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Cameroon Palm Oil Plantation Withdraws Sustainability Application

Posted by Pratap Chatterjee on September 6th, 2012
CorpWatch Blog
A bulldozer clears natural forest for the Fabe SGSOC oil palm nursery. Photo: Jan-Joseph Stok / Greenpeace.

A subsidiary of Herakles Capital, a New York based investment firm, has decided to cancel its application to join the Roundtable on Sustainable Palm Oil (RSPO) after environmental groups alleged that its 73,086 hectare project in southwestern Cameroon would threaten the sustainability of the local community.

In 2009, the SG Sustainable Oils Cameroon, Ltd. (SGSOC), which is wholly owned by Herakles Capital, acquired a 99 year lease to land in Ndian and Kupe-Manenguba divisions where it drew up plans for a $350 million palm oil plantation. (Herakles Capital has several other investments in Africa such as the Bujagali dam in Uganda, the Boke Alumina Project in the Republic of Guinea and an East African undersea fiber-optic project.)

“From its very name, American-owned SG Sustainable Oils Cameroon, Ltd. (SGSOC) presents a pro-environment, pro-resources image,” writes Frederic Mousseau, policy director of the Oakland Institute in California in a new report released this week. “(But it) is also part of a strategy to deceive the public into believing that there is logic to cutting down rainforests to make room for palm oil plantations.”

SGSOC has gone to great lengths to convince the public that it is socially responsible. “Our project, should it proceed, will be a big project with big impacts – environmentally and socially,” Herakles CEO Bruce Wrobel wrote to the Oakland Institute in July 2011. “The big question – and the real story – is whether it ends up strongly positive or strongly negative. I couldn’t be more convinced that this will be an amazingly positive story for the people within our impact area.”

In addition to Herakles, Wrobel operates a non-profit dedicated to poverty reduction named “All for Africa” that boasts board members like Nigerian-American actor Gbenga Akinnagbe who shot to fame in The Wire, a U.S. TV series, and the film: The Taking of Pelham 123.

And SGSOC also applied to join the international Round Table on Sustainable Palm Oil (RSPO), which has signed up 779 members and associates including almost every major industry player in the world, in an effort to burnish its social responsibility credentials.

Indeed RSPO was created in 2004 to address the numerous clashes over palm plantations around the world with the help of non-government organizations such as the World Wildlife Fund which helped set up the organization.
But the palm oil industry – which produces 50 million tons of edible oils and biofuels a year - remains deeply controversial.

As CorpWatch writer Melody Kemp noted in her recent article for us “Green Deserts: The Palm Oil Conflict” the plantation companies make money in two ways: First they clear cut and sell the existing high-value trees, burning the residue. The haze from those forest fires has interrupted regional air traffic and caused severe respiratory illnesses in countries like Indonesia, Malaysia as well as Singapore. Then the companies plant the spiky oil palms trees, creating vast, eerily silent monoculture plantations.

Activists have sparked a raging debate over the industry, faulting palm oil for contributing significantly to carbon dioxide and methane emissions, the loss of biodiversity and precious carbon sequestering forests, land subsidence, poverty, and for exacerbating starvation resulting from land appropriation.

The very same problems have been predicted in an Environmental and Social Impact Assessment (ESIA) conducted by SGSOC itself. The company assessment suggested that the negative impact of the plantation on livelihoods will be “major” and “long-term.”

Nor is the Herakles investment the most efficient way to support the local economy, according to a report by on the SGSOC deal by two Cameroonian NGOs, the Centre for Environment and Development (CED) and Réseau de Lutte contre la Faim (RELUFA). The groups calculated that the government of Cameroon could generate 13 times more employment and significantly larger tax revenue if it were to require local bread-makers to use 20 percent locally produced flour (derived from sweet potatoes, corn or cassava), using just 15,000 hectares of land.

Local farmers and politicians are especially skeptical of SGSOC because palm oil plantations are not new to the region. Beginning in 1927, companies like Pamol have operated similar projects for decades. “Plantation jobs have always been modern day slavery,” says Joshua Osih of the Social Democratic Front, Cameroon’s main opposition party, in an interview for the film “The Herakles Debacle” just released by the Oakland Institute. “We’ve seen a lot of industrial plantations develop around this area and nothing, absolutely nothing, has happened positively to the population.”

“Everybody here is self employed,” Okie Bonaventure Ekoko, a cocoa farmer from Mboko village told the film maker Franck Bieleu. “There is no advantages that the people here will have (from Herakles investments). We don’t need them, we are fine.”

“And if they come and say they want to take this land from us, we are not ready for it,” says Esoh Sylvanus Asui, a farmer from Bombe Konye village. “We will fight and we will die for our land.”

In May 2011, some 50 local and international environmental and community groups wrote a letter to Wrobel expressing concern. In March 2012 a number of the same groups lodged a formal complaint against Herakles with the RSPO alleging that Herakles' project violated Cameroonian laws and noted that it "would disrupt the ecological landscape and migration routes of protected species." Meanwhile local farmers have begun to organize against the project. On June 6, 2012, villagers from Fabe and Toko held a protest against the plantation during the visit of the local governor.

On August 24 2012, Herakles withdrew its application to the RSPO.

“The RSPO regrets this withdrawal of membership by Herakles Farms,” the organization said in a brief statement posted to its website. “This action pre-empts recommendations from the RSPO Complaints Panel to further verify the allegations made by the complainants.”

The company did not respond to requests for comment from the media.

Payments to Saudi Generals Investigated in UK Military Contract Bribery Case

Posted by Pratap Chatterjee on August 29th, 2012
CorpWatch Blog
Saudi security forces. Photo: Omar Chatriwala, Al Jazeera English. Used under Creative Commons license

Four cars worth £201,000 were allegedly gifted to Saudi generals and £278,000 paid out to rent a villa to win a military IT contract for a major European military contractor. Altogether at least £11.5 million ($18 million) in bribes were allegedly paid out via two Cayman Island companies.

The £2 billion ($3.2 billion) contract to build a military intranet as well as internet monitoring and jamming systems for Sangcom, the communications arm of the Saudi National Guard, was awarded in 2010 to GPT Special Project Management, a British subsidiary of European Aeronautic Defence and Space Company N.V. (EADS).

A UK Serious Fraud Office investigation is underway after Ian Foxley, a former project manager in Riyadh, Saudi Arabia, blew the whistle in 2011. “I have had first hand experience of the pernicious effects of corruption. My father was a high ranking civil servant who was convicted of corruption in defence procurement in the 1980s and pursued by the MoD Solicitor for a further 22 years,” wrote Foxley in a letter dated January 9, 2012, to Vince Cable, the UK Business Secretary.

“You may also imagine my utter horror and repugnance at the rank hypocrisy of the MoD’s obscene participation in similar corrupt practices throughout the whole period whilst relentlessly pursuing my father until 2002,” added Foxley. “Here is an organization whose officers are taught from the outset at RMA (Royal Military Academy) Sandhurst that the foundations of their profession rest on honesty, integrity and moral courage, yet which so duplicitously condones and complies with corruption for commercial gain.”

The story begins in 1977 when Sir Frank Cooper, a senior bureaucrat at the U.K. ministry of defence, issued a secret order allowing bribes to be paid out on government to government deals. Anything above ten percent or exceeding a certain amount had to be personally authorized by him.

A memo discovered in the UK national archives from Lester Suffield, then head of defence sales at the ministry, stated: “(T)he percentages commonly charged in Saudi Arabia for the sort of service being offered, which, although described as 'technical consultancy', amounts in practice to the exertion of influence to sway decisions in favour of the client." Cooper replied: “I see no difficulty about what you propose.”

The contract is now managed by EADS, a Netherlands-based company which was created in 2000 by the merger of French, German and Spanish arms manufacturers. EADS generated revenues of over €49 billion ($61.5 billion) in 2011 and is best known as the manufacturer of the Airbus passenger jets.

Mike Paterson, then financial controller of GPT Special Project Management, first noticed unusual payments to Simec International and Duranton International in the Cayman islands. He reported the matter to his managers in 2007 but no action was taken.

Emails seen by the Financial Times suggest that the bribes continued till at least December 2010. At least £11.5 million ($18 million) or about 12 per cent of a specific contract were paid out for questionable “bought-in services.”

EADS has kept relatively silent about the scandal. “Certain allegations have been made in connection with the company’s contracts with a subcontractor group. These allegations have been notified to the UK authorities with whom EADS is maintaining a dialogue,” the company wrote in a statement to the Financial Times. “The relevant subcontracts were terminated. This termination has led recently to an unquantified claim from the subcontractor group for monetary damages.”

Similar investigations into Saudi contracts in the past have been quashed. The most controversial was a £43 billion ($68 billion) deal signed in 1985 by BAE, a British arms manufacturer, to supply Hawk warplanes, Tornado aircraft and other military equipment. The deal, which was named Al-Yamamah (Arabic for "dove"), allegedly included quarterly payments of £30 million that were paid out to Prince Bandar of Saudi Arabia for at least 10 years.

A UK fraud investigation was halted in 2006 and Tony Blair, the prime minister, took “full responsibility.” Later BAE agreed to pay out over $400 million in fines after the U.S. launched an investigation into multiple instance of corruption in several countries including Saudi Arabia.

Today critics question whether the EADS case will be properly investigated by UK authorities. “(T)here appears to be prima facie evidence of bribery. Will the SFO break the trend of decades by fully investigating the allegations and, if appropriate, charge the corporate entity and the individuals responsible?” asks Andrew Feinstein, a former South African member of parliament and author of the book “The Shadow World: Inside the Global Arms Trade.”

“Or will this be another whitewash to protect the British defence industry, the government and its munificent Saudi client?” Feinstein wrote in the Guardian.

Gazprom Arctic Oil Rig Blockaded By Greenpeace

Posted by Pratap Chatterjee on August 28th, 2012
CorpWatch Blog
Greenpeace protest at Prirazlomnaya rig. Image courtesy Greenpeace.

Sailors working for Gazprom, the Russian oil giant, used water cannons to remove Greenpeace activists who were protesting their plans to drill in the Arctic. The environmental group took action to signal the potential for a catastrophic environmental disaster as well as the impact on climate change.

Gazprom is drilling in the Prirazlomnoye oil field located in the Pechora Sea off the northwest coast of Russia. It is the first company to attempt commercial extraction of the 526 million barrels of oil that are estimated to be located in the offshore fields. To date it has been impossible to work in the region because it is blocked by thick ice for eight months of the year. The Prirazlomnaya rig, a Russian all weather oil platform, was specially designed at the Severodvinsk shipyard, to overcome the harsh conditions.

Last Friday climbers from the environmental group scaled the Prirazlomnaya rig and spent 15 hours holding up a banner that read “Save the Arctic.” On Monday the Greenpeace activists used four speed boats to block the Anna Akhmatova ship from bringing workers to the rig. Sailors turned water cannons on the boats to force them out of the way.

“The force of the water was so intense it knocked my boots off!” tweeted one Greenpeace activist who attempted to block the Anna Akhmatova. “So much water, sometimes all you saw is white. Felt like we were in a hurricane,” tweeted another. (Watch a video of the Greenpeace boat being flipped over)

We climbed Gazprom's rusting oil platform backed by over a million people who have joined a new movement to protect the Arctic,” Kumi Naidoo, the executive director of Greenpeace international, said in a press release. (Naidoo was one of the climbers.) “(I)t’s not a question of if an Arctic oil spill will happen, but when. The only way to stop a catastrophic oil spill occurring in this unique region is to permanently ban all drilling now."

Gazprom received a permit to drill for oil in July 2007. The company submitted an official oil spill response plan that expired last month. The original document “shows that the company would be completely unprepared to deal with an accident in the Far North, and would rely on substandard clean-up methods — such as shovels and buckets — that simply do not work in icy conditions,” says Greenpeace.

“We can often observe conditions when the operating company will not be able to contain and recover (potential oil) spill(s),” says Valentin Ivanovich Zhuravel, the project manager at the Informatika Riska, a Russian consultancy, that was asked by Greenpeace and WWF Russia to comment on the response plan."This can lead to significant pollution in the Pechora Sea coast and protected areas.”

The company disagrees. "Last winter demonstrated the platform['s] safety and reliability in the Arctic environment," a Gazprom spokesperson told the Moscow Times in an e-mail. "A professional emergency response crew works night and day. Crews of the offshore ice-resistant stationary platform and support vessels were trained under a dedicated program for emergency response and first aid in case of sea accidents.”

Greenpeace has received support for its protest from the local indigenous community in the Komi Republic. “The peoples of the north will no longer be bought with dimes and cents to stand silently by while the oil companies destroy our native land,” says a support statement issued by the Save the Pechora River committee. “Our culture and history cannot be bought off and replaced with pipelines and drill rigs.”

Meanwhile, ice cover in the Arctic Ocean has thawed to a record low of less than 4.0 million square kilometers. The numbers could drop further given that ice cover typically continues to melt till the end of September.

"This is due to climate change," Nicolai Kliem, head of the ice service at Danish Meteorological Institute (DMI) told Reuters.

Gazprom is not the only company to be targeting the Arctic. In the Nenets autonomous district, also in northwestern Russia, Lukoil and Bashneft are currently drilling for oil in the Trebs oil field.

Cairn Energy, a Scottish company, is exploring off the coast of Greenland.  And in Alaska, Shell obtained authorization to drill for oil in the Chukchi sea, with the personal help of Barack Obama, the U.S. president.

Grupo San Jose Linked to Bulldozing of Land of Paraguayan Uncontacted Tribe

Posted by Pratap Chatterjee on August 27th, 2012
CorpWatch Blog
Ayoreo woman. Photo: Survival International

Grupo San Jose, a Spanish construction company, has been accused of bulldozing the forest home of the Ayoreo, one of the last uncontacted tribes outside the Amazon. The indigenous community lives in the Chaco forests, a semi-arid zone in northern Paraguay not too far from the borders with Brazil and Bolivia.

In late July, Paraguayan forestry officials caught workers for Carlos Casado SA “bulldozing forest, constructing buildings and reservoirs, and putting up wire fencing” on land that the Totobiegosode – a sub-group of the Ayoreo - are known to inhabit. The discovery was confirmed by a letter from the Paraguayan ministry of environment sent to Organizacion Payipie Ichadie Totobiegosode (OPIT)

Carlos Casado SA is a ranching subsidiary of Grupo San Jose. The president of both Carlos Casodo and Grupo San Jose is Jacinto Rey González, who is also the controlling shareholder of Grupo San Jose.

“It’s shocking to discover that one of Spain’s biggest companies is involved in such scandalous behavior. Perhaps they thought that as this is happening in a far-off corner of South America, no-one would notice,” Stephen Corry, director of Survival International, a UK-based NGO, said in a press release. “But if they continue, they will be directly responsible for the destruction of the Ayoreo’s heartland – in flagrant violation of Paraguayan and international laws.”

The Ayoreo are nomads who hunt wild pigs and large tortoises. They live in small communities of three to four families and shun the outside world. First contact was established by Mennonite farmers in the 1940s and 1950s, followed by the New Tribes Mission - a Florida-based evangelical group that attempts to spread the Bible by translating it to into other languages – who sponsored manhunts to track down the Ayoreo in 1979 and 1986.

Almost 70 years later, some of the members of the tribe have managed to elude all contact with others and environmentalists argue that this isolation needs to be maintained. One of the major reasons is that these tribes lack immunity to illnesses and diseases that are common elsewhere, and could die from exposure. 

This isolation has been threatened in recent years as three Brazilian companies have started clearing land in the area to set up ranches: BBC SA, River Plate SA and Yaguarete Porá SA. Survival was able to catch two of the companies doing illegal logging, using satellite imagery.

Guyra, an environmental group in Asunción, estimates that some 1.3 million acres of Chaco forest have been cleared in the last two years, for cattle ranches. http://www.guyra.org.py/index.php/reportes-de-cambios-de-uso-de-la-tierra-del-gran-chaco-americano Lucas Bessaire, a U.S. anthropologist told the New York Times that the rate of deforestation was so rapid that even during the day, the sky turns “twilight grey” from the forest fires. “One wakes with the taste of ashes and a thin film of white on the tongue,” he said.

Today the Mennonites farmers and Brazilian ranchers have coverted vast swathes of the Chaco region. Displaced Ayoreo live in poverty outside the new ranching boomtowns, sleeping under plastic bag tents under the trees.

“We are witnessing ethnocide in action,” Gladys Casaccia and Jorge Vera of Gente, Ambiente y Territorio (GAT), a Paraguayan NGO that supports environmental initiatives for the indigenous people of the Chaco. “This crime is a human tragedy, an embarrassment for Paraguay in the eyes of the world – and it will only stop if those responsible are caught and punished.”

Paraguay already has the sad distinction of being a deforestation champion,” José Luis Casaccia, a former environment minister, told the New York Times. “If we continue with this insanity, nearly all of the Chaco’s forests could be destroyed within 30 years.”

Turmoil at South Africa’s Platinum Mines

Posted by Pratap Chatterjee on August 23rd, 2012
CorpWatch Blog
Cyril Ramaphosa photo courtesy Mining Weekly video. Rustenberg platinum processing plant courtesy bbcworldservice. Used under Creative Commons license

A third wildcat strike this year has closed yet another South African platinum mine less than a week after the police opened fire and killed 34 miners at the Lonmin mine north of Johannesburg. The latest to lay down tools are a thousand workers at the Royal Bafokeng Platinum Mine at Rasimone this Wednesday.

The strikes have hit the global supply of platinum, which is mostly used by the car manufacturing industry to make catalytic converters. Some 80 percent of the world’s supply of the precious metal is mined in South Africa.

Clashes between South Africa’s powerful mining companies and the government are only part of the story. A battle to win membership between two rival unions – the older establishment affiliated National Union of Mineworkers (NUM) and the newer more radical Association of Mineworkers and Construction Union (AMCU) – is also reported to be a major factor in the violence.

NUM - which was founded by Cyril Ramaphosa in 1982 – was deeply involved in rallying black mine workers against apartheid. AMCU was created in 1998 by Joseph Mathunjwa who left the NUM after he fell out with Gwede Mantashe, then general secretary of the older union.

Today Mantashe has become the right hand man of Jacob Zuma, the president of South Africa and Ramaphosa has become a powerful and wealthy businessman. Last year Ramaphosa took over the franchise for McDonald’s in South Africa. He also serves on the board of Lonmin, the UK-based platinum mining company where workers were killed last week.

But while the NUM’s former leaders have become powerful actors in post-apartheid South Africa, the union has started to lose members. “The National Union of Mineworkers doesn’t care about the workers,” Thabo Moerane, a Lonmin supervisor told Bloomberg. “It is eating with management. We’ve been trying to get a decent salary increase since 2007. That is why we wanted to join AMCU.”

AMCU, which has grown to about a tenth of the size of NUM with 30,000 members nationally, has also attracted its own share of controversy. “Its leaders call themselves devout Christians and say life is sacred,” wrote Reuters recently. “But its supporters march with spears, machetes and clubs and anoint themselves with magic potions to ward off police bullets.”

Meanwhile, local anger at the mining companies has been brewing for a while. “Lonmin has done nothing for the local community. They take our platinum and enrich themselves but where is our royalty money going? We don't have tar roads and our youth are unemployed,” a woman worker told the BBC. “They cut off our water supply every day during the day. The water comes back only late at night. The water stinks and we have to buy purified water.”

The first strike, early this year, was in Rustenberg at the world’s largest platinum mine run by Impala Platinum Holdings. Three workers were killed in clashes between the unions. Then on August 10, some 3,000 Lonmin rock drill operators went on strike at the Marikana mining complex to ask for a pay raise to 12,500 rand ($1,500) a month. AMCU, which represents 5,000 workers out of a total workforce of 28,000 was in favor of the strike. NUM which represents some 12,000 workers at Lonmin did not back the strike. (Frans Baleni, NUM’s new general secretary, is paid 105,000 rand or $12,600 a month)

Over the next week, violent attacks and clashes resulted in ten deaths, including two police officers and at least one worker who was hacked to death on his way to work.

Then on August 16, the police claim they came under attack from workers armed with guns, spears and machetes. “Police had no option but to open fire,” police commissioner Riah Phiyega said. “This is a dark moment for the country.”

The police killed 34 people and injured another 78. The deaths caused shockwaves to roll through South Africa, where it brought back memories of the apartheid era shootings of protestors. Lonmin said it would not insist that workers return to work this week and Zuma came to meet with the workers Wednesday.

Workers feel that (violence) adds both positive and negative value,” Crispen Chinguno, a sociologist at the University of Witwaterstrand who conducted research among the platinum workers, told the Mail & Guardian newspaper. "At Implats, where workers were also demanding a salary adjustment (of 9,000 rand) outside of a bargaining agreement, they ended up getting more than 8,000 rand. The strike was illegal, some were dismissed, but most of them got their jobs back. From that perspective, the workers feel the use of violence is working for them. The negative aspects are some job losses, injuries and death."

Others say the killings reflect the reality of the new South Africa. “The story of the Marikana mine shootings is that of a trade union that cosied up to big business; of an upstart and populist new union that exploited real frustration to establish itself; and of police failure,” writes Justice Malala, founding editor of South Africa's ThisDay newspaper, in the Guardian. “It is a story which exposes South Africa's structural weaknesses too: we are one of the world's top two most unequal societies (with Brazil). Poverty, inequality and unemployment lie at the heart of the shootings this week.”

Indian Supreme Court to Hear Novartis “Patents Versus Patients” Case

Posted by Pratap Chatterjee on August 21st, 2012
CorpWatch Blog
Poster designed for Oxfam by net_efekt. Used under Creative Commons license.

Novartis, the Swiss pharmaceutical company, will appear before the Indian Supreme Court Wednesday to appeal against a patent rejection for a popular cancer drug. A decision in favor of the company could have a devastating impact on cheap supplies of many kinds of generic drugs for poor patients.

Cancer Patients Aid Association (CPAA) – an Indian non profit that has treated 300,000 patients since 1969 – is a key plaintiff in the case against Novartis. "(Their) aggressive patent policy makes Novartis responsible for the misery of thousands of cancer patients in India today and if not restrained will have similar effect at the global level," says Y.K. Sapru, the CEO of CPAA.

"It would quite simply be a death sentence for us," Vikas Ahuja, president of the Delhi Network of Positive People, told the Guardian. Ahuja was diagnosed with HIV almost 20 years ago. "I am quite sure that if Novartis wins, other multinationals will follow suit and other drugs will become prohibitively expensive."

The patent that the judges will examine is for imatinib mesylate, which is used to treat various forms of cancer. Developed by Nicholas Lydon in the 1990s, imatinib mesylate is now marketed under the brand name Gleevec by Novartis.

In the U.S. companies are issued 20 year patents, after which the drug becomes available for anyone to make. Novartis filed for a patent on imatinib mesylate in India in 1997 but Indian regulators ignored the application. At the time India refused to recognize international patents on essential drugs in order to keep prices affordable.

In 2005, India changed its laws to accept patents, as part of an agreement to join the World Trade Organization. At the time Gleevec was being sold by Novartis at prices of $32,000 per patient per year while Indian companies were selling the same drug for roughly $2,100 per patient per year. (Gleevec now retails for almost $70,000 a year)

In January 2006 the Patent Controller in Chennai ruled that Gleevec was not novel under section 3(d) of the patents law which explicitly requires that patents should only be granted on medicines that are truly new and innovative.

Novartis –said the court – was attempting to prolong an expired patent through an industry practice called “evergreening” – a tactic by pharmaceutical companies change the composition of the medicine or the way that it is delivered in order to claim a new innovation.

“Novartis argued that increased bioavailability of the salt form of imatinib meant increased efficacy, entitling it to a patent on imatinib mesylate,” a fact sheet from Médecins Sans Frontières (Doctors Without Borders) explains. “But at the time, Madras High Court clarified efficacy to mean ‘therapeutic effect in healing a disease.’The rejection of Novartis’s patent application was therefore confirmed.”

Novartis appealed the Indian decision in June 2006 and was rejected. The case has now wound its way to the Supreme Court where industry observers say a decision (which may not come down till November after several weeks of hearings) will have a dramatic impact of the future of foreign drug sales in the country.

For example, Leena Menghaney of Doctors Without Borders says that Indian generic drug manufacturers have been able to cut drug bills for HIV patients from $10,000 a year to just $150.

"If we lose, we don't know if we can continue sustaining a large number of patients in developing countries," Menghaney told the Wall Street Journal. "You could have existing drugs [in India] being patented and newer drugs about to go off patent being extended. It could be a big problem for us in the coming decade."

Pharmaceutical companies see the matter differently. If Novartis wins, the believe that India’s $11 billion drug market could be worth $74 billion by 2020.

Meanwhile Indian regulators are looking at setting price caps on as many as 348 drugs, up from 74 today, in order to protect poor patients.

In recent months Indian regulators have come down on the side of patients. In March, PH Kurian, the controller general of patents, designs and trademarks in India, allowed a local company to manufacture and sell a generic version of Sorafenib, a drug used to treat advanced kidney cancer and liver cancer.

Bayer, a German multinational, had been selling Sorafenib, under the brand name of Nexavar, for $5,600 a month. (The average per capita income in India is a little under $100 ie two percent of the price of the drug) Kurian allowed Natco Pharma, an Indian company, permission to sell the drug at $176 a month.

India is not the first country to act on this matter. Between November 2006 and January 2007, Thailand issued compulsory licenses for two AIDS drugs (efavirnz and the combination of lopinavir+ritonavir) and one antihypertension drug (clopidegrel). Several other countries - Ethiopia, the Congo, Tanzania and Uganda – are also considering similar action.

Serengeti Under Threat from UAE Big Game Hunting Company

Posted by Pratap Chatterjee on August 20th, 2012
CorpWatch Blog
Maasai warriors. Photo: David Berkowitz. Used under Creative Commons license

Serengeti national park is under threat from Ortello Business Corporation (OBC) in a deal that could displace 48,000 indigenous Maasai and open it up for hunting of lions and leopards. An urgent action by Avaaz, an international campaigning group, has gathered close to a million signatures to protest the scheme.

The Serengeti region covers 12,000 square miles (30,000 square kilometers) from north Tanzania to south western Kenya. Over 2,000 lions roam the area among dozens of other species from the crowned eagles to elephants and rare black rhinos. It is most famous for an annual migration during which over a million wildebeest and about 200,000 zebras travel south from the northern hills to the southern plains in October and November and then move west and north between April and June.

The region is also called Maasailand, after the semi-nomadic indigenous community that lived there for centuries until the British colonialists started to grab their lands to build ranches. Today the colorfully dressed spear carrying tribe have become a global tourist attraction.

“(O)ur vision of virgin nature has encouraged the takeover of the land by a new breed of super-rich conservationists and tourism operators,” writes New Scientist journalist Fred Pearce in his new book, The Land Grabbers. “The Serengeti has become the world’s biggest zoo, in which the Maasai warriors are reduced to decorative walk-on parts.”

One of these operators is OBC, which is based in the United Arab Emirates, and markets big game safaris. The company prefers not to speak to the media but a Conde Nast Traveler reporter sketched a profile of the company and its recent conflicts with the local Maasai.

In the early 1990s the Tanzanian government “granted OBC the right to hunt in more than 50,000 acres of savanna and hills in Masailand, reportedly in exchange for millions of dollars in financial aid to the Tanzanian armed forces,” writes Joshua Hammer.

In July 2009, the Tanzanian army allegedly kicked dozens of Maasai out of the area for "trespassing" on OBC land. " They ordered us out of our bomas (thorn bush compounds), then they poured gasoline on them and set them on fire," a cattle herder told Hammer. "After the burning, we rebuilt, and they came and did it again."

A similar report was published by a Tanzanian fact-finding mission conducted in August 2009 by Feminist Activist Coalition (FEMACT) which reported that “there were ruthless eviction operations conducted in the Loliondo villages. Contrary to the District Commissioner’s claims, the investigation team came across testimonies and evidence of despicable despicable acts. The team came across women who had undergone miscarriages, rape, loss of children and other properties including food and shelter. Men who were chained beaten and humiliated in front of their families, those who had lost thousands of livestock among other properties and those who were imprisoned for no apparent reasons.”

In September 2009, James Anaya, the United Nations special rapporteur on the human rights and fundamental freedoms of indigenous peoples wrote to the Tanzanian government to ask for an explanation of the incidents.

The UN letter notes that the original contract between OBC and the government, required to company to make payments of three million Tanzanian shillings to each villager and provide employment, roads, schools and water to the community. But OBC “has not complied with the contractual terms related to compensation, provision of services, and employment,” writes Anaya.

A week ago Avaaz, a letter writing campaign group, heard from the Maasai that OBC had new plans to expand and asked for their help.

“The last time this same corporation pushed the Maasai off their land to make way for rich hunters, people were beaten by the police, their homes were burnt to a cinder and their livestock died of starvation,” wrote Avaaz’s Sam Baraat in an email sent out last week. “But when a press controversy followed, Tanzanian President Kikwete reversed course and returned the Maasai to their land. This time, there hasn’t been a big press controversy yet, but we can change that and force Kikwete to stop the deal if we join our voices now.”

"For us, our land is everything, but these Arab princes have no respect for the animals or our rights,” Mzee Orosikos, a Maasai elder, told the Observer newspaper. “Many of us would rather die than be forced to move again."

The government denies the allegations. "(N)o eviction exercise has been planned for the Serengeti district, which is one of the districts in Mara region” George Matiko, spokesman for the resources and tourism ministry, told the newspaper. “In the Serengeti there is no hunting bloc allocated to Middle Eastern kings and princes to hunt lions and leopards."

The campaigners says that the government reply has been carefully worded to avoid the bigger question. "(T)he Tanzanian government is playing cynical word games – the Maasai lands in question are commonly understood to be within the Serengeti ecosystem’” says Emma Ruby-Sachs, campaign director at Avaaz. “If the government does not believe there is any threat to the Maasai lands, it should be easy for it to commit to a policy of not forcibly evicting any of its people to make way for foreign interests."

Hanwha CEO Jailed for Four Years

Posted by Pratap Chatterjee on August 17th, 2012
CorpWatch Blog
Hanwha building photo: riNux Kim Seung-youn photo: Πρωθυπουργός της Ελλάδας. Used under Creative Commons license.

Kim Seung-youn, the CEO of the Hanwha group in South Korea, has been sentenced to four years in prison and fined 5.1 billion won ($4.5 million). The jail time marks an unusual departure for the Korean judiciary who typically issue suspended sentences when prominent business bosses are found guilty.

Hanwha is the tenth largest “chaebol” or business conglomerate in South Korea. Started by Kim Chong-Hee as Korea Explosives Inc. in 1952, it now has an annual revenue of $30 billion and interests as diverse as dairy farming, finance and petrochemicals.

Kim Seung-youn, the son of the founder, has been in trouble with the law several times. In 1993 he was found guilty of smuggling cash to buy a large mansion in Los Angeles and then in 2004 he was found guilty of bribing a politician. In 2007, he was given a suspended sentence for assaulting workers with a steel pipe after his son got in a fight.

This time Kim has been accused of buying and selling shares in employees names to avoid taxes, bailing out his brother’s failing business and forcing his affiliates to sell shares in an oil company to his sister at below market prices.

"As a controlling shareholder of Hanwha Group, the defendant is passing on his responsibility to working-level officials and he has not shown remorse," said Seo Kyung-hwan, one of the three judges on the panel that decided the case. “Considering this, he needs to be strictly punished.”

Most chaebol got their start after the end of the Second World War when the government of Syngman Rhee encouraged entrepreneurs to rebuild the country. During the administration of General Park Chung Hee in the 1960s, the favored chaebol were given easy access to loans, foreign technology and large government contracts in order to rapidly industrialize the country. Today these elite companies – some of which have become global players like Hyundai, LG and Samsung – control much of the South Korean economy.

The chaebol bosses have operated beyond the reach of the law for many years. Take Lee Keun-hee of Samsung who was found guilty in July 2008 of operating a slush fund to bribe politicians, prosecutors and government officials. Lee was fined $109 million and given a five year suspended sentence.

Or Chung Mong-koo of Hyundai who was found guilty of embezzling funds that were funneled to politicians in February 2007 and sentenced to three years in jail. Chung had his sentence suspended on appeal. "The court has been agonising over whether to put the accused in jail or keep him out of prison," said Lee Jae-Hong, the chief judge. "But in consideration of the huge economic impact that could result from imprisonment, it decided to suspend the sentence."

A few brave whistleblowers have risked their careers to speak out against the chaebol. "Our society is so corrupt, and people are blindfolded because everyone is living well and people are greedy,” says Kim Yong-chul, a Samsung whistleblower. “I am not a revolutionary, an ideologue or a revenge. But I am against business as usual.”

Kim wrote a book about his experiences: "Thinking of Samsung" ("Samsungul Sanggak Handa"). The book was never reviewed by the South Korean media and he has been ostracized by the business establishment. “Isn’t this a comedy?” Kim told the New York Times. “I am challenging them to slap my face, to file a libel suit against me, but they don’t. They treat me like a nut case, an invisible man, although I am shouting about the biggest crime in the history of the nation."

Despite the news blackout, his book has become a best seller, promoted solely by Twitter and word-of-mouth. And distrust of the chaebol has been growing among ordinary citizens – indeed a recent poll by a major think tank found that 74 percent of people believed that the conglomerates were not moral.

It is this change in the political mood in the country that anti-corruption advocates are hoping will make sure that Kim Seung-youn serves his sentence

TrapWire Leaks Shine Light on New Video Tracking Technologies

Posted by Pratap Chatterjee on August 14th, 2012
CorpWatch Blog
Tag and Track footage from Ipsotek. Footage from company Youtube video.

TrapWire, a company founded and run by former Central Intelligence Agency (CIA) officers, that offers to track “suspicious” activities from surveillance video, has been spotlighted in a new Wikileaks release.

The system is described on the TrapWire’s website as "a unique, predictive software system designed to detect patterns of pre-attack surveillance and logistical planning.” The U.S. Department of Homeland Security paid TrapWire $832,000 to deploy Trapwire in Washington DC and Seattle in December 2011, according to federal spending data records.

The information on Trapwire’s contracts emerged from one of the five million internal emails from Stratfor, an Austin, Texas-based company that brands itself as a "global intelligence" provider, were recently obtained by Anonymous, the hacker collective, and were released in batches by WikiLeaks, the whistleblowing website, earlier this year.

The Trapwire technology was created at Abraxas corporation, which was founded by Richard "Hollis" Helms, a former CIA agent (but not the former head of the CIA under Nixon). Abraxas spun off Trapwire into another company which still has several senior employees who once worked at the agency. They include Dan Botsch, who worked at the CIA for 11 years as a Russian and Eastern European analyst,  Michael Maness, a 20 year CIA veteran who worked in counterterrorism and security operations in the Middle-East, the Balkans and Europe, and Michael K. Chang, a 12 years CIA veteran on counterterrorism operations.

The company appears to have deleted the list of senior employees from its website when the Wikileaks release occurred. But the company still promotes their prior experience: “Our professionals have led successful intelligence operations against terrorist organizations and fought on battlefields across the globe.”

The software has been described as a real life version of a system portrayed in Minority Report, a Hollywood blockbuster. “Anyone who takes a photograph at high-risk locations is logged as a suspected terrorist on a vast network of secret spy cameras linked to the U.S. Government, according to leaked emails,” writes Rick Dewsbury at the Daily Mail, a tabloid newspaper in the UK.

Mainstream media have reacted more cautiously to the TrapWire leaks. The New York Times commented that the “reports appear to be wildly exaggerated” noting that the Homeland Security had ended trials on the technology last year “because it did not seem promising.” The company refused to comment.

While TrapWire is now keeping quiet about its software, a similar UK venture is doing the opposite. Tag and Track, a technology developed by Kingston University researchers, is now being marketed by Ipsotek.

“The notion that you can tag a person and let the system do the tracking is a dream come true for CCTV operators,” says Professor Sergio Velastin who is also co-founder of Ipsotek. “The system relies on the identification of a person through features, such as their appearance, which different cameras can then pick up on.”

Ipsotek has sold its products to the Australian parliament and to airports in Belfast and Edinburgh. In a Reuters video report, the company demonstrates how it can follow any individual that an operator identifies and tags when analyzing video footage. The Tag and Track software then creates a unique colored trail to show where that individual has traveled.

A similar technology called Footpath, which is manufactured by Path Intelligence in the UK, tracks individuals based on the strength of their cell phone signals. The system was piloted by Forest City, a shopping mall company in the U.S. in Promenade Temecula in Temecula, California, and Short Pump Town Center in Richmond, Virginia last year.

The pilot project was canceled after privacy advocates pointed out that it was most likely illegal and members of Congress started to raise questions.

How accurate are these new video surveillance technologies? “(I)t’s extremely difficult, and probably impossible, to distinguish the one-in-a-billion terrorist from innocent people doing ordinary things like taking pictures,” Jay Stanley at American Civil Liberties Union told the New York Times. And therein lies the greatest danger.

Pfizer Admits Bribery in Eight Countries

Posted by Pratap Chatterjee on August 8th, 2012
CorpWatch Blog
Pfelon t-shirt by Zazzle. Dollar bill photo: Adam Kuban. Photo of pills: e-magineart.com. Used under Creative Commons license

For three years, Pfizer Italy employees provided free cell phones, photocopiers, printers and televisions to doctors, arranged for vacations (such as “weekend in Gallipoli,” “weekend with companion” and “weekend in Rome”) and even made direct cash payments (under the guise of lecture fees and honoraria) in return for promises by doctors to recommend or prescribe Pfizer’s products.

Today, the New York headquarters of the pharmaceutical giant has agreed to pay a total of $60.2 million in penalties to settle the documented charges of bribery. The Securities and Exchange Commission (SEC) says that Pfizer Italy employees went out of their way to “falsely” book the expenses under “misleading” labels like “Professional Training,” and “Advertising in Scientific Journals.”

The penalty is roughly half a percent of the company annual profits that exceed $10 billion a year on global sales of $67.4 billion in 2011.

Italy was not the only country where Pfizer has been accused of bribing doctors and local officials. “Pfizer took short cuts to boost its business in several Eurasian countries, bribing government officials in Bulgaria, Croatia, Kazakhstan and Russia to the tune of millions of dollars,” says Mythili Raman, the principal deputy assistant attorney general of the U.S. Department of Justice’s (DoJ) criminal division.

“Pfizer H.C.P. admitted that between 1997 and 2006, it paid more than $2 million of bribes to government officials in Bulgaria, Croatia, Kazakhstan and Russia,” notes a press release issued by the DoJ. “Pfizer H.C.P. also admitted that it made more than $7 million in profits as a result of the bribes.”

Amy Schulman, executive vice-president and general counsel for Pfizer, said: “The actions which led to this resolution were disappointing, but the openness and speed with which Pfizer voluntarily disclosed and addressed them reflects our true culture and the real value we place on integrity and meeting commitments.”

In a criminal complaint issued by the SEC, investigators laid out detailed charges for a total of eight countries: Bulgaria, China, Croatia, Czech Republic, Italy, Kazakhstan, Russia, and Serbia.

For example for almost six years, Pharmacia Croatia made monthly payments of approximately $1,200 per month into the Austrian personal bank account of a Croatian doctor. In 2003, Pfizer bought Pharmacia Croatia but allowed the payments to continue for three months.

A memo from a senior manager noted that the doctors was “a member of the Registration Committee regarding pharmaceuticals, I do expect that all products which are to be registered, will pass the regular procedure by his assistance. . . . He is a person of great influence in Croatia in the area of pharmaceuticals, and his opinion is respected very much; that’s the reason he is so important to us.”

In Russia, from the mid-1990s through 2005, Pfizer Russia had a special sales initiative called the “Hospital Program” under which employees were allowed to pay hospitals five percent of the value of certain Pfizer products. Some of this money was paid out in cash to individual Russian doctors “to reward past purchases and prescriptions and induce future purchases and prescriptions of Pfizer products.”

Government officials were also cultivated. On November 19, 2003, a Pfizer Russia employee sent in an invoice requesting “payment for the (motivational) trip of [the First Deputy Minister of Health] for the inclusion of [a Pfizer product] into the list . . . of medications refundable by the state.”

In another email June 27, 2005, a Pfizer Russia employee noted that a government doctor “should be assigned the task of stretching the amount of the purchases . . . to US $100 thousand” as an “obligation” in exchange for a trip to a conference in the Netherlands or Germany.

Federal officials have forced Pfizer to pay much higher fines in the past, based on the damage assessed in each case (typically a multiple of the damages). For example in 2009, Pfizer paid out $2.3 billion to settle allegations of criminal and civil liability arising from the illegal promotion of Bextra, an anti-inflammatory drug.

All told U.S. government regulators are expected to hand out $8 billion in fines this year to multinational corporations, estimates the New York Times. “Critics remain, however, arguing that the practice of settling fraud cases with companies while not charging any employees might be giving executives an incentive to push the limits of the law,” notes the newspaper.

“If you are an executive, you know that the chances of getting caught are infinitely small, and the chances of getting caught and prosecuted are even smaller,” Dennis M. Kelleher, president of Better Markets, told the New York Times.

Questions are being raised by some members of Congress. “A lot of people on the street, they’re wondering how a company can commit serious violations of securities laws and yet no individuals seem to be involved and no individual responsibility was assessed,” Jack Reed, a Rhode Island senator, said at a recent hearing.

Hospital Corporation of America Allegedly Profited From Questionable Cardiac Procedures

Posted by Pratap Chatterjee on August 7th, 2012
CorpWatch Blog
Richard Bracken, HCA CEO, speaking at Tulane university. Photo: Tulane publications. Used under Creative Commons license.

Hospital Corporation of America (HCA) – the world’s largest operator of private clinics and hospitals – has come under the spotlight for performing unnecessary cardiac procedures, notably in Florida.

Based in Nashville, Tennessee, the company has 163 hospitals and 110 surgery centers, and an annual revenue of $ $29.682 billion in 2011 with profits of $2.465 billion. About a fifth of its income comes from Florida, which has a large retiree population.

HCA previously paid out $1.7 billion in fines and repayments to settle charges of defrauding the government in 2000. One of the key agreements was “to resolve lawsuits alleging that HCA hospitals and home health agencies unlawfully billed Medicare, Medicaid and TRICARE for claims generated by the payment of kickbacks and other illegal remuneration to physicians in exchange for referral of patients.” (Medicaid, Medicare and TRICARE are U.S. government healthcare plans for poor people, elderly people and military personnel and their dependents respectively)

The company also signed a special eight year agreement from 2000 to 2008 with the U.S. Department of Justice that required them to promptly report fraud or face harsher penalties that other companies because of the previous fraud claims.

The new charges suggest “that a defendant, already caught once defrauding the government, has apparently not changed its corporate culture,” Michael Hirst, a former assistant United States attorney in California, told the New York Times.

The procedures that are being questioned today are diagnostic catheterization (insertion of a tube into the heart) and cardiac stents (a tube inserted into cardiac arteries). Medicare normally pays the hospitals about $3,000 and $10,000 for each procedure respectively.

The newspaper revealed that internal investigations at HCA showed that between 2002 and 2010, company doctors were “unable to justify many of the procedures they were performing,” write Reed Abelson and Julie Creswell. “Questions about the necessity of medical procedures — especially in the realm of cardiology — are not uncommon. But the documents suggest that the problems at HCA went beyond a rogue doctor or two.”

A catheterization laboratory at the Lawnwood Regional Medical Center in Fort Pierce, Florida, accounted for 35 percent of the hospital’s net profits. There Dr. Abdul Shadani and Dr. Prasad Chalasani at Lawnwood are named by the New York Times as being quick to perform catherizations. Some 1,200 procedures were found to be unnecessary in a 2010 review.

Also singled out was Dr. Sudhir Agarwal who practiced at the Regional Medical Center Bayonet Point in the town of Hudson, also in Florida. An internal review found that his “style of clinical practice leads to unnecessary procedures and unnecessary complications.”

Dr. Agarwal and the other eight doctors have sued HCA for defamation in county court. Anthony Leon, a lawyer for the nine doctors, issued a statement that said: “There is absolutely no merit to any allegation that any of these doctors were performing unnecessary procedures or performing procedures that led to unnecessary complications as a style or pattern of practice.”

HCA is hardly alone in being accused of defrauding the government. A quick scan of the official press release index of the Department of Justice suggests that it is a rare week when the authorities fail to catch someone who has milked the taxpayer for $10 million or more.

For example, in December 2010 three companies – Abbott Laboratories, B Braun Medical, and Roxane Laboratories – agreed to pay $421 million to settle allegations of overcharging. (The companies were billing the government up to 20 times more than the actual consumer costs for products like intravenous drugs and solutions.)

In 2009, Pfizer paid out $2.3 billion to settle allegations of criminal and civil liability arising from the illegal promotion of Bextra, an anti-inflammatory drug. And less than a month ago, GlaxoSmithKline to pay $3 billion in a civil and criminal settlement to settle allegations of illegal marketing of Paxil and Wellbutrin which was prescribed to treat depression as well as failure to report safety data for Avandia, a diabetes drug.

One of the problems in the U.S. is the staggering sums involved: the government is expected to spend a trillion dollars, or seven percent of GDP, on Medicare and Medicaid, which, in turn, have become a gold mine for the private companies that provide the care. (An interesting statistical note: the UK National Healthcare Services which covers all citizens costs roughly five percent of national income)

“If you are a hospital that wants to boost its bottom line though, performing more surgeries — even those that aren’t necessary — is pretty much the way to go,” writes Sarah Kliff at the Washington Post blog. “Right now, doctors get paid for each service they provide. The cardiologist that inserts more stents and performs more surgeries tends to net a higher salary.”

Chevron Face Opposition Over Eastern Europe Fracking Plans

Posted by Pratap Chatterjee on August 6th, 2012
CorpWatch Blog
Anti-fracking poster in Bulgaria. Photo: Пенка ГенадиеваБългария

Chevron - the Northern California-based oil and gas company – has been quietly acquiring rights to drill for natural gas in Eastern Europe using “fracking” technology – a controversial technique. However, grassroots opposition in Bulgaria and Romania has thwarted the companies plans so far.

An interview with Ian MacDonald, vice-president of Chevron Europe, Eurasia and Middle East, in the Financial Times suggests that the company is getting ready for what it believes is the next fossil fuel extraction boom in the region.

“For years, it has been snapping up exploration acreage along a geological faultline that stretches from the Baltic to the Black Sea,” writes Guy Chazan. “A crucial piece of its jigsaw fell into place in May when it won the right to negotiate a big shale gas contract in Ukraine. That left it with an almost continuous arc of concessions stretching from Bulgaria in the south-east to Poland in the north. The blocks in Romania alone cover 2,700sq km.”

But the company faces an uphill political battle to the technology that has been blamed for contaminating local water supplies and even causing earthquakes. Bulgaria banned fracking in January after a major protest against Chevron’s plans to drill in Dobrudja, the most fertile farm region in the country in January.

Chevron is also running into fierce opposition in Romania which has a moratorium on the technology. The company has licenses in the north-east and south-east Dobrogea region near the southern border with Bulgaria as well as for the in north-eastern Romania near the border with Moldova.

“We examined the Chevron contract and… encountered suspicious secrecy at all levels,” says Nicolae Rotaru of Civic Platform in Romania. “We want a law to be worked out to regulate the drilling for shale gas in Romania … It is dangerous for human life.”

Others pointed out that the drilling would not even benefit the local people financially. “These royalties are so tiny that they cost almost nothing, the private operators who profit from the exploitation and give peanuts to the state,” wrote Ilie Serbanescu in “Romania Libera”

The Czech republic is also considering a ban.

Western European countries have been fighting fracking too. France banned fracking last July after environmentalists and wine producers raised alarms about water pollution. Fracking was also recently briefly banned in the UK.

Why the opposition to fracking? Greenpeace explains here: “To access these reserves, fluid is pumped down a drilled channel (well) into the gas-bearing rock at very high pressures. This causes the rock to fracture, creating fissures and cracks through which the gas can 'escape'. The fracturing liquid generally consists of mainly water, mixed with sand and chemicals. Numerous different chemical agents are used, many of which are flagged as dangerous to humans and the environment (carcinogens, acute toxins).

“The fracturing of a single well requires a huge volume of water: around 9,000 - 29,000 m3 (9 -29 million litres). Chemicals make up about 2% of the fracturing liquid, i.e. about 180,000 – 580,000 litres. Only 15 – 80% of the injected fluid is recovered, meaning that the rest remains underground, where it is a source of contamination to water aquifers.”

The contamination has shown up in unusual place. For example communities in the U.S. have seen tap water catch on fire in fracking areas. (Watch this YouTube video and this one from Time magazine)

Fracking can also dramatically increase the likelihood of earthquakes, according to recent research in Youngstown, Ohio, where residents were hit last Christmas Eve and again on New Year's Eve.

A new study from Cliff Frohlich, a seismologist at the University of Texas, Austin, just published in the Proceedings of the National Academy of Sciences, shows a high degree of correlation between local earthquakes and fracking. “Beginning in 2001, the average number of earthquakes occurring per year of magnitude 3 or greater increased significantly, culminating in a six-fold increase in 2011 over 20th century levels,” Frohlich wrote. “This suggests injection-triggered earthquakes are more common than is generally recognized.”

To learn more about the dangers of fracking, check out the film Gasland and the Drilling Down series in the New York Times.

Congo Copper Mine Deals Questioned

Posted by Pratap Chatterjee on August 2nd, 2012
CorpWatch Blog
Women copper miners in the Congo. Photo: FairPhone. Used under Creative Commons license.

Eurasian Natural Resources Corporation (ENRC), a global mining company that got its start in Kazakhstan, has won a new $101.5 million license to dig for copper at the Frontier mine in the Democratic Republic of Congo. The company has been criticized by Global Witness for its purchases of rights from offshore companies connected to Dan Gertler, a controversial Israeli diamond merchant. http://www.globalwitness.org/library/possible-new-enrc-deal-raises-fresh-corruption-risks

“The Congolese state has foregone billions of dollars in revenues by secretly selling off its assets on the cheap to offshore companies,” Daniel Balint-Kurti, campaigner for the Democratic Republic of Congo at Global Witness said in a press release issued last month. “With so much at stake in one of the poorest countries on the planet, ENRC must do the right thing and shed full light on its dealings.”

Per-capita income in the Congo is under $300 a year and experts at the Carter Centre, which was founded by former US president Jimmy Carter, say there is a reason. "In a mining sector defined by irregularities and mismanagement, large industrial mining projects can earn huge profits for investors and government officials,” Sam Jones, associate director of the centre's human rights program, told the Guardian. “(L)ittle revenue finds its way back into desperately impoverished Congolese communities for schools, healthcare, or other social services.”

The Frontier copper mine is located near the town of Sakania in the Congo, about a mile from the Zambian border. It is located in the copper belt that straddles the border of the two countries that has been exploited commercially from the days of Belgian colonization to this day. Indeed the profits from the Union Minière du Haut Katanga, the original mining company in the region, was a major source of wealth for Belgium at the beginning of the 20th century.

First Quantum, a Canadian company, acquired the rights to mine for copper at Frontier in 2001 but was forced to turn it over to Sodimco, a state owned company in 2010 by the Congolese government. The licences were then sold to Fortune Ahead, a Hong Kong shell company. Meanwhile First Quantum filed multiple legal claims demanding $4 billion in compensation for Frontier and other assets nationalized by the Congolese government.

In January this year First Quantum agreed to turn over all its prior mineral rights to ENRC for $1.25 billion. ENRC had already bought rights to the giant Kolwezi tailings project for $175 million and purchased CAMEC, yet another Congolese company that owned a half share in the SMKK copper and cobalt mine.

But exactly who paid whom how much for mining rights in the Congo is up for debate. “ENRC’s purchase of its stake in Kolwezi was structured through a deal between itself and at least seven companies registered in the British Virgin Islands, all connected to Dan Gertler,” states a Global Witness fact sheet. “When ENRC bought the remaining 50 per cent stake in SMKK, it purchased it from another British Virgin Islands company linked to Mr Gertler. Even ENRC’s acquisition of CAMEC involved sale purchase agreements with several offshore companies linked to Dan Gertler which held shares in CAMEC.”

Gertler, an Israeli diamond merchant, has been doing business in Congo for over a decade, working first with Laurent-Désiré Kabila, the former president of the Congo, and now with his son, Joseph Kabila, the current president.

“The nature of these deals raises serious questions about whether corrupt Congolese officials could be benefitting from Congo’s considerable mineral wealth at the expense of the Congolese people,” says Balint-Kurti. “Global Witness has been calling for ENRC to publish the full results of an external audit into its dealings in Congo, conducted by the law firm Dechert.”

It is certainly not the first time Gertler and the Kabila clan have been linked. A lawsuit filed in Israel by Yossi Kamisa, a former Israeli fighter who worked for Gertler, says that the diamond tycoon had offered the elder Kabila military aid to the Congolese army in 2000.

“At the time, the Second Congo War (1998-2003) was raging - one of the most brutal conflicts in the history of the African continent, involving eight countries, dozens of guerrilla organizations and a horrific human toll that included large-scale rape and even cannibalism,” write Gidi Weitz, Uri Blau and Yotam Feldman in Haaretz newspaper. “This did not deter Gertler from realizing his plan to penetrate the lucrative diamond market in the DRC.”

Kamisa’s lawsuit charges that he “witnessed Gertler's method of operation, involving paying considerable sums of money as bribery to different individuals in the Congo government ... all in order to pave the way to a meeting with the president of Congo and to improve the terms of the future agreement that was to be struck between him and the state.”

Gertler denied these allegations, calling them vengeful and baseless, says the newspaper.

Malaysian Water Company Claims To Have Run Dry

Posted by Pratap Chatterjee on August 1st, 2012
CorpWatch Blog
Giant Syabas tap visible from the highway. Photo by suanie. Used under Creative Commons license.

Syabas, a private water company in Malaysia, has threatened to start water rationing in the state of Selangor after claiming that it had almost no water reserves left. The local government has called foul and critics claim that the threat is a ploy to win more lucrative contracts and to favor a rival political party.

“Here, we have a corporation holding a state government and public to ransom,” Charles Santiago, the coordinator of the Coalition Against Water Privatisation who is also a local member of parliament, told Free Malaysia Today. “The truth is not coming out. They have vested interest to overthrow the state.”

Selangor is the richest and most populous state in Malaysia with over seven million inhabitants and many of the country’s key industries in the area surrounding the national capital of Kuala Lumpur. It is governed by Pakatan Rakyat (PR) parties, an opposition coalition.

Syabas (which is short for Syarikat Bekalan Air Selangor) has a monopoly on providing water to Selangor. The company won a 30 year contract to provide water in December 2004 when the ruling Barisan National coalition privatized the state water supply.

Rozali Ismail, the treasurer for the United Malays National Organisation (UMNO) party in Selangor, owns 40 percent of Puncak Niaga Berhad, which in turns owns 70 percent of Syabas. UMNO is one of the key members of Barisan National.

Syabas is now lobbying heavily to raise rates for water but the Selangor government is insisting that the company first reduce the rate of “non-revenue water” which amounts to 30 percent of treated water.

Another option is the construction of a new RM3.6 billion ($1.15 billion) Langat 2 water treatment plant which is also likely to benefit Syabas and its affiliates.

“From what I understand from my industry sources, Umno boys are getting a lot of the contracts,” says Santiago. “I am talking about contracts for things like laying the pipes to others. Industry sources also tell me that Puncak Niaga is also getting the contract to operate and manage this.”

Tony Pua, another opposition politician, says that Barisan National wants to use the water issue as a way to prove that the state is being mismanaged. "They want to influence the course of the elections. They have a monopoly over water resources and are holding the people to ransom," Pua told Reuters.

“(I)n Selangor, the private concession companies chosen to treat and distribute water were not skilled nor experienced in the water services industry,” Khalid Ibrahim, the chief minister of Selangor, told the Sixth World Water Forum in Marseille, France, in March. “There should have been specific and detailed clauses providing penalties for the companies’ failure to comply with conditions. In our case, the agreement was so flawed that when the distributor experienced financial difficulties, the government eventually underwrote the companies’ debts.”

Others say that the idea that water privatization will serve the public better is simply untrue. “Proponents of privatization consistently argue that it saves costs due to competitive pressures private providers face to be more efficient,” writes Mildred E. Warner for the Trans National Institute in the Hague. Yet the reality is quite different. “The majority of the studies (11) found no difference in costs between public and private production,” she adds.

For example, Manila Water and Maynilad, two private corporations have run the water supply of eastern and western Manila since 1997. “Since then, water prices have soared, with increases between 450% - 850% for residents of each zone,” writes Corporate Accountability International. “Quality has suffered, with severe public health consequences, and the much-needed infrastructure investment which was used to justify the privatization has failed to materialize.”

The same was true in Jakarta where PT PAM Lyonnaise Jaya (Palyja) manages the west part of the city and PT Aetra Air Jakarta (Aetra) manages the east part. (Palyja’s major shareholder is Suez Environment, a French water company while Aetra is currently owned by Acuatico Ltd, a company based in Singapore)

“Citizens in Jakarta are suffering from unimproved services, high prices, bad quality of water and environmental deterioration,” writes Irfan Zamzami of the Amrta Institute for Water Literacy.  Zamzami predicts that the city will soon owe the companies 18.2 trillion rupiah. ($2.04 billion). “(W)ater service should be re-municipalized. This is a global trend and needs international solidarity to prevent citizens of the world from a privatized and inaccessible water service.”

Nomura CEO Resigns Over Insider Trading Scandal

Posted by Pratap Chatterjee on July 26th, 2012
CorpWatch Blog
Photo: MJ/TR (´・ω・) Used under Creative Commons license.

Kenichi Watanabe and Takumi Shibata, the CEO and chief operating officer of Nomura, have resigned to take responsibility for several recent insider trading scandals at the Japanese multinational conglomerate. The company, which once was once the world’s largest securities firms with holdings of $76 billion in 1987, is now valued at $12.3 billion.

"It is difficult at this stage to numerically estimate the possible damage,” Junko Nakagawa, chief financial officer of Nomura. “All we want to do is make efforts to regain trust."

In 2010 Nomura underwrote new share offerings for Inpex (an oil and natural gas exploration company), Mizuho Financial Group (one of Japan’s largest banks) and Tokyo Electric Power Company. Such offerings typically have an impact on share prices, so any advance knowledge of such plans allows traders to cash in.

Nomura employees allegedly secretly told a First New York Securities fund manager about the plans for the Tokyo Electric Power Company allowing the manager to take out a “short position” days before the utility company made a share offering in September 2010. First New York Securities made 7.2 million yen ($85,000 at the time) profit as a result.

Likewise Nomura employees gave out nonpublic information on Mizuho and Inpex to fund managers at Chuo Mitsui Asset Trust (now called Sumitomo Mitsui Trust Bank, Japan's biggest trust bank). Chuo sold Inpex holdings a higher price on behalf of foreign investors and bought them back a lower price to make a profit of ¥10 million ($119,000).

In March 2012, Japanese regulators handed out a fine of 8,000 yen (about $600). “The amount was so tiny—it would cover the cost of a fancy dinner for four in a Tokyo restaurant—that some critics questioned whether it would have any deterrent effect,” scoffed the Wall Street Journal at the time.

Japan's Securities and Exchange Surveillance Commission (SESC) has historically been fairly timid in imposing fines on insider trading. All told it has levied just ¥268 million ($3.2 million) in fines for 121 cases of insider trading since 2005. By comparison the Financial Services Authority in the UK imposed a £59.5 million fine (($93.5 million) on Barclays bank in June for fixing rates and the Securities and Exchange Commission levied a $550 million fine on Goldman Sachs in 2010 for the misleading investors on subprime mortgages.

Despite the small fines, the scandal has had a huge impact on Nomura. The Journal reports that Nomura has been dropped from underwriting deals for at least eight Japanese companies including one to act as joint global coordinator for a $6 billion share issue by Japan Airlines, expected to the biggest deal of the year. The company also says its profits for the second quarter have plunged 90 percent.

The scandal on insider trading in Japan may widen, as the SESC is investigating several other firms. Tadahiro Matsushita, the Japanese financial services minister, has asked 12 top brokers in Japan to submit reports by early August on how they handled nonpublic information.

The scandal at Nomura is also just one of a wave of global scandals in recent months that have shone an welcome light on seamier side of the financial industry. Robert Diamond resigned as CEO of Barclays bank earlier this month following a scandal on rigging global interest rates. The Securities and Exchange Commission (SEC) has fined Goldman Sachs researchers for passing on stock tips to investment bankers and traders while a recent a New York Times investigation has uncovered a questionable new phenomenon that suggests that some of the biggest brokerage firms in the U.S. “appear to be giving a handful of top hedge funds an early peek at … research analysts’ views — allowing them to trade on the information before other investors get the word.”

Mystery Threats Dog Russian Activists Fighting Vinci Highway Joint Venture

Posted by Pratap Chatterjee on July 25th, 2012
CorpWatch Blog
Protestors in Khimki forest. Photo by Daniel Beilinson/Coalition "For the Forests of Moscow Region!" Used under Creative Commons license.

A mysterious fire and a missing activist have contributed to the concerns of Russian activists fighting a new highway between Moscow and St. Petersburg.  The highway is being built by a consortium that involves Vinci, a French company, and individuals rumored to be close to prime minister Vladimir Putin.

This past weekend, new automotive dump trucks and a hydraulic excavator were set on fire by unknown individuals, at a disputed site in the Khimki forest that the activists have been fighting to protect. Days later Pavel Shekhtman, who has been campaigning against the impact of the highway on the forest, temporarily disappeared from his flat. “Pavel managed to call a friend and tell him that his apartment was being searched. After that his phone was snatched out of his hand, and he no longer replied to any calls," fellow activist Yevgeniya Chirikova told Interfax news agency.

"The torching of the vehicles in the Khimki forest is a provocation aimed at smearing the Khimki forest campaigners who use only peaceful, legitimate and non-violent methods," Chirikova wrote on Twitter.

The 2,500 acre Khimki forest, just outside Moscow where the Czars of Russia once hunted, boasts 200-year-old oaks that the Washington Post described as “stand(ing) so thick and silent that traffic from the nearby highway sounds like the hum of a lazy mosquito, leaves fall to the ground with a veritable clatter.” It was designated a “forest park” - which protected it from development under Russian law - until November 2009.

A few months prior, in July 2009, "Severo-Zapadnaya Concessionnaya Kompaniya" (North-West Concession Company (NWCC) was awarded an $8 billion contract to build a 700 kilometer (437 mile) highway. NWCC is a joint venture between Vinci - the largest construction company in Europe with over €28.5 billion ($37 billion) in orders last year – which owns half of the venture and a secretive group of investors.

An investigation by CEE Bankwatch, published in April 2011, revealed “a complex web of offshore entities ending in the British Virgin Islands, and confirms the involvement of Arkady Rotenberg “a friend of prime minister Putin. It noted that the entities were “mainly based in the tax privileged jurisdiction of Cyprus and partially end up in tax haven companies based in Tortola, British Virgin Islands, and (possibly) in Nassau, the Bahamas.”

The NGO also noted that Igor Levitin, a former Russian minister of transport who is now a presidential advisor, was formerly deputy CEO of SeverstalTrans, one of the Russian partners. “Levitin is also a Chairman of the Board of Directors of the Sheremetyevo International Airport corporation,” writes CEE Bankwatch. “A considerable part of the first section of the motorway coincides with the route of another project, the MRAR (Moscow Ring Auto Road)- Sheremetyevo-3 toll road, which would bring direct economic advantages for the airport company.”

Violence has dogged the highway project. Mikhail Beketov, a local newspaper editor who supported the cause, was viciously beaten in November 2008 leaving him half paralyzed and unable to talk. Stanislav Markelov, his lawyer and a human rights activist, was shot and killed on a Moscow street in January 2009. In 2010 Khimki opposition activist Konstantin Fetisov had his skull fractured in an assault shortly after leaving a police station where he had been questioned about a protest. And Oleg Kashin, a reporter with the Kommersant newspaper, was savagely beaten with an iron bar and his fingers were smashed, after reporting on the project.

In August 2010 President Dmitry Medvedev called a temporary halt to construction pending an environmental review. An independent expert assessment published in February 2011 found that the planned routing was among the very worst among several alternative solutions.

A few months later, Pur Projet, a a French consultancy, was hired to advise on minimizing the environmental impact of the road.

Last month, Khimki activists traveled to Brussels to lobby the European Parliament to take action against the project. "This case is a powerful example of the need for a law banning European companies from involvement in corruption outside the EU," Satu Hassi, a green Member of the European Parliament and former Finnish environment minister who organized a hearing on the highway project, told The Moscow Times.

On July 20 the construction company made “a sudden attempt” to cut down an oak grove at the site. “In the morning, loggers with heavy machines started to cut down trees there (100-years-old oaks among them)” wrote the activists in a news flash, “Destruction of the forest was protected by few men with criminal appearance, presumably private security guards. Trees were also cut down near the mesotrophic bog – another piece of pristine wilderness heavily damaged by the project.”

“They destroyed many, but it’s far from destroying all. This time we were lucky enough to repel them,” Sergey Ageev, one of the activists, tweeted. That night, a mysterious fire destroyed the construction equipment and soon after Shekhtman disappeared.

“(T)he official pre-text for this action was Pavel’s participations in an anti-Putin rally on May 6 where our movement formed a “Green Column” demonstrate that Russian environmentalists oppose Putin’s course in both economics and politics,” an activist press release announced this morning. “Fortunately, he was ultimately released and returned to the Khimki Forest Camp.”

U.S. Federal Agencies Targeted Employees With Commercial Spy Software

Posted by Pratap Chatterjee on July 23rd, 2012
CorpWatch Blog
Image courtesy: The Bureau of Investigative Journalism

SpectorSoft spyware is the latest tool to be employed by some U.S. government officials to conduct surveillance on staff. Best known for its off-the-shelf products for parents to track children, the Vero Beach, Florida, digital manufacturer has been revealed to be selling “keylogger” software to the U.S. Food and Drug Administration (FDA) to track every digital move of certain employees.

Police officials have long been happy to endorse the 14 year old private company’s products: "Our Internet safety presentation for parents and children has several tools that are important for parents, and Internet monitoring software is one of the tools," Sergeant Paul Garcia of Albuquerque, New Mexico, was quoted as saying in company literature in 2009. "Along with our IT team, I tested several products, and our first choice is Spector."

Dr Jefrrey Shuren, the director of the Center for Devices and Radiological Health at the FDA, apparently concurs. According to a court filing by Steven Kohn, a lawyer at the National Whistleblower Center, Shuren personally sent federal investigators at the office of the inspector general “several screen shots and documents obtained through spying on the private email correspondence of Dr. Robert C. Smith, Dr. Ewa M. Czerska, Mr. Paul T. Hardy, and Mr. Julian J. Nicholas.” (all FDA scientists apart from Hardy who worked for the U.S. Public Health Service Commissioned Corps)

The technology used by the FDA was identified by Eric Lichtblau and Scott Shane at the New York Times as SpectorSoft products which “captured screen images from the government laptops of the five scientists as they were being used at work or at home. The software tracked their keystrokes, intercepted their personal e-mails, copied the documents on their personal thumb drives and even followed their messages line by line as they were being drafted.”

The surveillance began soon after the scientists sent a letter in January 2009 letter to John Podesta, then director of the transition team of the newly elected Obama administration, blowing the whistle on how senior FDA staff  “ordered, intimidated, and coerced FDA experts to modify their scientific reviews, conclusions and recommendations in violation of the law.”

Journalists took an immediate interest in the concerns raised by the scientists. An article published on January 12, 2009, took issue with the SecondLook Digital Computer-Aided Detection System for Mammography manufactured by iCAD Inc. of New Hampshire. The reporter quoted an internal FDA review of the product that suggested it might miss cancers and risked “unnecessary biopsy or even surgery (by placing false positive marks) and unnecessary additional radiation.”

A second critical article appeared in the New York Times in March 2010 challenging FDA approval for coloscopy devices manufactured by General Electric of New York. “One CT colonoscopy device that they exposed made it onto the market, 600 to 800 times the radiation dosage of similar devices that are more effective,” says Kohn. (Researchers estimate that as many as 14,000 people may die every year of radiation-induced cancers as a result of excessive use of such scanning practices).

After the articles appeared GE officials and iCAD CEO Ken Ferry allegedly complained to the FDA the whistleblowers may have revealed trade secrets. In June 2010 Shuren took a personal interest in the matter by sending the results of the surveillance of the scientists to federal investigators. (To the credit of the investigators, they declined to act noting that government employees have the right to blow the whistle to Congress.)

The scientists are predictably outraged by the news of the surveillance. "Who would have thought that they would have the nerve to be monitoring my communications to Congress?" Robert Smith, one of scientists, told the Washington Post. "How dare they?" Members of Congress were also furious. The FDA "sound(s) more like the East German Stasi than a consumer protection agency in a free country” said Senator Chuck Grassley, a Republican from Iowa.

The agency denies it broke the law. "FDA did not monitor the employees’ use of non-government-owned computers at any time. Neither members of Congress nor their staffs were the focus of monitoring," the FDA told Democracy Now! “At no point in time did FDA attempt to impede or delay any communication between these individuals and Congress. Employees have appropriate routes to voice their concerns without disclosing confidential information to the public, and FDA has policies in place to ensure employees are aware of their rights and options.”

However, Quality Associates Inc. of Fulton, Maryland, another FDA contractor mistakenly posted the data retrieved by the SpectorSoft software on the Internet, where one of the scientists recently discovered the data and the extent of the surveillance operation. “(O)ne congressman, Van Hollen, was specifically put on it. Aides for Senate and House were put on it. Journalists were on it. Scientists and doctors were on it,” says Kohn.

“This is the insidious nature of electronic surveillance, because once they had the first whistleblower, Dr. Smith, target number one, they were able to learn who he was talking to and who was supportive of what he was trying to change. They were able to then identify all the other whistleblowers and then people who endorsed them. And then they created a list. And this list set forth additional targeted monitoring or surveillance.”

While one would hope that the FDA’s action was a rogue operation, it is definitely not the only agency in the market for covert surveillance spy software to track federal employees. A contract posted in June by the Transportation Security Administration (TSA) seeks a product to “monitor user activities through keystroke monitoring/logging; chat monitoring/logging; email monitoring/logging; attachment monitoring/logging; website monitoring/logging; network activity monitoring/logging; files transferred monitoring/logging; document tracking monitoring/logging; screenshot capture; program activity monitoring/logging,” with a key requirement that the “end user must not have the ability to detect this technology.” (first revealed by NextGov)

The solicitation was simply posted for public information, the TSA will not accept unsolicited bids. One presumes that SpectorSoft would be keen to bid. The company is in no trouble since it did not break any laws in selling software to the FDA. On the other hand, Quality Associates, which has a $20 million document archival contract with the FDA as well as a $30 million contract with the National Institutes of Health, seems likely to be shunned for future government contracts.

HSBC Bank Apologizes for Laundering Mexican Drug Cartel Money

Posted by Pratap Chatterjee on July 20th, 2012
CorpWatch Blog
HSBC protest in Hong Kong. Photo by twak. Used under Creative Commons license. Photo of David Bagley testifying at the Permanent Subcommittee on Investigations taken from official video feed.

HSBC, one of the world’s largest banks, has been accused of laundering money for Mexican drug cartels. At a hearing conducted by the U.S. Senate earlier this week, David Bagley, HSBC's head of compliance, apologized and resigned.

"I recognize that there have been some significant areas of failure. Despite the best efforts and intentions of many dedicated professionals, HSBC has fallen short of our own expectations and the expectations of our regulators," Bagley told the U.S. Senate Permanent Subcommittee on Investigations.

HSBC traces its origins back to the Hong Kong Shanghai Banking Corporation that was set up in 1865. Today it is one of the largest financial institutions in the world, with over $2.5 trillion in assets, 89 million customers, 300,000 employees, and 2011 profits of nearly $22 billion. The CEO is still based in Hong Kong but the bank is run out of London.

In 2002, HSBC bought up a Mexican bank named Banco Internacional, S.A. from Grupo Financiero Bital, S.A. de C.V. “A pre-purchase review disclosed that the bank had no functioning compliance program, despite operating in a country confronting both drug trafficking and money laundering,” noted a report prepared for the U.S. Senate. “It opened accounts for high risk clients, including Mexican casas de cambios and U.S. money service businesses, such as Casa de Cambio Puebla and Sigue Corporation which later legal proceedings showed had laundered funds from illegal drug sales in the United States.”

HSBC officials, however, treated the new Mexican unit as low risk. Paul Thurston, chief executive of retail banking and wealth management, who was dispatched to Mexico in 2007 to look into the matter, told Congress that he was "horrified" by what he found. "I should add that the external environment in Mexico was as challenging as any I had ever experienced. Bank employees faced very real risks of being targeted for bribery, extortion, and kidnapping – in fact, multiple kidnappings occurred throughout my tenure," he said.

Other HSBC staff also raised the alarm. “The AML (anti-money laundering) Committee just can’t keep rubber-stamping unacceptable risks merely because someone on the business side writes a nice letter. It needs to take a firmer stand. It needs some cojones. We have seen this movie before, and it ends badly,” wrote John Root, a senior HSBC Group Compliance expert, wrote in an email to Ramon Garcia, the compliance director in Mexico, on July 17, 2007.

All told, the Senate report estimates that HSBC’s Mexican affiliate transported $7 billion in physical dollars to the U.S. between 2007 and 2008 alone, outstripping other Mexican banks, even one twice its size. One Cayman islands subsidiary set up by the Mexican division of HSBC handled 50,000 client accounts and $2.1 billion in deposits, but neither staff nor offices. (Pro-Publica has a nice annotated summary of the 335 page report here.)

“Due to poor AML controls, HBUS exposed the United States to Mexican drug money, suspicious travelers cheques, bearer share corporations, and rogue jurisdictions,” said Senator Carl Levin of Michigan, the chairman of the subcommittee. “If an international bank won’t police its own affiliates to stop illicit money, the regulatory agencies should consider whether to revoke the charter of the U.S. bank being used to aid and abet that illicit money.”

While Bagley was taking the bullet, his former boss, Lord Stephen Green, who was chief executive of HSBC between 2003 and 2006 and chairman until 2010, has been avoiding calls to testify. An ordained priest and the author of a book titled "Serving God? Serving Mammon?" he is now the UK Trade minister.

“No one should raise questions about Mr Green's integrity. Au contraire. The cerebral businessman and part-time preacher turned minister isn't the type to play silly games with regulators,” wrote James Moore, the deputy business editor of the Independent newspaper. “But he does have questions to answer. Such as whether time spent on books would have been better spent on business. Or whether he was just asleep at the wheel.”

Court to Hear Challenge to Myriad’s Human Gene Patent

Posted by Pratap Chatterjee on July 19th, 2012
CorpWatch Blog
DNA sequence exhibit at the Science Museum in London. Photo by John Goode. Used under Creative Commons license.

Should a private company be allowed to patent isolated human genes? A lawsuit to be heard Friday pits Myriad Genetics of Utah against the American Civil Liberties Union (ACLU). Myriad wants to be the exclusive U.S. commercial provider of genetic screening tests for breast cancer or ovarian cancer but the non-profit says the patent limits scientific research as well as health care options for women.

Myriad Genetics Inc. has filed patents on the BRCA1 and BRCA2 genes which allow it to figure out if a woman is at risk of breast cancer or ovarian cancer. The tests cost over $3,000 and no other company is allowed to do research on the genes without permission from Myriad.

“For women as they are trying to make these major life decisions, it is very helpful for them to have a second opinion. By having only a single lab offering that testing, it is impossible really to be able get that second opinion, either in the way the test is performed or in the interpretation of such a result,” says Dr. Wendy Chung, a clinician and a geneticist at Columbia University. “You’re essentially stuck in a situation of a mediocre test.

The Myriad screening test is also mostly based on results gathered from white women. The patent has limited further research to see if the results are accurate for women of other races, says Kim Irish of Breast Cancer Action who cites the example of Runi Limary, an Asian woman who received ambiguous results when she had genetic testing done. “Runi was told that this “variant of uncertain significance” has been seen in Asian women, and that these ambiguous results seem to come up more for women of color,” says Irish.

The ACLU filed a lawsuit against Myriad, the University of Utah Research Foundation and the U.S. Patent and Trademark Office in May 2009. A federal judge ruled against Myriad in 2010 but the company won on appeal at the U.S. Court of Appeals for the Federal Circuit. This past March, the U.S. Supreme Court told the appeals court to revisit the case after it rejected a similar lawsuit.

(The other case involved Prometheus Laboratories of California which tried to patent a blood test for patients with Crohn's disease which was rejected unanimously by the Supreme Court justices.)

James Watson, one of the two scientists who discovered DNA, has filed a friend of the court brief that states: “(W)e would not want one individual or company to monopolize the legal right to the beneficial information of a human gene—information that should be used for the betterment of the human race as a whole.”

The U.S. Patent and Trademark Office has long accepted claims that include DNA sequences – an estimated 35,000 such patents have been approved.

However the Obama administration has recently started to limit this approach. “The chemical structure of native human genes is a product of nature, and it is no less a product of nature when that structure is ‘isolated’ from its natural environment than are cotton fibers that have been separated from cotton seeds or coal that has been extracted from the earth,” wrote lawyers for the U.S. Department of Justice in a legal brief in 2010. "Common sense would suggest that a product of nature is not transformed into a human-made invention merely by isolating it.”

Myriad may be in for a difficult fight, given the government opinion.

United Nations, Olympics Accused of Using “Unaccountable” Private Security

Posted by Pratap Chatterjee on July 13th, 2012
CorpWatch Blog
Thames river police boarding teams in Olympics security exercise, London. Photo: Terry Seward, UK Ministry of Defense.

Two global institutions – the United Nations and the Olympic Games – face charges that they are using “unaccountable and out of control” private security contractors. One of the companies at the heart of both controversies is G4S, a private security company in the UK.

Preparations for the Olympic Games in London later this month have been plunged into chaos because G4S failed to hire sufficient security while the U.N. has been alleged to have quietly been ramping up the use of such contractors in foreign missions including G4S.

G4S won a £284 million ($450 million) contract to provide 13,700 guards for the 2012 Olympics. A few days ago, the company was discovered to have only 4,000 in place.

Guards told the Guardian newspaper that they had been “offered shifts after they had failed G4S's own vetting.”

One G4S trainee, an ex-policeman, described the hiring process to the Guardian as "an utter farce". "There were people who couldn't spell their own name. The staff were having to help them. Most people hadn't filled in their application forms correctly. Some didn't know what references were and others said they didn't have anyone who could act as a referee. The G4S people were having to prompt them, saying things like "what about your uncle?"

The guards who were hired “had received no schedules, uniforms or training on x-ray machines” just 14 days to go until the Olympics opening ceremony.

The Guardian newspaper also published a memo that G4S sent out Thursday to retired police. "G4S Policing Solutions are currently and urgently recruiting for extra support for the Olympics. These are immediate starts with this Tuesday, Wednesday, Thursday and Friday available. We require ex-police officers ideally with some level of security clearance and with a Security Industry Association [accreditation], however neither is compulsory."

The UK government is now making emergency preparations to deploy the British military if G4S cannot meet the requirements laid out in the contract.

Meanwhile G4S and its subsidiaries were revealed to have received $3 million in U.N. contracts in 2010 in “Dangerous Partnership: Private Military & Security Companies and the U.N.” – a new report from Global Policy Forum (GPF), a New York think tank.

Other companies hired by the U.N. included Dyncorp and Saracen, according to GPF. Dyncorp of Virginia also recieved $3 million in U.N. contracts in 2010. (DynCorp became infamous for a sex trafficking scandal during the U.N. mission in Bosnia in the 1990s) Saraccen of South Africa was hired to support the Monusco peacekeeping mission in the Democratic Republic of Congo in 2010 and 2011.

GPF estimates that U.N. spending on private security companies went from at least $44 million in 2009 to $76 million in 2010, a 73 percent increase.

The U.N. Development Program spent $30 million of this amount. The U.N. peacekeeping program came second with $18.5 million while U.N. refugee programs spent and $12.2 million for private security contractors. This carries heavy risks, says GPF. "Armed security contractors can … smuggle weapons into conflict zones and sell them or make them available to parties to the conflict, as has happened in Bosnia, Sierra Leone, Afghanistan and Somalia," the report warns.

The GPF report underlines the fact that the U.N. does not have an overview of which contractors it is using. "U.N. security officials themselves cannot give an estimate of total security contracting within the U.N. system or a complete list of companies hired. This suggests a system that is unaccountable and out of control," the report says.

The U.N. has defended its policies. "U.N. contracting policies have improved and we need to continue to improve them," Martin Nesirky, a U.N spokesman, told the Associated Press. "The distinct differences in the ways that private security contractors go about their work also must be borne in mind."

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