WASHINGTON -- May 10 -- Under the guise of providing aid to victims of asbestos-related illnesses, a small group of companies has lobbied for and won relief from their liability worth tens of billions of dollars in the Senates asbestos trust fund bill, according to a new Public Citizen report.
Their success in protecting their corporate interests, however, will sharply reduce the funds under the legislation that will be available to asbestos victims, the report finds. Meanwhile, some of the nations largest financial investment firms have spent millions of dollars in lobbying and campaign contributions to position themselves to score big rewards should the legislation pass.
The big winners in the legislation, S. 852, include a handful of Fortune 500 companies Dow Chemical, Ford, General Electric, General Motors, Honeywell, Pfizer and Viacom and at least 10 asbestos makers that have filed for bankruptcy.
An intense Capitol Hill lobbying campaign on behalf of the Fortune 500 companies to win the financial concession has been spearheaded by a relatively unknown entity called the Asbestos Study Group (ASG), which refuses to make its full membership list public, Public Citizen found.
The Senate legislation that began as a good-faith effort to help the thousands of victims of asbestos has turned into a carnival of greed by some of Americas biggest corporate interests, said Joan Claybrook, president of Public Citizen.
Sponsored by Sens. Arlen Specter (R-Pa.) and Patrick Leahy (D-Vt.), S. 852 would create a privately funded, publicly run $140 billion trust fund that would operate for 30 years to compensate hundreds of thousands of American workers or their families who have suffered serious injury or death from asbestos-related illnesses.
Under the bill, asbestos companies with large existing liabilities that are in Chapter 11 bankruptcy would have those liabilities erased, in favor of contributions to the proposed national asbestos trust fund. But the value of contributions to the trust fund would be substantially less than the existing liabilities, providing significant windfalls to the companies involved.
The Public Citizen report found that:
- The total contributions on behalf of asbestos victims that would be paid by 10 large asbestos firms were they to complete their bankruptcy proceedings under current law will drop from an estimated $25.9 billion to $5.6 billion should S. 852 become law. This represents a savings of $20.3 billion, or 78.5 percent expressed in todays dollars. On an individual basis, asbestos companies would effectively see their total payments over the life of the fund on behalf of asbestos victims decline by margins ranging from 40.5 percent to 100 percent.
- At least eight Fortune 500 companies are huge winners under S. 852 because their annual asbestos payments to the trust fund will be capped at $27.5 million per year for 30 years no matter how large their revenues or how many asbestos cases they have pending against them. In current dollars this means that their maximum liability is $378.5 million. By comparison, Dow Chemical otherwise projects its future liability at between $1.6 billion and $2.2 billion over the next 15 years from 2004 to 2019. Similarly, Honeywell estimates its future liability at $2.75 billion from 2004 through 2018. But the company would pay only 13.8 percent of that amount $378.5 million over the next 30 years.
- To get the best bill possible, the Fortune 500 companies created the Asbestos Study Group, a relatively unknown coalition. Public Citizen estimates that the ASG, six Tier 1 bankrupt asbestos companies and seven Tier 2 Fortune 500 companies spent a combined $144.5 million lobbying Congress from 2003 through 2004, the latest figures available. The amount spent by ASG and the Tier 1 companies from 2003 to 2004 $27.9 million was probably almost exclusively to pass asbestos bailout legislation.
- Goldman Sachs, a leading Wall Street investment banking firm, has been providing critical advice to the ASG and the Senate Judiciary Committee since at least 2003 regarding two crucial matters: the feasibility of financing the proposed trust fund to compensate victims and at what level it should be funded. The firms role appears to be highly unusual if not inappropriate for an investment company with a big stake in the legislations outcome via significant holdings in Fortune 500 firms whose stock prices should appreciate considerably under S. 852.
- ASG and the 13 companies employed 168 individual lobbyists during 2003 and 2004 to work on asbestos legislation. Of the 168, Public Citizen counts 94 or 57.7 percent who walked through the revolving door from government service to the private sector, including eight former members of Congress.
The stakes for getting the compensation they need and deserve could not be higher for the hundreds of thousands of American workers and their families who have been stricken by diseases caused by asbestos, said Frank Clemente, director of Public Citizens Congress Watch. The Senate should not allow this legislation to become a feeding frenzy for companies that from all indications care more about their bottom lines than for the lives of the Americans their products harmed and for whom this legislation was intended.
To read the report, click here.
For more information about asbestos liability, click here.