The System Implodes: The 10 Worst Corporations of 2008

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The Multinational Monitor

The System Implodes: The 10 Worst Corporations of 2008

by
Robert Weissman

2008 marks the 20th anniversary of Multinational Monitor's annual list of the 10 Worst Corporations of the year.

In the 20 years that we've published our annual list, we've covered
corporate villains, scoundrels, criminals and miscreants. We've
reported on some really bad stuff - from Exxon's Valdez spill to Union
Carbide and Dow's effort to avoid responsibility for the Bhopal
disaster; from oil companies coddling dictators (including Chevron and
CNPC, both profiled this year) to a bank (Riggs) providing financial
services for Chilean dictator Augusto Pinochet; from oil and auto
companies threatening the future of the planet by blocking efforts to
address climate change to duplicitous tobacco companies marketing
cigarettes around the world by associating their product with images of
freedom, sports, youthful energy and good health.

But we've never had a year like 2008.

The financial crisis first gripping Wall Street and now spreading
rapidly throughout the world is, in many ways, emblematic of the worst
of the corporate-dominated political and economic system that we aim to
expose with our annual 10 Worst list. Here is how.

Improper political influence:
Corporations dominate the policy-making process, from city councils to
global institutions like the World Trade Organization. Over the last 30
years, and especially in the last decade, Wall Street interests
leveraged their political power to remove many of the regulations that
had restricted their activities. There are at least a dozen separate
and significant examples of this, including the Financial Services
Modernization Act of 1999, which permitted the merger of banks and
investment banks. In a form of corporate civil disobedience, Citibank
and Travelers Group merged in 1998 - a move that was illegal at the
time, but for which they were given a two-year forbearance - on the
assumption that they would be able to force a change in the relevant
law. They did, with the help of just-retired (at the time) Treasury
Secretary Robert Rubin, who went on to an executive position at the
newly created Citigroup.

Deregulation and non-enforcement:
Non-enforcement of rules against predatory lending helped the housing
bubble balloon. While some regulators had sought to exert authority
over financial derivatives, they were stopped by finance-friendly
figures in the Clinton administration and Congress - enabling the
creation of the credit default swap market. Even Alan Greenspan
concedes that that market - worth $55 trillion in what is called
notional value - is imploding in significant part because it was not
regulated.

Short-term thinking: It was obvious to
anyone who cared to look at historical trends that the United States
was experiencing a housing bubble. Many in the financial sector seemed
to have convinced themselves that there was no bubble. But others must
have been more clear-eyed. In any case, all the Wall Street players had
an incentive not to pay attention to the bubble. They were making
stratospheric annual bonuses based on annual results. Even if they were
certain the bubble would pop sometime in the future, they had every
incentive to keep making money on the upside.

Financialization:
Profits in the financial sector were more than 35 percent of overall
U.S. corporate profits in each year from 2005 to 2007, according to
data from the Bureau of Economic Analysis. Instead of serving the real
economy, the financial sector was taking over the real economy.

Profit over social use:
Relatedly, the corporate-driven economy was being driven by what could
make a profit, rather than what would serve a social purpose. Although
Wall Street hucksters offered elaborate rationalizations for why exotic
financial derivatives, private equity takeovers of firms,
securitization and other so-called financial innovations helped improve
economic efficiency, by and large these financial schemes served no
socially useful purpose.

Externalized costs: Worse,
the financial schemes didn't just create money for Wall Street movers
and shakers and their investors. They made money at the expense of
others. The costs of these schemes were foisted onto workers who lost
jobs at firms gutted by private equity operators, unpayable loans
acquired by homeowners who bought into a bubble market (often made
worse by unconscionable lending terms), and now the public.

What
is most revealing about the financial meltdown and economic crisis,
however, is that it illustrates that corporations - if left to their
own worst instincts - will destroy themselves and the system that
nurtures them. It is rare that this lesson is so graphically
illustrated. It is one the world must quickly learn, if we are to avoid
the most serious existential threat we have yet faced: climate change.

Of course, the rest of the corporate sector was not on good behavior
during 2008 either, and we do not want them to escape justified
scrutiny. In keeping with our tradition of highlighting diverse forms
of corporate wrongdoing, we include only one financial company on the
10 Worst list. Here, presented in alphabetical order, are the 10 Worst
Corporations of 2008.

AIG: Money for Nothing

There's surely no one party responsible for the ongoing global financial crisis.

But if you had to pick a single responsible corporation, there's a very
strong case to make for American International Group (AIG).

In
September, the Federal Reserve poured $85 billion into the distressed
global financial services company. It followed up with $38 billion in
October.

The government drove a hard bargain for its support.
It allocated its billions to the company as high-interest loans; it
demanded just short of an 80 percent share of the company in exchange
for the loans; and it insisted on the firing of the company's CEO (even
though he had only been on the job for three months).

Why did
AIG - primarily an insurance company powerhouse, with more than 100,000
employees around the world and $1 trillion in assets - require more
than $100 billion ($100 billion!) in government funds? The company's
traditional insurance business continues to go strong, but its gigantic
exposure to the world of "credit default swaps" left it teetering on
the edge of bankruptcy. Government officials then intervened, because
they feared that an AIG bankruptcy would crash the world's financial
system.

Credit default swaps are effectively a kind of insurance
policy on debt securities. Companies contracted with AIG to provide
insurance on a wide range of securities. The insurance policy provided
that, if a bond didn't pay, AIG would make up the loss.

AIG's
eventual problem was rooted in its entering a very risky business but
treating it as safe. First, AIG Financial Products, the small
London-based unit handling credit default swaps, decided to insure
"collateralized debt obligations" (CDOs). CDOs are pools of mortgage
loans, but often only a portion of the underlying loans - perhaps
involving the most risky part of each loan. Ratings agencies graded
many of these CDOs as highest quality, though subsequent events would
show these ratings to have been profoundly flawed. Based on the
blue-chip ratings, AIG treated its insurance on the CDOs as low risk.
Then, because AIG was highly rated, it did not have to post collateral.

Through credit default swaps, AIG was basically collecting insurance
premiums and assuming it would never pay out on a failure - let alone a
collapse of the entire market it was insuring. It was a scheme that
couldn't be beat: money for nothing.

In September, the New
York Times' Gretchen Morgenson reported on the operations of AIG's
small London unit, and the profile of its former chief, Joseph Cassano.
In 2007, the Times reported, Cassano "described the credit default
swaps as almost a sure thing." "It is hard to get this message across,
but these are very much handpicked," he said in a call with analysts.

"It is hard for us, without being flippant, to even see a scenario
within any kind of realm of reason that would see us losing one dollar
in any of those transactions," he said.

Cassano assured
investors that AIG's operations were nearly fail safe. Following
earlier accounting problems, the company's risk management was stellar,
he said: "That's a committee that I sit on, along with many of the
senior managers at AIG, and we look at a whole variety of transactions
that come in to make sure that they are maintaining the quality that we
need to. And so I think the things that have been put in at our level
and the things that have been put in at the parent level will ensure
that there won't be any of those kinds of mistakes again."

Cassano turned out to be spectacularly wrong. The credit default swaps
were not a sure thing. AIG somehow did not notice that the United
States was experiencing a housing bubble, and that it was essentially
insuring that the bubble would not pop. It made an ill-formed judgment
that positive credit ratings meant CDOs were high quality - even when
the underlying mortgages were of poor quality.

But before the
bubble popped, Cassano's operation was minting money. It wasn't hard
work, since AIG Financial Products was taking in premiums in exchange
for nothing. In 2005, the unit's profit margin was 83 percent,
according to the Times. By 2007, its credit default swap portfolio was
more than $500 billion.

Then things started to go bad. Suddenly,
AIG had to start paying out on some of the securities it had insured.
As it started recording losses, its credit default swap contracts
require that it begin putting up more and more collateral. AIG found it
couldn't raise enough money fast enough - over the course of a weekend
in September, the amount of money AIG owed shot up from $20 billion to
more than $80 billion.

With no private creditors stepping
forward, it fell to the government to provide the needed capital or let
AIG enter bankruptcy. Top federal officials deemed bankruptcy too high
a risk to the overall financial system.

After the bailout, it emerged that AIG did not even know all of the CDOs it had ensured.

In September, less than a week after the bailout was announced, the
Orange County Register reported on a posh retreat for company
executives and insurance agents at the exclusive St. Regis Resort in
Monarch Beach, California. Rooms at the resort can cost over $1,000 per
night.

After the House of Representatives Oversight and
Government Reform Committee highlighted the retreat, AIG explained that
the retreat was primarily for well-performing independent insurance
agents. Only 10 of the 100 participants were from AIG (and they from a
successful AIG subsidiary), the company said, and the event was planned
long in advance of the federal bailout. In an apology letter to
Treasury Secretary Henry Paulson, CEO Edward Liddy wrote that AIG now
faces very different challenges, and "that we owe our employees and the
American public new standards and approaches."

New standards and approaches, indeed.

Cargill: Food Profiteers

The world's food system is broken.
Or, more accurately, the giant food companies and their allies in the
U.S. and other rich country governments, and at the International
Monetary Fund and World Bank, broke it.

Thirty years ago, most developing countries produced enough food to
feed themselves [CHECK]. Now, 70 percent are net food importers.

Thirty years ago, most developing countries had in place mechanisms
aimed at maintaining a relatively constant price for food commodities.
Tariffs on imports protected local farmers from fluctuations in global
food prices. Government-run grain purchasing boards paid above-market
prices for farm goods when prices were low, and required farmers to
sell below-market when prices were high. The idea was to give farmers
some certainty over price, and to keep food affordable for consumers.
Governments also provided a wide set of support services for farmers,
giving them advice on new crop and growing technologies and, in some
countries, helping set up cooperative structures.

This was not a perfect system by any means, but it looks pretty good in retrospect.

Over the last three decades, the system was completely abandoned, in
country after country. It was replaced by a multinational-dominated,
globally integrated food system, in which the World Bank and other
institutions coerced countries into opening their markets to cheap food
imports from rich countries and re-orienting their agricultural systems
to grow food for rich consumers abroad. Proponents said the new system
was a "free market" approach, but in reality it traded one set of
government interventions for another - a new set of rules that gave
enhanced power to a handful of global grain trading companies like
Cargill and Archer Daniels Midland, as well as to seed and fertilizer
corporations.

"For this food regime to work," Raj Patel, author
of Stuffed and Starved, told the U.S. House Financial Services
Committee at a May hearing, "existing marketing boards and support
structures needed to be dismantled. In a range of countries, this meant
that the state bodies that had been supported and built by the World
Bank were dismantled by the World Bank. The rationale behind the
dismantling of these institutions was to clear the path for private
sector involvement in these sectors, on the understanding that the
private sector would be more efficient and less wasteful than the
public sector."

"The result of these interventions and
conditions," explained Patel, "was to accelerate the decline of
developing country agriculture. One of the most striking consequences
of liberalization has been the phenomenon of ‘import surges.' These
happen when tariffs on cheaper, and often subsidized, agricultural
products are lowered, and a host country is then flooded with those
goods. There is often a corresponding decline in domestic production.
In Senegal, for example, tariff reduction led to an import surge in
tomato paste, with a 15-fold increase in imports, and a halving of
domestic production. Similar stories might be told of Chile, which saw
a three-fold surge in imports of vegetable oil, and a halving of
domestic production. In Ghana in 1998, local rice production accounted
for over 80 percent of domestic consumption. By 2003, that figure was
less than 20 percent."

The decline of developing country
agriculture means that developing countries are dependent on the
vagaries of the global market. When prices spike - as they did in late
2007 and through the beginning of 2008 - countries and poor consumers
are at the mercy of the global market and the giant trading companies
that dominate it. In the first quarter of 2008, the price of rice in
Asia doubled, and commodity prices overall rose 40 percent. People in
rich countries felt this pinch, but the problem was much more severe in
the developing world. Not only do consumers in poor countries have less
money, they spend a much higher proportion of their household budget on
food - often half or more - and they buy much less processed food, so
commodity increases affect them much more directly. In poor countries,
higher prices don't just pinch, they mean people go hungry. Food riots
broke out around the world in early 2008.

But not everyone was
feeling pain. For Cargill, spiking prices was an opportunity to get
rich. In the second quarter of 2008, the company reported profits of
more than $1 billion, with profits from continuing operations soaring
18 percent from the previous year. Cargill's 2007 profits totaled more
than $2.3 billion, up more than a third from 2006.

In a
competitive market, would a grain-trading middleman make super-profits?
Or would rising prices crimp the middleman's profit margin?

Well, the global grain trade is not competitive.

In an August speech, Cargill CEO Greg Page posed the question, "So,
isn't Cargill exploiting the food situation to make money?" Here is how
he responded:

"I would give you four pieces of information about why our earnings have gone up dramatically.

  1. The demand for food has gone up. The demand for our facilities has gone
    up, and we are running virtually all of our facilities worldwide at
    total capacity. As we utilize our capacity more effectively, clearly we
    do better.
  2. Fertilizer prices rose, and we are
    owners of a large fertilizer company. That has been the single largest
    factor in Cargill's earnings.
  3. The volatility in the
    grain industry - much of it created by governments - was an opportunity
    for a trading company like Cargill to make money.
  4. Finally, in this era of high prices, Cargill over the last two years
    has invested $15.5 billion additional dollars into the world food
    system. Some was to carry all these high-priced inventories. We also
    wanted to be sure that we were there for farmers who needed the working
    capital to operate in this much more expensive environment. Clearly,
    our owners expected some return on that $15.5 billion. Cargill had an
    opportunity to make more money in this environment, and I think that is
    something that we need to be very forthright about."

OK, Mr. Page, that's all very interesting. The question was, "So, isn't
Cargill exploiting the food situation to make money?" It sounds like
your answer is, "yes."

Chevron: "We can't let little countries screw around with big companies"

The world has witnessed a stunning consolidation of the multinational oil companies over the last decade.

One of the big winners was Chevron. It swallowed up Texaco and Unocal,
among others. It was happy to absorb their revenue streams. It has been
less willing to take responsibility for ecological and human rights
abuses perpetrated by these companies.

One of the inherited
legacies from Chevron's 2001 acquisition of Texaco is litigation in
Ecuador over the company's alleged decimation of the Ecuadorian Amazon
over a 20-year period of operation. In 1993, 30,000 indigenous
Ecuadorians filed a class action suit in U.S. courts, alleging that
Texaco had poisoned the land where they live and the waterways on which
they rely, allowing billions of gallons of oil to spill and leaving
hundreds of waste pits unlined and uncovered. They sought billions in
compensation for the harm to their land and livelihood, and for alleged
health harms. The Ecuadorians and their lawyers filed the case in U.S.
courts because U.S. courts have more capacity to handle complex
litigation, and procedures (including jury trials) that offer
plaintiffs a better chance to challenge big corporations. Texaco, and
later Chevron, deployed massive legal resources to defeat the lawsuit.
Ultimately, a Chevron legal maneuver prevailed: At Chevron's
instigation, U.S. courts held that the case should be litigated in
Ecuador, closer to where the alleged harms occurred.

Having
argued vociferously that Ecuadorian courts were fair and impartial,
Chevron is now unhappy with how the litigation has proceeded in that
country. So unhappy, in fact, that it is lobbying the Office of the
U.S. Trade Representative to impose trade sanctions on Ecuador if the
Ecuadorian government does not make the case go away.

"We can't
let little countries screw around with big companies like this -
companies that have made big investments around the world," a Chevron
lobbyist said to Newsweek in August. (Chevron subsequently stated that
"the comments attributed to an unnamed lobbyist working for Chevron do
not reflect our company's views regarding the Ecuador case. They were
not approved by the company and will not be tolerated.")

Chevron
is worried because a court-appointed special master found in March that
the company was liable to plaintiffs for between $7 billion and $16
billion. The special master has made other findings that Chevron's
clean-up operations in Ecuador have been inadequate.

Another of
Chevron's inherited legacies is the Yadana natural gas pipeline in
Burma, operated by a consortium in which Unocal was one of the lead
partners. Human rights organizations have documented that the Yadana
pipeline was constructed with forced labor, and associated with brutal
human rights abuses by the Burmese military.

EarthRights
International, a human rights group with offices in Washington, D.C.
and Bangkok, has carefully tracked human rights abuses connected to the
Yadana pipeline, and led a successful lawsuit against Unocal/Chevron.
In an April 2008 report, the group states that "Chevron and its
consortium partners continue to rely on the Burmese army for pipeline
security, and those forces continue to conscript thousands of villagers
for forced labor, and to commit torture, rape, murder and other serious
abuses in the course of their operations."

Money from the
Yadana pipeline plays a crucial role in enabling the Burmese junta to
maintain its grip on power. EarthRights International estimates the
pipeline funneled roughly $1 billion to the military regime in 2007.
The group also notes that, in late 2007, when the Burmese military
violently suppressed political protests led by Buddhist monks, Chevron
sat idly by.

Chevron has trouble in the United States, as well.
In September, Earl Devaney, the inspector general for the Department of
Interior, released an explosive report documenting "a culture of
ethical failure" and a "culture of substance abuse and promiscuity" in
the U.S. government program handling oil lease contracts on U.S.
government lands and property. Government employees, Devaney found,
accepted a stream of small gifts and favors from oil company
representatives, and maintained sexual relations with them. (In one
memorable passage, the inspector general report states that "sexual
relationships with prohibited sources cannot, by definition, be
arms-length.") The report showed that Chevron had conferred the largest
number of gifts on federal employees. It also complained that Chevron
refused to cooperate with the investigation, a claim Chevron
subsequently disputed.

Constellation Energy: Nuclear Operators

Although
it is too dangerous, too expensive and too centralized to make sense as
an energy source, nuclear power won't go away, thanks to equipment
makers and utilities that find ways to make the public pay and pay.

Case in point: Constellation Energy Group, the operator of the Calvert
Cliffs nuclear plant in Maryland. When Maryland deregulated its
electricity market in 1999, Constellation - like other energy
generators in other states - was able to cut a deal to recover its
"stranded costs" and nuclear decommissioning fees. The idea was that
competition would bring multiple suppliers into the market, and these
new competitors would have an unfair advantage over old-time monopoly
suppliers. Those former monopolists, the argument went, had built
expensive nuclear reactors with the approval of state regulators, and
it would be unfair if they could not charge consumers to recover their
costs. It would also be unfair, according to this line of reasoning, if
the former monopolists were unable to recover the costs of
decommissioning nuclear facilities.

In Maryland, the "stranded
cost" deal gave Constellation (through its affiliate Baltimore Gas
& Electric, BGE) the right to charge ratepayers $975 million in
1993 dollars (almost $1.5 billion in present dollars).

Deregulation meant that Constellation's energy generating assets -
including its nuclear facility at Calvert Cliffs - were free from price
regulation. As a result, instead of costing Constellation, Calvert
Cliffs' market value increased.

Deregulation also meant that,
after an agreed-upon freeze period, BGE was free to raise its rates as
it chose. In 2006, it announced a 72 percent rate increase. For
residential consumers, this meant they would pay an average of $743
more per year for electricity.

The sudden price hike sparked a
rebellion. The Maryland legislature passed a law requiring BGE to
credit consumers $386 million over a 10-year period. At the time,
Constellation was very pleased with the deal, which let it keep most of
its price-gouging profits - a spokesperson for the then-governor said
that Constellation and BGE were "doing a victory lap around the
statehouse" after the bill passed.

In February 2008, however,
Constellation announced that it intended to sue the state for
unconstitutionally "taking" its assets via the mandatory consumer
credit. In March, following a preemptive lawsuit by the state, the
matter was settled. BGE agreed to make a one-time rebate of $170
million to residential ratepayers, and 90 percent of the credits to
ratepayers (totaling $346 million) were left in place. The deal also
relieved ratepayers of the obligation to pay for decommissioning - an
expense that had been expected to total $1.5 billion (or possibly much
more) from 2016 to 2036.

The deal also included regulatory
changes making it easier for outside companies to invest in
Constellation - a move of greater import than initially apparent. In
September, with utility stock prices plummeting, Warren Buffet's
MidAmerican Energy announced it would purchase Constellation for $4.7
billion, less than a quarter of the company's market value in January.

Meanwhile, Constellation plans to build a new reactor at Calvert
Cliffs, potentially the first new reactor built in the United States
since the near-meltdown at Three Mile Island in 1979.

"There are
substantial clean air benefits associated with nuclear power, benefits
that we recognize as the operator of three plants in two states," says
Constellation spokesperson Maureen Brown.

It has lined up to
take advantage of U.S. government-guaranteed loans for new nuclear
construction, available under the terms of the 2005 Energy Act [see
"Nuclear's Power Play: Give Us Subsidies or Give Us Death,"
Multinational Monitor, September/October 2008]. "We can't go forward
unless we have federal loan guarantees," says Brown.

Building
nuclear plants is extraordinarily expensive (Constellation's planned
construction is estimated at $9.6 billion) and takes a long time;
construction plans face massive political risks; and the value of
electric utilities is small relative to the huge costs of nuclear
construction. For banks and investors, this amounts to too much
uncertainty - but if the government guarantees loans will be paid back,
then there's no risk.

Or, stated better, the risk is absorbed
entirely by the public. That's the financial risk. The nuclear safety
risk is always absorbed, involuntarily, by the public.

CNPC: Fueling Violence in Darfur

Many
of the world's most brutal regimes have a common characteristic:
Although subject to economic sanctions and politically isolated, they
are able to maintain power thanks to multinational oil company
enablers. Case in point: Sudan, and the Chinese National Petroleum
Corporation (CNPC).

In July, International Criminal Court (ICC)
Prosecutor Luis Moreno-Ocampo charged the President of Sudan, Omar
Hassan Ahmad Al Bashir, with committing genocide, crimes against
humanity and war crimes. The charges claim that Al Bashir is the
mastermind of crimes against ethnic groups in Darfur, aimed at removing
the black population from Sudan. Sudanese armed forces and
government-authorized militias known as the Janjaweed have carried out
massive attacks against the Fur, Masalit and Zaghawa communities of
Darfur, according to the ICC allegations. Following bombing raids,
"ground forces would then enter the village or town and attack civilian
inhabitants. They kill men, children, elderly, women; they subject
women and girls to massive rapes. They burn and loot the villages." The
ICC says 35,000 people have been killed and 2.7 million displaced.

The ICC reports one victim saying: "When we see them, we run. Some of
us succeed in getting away, and some are caught and taken to be raped -
gang-raped. Maybe around 20 men rape one woman. ... These things are
normal for us here in Darfur. These things happen all the time. I have
seen rapes, too. It does not matter who sees them raping the women -
they don't care. They rape girls in front of their mothers and fathers."

Governments around the world have imposed various sanctions on Sudan,
with human rights groups demanding much more aggressive action.

But there is little doubt that Sudan has been able to laugh off
existing and threatened sanctions because of the huge support it
receives from China, channeled above all through the Sudanese
relationship with CNPC.

"The relationship between CNPC and Sudan
is symbiotic," notes the Washington, D.C.-based Human Rights First, in
a March 2008 report, "Investing in Tragedy." "Not only is CNPC the
largest investor in the Sudanese oil sector, but Sudan is CNPC's
largest market for overseas investment."

China receives three
quarters of Sudan's exports, and Chinese companies hold the majority
share in almost all of the key oil-rich areas in Sudan. Explains Human
Rights First: "Beijing's companies pump oil from numerous key fields,
which then courses through Chinese-made pipelines to Chinese-made
storage tanks to await a voyage to buyers, most of them Chinese." CNPC
is the largest oil investor in Sudan; the other key Chinese company is
the Sinopec Group (also known as the China Petrochemical Corporation).

Oil money has fueled violence in Darfur. "The profitability of Sudan's
oil sector has developed in close chronological step with the violence
in Darfur," notes Human Rights First. "In 2000, before the crisis,
Sudan's oil revenue was $1.2 billion. By 2006, with the crisis well
underway, that total had shot up by 291 percent, to $4.7 billion. How
does Sudan use that windfall? Its finance minister has said that at
least 70 percent of the oil profits go to the Sudanese armed forces,
linked with its militia allies to the crimes in Darfur."

There
are other nefarious components of the CNPC relationship with the
Sudanese government. China ships substantial amounts of small arms to
Sudan and has helped Sudan build its own small arms factories. China
has also worked at the United Nations to undermine more effective
multilateral action to protect Darfur. Human rights organizations
charge a key Chinese motivation is to lubricate its relationship with
the Khartoum government so the oil continues to flow.

CNPC did not respond to repeated requests for comment.

Dole: The Sour Taste of Pineapple

Starting
in 1988, the Philippines undertook what was to be a bold initiative to
redress the historically high concentration of land ownership that has
impoverished millions of rural Filipinos and undermined the country's
development. The Comprehensive Agricultural Reform Program (CARP)
promised to deliver land to the landless.

It didn't work out that way.

Plantation owners helped draft the law and invented ways to circumvent its purported purpose.

Dole pineapple workers are among those paying the price.

Under CARP, Dole's land was divided among its workers and others who
had claims on the land prior to the pineapple giant. However, under the
terms of the law, as the Washington, D.C.-based International Labor
Rights Forum (ILRF) explains in an October report, "The Sour Taste of
Pineapple," the workers received only nominal title. They were required
to form labor cooperatives. Intended to give workers - now the new land
owners - a means to collectively manage their land, the cooperatives
were instead controlled by wealthy landlords.

"Through its
dealings with these cooperatives," ILRF found, Dole and Del Monte, (the
world's other leading pineapple grower) "have been able to take
advantage of a number of worker abuses. Dole has outsourced its labor
force to contract labor and replaced its full-time regular employment
system that existed before CARP." Dole employs 12,000 contract workers.
Meanwhile, from 1989 to 1998, Dole reduced its regular workforce by
3,500.

Under current arrangements, Dole now leases its land from
its workers, on extremely cheap terms - in one example cited by ILRF,
Dole pays in rent one-fifteenth of its net profits from a plantation.
Most workers continue to work the land they purportedly own, but as
contract workers for Dole.

The Philippine Supreme Court has
ordered Dole to convert its contract workers into regular employees,
but the company has not done so. In 2006, the Court upheld a Department
of Labor and Employment decision requiring Dole to stop using illegal
contract labor. Under Philippine law, contract workers should be
regularized after six months.

Dole emphasizes that it pays its
workers $10 a day, more than the country's $5.60 minimum wage. It also
says that its workers are organized into unions. The company responded
angrily to a 2007 nomination for most irresponsible corporations from a
Swiss organization, the Berne Declaration. "We must also say that those
fallacious attacks created incredulity and some anger among our Dolefil
workers, their representatives, our growers, their cooperatives and
more generally speaking among the entire community where we operate."
The company thanked "hundreds of people who spontaneously expressed
their support to Dolefil, by taking the initiative to sign manifestos,"
including seven cooperatives.

The problem with Dole's position,
as ILRF points out, is that "Dole's contract workers are denied the
same rights afforded to Dole's regular workers. They are refused the
right to organize or benefits gained by the regular union, and are
consequently left with poor wages and permanent job insecurity."
Contract workers are paid under a quota system, and earn about $1.85 a
day, according to ILRF.

Conditions are not perfect for unionized
workers, either. In 2006, when a union leader complained about
pesticide and chemical exposures (apparently misreported in local media
as a complaint about Dole's waste disposal practices), the management
of Dole Philippines (Dolefil) pressed criminal libel charges against
him. Two years later, these criminal charges remain pending.

Dole says it cannot respond to the allegations in the ILRF report,
because the U.S. Trade Representative is considering acting on a
petition by ILRF to deny some trade benefits to Dole pineapples
imported into the United States from the Philippines.

Concludes
Bama Atheya, executive director of ILRF, "In both Costa Rica and the
Philippines, Dole has deliberately obstructed workers' right to
organize, has failed to pay a living wage and has polluted workers'
communities."

GE: Creative Accounting

General
Electric (GE) has appeared on Multinational Monitor's annual 10 Worst
Corporations list for defense contractor fraud, labor rights abuses,
toxic and radioactive pollution, manufacturing nuclear weaponry,
workplace safety violations and media conflicts of interest (GE owns
television network NBC).

This year, the company returns to the list for new reasons: alleged tax cheating and the firing of a whistleblower.

In June, former New York Times reporter David Cay Johnston reported on
internal GE documents that appeared to show the company had engaged in
long-running effort to evade taxes in Brazil. In a lengthy report in
Tax Notes International, Johnston cited a GE subsidiary manager's
powerpoint presentation that showed "suspicious" invoices as "an
indication of possible tax evasion." The invoices showed suspiciously
high sales volume for lighting equipment in lightly populated Amazon
regions of the country. These sales would avoid higher value added
taxes (VAT) in urban states, where sales would be expected to be
greater.

Johnston wrote that the state-level VAT at issue, based
on the internal documents he reviewed, appeared to be less than $100
million. But, "since the VAT scheme appears to have gone on long before
the period covered in the Moreira [the company manager] report, the
total sum could be much larger and could involve other countries
supplied by the Brazil subsidiary."

A senior GE spokesperson,
Gary Sheffer, told Johnston that the VAT and related issues were so
small relative to GE's size that the company was surprised a reporter
would spend time looking at them. "No company has perfect compliance,"
Sheffer said. "We do not believe we owe the tax."

Johnston did
not identify the source that gave him the internal GE documents, but GE
has alleged it was a former company attorney, Adriana Koeck. GE fired
Koeck in January 2007 for what it says were "performance reasons." GE
sued Koeck in June 2008, alleging that she wrongfully maintained
privileged and confidential information, and improperly shared the
information with third parties. In a court filing, GE said that it
"considers its professional reputation to be its greatest asset and it
has worked tirelessly to develop and preserve an unparalleled
reputation of ‘unyielding integrity.'"

GE's suit followed a
whistleblower defense claim filed by Koeck in 2007. In April 2007,
Koeck filed a claim with the U.S. Department of Labor under the
Sarbanes-Oxley whistleblower protections (rules put in place following
the Enron scandal).

In her filing, Koeck alleges that she was
fired not for poor performance, but because she called attention to
improper activities by GE. After being hired in January 2006, Koeck's
complaint asserts, she "soon discovered that GE C&I [consumer and
industrial] operations in Latin America were engaged in a variety of
irregular practices. But when she tried to address the problems, both
Mr. Burse and Mr. Jones [her superiors in the general counsel's office]
interfered with her efforts, took certain matters away from her,
repeatedly became enraged with her when she insisted that failing to
address the problems would harm GE, and eventually had her terminated."

Koeck's whistleblower filing details the state VAT-avoidance scheme
discussed in Johnston's article. It also indicates that several GE
employees in Brazil were blackmailing the company to keep quiet about
the scheme.

Koeck's whistleblower filing also discusses reports
in the Brazilian media that GE had participated in a "bribing club"
with other major corporations. Members of the club allegedly met to
divide up public contracts in Brazil, as well as to agree on the
amounts that would be paid in bribes. Koeck discovered evidence of GE
subsidiaries engaging in behavior compatible with the "bribing club"
stories and reported this information to her superior. Koeck alleges
that her efforts to get higher level attorneys to review the situation
failed.

In a statement, GE responds to the substance of Koeck's
allegations of wrongdoing: "These were relatively minor and routine
commercial and tax issues in Brazil. Our employees proactively
identified, investigated and resolved these issues in the appropriate
manner. We are confident we have met all of our tax and compliance
obligations in Brazil.GE has a strong and rigorous compliance process
that dealt effectively with these issues."

Koeck's Sarbanes-Oxley complaint was thrown out in June, on the grounds that it had not been filed in a timely matter.

The substance of her claims, however, are now under investigation by
the Department of Justice Fraud Section, according to Corporate Crime
Reporter.

Imperial Sugar: 13 Dead

On February 7, an explosion rocked the Imperial Sugar refinery in Port Wentworth, Georgia, near Savannah.

Tony Holmes, a forklift operator at the plant, was in the break room when the blast occurred.

"I heard the explosion," he told the Savannah Morning News. "The
building shook, and the lights went out. I thought the roof was falling
in. ... I saw people running. I saw some horrific injuries. ... People
had clothes burning. Their skin was hanging off. Some were bleeding."

Days later, when the fire was finally extinguished and
search-and-rescue operations completed, the horrible human toll was
finally known: 13 dead, dozens badly burned and injured.

As with
almost every industrial disaster, it turns out the tragedy was
preventable. The cause was accumulated sugar dust, which like other
forms of dust, is highly combustible.

The Occupational Safety
and Health Administration (OSHA), the government workplace safety
regulator, had not visited Imperial Sugar's Port Wentworth facility
since 2000. When inspectors examined the blast site after the fact,
they found rampant violations of the agency's already inadequate
standards. They proposed a more than $5 million fine, and issuance of
citations for 61 egregious willful violations, eight willful violations
and 51 serious violations. Under OSHA's rules, a "serious" citation is
issued when death or serious physical harm is likely to occur, a
"willful" violation is a violation committed with plain indifference to
employee safety and health, and "egregious" citations are issued for
particularly flagrant violations.

A month later, OSHA inspectors
investigated Imperial Sugar's plant in Gramercy, Louisiana. They found
1/4- to 2-inch accumulations of dust on electrical wiring and
machinery. They found 6- to 8-inch accumulations on wall ledges and
piping. They found 1/2- to 1-inch accumulations on mechanical equipment
and motors. They found 3- to 48-inch accumulations on workroom floors.
OSHA posted an "imminent danger" notice at the plant, because of the
high likelihood of another explosion.

Imperial Sugar obviously
knew of the conditions in its plants. It had in fact taken some
measures to clean up operations prior to the explosion.

Graham
H. Graham was hired as vice president of operations of Imperial Sugar
in November 2007. In July 2008, he told a Senate subcommittee that he
first walked through the Port Wentworth facility in December 2007. "The
conditions were shocking," he testified. "Port Wentworth was a dirty
and dangerous facility. The refinery was littered with discarded
materials, piles of sugar dust, puddles of sugar liquid and airborne
sugar dust. Electrical motors and controls were encrusted with
solidified sugar, while safety covers and doors were missing from live
electrical switchgear and panels. A combustible environment existed."

Graham recommended that the plant manager be fired, and he was. Graham
ordered a housekeeping blitz, and by the end of January, he testified
to the Senate subcommittee, conditions had improved significantly, but
still were hazardous.

But Graham also testified that he was
told to tone down his demands for immediate action. In a meeting with
John Sheptor, then Imperial Sugar's chief operating officer and now its
CEO, and Kay Hastings, senior vice president of human resources, Graham
testified, "I was also informed that I was excessively eager in
addressing the refinery's problems."

Sheptor, who was nearly killed in the refinery explosion, and Hastings both deny Graham's account.

The company says that it respected safety concerns before the
explosion, but has since redoubled efforts, hiring expert consultants
on combustible hazards, refocusing on housekeeping efforts and
purchasing industrial vacuums to minimize airborne disbursement.

In March, the House of Representatives Education and Labor Committee
held a hearing on the hazards posed by combustible dust. The head of
the Chemical Safety Board testified about a 2006 study that identified
hundreds of combustible dust incidents that had killed more than 100
workers during the previous 25 years. The report recommended that OSHA
issue rules to control the risk of dust explosions.

Instead of
acting on this recommendation, said Committee Chair George Miller,
D-California, "OSHA chose to rely on compliance assistance and
voluntary programs, such as industry ‘alliances,' web pages, fact
sheets, speeches and booths at industry conferences."

The
House of Representatives then passed legislation to require OSHA to
issue combustible dust standards, but the proposal was not able to pass
the Senate.

Remarkably, even after the tragedy at Port
Wentworth, and while Imperial Sugar said it welcomed the effort for a
new dust rule, OSHA head Edwin Foulke indicated he believed no new rule
was necessary.

"We believe," he told the House Education and
Labor Committee in March, "that [OSHA] has taken strong measures to
prevent combustible dust hazards, and that our multi-pronged approach,
which includes effective enforcement of existing standards, combined
with education for employers and employees, is effective in addressing
combustible dust hazards. We would like to emphasize that the existence
of a standard does not ensure that explosions will be eliminated."

Philip Morris International: Unshackled

The
old Philip Morris no longer exists. In March, the company formally
divided itself into two separate entities: Philip Morris USA, which
remains a part of the parent company Altria, and Philip Morris
International.

Philip Morris USA sells Marlboro and other
cigarettes in the United States. Philip Morris International tramples
over the rest of the world.

The world is just starting to come
to grips with a Philip Morris International even more predatory in
pushing its toxic products worldwide.

The new Philip Morris
International is unconstrained by public opinion in the United States -
the home country and largest market of the old, unified Philip Morris
-and will no longer fear lawsuits in the United States.

As a
result, Thomas Russo of the investment fund Gardner Russo & Gardner
told Bloomberg, the company "won't have to worry about getting
pre-approval from the U.S. for things that are perfectly acceptable in
foreign markets." Russo's firm owns 5.7 million shares of Altria and
now Philip Morris International.

A commentator for The Motley
Fool investment advice service wrote, "The Marlboro Man is finally free
to roam the globe unfettered by the legal and marketing shackles of the
U.S. domestic market."

In February, the World Health
Organization (WHO) issued a new report on the global tobacco epidemic.
WHO estimates the Big Tobacco-fueled epidemic now kills more than 5
million people every year.

Five million people.

By 2030, WHO estimates 8 million will die a year from tobacco-related disease, 80 percent in the developing world.

The WHO report emphasizes that known and proven public health policies
can dramatically reduce smoking rates. These policies include indoor
smoke-free policies; bans on tobacco advertising, promotion and
sponsorship; heightened taxes; effective warnings; and cessation
programs. These "strategies are within the reach of every country, rich
or poor and, when combined as a package, offer us the best chance of
reversing this growing epidemic," says WHO Director-General Margaret
Chan.

Most countries have failed to adopt these policies, thanks
in no small part to decades-long efforts by Philip Morris and the rest
of Big Tobacco to deploy political power to block public health
initiatives. Thanks to the momentum surrounding a global tobacco
treaty, known as the Framework Convention on Tobacco Control, adopted
in 2005, this is starting to change. There's a long way to go, but
countries are increasingly adopting sound public health measures to
combat Big Tobacco.

Now Philip Morris International has signaled its initial plans to subvert these policies.

The company has announced plans to inflict on the world an array of new
products, packages and marketing efforts. These are designed to
undermine smoke-free workplace rules, defeat tobacco taxes, segment
markets with specially flavored products, offer flavored cigarettes
sure to appeal to youth and overcome marketing restrictions.

The
Chief Operating Officer of Philip Morris International, Andre
Calantzopoulos, detailed in a March investor presentation two new
products, Marlboro Wides, "a shorter cigarette with a wider diameter,"
and Marlboro Intense, "a rich, flavorful, shorter cigarette."

Sounds innocent enough, as far as these things go.

That's only to the innocent mind.

The Wall Street Journal reported on Philip Morris International's
underlying objective: "The idea behind Intense is to appeal to
customers who, due to indoor smoking bans, want to dash outside for a
quick nicotine hit but don't always finish a full-size cigarette."

Workplace and indoor smoke-free rules protect people from second-hand
smoke, but also make it harder for smokers to smoke. The inconvenience
(and stigma of needing to leave the office or restaurant to smoke)
helps smokers smoke less and, often, quit. Subverting smoke-free bans
will damage an important tool to reduce smoking.

Philip Morris
International says it can adapt to high taxes. If applied per pack (or
per cigarette), rather than as a percentage of price, high taxes more
severely impact low-priced brands (and can help shift smokers to
premium brands like Marlboro). But taxes based on price hurt Philip
Morris International.

Philip Morris International's response?
"Other Tobacco Products," which Calantzopoulos describes as "tax-driven
substitutes for low-price cigarettes." These include, says
Calantzopoulos, "the ‘tobacco block,' which I would describe as the
perfect make-your-own cigarette device." In Germany, roll-your-own
cigarettes are taxed far less than manufactured cigarettes, and Philip
Morris International's "tobacco block" is rapidly gaining market share.

One of the great industry deceptions over the last several decades is
selling cigarettes called "lights" (as in Marlboro Lights), "low" or
"mild" - all designed to deceive smokers into thinking they are safer.

The Framework Convention on Tobacco Control says these
inherently misleading terms should be barred. Like other companies in
this regard, Philip Morris has been moving to replace the names with
color coding - aiming to convey the same ideas, without the
now-controversial terms.

Calantzopoulos says Philip Morris International will
work to more clearly differentiate Marlboro Gold (lights) from Marlboro
Red (traditional) to "increase their appeal to consumer groups and
segments that Marlboro has not traditionally addressed."

Philip Morris International also is rolling out a range
of new Marlboro products with obvious attraction for youth. These
include Marlboro Ice Mint, Marlboro Crisp Mint and Marlboro Fresh Mint,
introduced into Japan and Hong Kong last year. It is exporting clove
products from Indonesia.

The company has also renewed efforts to sponsor
youth-oriented music concerts. In July, activist pressure forced Philip
Morris International to withdraw sponsorship of an Alicia Keys concert
in Indonesia (Keys called for an end to the sponsorship deal); and in
August, the company was forced to withdraw from sponsorship in the
Philippines of a reunion concert of the Eraserheads, a band sometimes
considered "the Beatles of the Philippines."

Responding to
increasing advertising restrictions and large, pictorial warnings
required on packs, Marlboro is focusing increased attention on
packaging. Fancy slide packs make the package more of a marketing
device than ever before, and may be able to obscure warning labels.

Most worrisome of all may be the company's forays into China, the
biggest cigarette market in the world, which has largely been closed to
foreign multinationals. Philip Morris International has hooked up with
the China National Tobacco Company, which controls sales in China.
Philip Morris International will sell Chinese brands in Europe. Much
more importantly, the company is starting to sell licensed versions of
Marlboro in China. The Chinese aren't letting Philip Morris
International in quickly - Calantzopoulos says, "We do not foresee a
material impact on our volume and profitability in the near future."
But, he adds, "we believe this long-term strategic cooperation will
prove to be mutually beneficial and form the foundation for strong
long-term growth."

What does long-term growth mean? In part, it
means gaining market share among China's 350 million smokers. But it
also means expanding the market, by selling to girls and women. About
60 percent of men in China smoke; only 2 or 3 percent of women do so.

Roche: Saving Lives is Not Our Business

Monopoly
control over life-saving medicines gives enormous power to drug
companies. And, to paraphrase Lord Acton, enormous power corrupts
enormously.

The Swiss company Roche makes a range of HIV-related
drugs. One of them is enfuvirtid, sold under the brand-name Fuzeon.
Fuzeon is the first of a new class of AIDS drugs, working through a
novel mechanism. It is primarily used as a "salvage" therapy - a
treatment for people for whom other therapies no longer work. Fuzeon
brought in $266 million to Roche in 2007, though sales are declining.

Roche charges $25,000 a year for Fuzeon. It does not offer a discount price for developing countries.

Like most industrialized countries, Korea maintains a form of price
controls - the national health insurance program sets prices for
medicines. The Ministry of Health, Welfare and Family Affairs listed
Fuzeon at $18,000 a year. Korea's per capita income is roughly half
that of the United States. Instead of providing Fuzeon, for a profit,
at Korea's listed level, Roche refuses to make the drug available in
Korea.

Korea is not a developing country, emphasizes Roche
spokesperson Martina Rupp. "South Korea is a developed country like the
U.S. or like Switzerland."

Roche insists that Fuzeon is uniquely
expensive to manufacture, and so that it cannot reduce prices.
According to a statement from Roche, "the offered price represents the
lowest sustainable price at which Roche can provide Fuzeon to South
Korea, considering that the production process for this medication
requires more than 100 steps - 10 times more than other
antiretrovirals. A single vial takes six months to produce, and 45
kilograms of raw materials are necessary to produce one kilogram of
Fuzeon."

The head of Roche Korea was reportedly less diplomatic.
According to Korean activists, he told them, "We are not in business to
save lives, but to make money. Saving lives is not our business."

Says Roche spokesperson Rupp: "I don't know why he would say that, and
I cannot imagine that this is really something that this person said."

Another AIDS-related drug made by Roche is valganciclovir.
Valganciclovir treats a common AIDS-related infection called
cytomegalovirus (CMV) that causes blindness or death. Roche charges
$10,000 for a four-month course of valganciclovir. In December 2006, it
negotiated with Médicins Sans Frontières/Doctors Without Borders (MSF)
and agreed on a price of $1,899. According to MSF, this
still-price-gouging price is only available for poor and very high
incidence countries, however, and only for nonprofit organizations -
not national treatment programs.

Roche's Rupp says that
"Currently, MSF is the only organization requesting purchase of Valcyte
[Roche's brand name for valganciclovir] for such use in these
countries. To date, MSF are the only AIDS treatment provider treating
CMV for their patients. They told us themselves this is because no-one
else has the high level of skilled medical staff they have."

Dr. David Wilson, former MSF medical coordinator in Thailand, says he
remembers the first person that MSF treated with life-saving
antiretrovirals. "I remember everyone was feeling really great that we
were going to start treating people with antiretrovirals, with the hope
of bringing people back to normal life." The first person MSF treated,
Wilson says, lived but became blind from CMV. "She became strong and
she lived for a long time, but the antiretroviral treatment doesn't
treat the CMV."

"I've been working in MSF projects and
treating people with AIDS with antiretrovirals for seven years now," he
says, "and along with many colleagues we've been frustrated because we
don't have treatment for this particular disease. We now think we have
a strategy to diagnose it effectively and what we really need is the
medicine to treat the patients."

Multinational Monitor editor Robert Weissman is the director of Essential Action.

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