingredients in Agent Orange. Doyle says that “Dow just fought tooth and nail over this chemical — persisted every way it could in court and with the agencies, at the state and federal levels, to buy more time for this product. They went into a court in Arkansas in the early 1970s to challenge the EPA administrator. They did that to buy some extra marketing time, and they got two years, even though it appears that Dow knew this chemical was a bad actor by then, caused birth defects in lab animals, and was also being found in human body fat by then. But it wasn’t until 1983 that Dow quit making 2,4,5-T in the United States , and 1987 before they quit production in New Zealand . And 2,4,5-T health effects litigation continues to this day.”

13. Busting unions — In 1967, unions represented almost all of Dow’s production workers. But since then, according to the Metal Trades Department of the AFL-CIO, Dow undertook an “unapologetic campaign to rid itself of unions.”

12. Silicone — The key ingredient for silicone breast implants, made by a joint venture between Dow and Corning (Dow Corning), made women sick. Litigation over silicone breast implants — removed from the market more than a decade ago — continues.

11. DBCP — DBCP is the toxic active ingredient in the Dow pesticide Fumazone. Doctors who tested men who worked with DBCP thought they had vasectomies — they had no sperm present.

10. Dursban — Dursban is the trade name for chlorpyrifos, a toxic pesticide, a product that proved to have the nerve agent effects that Rachel Carson warned about. It was tested on prisoners in New York in 1971 and in 1998 at a lab in Lincoln, Nebraska. It replaced DDT when DDT was banned in 1972. A huge seller, in June 2000, EPA limited its use and forced it off the market at the end of 2004.

9. Dow at Christmas — “Uses of Dow plastics by the toy industry are across the board,” boasted Dow Chemical in an internal company memo one Christmas season — “and more and more of our materials are found under the Christmas tree and on the birthday table, make some child, some toy company, and Dow, very happy indeed.” Among the chemicals used in these toys — polystyrene, polyethylene, ethylene copolymer resins, saran resins, PVC resins, or vinyls and ethyl cellulose. And a Happy New Year.

8.The Tittabawassee — The Tittabawassee is a river and river basin polluted by Dow in its hometown, Midland, Michigan.

7. Brazos River, Freeport, TexasA February 1971 headline in the Houston Post read: “Brazos River is Dead.” In 1970 and 1971, Dow’s operation there was sending more than 4.5 billion gallons of wastewater per day into the Brazos and on into the Gulf of Mexico.

6. Toxic Trespass — Doyle writes: “Dow Chemical has been polluting property and poisoning people for nearly a century, locally and globally — trespassing on workers, consumers, communities, and innocent bystanders — on wildlife and wild places, on the global biota and the global genome. ... Dow Chemical must end its toxic trespass.”

5. Holmesburg Experiments — In January 1981, a Philadelphia Inquirer story revealed that Dow Chemical paid a University of Pennsylvania dermatologist to test dioxin on prisoners at Holmesburg Prison in Philadelphia. Tests were conducted in 1964 on 70 inmates.

4. Worker deaths — Dow has a long history of explosions and fires at its facilities, well documented by Doyle. One example, in May 1979: an explosion ripped through Dow Chemical’s Pittsburgh facility, killing two workers and injuring more than 45 others.

3. Brain tumors — In 1980, investigators found 25 workers with brain tumors at the company’s Freeport, Texas facility — 24 of which were fatal.

2. Saran Wrap — The thin slice of plastic invaluable to our lives, Saran Wrap was produced by Dow until consumers were looking for Dow products to boycott. Dow decided to get out of consumer products for this reason — it sold off Saran Wrap — and since then the company, now the world’s largest plastics maker, just manufactures the chemical feeds that manufacturers use to make our consumer products.

1. Bhopal — Give us this day our daily bread, and forgive us our trespasses, as we seek to bring to justice those who trespass against us.


GlaxoSmithKline, Paxil and selective serotonin reuptake inhibitors (SSRIs). It was the story that foreshadowed and strikingly paralleled the controversy surrounding Merck, Vioxx and Cox-2 inhibitors.

Longstanding evidence of harm from a heavily advertised, blockbuster medicine. Company and regulatory refusal to consider disturbing evidence of dangerous side effects. Suppression of Food and Drug Administration (FDA) regulators willing to look coldly at the evidence. And an eventual, but too long delayed breakthrough in appropriate health messages to the public.

With the antidepressant Paxil (generic name: paroxetine), the story was driven primarily from the United Kingdom, by the BBC Program “Panorama,” and a public interest group called Social Audit. They called attention to the severe side effects from the drugs — notably that they are addictive and lead to increased suicidality in youth.

In 2003, the evidence of dangerous side effects had piled too high for British regulators to continue to ignore it. In June, the UK health experts advised that children should not be prescribed Paxil.

In February 2004, Panorama reported on internal documents from GlaxoSmithKline (GSK) showing the company knew that Paxil could not be proved to work in children.

In March 2004, days after the Medicines and Healthcare Products Regulatory Agency — the UK’s drug regulatory agency — advised that Paxil dosages should be kept to low levels, an expert participating in the Paxil review resigned, claiming the agency had possessed evidence for more than a decade suggesting that Paxil dosages should be kept low, but failed to act on it.

By this time, the story had started to heat up in the United States . Dr. Andrew Mosholder, of the FDA Office of Drug Safety, had conducted an analysis of clinical trials related to antidepressant use in children, and found a heightened risk of suicidality. But his superiors refused to let him present his findings to an advisory panel convened to look at the issue in the wake of the British action.

According to an investigation by Senator Charles Grassley, R-Iowa, the FDA actually tried to get Mosholder to present data that deceptively underrepresented the risk of suicidality.

Although Paxil is not approved by the FDA for prescription to children, doctors routinely write “off-label” prescriptions for the product for children, a practice permitted under FDA rules. More than two million prescriptions for Paxil were written for children and adolescents in the United States in 2002. Nearly 900,000 of these prescriptions were for youngsters whose primary diagnosis was a mood disorder, the most common of which is depression.

In April 2004, the Lancet, the prestigious British medical journal, published a paper showing that clinical test data did show problems with prescribing Paxil and other SSRIs to children. The Lancet would later name this article the scientific paper of the year.

In June, New York State Attorney General Eliot Spitzer filed suit against Glaxo, charging the giant drug maker with suppressing evidence of Paxil’s harm to children, and misleading physicians.

“By concealing critically important scientific studies on Paxil, GSK impaired doctors’ ability to make the appropriate prescribing decision for their patients and may have jeopardized their health and safety,” said Spitzer in announcing the suit.

GSK responded in a statement that it “has acted responsibly in conducting clinical studies in pediatric patients and disseminating data from those studies. All pediatric studies have been made available to the FDA and regulatory agencies worldwide. We have publicly communicated data from all pediatric studies.”

Spitzer’s complaint cited a 1998 GSK memo which states that the company must “manage the dissemination of these data in order to minimi[z]e any potential negative commercial impact.”

Responding to Spitzer’s suit, GSK claimed that, “As for the 1998 memo, it is inconsistent with the facts and does not reflect the company position.”

The New York complaint asserted as well that “GSK has repeatedly misrepresented the safety and efficacy outcomes from its studies of paroxetine as a treatment for MDD [Major Depressive Disorder] in a pediatric population to its employees who promote paroxetine to physicians.”

Later in June, GSK announced a new policy, whereby it would post on the Internet summaries of the results of clinical trials it conducts. In August, the company settled with Spitzer for $2.5 million, plus a commitment to maintain the policy of posting clinical trial results, for all drugs marketed by the company.

The next month, the Star-Ledger of New Jersey reported on a Glaxo memo from the year before, instructing the company’s sales force not to talk to doctors about company data showing dangers from prescribing Paxil to kids. Glaxo says sales people do not discuss off-label uses with doctors.

In October, the FDA ordered Glaxo and other SSRI makers to include a “black box” warning — the agency’s strongest warning — with their pills. The warning says SSRIs double the risk of suicide in children, though some medical researchers say the number should be higher. At least one GSK clinical trial showed 7.5 percent of youth taking Paxil suffering from suicidality (versus zero percent among those taking a placebo).

Glaxo continues to insist that it disclosed information to appropriate authorities as soon as it discerned important results from its clinical studies.

Thanks largely to Glaxo and other drug companies’ bombardment of the airwaves with ads touting the wonders of drug treatments for all kinds of emotional disorders, childhood use of antidepressants and other pills is skyrocketing — even for drugs that haven’t been shown to help kids. No one should understate the sometime difficulties of adolescence and the trauma that many youth must deal with. But overdosing kids is no answer — and pushing ineffective drugs that spike their risk of suicidality is deplorable.


Hardee’s, Home of the Monster Thickburger. When Hardee’s introduced the thickburger earlier this year, Jay Leno joked that it was being served in little cardboard boxes shaped like coffins.

David Letterman did a skit showing a Hardee’s executive suffering a heart attack as he defended the thickburger.

But, alas, there is no defense for the Monster Thickburger.

With other major fast food outlets moving to green salads, Hardee’s revels in big beef.

Let’s now go to Hardee’s press release of November 15, 2004, which begins this way:

   “St. Louis, Missouri — First there were burgers. Then there were Thickburgers. Now Hardee’s is introducing the mother of all burgers — the Monster Thickburger™. Weighing in at two-thirds of a pound, this 100 percent Angus beef burger is a monument to decadence, yet is still a throwback, as it features lots of meat, cheese and bacon on a bun. Available at all Hardee’s restaurants starting today, the Monster Thickburger is certain to crush the hunger pangs of even the most famished burger lovers.”

   “Before the introduction of the Thickburger line at Hardee’s, the Monster Burger was one of our most popular menu items,” said Brad Haley, executive vice president of marketing for Hardee’s. “In fact, it’s been one of the most requested items from our old menu. However, we didn’t just bring it back. Since it’s now a Thickburger, it’s even bigger and better than it was before.”

Clearly, Hardee’s, a subsidiary of CKE Restaurants, Inc. of Carpinteria, California, is not worried about the public health aspects of unleashing the monster into the marketplace.

It’s a 1,420-calorie sandwich.

Eating one Thickburger is like eating two Big Macs or five McDonald’s hamburgers.

Add 600 calories worth of Hardee’s fries and you get more than the 2,000 calories that many people should eat in a whole day, according to Michael Jacobson of the Center for Science in the Public Interest, which calls the Thickburger “food porn.”

What’s in a Thickburger?

Two 1/3-lb. charbroiled patties of Angus beef, topped with no less than four strips of crispy bacon, three slices of American cheese, and some mayonnaise — all on a buttered, toasted, sesame seed bun.

The Monster Thickburger sells for $5.49 by itself, or $7.09 for a combo meal including medium fries and a medium drink.

Want to see a picture of the beast? Go to www.monsterthickburger.com.

Hardee’s doesn’t believe in doing well without doing good, so the hamburger chain partnered with the National Football league in 10 markets to raise money for charity.

In each of the markets, one “monstrous” NFL player will work the drive-thru of a local Hardee’s for two hours, and the proceeds from every Monster Thickburger sold at that location on that day will be donated to the player’s charity of choice.

Like what charity — medical efforts to drive down diabetes or hypertension?

And check the limits of law enforcement:

The Federal Trade Commission (FTC) earlier this year charged KFC Corporation, owner of the Kentucky Fried Chicken national restaurant chain, with making false claims in a national television advertising campaign about the relative nutritional value and healthiness of its fried chicken and with making false claims that its fried chicken is compatible with certain popular weight-loss programs.

The false claim? KFC said that eating fried chicken, specifically two Original Recipe fried chicken breasts, is better for a consumer’s health than eating a Burger King Whopper.

One ad featured a woman putting a bucket of KFC fried chicken down in front of her husband and announcing, “Remember how we talked about eating better? Well, it starts today!” The ad then states that “Two KFC breasts have less fat than a BK Whopper.”

The FTC says that while it is true that the two fried chicken breasts have slightly less total fat and saturated fat than a Whopper, they have more than three times the trans fat and cholesterol, more than twice the sodium, and more calories.

KFC settled the case.

But there will be no law enforcement action brought against Hardee’s.


Because Hardee’s makes no pretensions that the Hardee’s thickburger is good for you.

And they are reveling in the publicity from Jacobson’s group, Leno and Letterman.

Jacobson says that if Hardee’s persists in marketing this junk, it should at least list calories right up on the menu board.

But Hardee’s has no qualms about the impact of the monster on the public’s health.

The fast-food pusher’s new advertising campaign is straight up — “Be afraid. Be very afraid.”

As the New York Times put it in an editorial, “It is a setback for public health, but a triumph for truth in advertising.”

7) MERCK: 55,000 DEAD

It’s not as if people in power didn’t know about the impending disaster — what David Graham, a Food and Drug Administration (FDA) drug safety official, calls “maybe the single greatest drug-safety catastrophe in the history of this country.’’

Testifying before a Senate committee in November, Dr. Graham put the number in United States who had suffered heart attacks or stroke as result of taking the arthritis drug Vioxx in the range of 88,000 to 139,000.

As many as 40 percent of these people, or about 35,000-55,000, died as a result, Graham said.

The unacceptable cardiovascular risks of Vioxx were evident as early as 2000 — a full four years before the drug was finally withdrawn from the market by its manufacturer, Merck, according to a study released by The Lancet, the British medical journal.

“This discovery points to astonishing failures in Merck’s internal systems of post-marketing surveillance, as well as to lethal weaknesses in the U.S. Food and Drug Administration’s regulatory oversight,” The Lancet editors wrote.

Authors of the Lancet study pooled data from 25,273 patients who participated in 18 clinical trials conducted before 2001. They found that patients given Vioxx had 2.3 times the risk of heart attacks as those given placebos or other pain medications.

Merck withdrew Vioxx on September 30 of this year after a company-sponsored trial found a doubling of the risks for heart attack or stroke among those who took the medicine for 18 months or more.

Merck says it disclosed all relevant evidence on Vioxx safety as soon as it acquired it, and pulled the drug as soon as it saw conclusive evidence of the drug’s dangers.

“Over the past six years,” Merck CEO Raymond Gilmartin told the Senate Finance Committee at the November hearing where Graham made his big splash, “since the time Merck submitted a New Drug Application for Vioxx to the FDA, we have promptly disclosed the results of numerous Merck-sponsored studies to the FDA, physicians, the scientific community and the media and participated in a balanced, scientific discussion of its risks and benefits.”

Until the September clinical trial results came in, Gilmartin said, “the combined data from randomized controlled clinical trials showed no difference in confirmed cardiovascular event rates between Vioxx and placebo and Vioxx and NSAIDs other than naproxen. When data from the APPROVe study [the September results] became available, Merck acted quickly to withdraw the medicine from the market.”

But there is evidence that strongly suggests a different version of the story.

The Lancet findings came in the wake of new disclosures that suggest Merck was fully aware of Vioxx’s potential risks by 2000.

The Wall Street Journal revealed e-mails that confirm Merck executives’ knowledge of their drug’s adverse cardiovascular profile — the risk was “clearly there,” according to one senior researcher.

Merck’s marketing literature included a document intended for its sales representatives which discussed how to respond to questions about Vioxx — it was labeled “Dodge Ball Vioxx.”

“Given this disturbing contradiction — Merck’s own understanding of Vioxx’s true risk profile and its attempt to gloss over these risks in their public statements at the time — it is hard to see how Merck’s chief executive officer, Raymond Gilmartin, can retain the confidence of the public, his company’s most important constituency,” the Lancet editors wrote. “The FDA’s position is no less [un]comfortable. The public expects national drug regulators to complete research in their ongoing efforts to protect patients from undue harm. But, too often, the FDA saw and continues to see the pharmaceutical industry as its customer — a vital source of funding for its activities — and not as a sector of society in need of strong regulation.”

Dr. Graham, the federal drug-safety reviewer, continues to seek to publish his study demonstrating the dangers of Vioxx, but he has been delayed and demeaned by top officials at the Food and Drug Administration.

At the Senate hearing, Dr. Graham said that the FDA “as currently configured is incapable of protecting America against another Vioxx,” because of ties between agency reviewers and the pharmaceutical industry.

Graham says that as a result of his testimony, his bosses have threatened to toss him out of the FDA’s drug safety unit.

In December 2004, a group of 22 members of the U.S. House of Representatives sent a letter to the FDA complaining about efforts to intimidate and smear Dr. Graham.

House members, led by Bart Stupak, D-Michigan, sent the letter to acting FDA Commissioner Lester Crawford “to express strong dismay at recent reports about efforts taken by some at FDA to discredit and smear Dr. Graham.”

“This shameful behavior by management cannot continue, and we demand you put a stop to it,” the letter said.

“Your treatment of Dr. Graham undoubtedly has had a chilling effect on the willingness of FDA employees to speak up and disagree when they believe the public’s health is at risk,” the letter said.

If Graham were targeting just Merck, his job might be safe. But it is about more than Vioxx and Merck.

At the Senate hearing, Graham said that at least five medications currently on the market pose such risks that their sale ought to be limited or stopped. Graham named the five as Meridia, Crestor, Accutane, Bextra and Serevent.

In November 2004, Forbes.com — capitalist tool that it claims to be — named David Graham “face of the year.”

We join with Forbes in saluting Graham “for his steadfast advocacy of drug safety and his willingness to blow the whistle on his bosses.”

“Without Graham, the Vioxx debacle might have been seen as an isolated event,” Forbes wrote. “But because he was willing to step into the spotlight, the withdrawal of Vioxx from the market looks like part of a systemic failure to properly weigh the risks and benefits of drugs. To hear Graham tell it, this is part of a systemic failure to address drug safety on the part of the FDA, a story that reaches back over the entirety of his 20-year career at the agency. That could kick-start a broad debate over what risks we’re willing to take every time we swallow pills. In the long run, change would be good for regulators and drug companies.”


When the New York Times is bad, it can be very bad. But when it is good, it can be very good.

Earlier this year, it was very good.

It was very good when it ran a three-part series by David Barstow and Lowell Bergman that exposed the egregious safety record of McWane Inc., a large, privately held Alabama-based sewer and water pipe manufacturer.

Nine McWane employees have lost their lives in workplace accidents since 1995.

More than 4,600 injuries were recorded among the company’s 5,000 employees.

According to the series, one man died when an industrial oven exploded after he was directed to use it to incinerate highly combustible paint. Another was crushed by a conveyor belt that lacked a required protective guard.

Three of McWane’s nine deaths were the result of deliberate violations of safety standards.

In five others, safety lapses were a contributing factor.

According to the Times, McWane pulled the wool over the eyes of investigators by stalling them at the factory gates, and then hiding defective equipment.

Accident sites were altered before investigators could inspect them, in violation of federal rules.

One former plant manager told of submitting phony water samples to environmental investigators, the Times reported.

When government enforcement officials did find serious violations, “the punishment meted out by the federal government was so minimal that McWane could treat it as simply a cost of doing business.”

“After a worker was crushed to death by a forklift that apparently had faulty brakes, an Occupational Safety and Health Administration investigation found defects in all 14 of the plant’s forklifts, including the one involved in the death,” the Times reported. The fine was just $10,500. Employers are further protected by the workers’ compensation system, which can make it hard for victims to sue.”

Companies who cause the death of workers on the job rarely face the full force of the criminal law. Manslaughter and negligence prosecutions in workplace death cases have been declining for years — as the dead worker bodies steadily pile up.

According to the Times, in one McWane oven explosion that killed an employee, Frank Wagner, McWane “hired a well-connected lobbyist to lean on Dennis Vacco, then New York State’s attorney general, and ended up with a settlement in which it did not admit responsibility for the death.”

The experts who looked at the case determined that the explosion that killed him was the result of reckless criminal actions by McWane, which was operating a cast-iron foundry in Elmira, New York, where Wagner worked.

“The evidence compels us to act,” the prosecution team wrote in a confidential memorandum to Vacco in 1996. The team urged him to ask a grand jury to indict McWane and its managers on manslaughter and other charges. A grand jury inquiry, senior investigators believed, could have taken them up the corporate ladder, the Times reported.

But Vacco never sought an indictment against McWane for any crime.

Only after an unusual intervention by the United States attorney in Buffalo, who threatened federal charges, did McWane agree to plead guilty to a state felony and pay $500,000.

“But as the company and Mr. Wagner’s widow are quick to note, that charge, a hazardous-waste violation, specifically did not hold McWane accountable for Mr. Wagner’s death,” the Times reported.

“It was a reckless act on the part of certain individuals in that company that caused the death of that person. I’ll believe that till the day I die,” says Donald Snell, who supervised the state environmental agency’s investigation. “The ends of justice were not met.”

As the Times series showed, in plant after plant, year after year, “McWane workers have been maimed, burned, sickened and killed by the same safety and health failures.”

The Times documented more than 400 safety violations and 450 environmental violations since 1995 alone.

“Yet regulators and law enforcement officials have never joined forces to piece this record together, never taken a coordinated approach to end patterns of transgression,” the Times reported. “Their responses, piecemeal and disjointed, bring into sharp relief weaknesses in government’s ability to take on corporations with operations spread far and wide.”

McWane says it is changing — and it’s certainly paying more attention to PR after the Times series.

“Over the last several years, our Company has embarked on significant changes that are focused on setting the industry standard in employee safety, health and environmental programs,” asserts a May 2004 report from the company on health and safety. “We have challenged ourselves to go beyond compliance in the development of a state-of the-art safety, health and environmental management system to create a comprehensive program designed to exemplify excellence in environmental, health and safety performance, integrity, service and quality.”

“McWane and its subsidiaries actively promote a safe workplace,” the company asserts. “We have positive and ongoing working relationships with federal, state and local authorities to continuously improve our safety training, workplace technologies, and overall safety programs.”

That doesn’t exactly jibe with what company managers call “the McWane way” — what federal and state regulators characterized to the Times as a “lawless” and “rogue” operation that ruthlessly sought profits with disregard for worker safety and well-being.

Now, consider this:

McWane is responsible for nine worker deaths and countless injuries.

Scott Peterson was responsible for the death of his wife and unborn child.

Which one did the mass television media focus on?

Who got the death penalty?

And why?


Being a military dictator is not as easy as it looks.

You need suppliers of weapons. You need an army to work with you. And, if you are a crook — as most military dictators are — you need a bank to hold on to your money.

That’s where Riggs Bank in Washington, D.C. comes in.

An explosive report from the U.S. Senate Permanent Subcommittee on Investigations of the Committee on Governmental Affairs, issued in July, revealed that Riggs illegally operated bank accounts for former Chilean dictator Augusto Pinochet, and routinely ignored evidence of corrupt practices in managing more than 60 accounts for the government of Equatorial Guinea .

An ongoing internal investigation by Riggs has revealed that the bank’s dealing with Pinochet dates back to 1985, while the Chilean despot remained in power, according to a November Washington Post report.

Riggs has not so far been cited for civil or criminal violations in connection with the Pinochet money-laundering scheme. In May, the bank paid $25 million in fines in connection with money-laundering violations related to the Equatorial Guinea and Saudi Arabian governments.

The bank is the subject of ongoing criminal investigations by the U.S. Department of Justice and the U.S. Attorney’s Office for the District of Columbia, according to recent filings with the Securities and Exchange Commission.

Riggs, which traces its history back to 1840, likes to brag about serving such historical figures as President Abraham Lincoln (and 19 other presidents) and American Red Cross founder Clara Barton, and having supplied the gold for the purchase of the state of Alaska.

It capitalized on its venerable reputation in Washington to become the banker to the embassies that dot the city and the large foreign diplomatic corps resident in the U.S. capital.

Riggs eagerly sought to service them all, apparently even when dictators and their families requested the bank engage in illegal activities to launder money.

The Permanent Subcommittee on Investigations report found that from 1994 until 2002, Riggs opened at least six accounts and issued several certificates of deposit (CDs) for Pinochet while he was under house arrest in the United Kingdom and his assets were the subject of court proceedings. The aggregate deposits in the Pinochet accounts at Riggs ranged from $4 million to $8 million at a time.

What is now becoming apparent is that Riggs was collaborating with Pinochet even a decade earlier, with a scale of activity not yet clear.

Riggs was not a passive or unknowing actor in this drama. According to the Permanent Subcommittee on Investigations report, high bank officials solicited Pinochet’s business, the bank helped Pinochet set up offshore shell corporations and open accounts in the names of those corporations to disguise his control of the accounts, altered the names of his personal accounts to disguise their ownership, and otherwise worked to help him hide his money flow.

Although these activities seem to violate U.S. banking rules, the Office of the Comptroller of the Currency (OCC) did not take enforcement action against the bank after it learned of these matters in 2002. That presumably was not unrelated to the fact that the OCC examiner at Riggs soon thereafter went to work for Riggs.

This is not just a matter of avoiding taxes or failing to follow legalistic rules. These are the actions that reward dictators, and help them live lavishly after stepping down from power. They come at the expense of the dictator’s victims — thousands of dead and tortured in the case of Pinochet. For those who need a reminder of Pinochet’s brutality, see www.memoriaviva.com for a moving list and pictures of victims.

Pinochet is not the only dictator for whom Riggs undertook money laundering.

Equatorial Guinea is a small, oil-rich West African country dominated by a dictator, President Teodoro Obiang Nguema Mbasago. Obiang, his family and cronies live a life of luxury, while the rest of the country remains desperately poor.

The Permanent Subcommittee on Investigations report found that from 1995 until 2004, Riggs Bank administered more than 60 accounts and CDs for the government of Equatorial Guinea , Equatorial Guinea government officials or their family members. Money laundering to cover up corruption appeared to be routine.

Combined, these accounts represented the largest relationship at Riggs Bank, with aggregate deposits ranging from $400 to $700 million at a time.

Riggs does not deny these activities took place, and its internal investigation is continuing. A number of Riggs employees involved in the scandals have been fired or demoted. In July, Riggs announced that it was going to be acquired by PNC Financial Services Group (about which see the profile of AIG above) for more than $700 million. Ongoing legal problems at Riggs could derail the deal, which is supposed to be consummated early in 2005, but for now both parties say it remains on.


You only have to look at the cover of Wal-Mart’s 2004 Annual Report to know the company is facing trouble unlike any it has had to handle before.

“It’s my Wal-Mart,” asserts the slogan on the cover of the annual report.

At the bottom are these claims: “Good Jobs * Good Works * Good Citizen * Good Investment.”

Missing is any reference to “Always Low Prices.”

Stepped up and novel community and legal challenges confronting the company are making the mammoth retailer expend energy on repositioning its image. Hence the annual report, the major image-oriented television ads, the sponsorships on National Public Radio — listened to by few of its shoppers — and the huge surge in campaign contributions. Wal-Mart and its managers gave more than $2 million to federal candidates in the last U.S. electoral cycle, more than any oil company, and almost triple the level the company donated in the 2000 elections.

The company faces a class action lawsuit on behalf of 1.6 million women workers, alleging rampant employment discrimination at Wal-Mart.

The Service Employees International Union (SEIU) has announced plans to spend $25 million a year with the ultimate goal of unionizing Wal-Mart, the largest private U.S. employer.

And the company — which has already lost more than 200 site fights — faces an even more-intensified resistance to its efforts to locate new stores, as it increasingly seeks to enter markets in more urban areas. In April, voters in the largely African-American and Latino working class town of Inglewood, California rejected a referendum that would have allowed Wal-Mart to open a Supercenter without being subject to normal municipal reviews.

But while on a bit of a public relations defensive, the company remains the colossus of U.S. — and increasingly global — retailing. It registers more than a quarter trillion dollars in sales. Its revenues account for 2 percent of U.S. Gross Domestic Product.

The company takes in more than one in five dollars spent nationally on food sales, and market researcher Retail Forward predicts Wal-Mart will control more than a third of food store industry sales, as well as a quarter of the drug store industry, by 2007. Wal-Mart is the largest jewelry seller in the United States, “despite the fact that the prime target market for jewelry — high-income women from 25 to 54 years — are the least likely of all consumers to shop for jewelry in discount channels,” as Unity Marketing notes. Wal-Mart is the largest outlet for sales of CDs, videos and DVDs. And on and on.

For two years running, Fortune has named Wal-Mart the most admired company in America . It is arguably the defining company of the present era.

The company’s business model has relied on new innovations in inventory management, focusing on ignored markets (low-income shoppers in rural areas — though this is now changing), and squeezing suppliers to lower their margins. But it has also relied centrally on undercompensating employees and externalizing costs on to society.

A February 2004 report issued by Representative George Miller, D-California, encapsulated the ways that Wal-Mart squeezes and cheats its employees, among them: blocking union organizing efforts, paying employees an average $8.23 an hour (as compared to more than $10 for an average supermarket worker), allegedly extracting off-the-clock work, and providing inadequate and unaffordable healthcare packages for employees.

Miller’s report’s innovation was in documenting how Wal-Mart’s low wages and inadequate benefits not only hurt workers directly, but impose costs on taxpayers. The report estimated that one 200-person Wal-Mart store may result in a cost to federal taxpayers of $420,750 per year — about $2,103 per employee. These public costs include:

    * $36,000 a year for free and reduced lunches for just 50 qualifying Wal-Mart families.

    * $42,000 a year for Section 8 housing assistance, assuming 3 percent of the store employees qualify for such assistance, at $6,700 per family.

    * $125,000 a year for federal tax credits and deductions for low-income families, assuming 50 employees are heads of household with a child and 50 are married with two children.

    * $100,000 a year for the additional Title I [educational] expenses, assuming 50 Wal-Mart families qualify with an average of two children.

    * $108,000 a year for the additional federal healthcare costs of moving into state children’s health insurance programs (S-CHIP), assuming 30 employees with an average of two children qualify.

“There’s no question that Wal-Mart imposes a huge, often hidden, cost on its workers, our communities and U.S. taxpayers,” Miller said. “And Wal-Mart is in the driver’s seat in the global race to the bottom, suppressing wage levels, workplace protections and labor laws.”

Wal-Mart’s abuses are giving rise to countervailing efforts, but it is an open question whether the company has amassed such power that it will be able to defeat such initiatives.

In California, in November, the company was able to stave off by a 51-to 49 percent margin a proposition that would have required every large and medium employer in the state to provide decent healthcare coverage for their workers, with the employer contribution set at a minimum of 80 percent of costs.

Wal-Mart dumped a half million dollars into the anti-Proposition 72 campaign just a week before the vote.

“As one of California’s leading employers, we care about the health of our 60,000 employees here,” said Wal-Mart spokesperson Cynthia Lin, in celebrating the defeat of Proposition 72. “That’s why we provide our employees with affordable, quality health care coverage.”

“Prop. 72 was never about Wal-Mart,” she claimed. “It was about allowing businesses to operate without unreasonable government mandates, it was about the survival of small businesses and it was about consumer choice in healthcare benefits.”

The biggest immediate challenge facing Wal-Mart is the class action lawsuit filed by its women workers. The women allege that Wal-Mart pays female workers less than men, promotes men faster than women and men above more competent women, and fosters a hostile work environment. A federal judge ruled in June that the case could proceed as a class action.

“We strongly disagree with his decision and will seek an appeal,” says company spokesperson Mona Williams. “While we cannot comment on the specifics of the litigation, we can say we continue to evaluate our employment practices. For example, earlier this month Wal-Mart announced a new job classification and pay structure for hourly associates. This new pay plan was developed with the assistance of third party consultants and is designed to ensure internal equity and external competitiveness.”

Liza Featherstone, who has chronicled the claims of the women employees in her book Selling Women Short, says women workers report “a pattern of arbitrary, very subjective decision-making by management.” They report business meetings being held at Hooter’s or strip clubs.

The contradiction of a self-righteously moral company — which won’t sell racy magazines or CDs with parental advisory labels — permitting such behavior is a reflection of women employees’ powerlessness. “Unlike its female workforce,” Featherstone writes, “the women who shop at Wal-Mart can’t be ignored, and many of them have conservative values.”

But while Wal-Mart is willing to bend to consumer demand on marginal issues like covering over the headlines on Cosmopolitan magazine, it is not so flexible on respect for worker rights. Nor is there any sign of a consumer rebellion on anything like the scale necessary to make the company revisit its employment policies.


Russell Mokhiber and Robert Weissman are co-authors of On the Rampage: Corporate Predators and the Destruction of Democracy (Monroe, Maine: Common Courage Press). Robert Weissman is general counsel for Essential Inventions, a nonprofit mentioned in the Abbott profile.




Multinational Monitor

March/April 2005

The Wolfowitz Card

Shock and awe was the response around the world to the U.S. nomination of Paul Wolfowitz, former U.S. deputy secretary of defense, to become president of the World Bank.

But, from governments at least, dismay was quickly followed by capitulation. On March 31, the executive directors of the World Bank approved the key architect of the Iraq war as president of what is supposed to be the world’s largest development agency. (The executive directors are effectively the Bank’s board of directors, and represent countries, with voting shares proportionate to what countries lend to the Bank.)

By tradition, but without any legal requirement, the United States picks the head of the Bank.

The announcement of a nominee who many believe symbolizes U.S. unilateralism and contempt for the rule of law, however, stunned governments around the world.

Especially because the United States exercised an effective veto over a recent European pick to run the World Bank’s sister institution, the International Monetary Fund, for a short while it appeared the controversial Wolfowitz nomination might set off a firestorm requiring the Bush administration to replace the nominee.

Instead, however, the stars rapidly aligned, and Wolfowitz was confirmed within two weeks of his nomination.

Ignoring human rights

The Wolfowitz nomination had been floated weeks before the formal announcement. Following global outrage, the Bush administration issued a statement — soon shown to be untrue — that Wolfowitz would remain at the Department of Defense.

From civil society, at least, outrage intensified with the actual nomination.

Three messages emerged from civil society criticisms: First, Wolfowitz comes to the job of Bank president particularly unqualified. Second, there is a nexus between the corporate-friendly economic model pushed by the Bank and the military aggression of the United States . Third, controversy about the presidential appointment should not obscure more fundamental problems with the Bank’s activities. For many groups offering criticism, that the process of choosing the Bank president is anti-democratic is just one small component.

“Wolfowitz’s record demonstrates that he has almost no understanding of poverty reduction and environmental protection,” said Longgena Ginting, co-coordinator of the Friends of the Earth International campaign on International Financial Institutions.

“As U.S. ambassador to Indonesia , he also ignored many gross human rights violations practiced by the Suharto administration, like those in East Timor, Aceh and Papua. Wolfowitz was very close to Suharto, coddled corruption and made life as easy as possible for U.S. corporations, including some with terrible social and environmental records,” said Ginting, who is a past executive director of Friends of the Earth Indonesia, Indonesia’s largest environmental organization.

Wolfowitz’s allies say he worked to promote democracy and human rights in Indonesia when he was U.S. ambassador there. But Northwestern University Professor and Indonesia expert Jeffrey Winters notes that there is no available press account of Wolfowitz mentioning democracy or human rights while ambassador — but an extensive record of apologetics for the despotic Suharto regime. Indonesian human rights activists say Wolfowitz never met with them.

For many critics of World Bank policy, the Wolfowitz choice highlighted the connection between use of economic and military power to advance corporate interests.

Washington’s message however could not be clearer or more ‘transparent,’” said a statement from Jubilee South, a network of debt cancellation organizations in the developing countries. “The World Bank, and indeed the very notion of development, must continue to take their unambiguous place in the U.S.-driven neoliberal war against people’s right to self-determination and autonomous development. The nexus between economic and military imperialism stands exposed.”

“This nomination is an aggressive move by the Bush Administration to use international development policy, and the money of the World Bank, to impose its will on developing countries, just as it has used its military to impose its will on Iraq and Afghanistan ,” agreed Leslie Cagan, national coordinator for United for Peace and Justice, a U.S. peace organization.

But while critics lambasted Wolfowitz, they were careful to emphasize that the Bank’s problems extend far beyond who serves as its top officer.

“The IMF and World Bank have made repeated claims that the economic policy reforms attached as conditions on their loans are not imposed from the outside, but instead are ‘country-owned,’” says Rick Rowden, policy analyst with ActionAid International USA. “In fact, economic policies which harm poor people continue to be imposed by the international financial institutions as conditions on debt relief and new loans, with these institutions retaining the power to overrule local parliaments.”

“The World Bank has a track-record plagued with harmful projects around the world, including major oil and gas projects that have damaged the environment and done nothing for poverty reduction,” adds David Waskow, director of the international program at Friends of the Earth - U.S. “Wolfowitz, who’s promoted the interests of oil corporations in Iraq and Indonesia, is the wrong person to change the course of the Bank.”

From Jubilee South came the harshest language: “We call on all those concerned to direct their campaign efforts not simply at reversing” Wolfowitz’s appointment, “but at decommissioning the World Bank itself, holding its owners and directors accountable for the genocidal consequences of its lending and collections, and resisting the neoliberal economic offensive that it is now entrusting Wolfowitz to unambiguously lead.”

The capitulation

But while civil society opposition was heating up, governments were quickly falling into line to support Wolfowitz.

This even though Europe does have the votes to block a U.S. selection, and organized opposition from developing countries would have made it very hard for the Wolfowitz nomination to succeed.

Europe wasn’t willing to force a confrontation with the United States — it being perfectly clear that the Bush administration knew how distasteful the nomination would be in Europe, where there is continuing and overwhelming opposition to the Iraq war.

Instead, the Europeans opted for horse-trading. France hopes to win U.S. support for its candidate to run the World Trade Organization. Germany is seeking a seat on the UN Security Council. And the Europeans reportedly extracted a commitment for a new number two position at the Bank, to be reserved for a European.

The developing countries also chose to sit on their hands. There was some Machiavellian calculation here, too — Brazil also hopes for a Security Council seat — but generally the poor countries were intimidated into staying quiet. Unlike the Europeans, they actually borrow from the World Bank and are subject to its dictates, so challenging a presidential contender, with the likelihood of failing, would be a major gamble.

While the Europeans cut deals, Wolfowitz quickly launched what all labeled a “charm offensive.” He noted his concern for the poor, and repeated that he understood the Bank chieftain to be a civil servant responsible to all nations, not just his friends in the Bush administration.

The charm offensive succeeded, and Wolfowitz quickly won the unanimous support of the World Bank’s executive directors.

In accepting the appointment, Wolfowitz said that he had “exchanged views with dozens of ministers, ambassadors and even Presidents and Prime Ministers, from every continent. I appreciate their support and their commitment to the vision of the World Bank. As I have said frequently, that mission — helping the poorest of the world to lift themselves out of poverty — is a noble mission or, as former Secretary of State George Shultz said, a beautiful mission.’ I believe deeply in that mission.” “Nothing is more gratifying than being able to help people in need and developing opportunities for all the people of the world to achieve their full potential.”

Whether Wolfowitz will do anything to advance that mission — which the Bank, by its own accounting, has so routinely failed — is something about which many Bank watchers are deeply skeptical.

One small sign of hope for some is that Wolfowitz brings a skepticism about the institution’s effectiveness, and perhaps a preference for grants over loans.

Another possible “silver lining in this choice is that Wolfowitz was a leading advocate for canceling Iraq ’s debt,” says Neil Watkins, national coordinator of Jubilee USA. “His advocacy for canceling Iraq’s debt on the grounds of its odiousness — its history of being contracted by a dictator without public consent, and the funds used for purposes antithetical to the public interest — mirrors one of the chief arguments jubilee campaigns have long invoked in the their struggle for debt cancellation in dozens of countries.”

— Robert Weissman

Australia 's Oil Grab

“We went to East Timor to help those people, and now we are slapping them in the face and stealing their oil.”

This is what Chip Henriss-Anderssen, a former major in the Australian military who served with the International Force for East Timor, told reporters on March 7. “We thought we were doing something decent. Now we have to ask the very real question of whether or not we went to East Timor to secure oil assets that aren’t ours.”

The latest round of talks between Australia and East Timor in Canberra on disputed oil and gas fields in the Timor Sea took place March 7-9, but concluded with little more than an announcement that further talks will take place soon.

Just prior to the talks, a foreign affairs and trade department official told reporters in Canberra that the Australian coalition government was prepared to hold out for up to 99 years — referring to a “Hong Kong” scenario — if the government of East Timor maintained its demand that the maritime boundaries be settled according to international law.

Two months before East Timor gained independence, Australia withdrew recognition of the maritime boundary jurisdiction of the International Court of Justice, leaving East Timor with no legal avenue to contest the current boundary dispute.

At the center of discussions is the Greater Sunrise gas field, the largest known reserve of gas in the Timor Sea. Negotiations stalled last year after the October federal election, when the East Timorese government refused to accept the terms on offer for a “creative solution” regarding Greater Sunrise.

The Australian government has reportedly made an offer of $2.4 billion to $4 billion (over 30 years) to East Timor if it drops the demand for a royalty share greater than 18 percent. Australian negotiators are arguing that this new “creative solution” should be concluded separate to finalizing the maritime boundaries, hence the threat to hold out for decades if East Timor does not relinquish its claims.

While the estimates of the wealth expected to be generated from Greater Sunrise vary, based on current world prices the total government take from royalties is likely to be on the order of $30 billion. The Australian government appears to hope that cash-strapped East Timor will accept.

A delegation of prominent Australian supporters of East Timor, including Greens Senator Bob Brown, Bishop Hilton Deakin and businessperson Ian Melrose, gathered in Canberra outside the venue of the talks on March 7 and condemned the Australian government’s stance.

According to Bishop Hilton Deakin, “The majority of Australians want our government to offer a fair deal that reflects East Timor’s rightful entitlement under current international law.”

Melrose has vowed to spend more than $4.5 million on a media campaign in support of East Timor’s claims, “if I don’t think it’s getting the momentum required.”

Many former Australian military personnel, including Second World War veterans who were stationed in Timor, have spoken out in support of East Timor’s rights.

A letter signed by 17 U.S. senators and representatives was also recently sent to Prime Minister John Howard, calling for “Australia to move quickly and seriously to establish a fair, permanent maritime boundary with Timor-Leste.”

The letter said: “An equitable sharing of oil and gas revenues would enable Timor-Leste to provide better healthcare and other essential services to its citizens. Such equitable sharing of revenue is not a question of charity; rather it is a matter of self-determination, sovereignty and Timor-Leste’s future.”

“Unless the Australian government acknowledges East Timor’s legal entitlements under current international law and stops trying to shortchange the East Timorese people,” says Tom Clarke, coordinator of the Timor Sea Justice Campaign in Melbourne, “future negotiations are not going to result in a just and fair outcome.”

“The East Timorese resisted a brutal occupation for 24 long years. Why would they give up on their struggle for self-determination for a one-off payment that falls well short of what East Timor is legally entitled to?”

Clarke claims the Howard government is ignoring international law “so it can take billions of dollars from one of the poorest nations in the world. East Timorese children are dying from preventable diseases and the Australian government is taking $1 million a day of contested oil royalties. It’s bringing shame to all Australians.”

— Jon Lamb

Third World Network Features/

Green Left Weekly. This article

appeared initially in Green

Left Weekly, March 16, 2005.


The March/April Lawrence Summers Memorial Award* goes to SeaCode company, which plans on locating a cruise ship in international waters, just off of the California coast, and out of reach of U.S. labor, employment and immigration law, to house a software development company.

The idea is that the company will be able to deliver project pricing “comparable to a distant-shore firm,” but from closer geographic proximity to U.S. clients. The company also plans to have programmers form around-the-clock development teams.

SeaCode’s founders say their primary motivation is to get around immigration restrictions on using foreign programmers in the United States . The founders promise the workers will be treated well, and able to use the cruise ship’s amenities in off hours. By contrast, information technology columnist John Dvorak has disparaged the idea as an “Indian slave ship.”

Source: Linda Briggs, “Outsourcing off Los Angeles?”

ADTmag.com, April 18, 2005.

*In a 1991 internal memorandum, then-World Bank economist Lawrence Summers argued for the transfer of waste and dirty industries from industrialized to developing countries. “Just between you and me, shouldn’t the World Bank be encouraging more migration of the dirty industries to the LDCs (lesser developed countries)?” wrote Summers, who went on to serve as Treasury Secretary during the Clinton administration and is now president of Harvard University. “I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that. ... I’ve always thought that underpopulated countries in Africa are vastly under polluted; their air quality is vastly inefficiently low [sic] compared to Los Angeles or Mexico City.” Summers later said the memo was meant to be ironic.




Multinational Monitor

March/April 2005

Junk Food's Health Crusade

(How Ronald McConald Became a Health Ambassador, and other Stories)

by Michele Simon

Any parent who goes grocery shopping with young children in tow will tell you it can be quite a challenge, enduring endless battles over fat- and sugar-laden food products adorned with the latest Disney movie character. But what used to be mainly a private matter has now become a full-blown public debate over the role the food industry plays in children’s health.

Major food companies and fast food chains are coming under increasing public scrutiny in the wake of a growing childhood obesity epidemic. Not taking the finger-pointing lying down, Big Food has set its PR machine into overdrive; companies are tripping over each other trying to position themselves as caring about children's’ health.

But national experts and grassroots activists alike are skeptical. Behind the mainstream media hype, they say, is a trail of deception, lobbying and utter hypocrisy.

The New Greenwashing

To demonstrate its commitment to children, McDonald’s has introduced “Happy Meal Choices” so that parents can replace high-fat French fries with “Apple Dippers” (sliced apples and caramel dipping sauce); and instead of a Coke, kids can now have apple juice or milk. There is, however, no substitute for the hamburger, cheeseburger or Chicken McNuggets.

In addition to promoting its food as nutritious, the fast food giant is also attempting to deflect attention from its unhealthy products by promoting physical activity as the “real” answer to the obesity problem. In January, McDonald’s announced that it was sending its mascot, Ronald McDonald, into elementary schools to promote fitness among children. Dubbed the company’s new “chief happiness officer,” Ronald has become an “ambassador for an active, balanced lifestyle,” McDonald’s Chief Creative Officer Marlena Peleo-Lazar told a government panel studying food advertising.

Nutritionist Melinda Hemmelgarn, a food and society policy fellow with the Thomas Jefferson Agricultural Institute in Missouri, is unimpressed. “Their goal in going into schools is, in a word, branding. If Ronald was truly an ambassador of health, he would promote organic, sustainably-produced foods, preferably from local producers to support local economies and protect the environment,” she says.

Susan Linn, a psychologist at Harvard’s Judge Baker Children’s Center and author of Consuming Kids: The Hostile Takeover of Childhood, agrees that McDonald’s has no place in school. “This is just another marketing ploy. The notion that children need Ronald McDonald to get them to enjoy exercise is bogus. Given the opportunity, kids naturally like to be active,” she says.

Another company seeking to teach children about exercise is PepsiCo, the world’s fifth-largest food and beverage company. Last fall, PepsiCo reached 3 million students by sending educational materials on fitness to elementary schools. In March, the company targeted all 15,000 middle schools in the United States with its get-fit message. Ironically, PepsiCo already has a strong marketing presence in public schools. Exclusive contracting with school districts allows the company to sell highly sweetened beverages and Frito-Lay-branded junk food, much to the dismay of nutrition advocates.

To deflect critics, PepsiCo has created a Web site (www.healthispower.net) devoted to making the case that it cares about children’s health. The site claims that “kid-friendly” school snacks such as Doritos and Pepsi are “part of a balanced diet.”

“If companies like McDonald’s and Pepsi really cared about children’s health, they would stop hawking their wares in schools,” says Linn.

The food and beverage giant also recently introduced the “Smart Spot” symbol, a small green circle with the message, “Smart Choices Made Easy” that appears on such “healthy products” as Diet Pepsi, Gatorade and Baked Lays. But labeling a food healthy does not make it so. Hemmelgarn thinks the labels can be misleading. “Gatorade is simply sugar and water; it’s not a healthy product,” she says. Gatorade is often marketed in schools as a healthy alternative to soda.

Nutrition consultant Fern Gale Estrow is concerned about the more insidious nature of the Smart Spot. She says it’s a way of marketing to kids because children respond to symbols. She also notes that the Smart Spot symbol contains a check mark that looks very similar to the VeriSign — the symbol that means certain Internet sites are secure. “That’s a positive message. A check-mark means something is ok; so I have real concerns about the marketing and media messaging,” she says.

Another company jumping on the “good for you” bandwagon is General Mills. A leader in children’s cereals with annual sales of more than $1 billion, the corporation markets products in more than 100 countries. In January, General Mills reformulated its cereals sold in the United States to contain whole grains, the company says, in response to the federal government’s recommendations to eat more whole grains.

But what about all those high-sugar cereals aimed at kids? Marybeth Thorsgaard, a Genera l Mills spokesperson, says, “Even with pre-sweetened cereals, there really is no better breakfast your child could eat in the morning. Pre-sweetened cereals account for less than 5 percent of your sugar for the entire day, but because it’s fortified and nutritionally dense for the amount of calories, there really is no better breakfast that your child could eat.”

Marion Nestle, Paulette Goddard Professor of Nutrition, Food Studies and Public Health at New York University and author of Food Politics, has heard this argument before. “It’s hard not to react sarcastically to such statements from cereal makers. I have heard them say the reason sugary cereals are good for kids is because of the milk that’s added. That, I suppose, would also be the rationale for giving kids cookies for breakfast. This is a marketing ploy to make people think that whole grain Cocoa Puffs are healthy. Sugar is still the first ingredient,” she says.

Estrow is also skeptical about the General Mills move and is concerned that parents might be duped by the new labels. “The level of confusion in nutrition is already massive. Now we have whole grain Lucky Charms. I think it’s totally bogus. The dietary guidelines were changed to make a stronger statement about fiber, and this product has less than one gram of fiber per serving. That’s just not sufficient,” she says.

Nutrition experts say that these health claims boil down to nothing more than marketing gimmicks. Melinda Hemmelgarn says the goal is not to actually promote health, but rather simply “to increase sales by health-conscious parents.”

Marion Nestle is more blunt: “Food companies are desperate for sales and growth and if they can use ‘health’ to sell junk food, they will,” she says.

Fighting for the Right to Advertise

The issue of excessive food marketing to kids is fast becoming a hotly debated topic. Many experts, including nutritionist Hemmelgarn, think that marketing to children under age eight is unethical because young children don’t have the critical thinking skills to evaluate media messages.

In January, the Institutes of Medicine (IOM, a Congressionally chartered independent advisory body to the federal government) hosted a “Workshop on Marketing Strategies that Foster Healthy Food and Beverage Choices in Children and Youth.” Featured speakers included executives from Kraft, PepsiCo and McDonald’s, as well as television and advertising representatives. Health advocates had almost no representation.

In its remarks, the mega food conglomerate Kraft Foods (owned by Altria, the company formerly known as Philip Morris) was especially eager to portray itself as doing right by children. Lance Freidmann, senior vice president of global health and wellness, promised that Kraft’s R&D team was “hard at work creating new products for kids” that meet the company’s self-defined healthy criteria. He also stressed the importance of self-regulation, concluding that industry and government should develop “responsible self-regulatory practices for marketing to kids while permitting companies to compete vigorously in the growing market for healthier foods.”

Also in January, Kraft promised to scale back junk food ads to children, a move that earned the company much free positive media. But the potential impact of Kraft’s promises isn’t entirely clear. For example, only certain products, including regular Kool-Aid, Oreo cookies, several Post children’s cereals and some varieties of Lunchables will no longer be advertised to children under age 11. However, according to a press release, “products that the company will continue to advertise in media aimed specifically at the 6-11 age group include: Sugar-Free Kool-Aid, Half the Sugar Fruity Pebbles cereal, and Chicken Dunks Lunchables Fun Pack.” Why are these products fair game? Kraft claims that they offer ‘beneficial nutrients or a functional benefit.’”

Less than two weeks later, Kraft turned right around to join with other major food companies and ad agencies to create a new lobbying group, the Alliance for American Advertising. Together, Kraft and fellow members General Mills (which refused to comment on its involvement for this story) and Kellogg comprise the top three advertisers of packaged food to kids. Their combined annual spending on kids’ ads is close to $380 million in the United States alone. Other alliance founders include the American Association of Advertising Agencies and the Grocery Manufacturers of America, two powerful trade associations in their own right. The alliance’s stated purpose is to defend the industry’s purported First Amendment rights to advertise to children and to promote self-regulation as an alternative to government restrictions.

Susan Linn is appalled at this marketing campaign to defend the right to advertise. “Food companies and the advertising industry should be thinking about their responsibilities to children, not about their ‘right’ to exploit them. Whether we rely on research or common sense, we know that children are more vulnerable to marketing than adults and that they should be protected because of their vulnerabilities,” she says.

Commercial-Free Childhood

Public health advocates are increasingly insisting that parents have the right to raise their children without being undermined by corporate marketers; and that the government should restrict commercial access to children.

Those sentiments were expressed in a public statement signed by dozens of leading educators and health advocates, and organized by a public health coalition with which Linn works called the Campaign for Commercial-Free Childhood, stating that children have the right to grow up in a safe and healthy environment.

This health perspective is beginning to make inroads in the corridors of power. In March, Senator Tom Harkin, D-Iowa, announced plans to introduce a bill to give the Federal Trade Commission (FTC) the authority to regulate advertising to children. Congress stripped the agency of the authority to regulate unfair advertising to kids in 1980, when the commission was on the verge of restraining ads targeting children. As a result, the commission now has greater authority over advertising aimed at adults than at children.

At a press conference surrounded by toys used to promote junk food to kids, Harkin criticized the food industry for contributing to childhood obesity by spending as much as $15 billion last year on marketing to children. Harkin singled out General Mills’ Shrek cereal as being particularly egregious. The product consists of sweetened corn puffs with marshmallow pieces and contains 14 grams of sugar per serving. “Kids just see that it’s Shrek,” Harkin said.

Also in March, the chair of the FTC, Deborah Majoras, announced a workshop to be held this summer on food marketing to children. In the same breath, she also asserted that the agency did not intend to regulate industry. “Let me make this clear, this is not the first step toward new government regulations to ban or restrict children’s food advertising and marketing. The FTC tried that approach in the 1970s and it failed,” Majoras said at a Consumer Federation of America conference.

The food industry relies on a self-regulatory body called the Children’s Advertising Review Unit (CARU) to police its advertising policies.

“We support CARU, a self-regulatory mechanism that reviews all ads directed to children and ensures that they are appropriate for them and takes into account where children are developmentally,” says Stephanie Childs, a spokesperson for the Grocery Manufacturers of America, a trade association whose 140 members enjoy annual sales of more than $500 billion in the United States alone, and consists of major food corporations such as Kraft, Nestle and PepsiCo.

She also asserts that “CARU has not hesitated once to let companies know when they think an ad is inappropriate and if the company does not make changes, CARU takes the complaint directly to the FTC.” She is unable to point to any examples of CARU doing so, however.

Many experts question CARU’s effectiveness. Attorney Ellen Fried teaches food law at New York University and has filed complaints with CARU to challenge food industry ads. “As with all self-regulatory bodies, CARU is hampered by its being a creature of, and supported by, industry.” She adds that few people even know CARU exists. “Most of their activity is self-initiated because consumers — as opposed to industry competitors — don’t even know where, or to whom, to complain.”

Senator Harkin says that self-regulation has been a complete failure. “The current industry efforts are woefully inadequate,” he says.

“I sincerely hope that the industry will develop tough and effective marketing guidelines, but when private interests work against the public good like this, government is obliged to act.”

Coke: No Connection Between Soda and Obesity

When it comes to undermining children’s health, many advocates would place Coca-Cola among the worst offenders. The top soda company has spent years becoming firmly entrenched in public schools by forming lucrative, long-term contracts that contain various marketing devices.

Amidst growing health concerns, state legislatures and school districts all over the United States are now attempting to rid schools of unhealthy beverages. Determined not to go down without a fight, Coca-Cola has responded with heavy-hitting lobbying and PR tactics reminiscent of Big Tobacco’s response to public health demands.

Veteran dietician Carolyn Dennis, chair of the Kentucky Action for Healthy Kids Taskforce, has been battling Coca-Cola lobbyists for four years. In March, the Kentucky state legislature finally passed a compromise bill that gets rid of soda in elementary schools. Allowing soft drink companies to continue to sell soda in middle and high schools was the only way the bill could possibly pass. Even that wasn’t enough for Coke. The bill’s original language called for “healthy beverages” to replace soda, but Coca-Cola balked, worried about the implications for its flagship product’s reputation. Dennis explains: “The Coke lobbyist wanted the language, ‘school-day appropriate beverages.’ We debated it for hours, and finally my colleagues said ‘Look, if this will get them off our backs, let’s do it.’ So we compromised on ‘school-day approved.’”

Fellow Kentucky schools health advocate Martin Solomon, a retired economics professor, says “numerous studies show conclusively that the significant calorie content of sweetened beverages is a serious threat to children’s health. And yet the soda industry continues to say that it’s a lack of exercise — not excess calories — that’s responsible.”

In March, at a conference on childhood obesity at Harvard University, Dr. Maxime Buyckx, Coca-Cola’s director of nutrition and health sciences, denied any scientific connection between soda and obesity, despite a Harvard study concluding that each additional soda a child drinks a day increases their risk of obesity by 60 percent.

Professor Richard Daynard, of Northeastern University School of Law and the Public Health Advocacy Institute, challenged Buyckx at the meeting: “Does your company feel any responsibility for creating this situation?” he asked.

In response, Buyckx claimed that the study in question was methodologically flawed and should merely be treated as “hypothesis-generating.”

Later, Daynard, a long-time tobacco control advocate, said: “Buyckx’s response eerily echoed claims that the tobacco companies made about the numerous studies showing that smoking causes lung cancer — they were all just ‘hypothesis-generating.’ The tobacco industry is currently defending a racketeering suit brought by the U.S. Department of Justice based on its decades-long campaign of scientific denial and disinformation. Will Coke be next?”

— M.S.

Michele Simon, a public health attorney who teaches health policy at the University of California Hastings College of the Law, directs the Center for Informed Food Choices and is currently writing a book about food industry lobbying.




Multinational Monitor

March/April 2005

T A K I N G   A W A Y   V I C T I M S '   R I G H T S

Winning the White House in the "Lawsuit Lottery

The Bush-Rove Ticket to Power

by Andrew Wheat

We need to make sure that this lottery, this lawsuit lotter doesn't ruin the health care for citizens all across our country.

- President Bush

Grand Rapids, MI

January 29, 2003

The “lawsuit lottery’s” all-time greatest winners are George W. Bush and chief Bush strategist Karl Rove, who purchased their first winning ticket together in Texas in 1994.

The four issues that Rove had candidate Bush hammer in the 1994 Texas gubernatorial race were education, welfare, juvenile crime and civil justice. Reporters James Moore and Wayne Slater, in their book on Rove, Bush’s Brain, write that education and juvenile crime already were hot political issues in Texas. Bush added welfare reform. “Later, we added tort reform,” the book quotes Rove saying. “I sort of talked him into that one.”

Rove “talked him into that one” because the other three issues were not cash cows that could finance the exorbitant campaign needed to beat Governor Ann Richards.

In contrast, Rove had learned that “tort reform” — limits on victims’ rights to sue corporations and other wrongdoers for compensation in the civil justice system — is a Republican treasure trove.

Rovian revolution

A debate-club wonk who won his first campaign — to be president of a Utah high school — in 1968, Rove is a college dropout who went from the College Republicans to a job at the Republican National Committee under George Bush the elder. Rove later moved to Houston to run the Fund for Limited Government PAC that would soon fuel the elder Bush’s first presidential bid. While on the payroll of the elder Bush’s PAC, Rove advised the younger Bush in his 1978 campaign to represent West Texas’ oil fields in Congress. Texas voters rejected George W. Bush in that election but did elect oil tycoon Bill Clements as Texas’ first Republican governor since the post-Civil War Reconstruction era.

In so doing, Texas voters gave expression to a gradual but powerful electoral shift that struck the South and rippled across the United States . Especially in the South, the welfare and civil rights policies of the Kennedy-Johnson era alienated many rural and blue-collar whites, who steadily abandoned the Democratic Party.

This shift was neither sudden nor complete. To prevail, Republicans needed to spend heavily to mobilize swing voters.

Bill Clements, for example, ran up a $7 million campaign debt in winning the Governor’s Mansion in 1978. Afterwards, the Clements campaign hired Rove to repay these loans through a direct-mail blitz of wealthy Republicans. If Rove’s success at retiring this debt was impressive, it arguably made the greatest impression upon Rove himself. Within two decades, Rove and the direct-mail shop that he opened in Austin in 1981 could claim enormous credit for kicking Democrats out of every statewide office in Texas — even as they catapulted George W. Bush into the Governor’s Mansion and ultimately to the White House.

Rove’s success came in fits and starts. After running Clements’ failed reelection campaign in 1982, Rove and Clements returned to retake the governor’s mansion from Democrats in 1986. Meanwhile, Rove’s client list soared, fed in part by Governor Clements’ appointment powers. One of these appointments would teach Rove all he needed to know about playing the “lawsuit lottery.”

“Justice for Sale

In December 1997, “60 Minutes” broadcast “Justice for Sale,” an exposé of conflicts at the Democratic-controlled Texas Supreme Court. As the largest of nine states where justices win office through partisan campaigns, Texas long has been a hothouse of judicial corruption. Candidates for the Texas high court often spend more than $1 million, with much of this money coming from lawyers and litigants with cases before the court.

After the “60 Minutes” exposé, Democratic Chief Justice John Hill resigned midterm and Clements appointed Republican Tom Phillips, an attorney formerly with Baker Botts, the law firm of George Bush the Elder confidante James Baker, as his temporary replacement in January 1988. Phillips then hired Rove to help him face voters later that year.

Texas voters typically elect three or four judges to the high court at a time, but the scandal helped put six seats up for grabs in November 1988. Allied with defense-oriented businesses and doctors, Rove helped turn the 1988 judicial election into a referendum on the Supreme Court scandal. Chief Justice Phillips led the so-called “Clean Slate” of business-bankrolled court candidates, which was nominally “bipartisan” thanks to inclusion of conservative Democratic Justice Raul Gonzalez. The main thrust of this slate’s campaign — replayed for a decade until no Democratic justice remained — was that greedy trial lawyers had corrupted the court’s liberal Democratic majority.

The “Clean Slate” won four of the six seats on the ballot in 1988 (losing only to current U.S. Representative Lloyd Doggett). Rove now had an issue that his direct-mail machine could take to the bank. It did. In 1990, the business lobby gained a majority on the state court with the election of Republican John Cornyn (now a U.S. Senator).

The 1994 election witnessed the triumph of two more Rove candidates, conservative Justice Priscilla Owen — and Governor George W. Bush.

Governor Bush’s judicial appointments would help secure an all-Republican state Supreme Court by 1999.

Texas’ Republican justices — seven of whom were Rove clients — were raising an average of $1.4 million per election during the 1990s. The top sources of this money were corporate law firms followed by business interests with heavy legal liabilities. These same donors fared extremely well under the new court. In a single day in 1996, the court overturned lower courts with two tax decisions that saved hundreds of thousands of dollars for two major donors to the justices: Enron and HEB Grocery Co. In 1998, “60 Minutes” aired a sequel that found the “Clean-Slate” court to be strikingly similar to its predecessor. The chief distinction was that the justices now took money from — and ruled for — business interests.

This is what makes the tort issue a cash machine. Politicos such as Rove can make the pitch to businesses that contributions to lawsuit-hostile candidates in any branch of government are investments that pay themselves back many times over. Similarly, pitching lawsuit-sympathetic candidates allowed Texas Democrats to belly up to an open plaintiff’s bar in the 1980s.

Tex-Mex torts

In a 1992 Austin American-Statesman interview, Rove disavowed paternity for the trial-lawyer attack strategy, which the Bush-Quayle reelection campaign also was deploying at the time. Instead, Rove credited the Manhattan Institute think tank and Vice President Dan Quayle’s deregulatory White House Council on Competitiveness for developing this political issue.

Yet this account neglected to credit the contributions of one of Rove’s own clients. A year earlier Rove started a gig with Philip Morris, which paid him a $3,000-a-month consulting retainer through 1996. Documents released as part of the tobacco industry’s 1998 legal settlement with state attorneys general reveal that, during Rove’s Philip Morris period, the industry invested heavily in Texas judicial races and helped take Texas’ budding anti-tort movement national.

The Rio Grande Valley Chamber of Commerce started the non-profit Weslaco Citizens Against Lawsuit Abuse (CALA) in 1990 after two Mexican-Americans won a $2.5 million jury award for being illegally fired from a sugar mill near Texas’ Mexican border. Funded by local businesses and doctors, CALA put up billboards in January 1991 that took the anti-tort message to regular people by attacking “lawsuit abuse” [see “Corporate Astroturf and Civil Justice,” Multinational Monitor, March 2003].

CALA next ran a blitz of “lawsuit-abuse” ads in early 2002 and organized a state Senate candidate debate between Democratic primary challenger Juan Hinojosa and incumbent state Senator Eddie Lucio, who ran on the tort issue.

The timing of CALA’s ads is intriguing given that Philip Morris Vice President Craig Fuller reported in a February 1992 memo that his company was making two commercials “to test the impact of the tort reform issue in Texas state Senate elections.” The memo added, “Focus groups will be conducted in February; the primary is in March.”

If CALA already was not working with the tobacco industry, it would be soon.

Former tobacco attorney and then-U.S. Solicitor General Ken Starr wrote a 1991 Council on Competitiveness report that convinced the administration to make “tort reform” a priority. Martin Connor, who founded the industry-sponsored American Tort Reform Association (ATRA), then arranged to send Vice President Quayle on a national tort tour. Stopping in Weslaco in 1992, Quayle urged CALA to expand beyond the Rio Grande Valley.

Initial aid for CALA’s proselytizing came from ATRA, the Texas Chamber of Commerce and the Republican-aligned Texas Public Policy Foundation. Internal corporate documents reveal that the tobacco industry budgeted $200,000 to support fledgling CALAs in Texas and California during 1994.

To coordinate the 10 CALA chapters that had formed statewide, the tort lobby organized Texans Against Lawsuit Abuse (TALA) in 1996. Oversight of TALA soon passed to Rossanna Salazar — who worked with Rove when she was Governor Clements’ press secretary.

Governor Bush delivers

The CALAs did not play a big part in bankrolling George W. Bush’s 1994 and 1998 gubernatorial campaigns. This role fell to two larger business tort lobby groups: the Texas Civil Justice League (TCJL) and Texans for Lawsuit Reform (TLR). Bush and Rove raised $41 million for Bush’s two gubernatorial campaigns, with 10 percent of this money coming directly from these two PACs or from donors represented on the TCJL or TLR boards.

TLR, the better endowed of the two groups, was founded in 1994 by three Houston executives who made fortunes in the alcohol and construction industries. TLR received $15,000 in early seed money from the tobacco industry, but did not need to rely on this funding long. Capitalizing on the fact that Texas imposes no limits on how much individuals can contribute to legislative- or executive-branch candidates, a few dozen Texas tort tycoons quickly armed TLR’s political action committee (PAC) with a huge war chest.

During the five-year period covering Bush’s two gubernatorial campaigns, the TLR PAC raised more than $3 million. Donors who helped TLR become a major political force include Enron’s Ken Lay and homebuilder Bob Perry, who bankrolled the Swiftboat Veterans for Truth attacks on John Kerry.

This generous funding helped Rove engineer Bush’s 1994 upset victory over Ann Richards. The new administration quickly showed its gratitude. Soon after his January 1995 inauguration, Governor Bush met CALA representatives at a salsa factory near Austin and declared “frivolous and junk lawsuits” an “emergency issue,” thereby putting this issue on the legislative fast track. In 1995 and 1997, Governor Bush signed most of TLR’s then-existing agenda into law. This overhaul of Texas’ civil justice system included:

    * Punitive Damages: Capping the punitive damages that juries award to punish the worst wrongdoers at $200,000 or two times the economic damages inflicted (whichever is greater);

    * Deceptive Trade: Eliminating the triple damage awards used to punish deceptive business practices for cases involving sales exceeding $500,000 or involving either personal injuries or deaths;

    * Joint & Several Liability: Raising the threshold for defendants to be held liable for harming a plaintiff from 11 percent responsibility to 51 percent responsibility; and

    * Venue: Limiting where Texas lawsuits can be filed and who can file them and retroactively dismissing all lawsuits filed by out-of-state asbestos victims.

Aborted judicial candidates

The business tort lobby’s greatest victory in Texas since Bush moved to the White House has been putting a $250,000 cap on non-economic, medical malpractice damages, which juries award to compensate victims for pain, suffering, disfigurement or impairment. The U.S. Congress now is considering a similar cap for federal courts after President Bush made this a key issue in his reelection campaign.

When the Texas Legislature moved to cap these damages in 2003, lawmakers were concerned that the caps might not withstand a state constitutional challenge — even before a highly sympathetic state Supreme Court. To preempt this problem, the legislature presented voters with a constitutional amendment that authorizes the legislature to cap jury awards. This ballot initiative triggered a battle of titans. The main business PAC promoting the amendment spent $7 million, while the PAC that trial lawyers sponsored to defeat the initiative spent $7.5 million.

In an interesting twist, the trial-lawyer group, Save Texas Courts, recruited Deborah Hankinson as its spokesperson. Like current Attorney General Alberto Gonzales, Hankinson was one of four justices whom then-Governor George W. Bush tapped to fill uncompleted terms on the Texas Supreme Court. While Bush’s appointees to Texas’ high court were pro-business Republicans, three of the four were social moderates — especially compared to the court’s hardliners, Nathan Hecht and Rove client Priscilla Owen. Indeed, Bush’s Texas judicial appointments seemed to reflect a Rovian strategy to prepare for a presidential run in which Bush could not afford to spurn those swing voters who regard abortion as a constitutional right.

After taking the White House with the support of social conservatives and many moderates, President Bush suddenly began picking hard-line judicial nominees, including two Rove clients: Alabama Attorney General Bill Pryor and Texas Justice Owen. The U.S. Senate battle over Bush’s judicial nominees continues to be one of Washington’s bitterest partisan battles. Democrats continue to block Owen’s confirmation for the New Orleans-based 5th U.S. Circuit Court of Appeals.

After President Bush nominated Justice Owen for the federal bench, Justice Hankinson opted not to run for reelection in 2002. Instead, this Bush-appointed Republican justice opened a law practice and served as a spokesperson for the trial-lawyer group opposing caps on jury damages.

It is possible that Hankinson took this job solely because she believes that such caps violate the separation of powers doctrine. Yet the President’s promotion of Owen over Hankinson must have made Hankinson’s job all the sweeter.

In this role, Hankinson faced off against Rossanna Salazar, Rove’s old Clements administration colleague who resurfaced as a leading spokesperson for the constitutional amendment on jury-award caps.

The Rove camp, as usual, enjoyed the last laugh. In September 2003, Texas voters approved the constitutional amendment on jury caps, with 51 percent of the vote.


Multinational Monitor contributing editor Andrew Wheat is research director for the Austin-based Texans for Public Justice, a public interest group focused on political corruption and corporate abuses in Texas.


Francis McCollum Feeley

Professor of American Studies/

Director of Research at CEIMSA-IN-EXILE