Beef from Brazil: JBS Faces Allegations of Amazon Deforestation
Posted by Pratap Chatterjee on June 6th, 2012
|Broken Promises video footage from Todd Southgate, Greenpeace.|
The Xavante tribe in western Brazil and the Parakana tribe in the north-east are separated by a thousand miles of the Amazon basin but they face a common threat: the sprawling global beef export empire controlled by the Batista family from the state of Goiás.
JBS S.A. was founded in 1953 by Jose Batista Sobrinho as a small slaughterhouse in the town of Anapolis. In the last decade, JBS expanded to Argentina, acquired Smithfield and Swift Foods in the U.S. and Tasman in Australia, to make it a $33 billion multinational. Today JBS slaughters 90,000 head of cattle a day, employs 125,000 workers and exports to 150 countries, according to company statistics.
The company has benefited from loans from the World Bank and generous support from the government of President Luiz Inacio Lula da Silva who helped turn the country into the world’s largest beef exporter. Much of this has come at the expense of the environment: One out of three of the 200 million cattle in Brazil graze on land cleared from the Amazon rainforest.
In an admiring article describing how the company now supplies beef from “farm to fork” to “feed ... the middle class” a Washington Post reporter described the efficiency of company operations in Lins, Brazil, in April 2011: “(T)he animal is rendered unconscious by a captive bolt pistol. It is hoisted up by its hind legs. A worker then slices the carotid artery and jugular vein, and the steer bleeds to death in seconds.”
“A processing line of workers, all in hard hats and white aprons, then skin, debone, slice, can and package the meat … The final product: rump roasts or tenderloins, corned beef or beef jerky, to be exported as far away as London.”
But behind this tale is another story tracked by environmental researchers from Greenpeace who uncovered “numerous new cases of JBS purchasing cattle directly and indirectly from farms involved in illegal deforestation, invasion of protected areas and indigenous lands, and also of farms using slave labour.”
Over a couple of months in 2011, Greenpeace researchers traced 834 cattle raised on illegal farms with names like Panorama and Fortoleza (fortress) inside the Maraiwatsede reserve that were sent for slaughter to the Água Boa plant in Mato Grosso (financed by the International Finance Corporation, an arm of the World Bank). The reserve is the home of the Xavante people.
“The Xavantes can no longer fish because the rivers have run dry or are contaminated due to the destruction of forests, landfills invading river systems in an effort to expand pastoral areas, plus extensive use of agrochemicals. Now 85 percent of the forest has been cut down and the Xavante people’s reports to the authorities describe substantial conflict with farmers accused of attempted murder and destruction of property,” write the authors of JBS Scorecard, the new Greenpeace report.
The situation is similar for the Parakana tribe in the Apyterewa Indigenous Reserve. In 2009, a Reuters reporter told the story of Tamakware, a tribal elder daubed in black pigment who brandished an arrow, and “made a plaintive appeal to foreign visitors to tell President Lula to move the farmers out.”
Two years later, Greenpeace found that a JBS unit in Tucuma, Para was still buying animals from a farm located within the Apyterewa indigenous land.
The beef from these operations were exported by JBS to the UK where activists were able to identify them by serial numbers on “100 tins of beef chunks, mince and corned beef” at outlets run by Tesco, Britain’s biggest grocery chain.
The new Greenpeace report has had an immediate effect on JBS sales. Tesco announced today that it would stop buying JBS beef. “We started to cut back our supplies from JBS a year ago and have now ceased sourcing any canned beef products from JBS. Ethics and sustainability remain an important part of our dialogue with suppliers,” a spokesman told the Telegraph newspaper.
For its part, JBS wrote to Greenpeace claiming that it was "fully committed to sourcing livestock from farms that are not involved in any illegal activities, including illegal deforestation, the invasion of indigenous lands or the use of any form of slavery.” It did not confirm or deny the NGO’s research.
Coral Before Coal: Great Barrier Reef Projects Halted
Posted by Pratap Chatterjee on June 5th, 2012
|Great Barrier Reef. Photo: PhOtOnQuAnTiQuE. Used under Creative Commons license.|
A $6.3 billion coal mine project in the Galilee Basin in Queensland that could impact the Great Barrier Reef, has been halted by Tony Burke, Australian environment minister. The Alpha project is the first of several major coal projects in the northern Australian state that are being pushed by Campbell Newman, the state premier, who gave it the go-ahead in late May.
‘‘I don’t have the level of trust in the Queensland government which I wish I had,’’ Burke told reporters. ‘‘I cannot trust them with Queensland jobs. I cannot trust them with the Great Barrier Reef and that’s why I’ll be taking the action I’ve described.’’
The Alpha project is being developed by Hancock Prospecting, which is owned by Gina Rinehart, an Australian billionaire and sponsor of anti-climate change scientists. Rinehart has previously come under fire for her plan to import 1,700 workers to develop the Roy Hill iron mine in Western Australia under an Enterprise Migration Agreement (EMA).
Rinehart has teamed up with GVK Power & Infrastructure, an Indian multinational from Secunderabad in Andhra Pradesh, which owns 79 percent of the Alpha coal project. Other Indian companies eyeing coal projects in Queensland include Adani Enterprises from Ahmedabad, Gujarat, which is planning a A$10.9 billion (U.S. $10.55 billion) coal and rail project at Abbot Point. Also hoping to cash in on the Queensland coal boom is Clive Palmer, another Australian billionaire, whose company Waratah Holdings has a contract to sell 30 million tons of coal to China over the next 20 years.
Environmentalists say that the project will have a major detrimental impact on the Great Barrier Reef which is a United Nations Educational Scientific and Cultural Organisation (UNESCO) designated World Heritage Site. The Reef, which is the world’s largest coral ecosystem, provides nesting grounds to dugongs, green turtles and seabirds which live off the prawns, crayfish, and crabs that inhabit the seagrass meadows. One species that is likely to be impacted is the rare snub nose dolphin.
“Boom Goes the Reef” – a new report issued by Greenpeace Australia in March 2012 – notes that current plans for coal mining and export expansion call for 10,150 ship journeys out of Queensland ports by 2020, up from 1,722 in 2011. The environmental group noted that a number of accidents have already threatened the delicate corals such as the grounding of the Shen Neng 1 coal cargo ship in April 2010.
Just two weeks ago another ship – the ID Integrity from Hong Kong – broke down off Cairns, provoking a warning from activist group GetUp! which is also campaigning against the coal mining. "The incident should be of concern to all Australians. It's more likely to occur in the future as we see more and more ships use the Great Barrier Reef to export coal," GetUp! national director Simon Sheikh told ABC Radio.
The Australian Green party is also opposed to the coal developments in Queensland. “(We) are calling on the Australian Government to end this shambolic state of affairs, compel a real and comprehensive strategic assessment of the coal export developments for the Reef, and stop trying to give away their environmental responsibilities,” said Senator Larissa Waters, the party’s environment spokesperson. “Campbell Newman’s response … “We’re in the coal business”, could leave no shred of doubt that Queensland will not hesitate to allow the destruction of the environment, even our World Heritage icons, to boost the profits of mining billionaires.”
The coal projects are just the latest of major industrial expansion project proposed for the region. In 2008, CorpWatch wrote about plans for a $3 billion bauxite refinery to be developed by the Aluminum Corporation of China Limited (Chalco) in the Keela wetlands. That project was shelved in late 2009.
“Banjo Rinehart” fancies herself as a poet and a champion of the downtrodden. Here’s a ditty that she had inscribed on a rock from the Roy Hill mine and installed just outside Perth to prove it!
“The globe is sadly groaning with debt, poverty and strife
And billions now are pleading to enjoy are better life
Their hope lies with resources buried deep within the earth …
Develop North Australia, embrace multiculturalism
and welcome short term foreign workers to our shores
To benefit from the export of our minerals and ores
The world’s poor need our resources: do not leave them to their fate”
Ikea Furniture Made From Ancient Russian Trees
Posted by Pratap Chatterjee on May 31st, 2012
|Swedwood pine lumber from Karelia. Age range approx. 200-600 years old. Photo: Protect the Forest Sweden.|
Kalevala, a 19th century epic poem from Finland, is often considered the heart of the Finnish national identity. It was inspired by traditional verses from the ancient forests on the border of central Finland and Russia. Today some of the 600 year old trees around the Kalevala national park are being chopped up to make cheap furniture for Ikea, the Swedish home furnishing chain, according to activists.
Ikea, which is based in Delft, Netherlands, sells €23.5 billion ($30 billion) worth of goods every year from shelves to entire kitchens through its 300 shops around the world. Wood is used in roughly 60 percent of the products that it stocks – according to IPS news agency - and one of the company’s slogans is: "We Love Wood"
Critics are now questioning what this love for wood really represents.
In 2010 and 2011 activists from Protect the Forest Sweden took photos of lumber being hauled out of high conservation value forests just outside Kalevala national park in Russia by a company named Swedwood Karelia.
Protect the Forest immediately sent a letter of complaint to Nikolay Tochilov, the director of NEPCon, a Danish NGO that helps monitor sustainable forestry projects for Ikea. “Swedwood Karelia and their owner Ikea … state that they do not log primeval forests and that they do not cut hundred of years old trees,” wrote Viktor Säfve and Daniel Rutschman of Protect the Forest in a September 21, 2011 letter. “They … are clearly misleading their customers through marketing and through media, stating that their forestry is ecologically, socially and economically sustainable.”
Just 10 percent of the ancient old-growth forests remain in Karelia, according to the forest department of SPOK, the Karelia Regional Nature Conservancy, a Russian NGO. Swedish public service television recently estimated that Swedwood is further depleting that stock by cutting down about 1,400 acres of forest a year.
Protect the Forest say that the Kalevala forests hosts a number of red-list species, notably a number of lichen and fungi such as Antrodia crassa and Antrodia infirma (fungi), Bryoria Fremontii (black tree lichen), Hydnellum gracilipes (tooth fungus) and , Lobaria Pulmonaria (lungwort).
Earlier this week the forest activists launched a campaign against the company. "During our field visits to Russian Karelia, we have documented the reality of IKEA's forestry, and it's a far cry from the fine words in their advertising," Säfve wrote in the press release. "You must immediately stop logging old-growth forests, and you must stop lying! Those are two of the demands we make of IKEA."
“We believe the future of forestry in Russia lies in sustainably managing the vast areas of secondary forests – not in destroying the last intact areas of primeval forests,” Säfve and Rutschman wrote. “There are excellent conditions in Karelia to implement selective cutting methods in unmanaged, naturally regenerated secondary forests.”
Ikea disputes the charges. "Swedwood has played an important role in the advancement of forestry in Karelia. Our goal is to develop and improve forest management," Anders Hildeman, forest manager at Ikea told IPS. “We will continue to work according to the principles that we agreed on together with Russian environmental organisations like SPOK.
Whale Wars: Hedge Funds Rob Banks, and the Poor Suffer Most
Posted by Pratap Chatterjee on May 30th, 2012
|Jamie Dimon cartoon: DonkeyHotey. $100 bills. Photo: Adam Kuban. Used under Creative Commons license.|
Boaz Weinstein took as much as $2 billion from Jamie Dimon and Bruno Iksil. That is to say a hedge fund named Saba Capital Management in New York bet against the London office of an investment bank named JP Morgan and won. These men - known as “whales” because of the size of their bets in the financial markets – have triggered a major outcry over the lack of regulation of Wall Street, mostly because of the $2 billion loss by JP Morgan, a public company and bank.
“(I)t’s not O.K. for banks to take the kinds of risks that are acceptable for individuals, because when banks take on too much risk they put the whole economy in jeopardy — unless they can count on being bailed out,” wrote an outraged Paul Krugman, a Nobel Prize winning economist.
Wonderful sentiments, but what about when these banks make huge profits? Are they supporting the economy then? Or are they also taking money from some one else on those occasions?
Certainly hedge funds – a secretive group of financiers – often make a killing, though sometimes they lose their shirts. Much of the money is made in ways that are very hard to understand, but in simple words: by stealing legally from the rich like the investment banks, but also from the working class and the poor. (They don’t discriminate)
Here’s an extreme example: George Soros, the hedge fund billionaire, bet against Asian currencies in 1997 and plunged the region into crisis. Millions lost their jobs, major riots ensued, and entire countries went into severe recession. Soros argues - with some accuracy – that the governments were to be blamed for their economic policies that led to artificial currency rates but the fact of the matter is he took advantage of it to make a lot of money for himself.
Here’s a more common example: Splunk, a data company, recently went public at $17 a share. A month later the stock had doubled to $35. The banks and hedge funds who bought the shares initially are happy because they can sell now and make a tidy profit, but it means that the company raised only half the money it wanted. Still that’s the way the world works and the financial community loves it. (Thanks, Joe Nocera, for that example)
Wall Street was not as happy when Facebook also recently went public at $38 and then the price dropped. Facebook walked off with extra money but many of the institutional buyers were the ones who lost out. (Perhaps Wall Street should have been less critical of a 28 year old with a hoodie who outsmarted them. He didn’t need a sharp suit to take their money away from them)
Now back to the hedge funds robbing the banks. Weinstein noticed that Iksil (known as the London Whale) was making large bets on credit derivatives that didn’t make sense and he bet against him. Weinstein, according to a recent New York Times profile who had himself lost $2 billion at Deutsche Bank when doing whale-sized bets, recognized the problem and moved quickly to profit out of it.
So who cares? One rich bank lost money to a rich hedge fund. Surely that is a zero sum game: They swap mansions and yachts, their partners swap diamonds and butlers, and it makes no difference to the rest of us. Or does it?
One of the biggest problems is that the world of finance is that it is actually awash in cash. And the owners of that cash want to make even more cash. “(C)orporate money has been flooding into JPMorgan, as companies pull their money out of eurozone banks,” notes Gillian Tett at the Financial Times who says that roughly $2 trillion is available for investment at any given time. “Somehow you have to stash that money in an incredibly safe place, but also produce some returns. So where do you put it? In Treasuries, which carry negative real returns and are becoming riskier by the day? In eurozone bonds or corporate credit? Or can you find something else, without creating new risk?”
Remember also that even in these lean times, the titans of the hedge fund world are still mostly minting money: Raymond Dalio of Bridgewater Associates was paid an estimated $3 billion in 2011, Carl Icahn of Icahn Capital Management earned $2 billion. The top European hedge fund manager in 2011 was Alan Howard of Brevan Howard Asset Management, who earned $400 million last year. All told, the 40 highest paid hedge fund managers were paid a combined $13.2 billion in 2011, according to a Forbes magazine survey.
Same with the banks and CEOs.
Where did this money come from if the world economy is in a recession?
Well, the simple answer is that every day, both the banks and the hedge funds are taking little chunks of our money, although not in the extreme way that Soros did in Indonesia back in 1997. Higher interest rates; lower wages by moving factories; buying up farmland etc. etc.
The good news about the Jamie Dimon/JP Morgan debacle is that the U.S. Congress is taking notice about money being used rashly and may force the banks to make some changes. “We had too many regulators, too many gaps and too much overlap…we added more,” Jamie Dimon told a U.S. Chamber of Commerce conference in Washington in 2011. “It’s even more complicated now.” (See here for a video compilation)
Dimon’s remarks are being used to roast him now and it’s high time. We need better regulation of both banks and hedge funds. One important reform is to make sure that investment banks and regular banks are separated. If the rich want to trade mansions, they can do so. But the investment banks and hedge funds should not be bailed out. And if they want to take money from the rest of us, they need to be kept in check.
Unfortunately that may be the opposite of what happens. As the Washington Post’s Dana Milbank notes: “The trading scandal at JPMorgan highlighted the urgent need for tougher regulation of Wall Street, but (Alabama Congressman’s) Shelby’s harangue was part of a larger effort to use the scandal as justification to repeal regulations.”
Bailing out Germany: The Story Behind the European Financial Crisis
Posted by Pratap Chatterjee on May 28th, 2012
|Translation: The Rich Get Richer. Stop Poverty Wages! (Photo of Blocupy poster: linkskreativ. Photo of Euro: Slolee. Used under Creative Commons license)|
Bankia, Spain’s fourth largest bank, asked the government for a €19 billion ($24 billion) bail out on Friday night. Four Greek banks - Alpha Bank, Bank of Piraeus, Eurobank and National Bank of Greece – were together given €18 billion ($23 billion) from their government last week also.
The sudden economic crash in several southern European countries: Greece, Italy, Portugal and Spain as well as Ireland (sometime called the PIIGS, a rather dubious and perjorative name); is commonly blamed on lazy workers, a bloated social security system and unwise borrowings by greedy governments. This is why lenders like the European Central Bank (ECB) and the International Monetary Fund (IMF) are now asking these governments to cut social spending (austerity measures) and pay ever higher interest rates, despite the fact that only serves to make the situation worse.
"As far as Athens is concerned, I … think about all those people who are trying to escape tax all the time. All these people in Greece who are trying to escape tax," Christian Lagarde, the French head of the IMF told the Guardian.
In reality, a large chunk of the bailouts are for debts created by private banks in Greece, Ireland, Italy, Portugal and Spain borrowing abroad – for speculative real estate schemes and such like - not by shopkeepers, small entrepreneurs and ordinary citizens. And a surprisingly big chunk of the rash loans were handed out by private (and some public) banks in just four countries: France, Germany, the UK and Belgium (in that order).
Peter Böfinger, an economic advisor to the German government, put his finger on it when he told Der Spiegel last year: “[The bailouts] are first and foremost not about the problem countries but about our own banks, which hold high amounts of credit there.”
Let’s dig a little deeper. First were all the borrowing countries wildly spendthrift? Here are some very instructive numbers: before 2008, the Irish and Spanish governments had borrowed less than Belgium, France, Germany and the UK. The Irish owed owed roughly 25 percent of gross domestic product (GDP) in 2007, the Spaniards owed 36 percent. Meanwhile the Belgians had borrowed 84 percent, the French and German government had taken out 65 percent while the UK was at 44 percent. The Portugese were at about 65 percent – same as the Germans – and Greece and Italy admittedly were at over 100 percent.
The BBC’s Laurence Knight notes “Madrid was in the process of paying its debts off - it earned more in tax revenues than its total spending. In contrast, Berlin regularly broke the maximum annual borrowing level laid down in the Maastricht Treaty of three percent of GDP.” Interestingly, so did France and the UK (the latter isn’t bound by the treaty).
Second, who was lending the money that is now so difficult to pay back? After all it takes two to tango, as they say. Borrowers and lenders share in the risk and the blame.
Well, Bloomberg took a look at statistics from the Bank for International Settlements and worked out that German banks loaned out a staggering $704 billion to Greece, Ireland, Italy, Portugal and Spain before December 2009. Two of Germany’s largest private banks - Commerzbank and Deutsche Bank – together loaned $201 billion to Greece, Ireland, Italy, Portugal and Spain, according to numbers compiled by BusinessInsider. And BNP Paribas and Credit Agricole of France loaned $477 billion to Greece, Ireland, Italy, Portugal and Spain.
How much of these loans were to the government? The Economist has some interesting numbers – just $36 billion went to the governments of Greece, Portugal and Spain. The rest was loaned out by banks like Munich based Hypo Real Estate that distributed over $104 billion for property schemes.
(For more details the BBC has an excellent graphic tool that shows which country was borrowing from whom: Spain’s biggest creditor is Germany at €131.7 billion ($171.2 billion) and Portugal’s biggest creditor is also Germany €26.6 billion ($34.6 billion). The Greeks owed most to France at €41.4 billion ($53.8 billion).
Finally, who profits out of this? Well, the German banks have since taken their money out: Bloomberg estimates that $590 billion was taken back after December 2009. But the debt remains so that is why the borrowing countries are forced to go to lenders like the ECB which in turn is getting it from the Bundesbank (the German central bank). The German government only has to pay an interest rate of 1.42 percent to borrow money for 10 year bonds, apparently the lowest they have ever paid. (The French are also doing fine at 2.42 percent)
The ECB money comes with strings attached – severe austerity. It is true the borrowing countries don’t have to take these conditional loans, they can also borrow at market rates but this can be very expensive: they have to pay between 5.5 percent (Italy) to an astronomical 30 percent (Greece) in interest for 10 year bonds.
“The euro-zone crisis is often framed as a bailout that rich, responsible countries like Germany have extended to poor, irresponsible countries like Greece,” writes Ezra Klein in the Washington Post.
In reality this crisis is at least partly (perhaps mostly) the fault of the banks in the wealthy countries like France and Germany and it is these banks that have really been bailed out by the ECB and the IMF.
The Indignados in Madrid, Blockupy in Frankfurt and Occupy Wall Street have it right.
How Obama Helped Authorize Shell’s Drilling the Arctic
Posted by Pratap Chatterjee on May 23rd, 2012
|Protestor dressed as Grim Reaper outside Shell annual meeting in London. Photo: rikki (indymedia). Used under Creative Commons license.|
President Barack Obama personally helped Shell obtain authorization to drill for oil in Alaska, according to a 4,678 word front page article in the New York Times. This is a startling break from decades long U.S. policy which regarded the environment in the Arctic region too fragile to tamper with.
“(T)he president concluded that the reward was worth the risk, and created an unusual interagency group, overseen by a midlevel White House aide, to clear Shell’s path through the often fractious federal regulatory bureaucracy,” write John Broder and Clifford Krauss.
In November 2010, almost two years after he was elected, Obama told William K. Reilly and Carol M. Browner, two former heads of the Environmental Protection Agency, what he wanted them to do. “Where are you coming out on the offshore Arctic?” he asked. “What that told me,” Reilly told the New York Times, “was that the president had already gotten deeply into this issue and was prepared to go forward.”
The article describes the clash between two powerful men, Edward Itta, the former mayor of Inupiat North Slope Borough, and Pete Slaiby, Shell Alaska vice president. The story is already the basis of a new book, “The Eskimo and the Oil Man: The Battle at the Top of the World for America’s Future,” by Bob Reiss.
Shell spent over $35 million lobbying for the permission during the Obama adminstration. Marvin Odum, president of Shell North America, and Sara B. Glenn, a lobbyist, visited the White House 19 times to meet with Obama’s staff.
Some environmental groups are astonished at Obama’s role. “We never would have expected a Democratic president — let alone one seeking to be ‘transformative’ — to open up the Arctic Ocean for drilling,” Michael Brune, executive director of the Sierra Club told the New York Times.
Protests against Shell’s plan have been ongoing for years. On Wednesday, activists launched two reports at the company’s annual meeting in the Hague. “Risking Ruin : Shell’s dangerous developments in the Tar Sands, Arctic, and Nigeria report” by the Indigenous Environmental Network (IEN) and “Out in the Cold – Investor Risk in Shell’s Arctic Exploration” from Platform, Greenpeace and FairPensions.
“Our village has been there 4000 years. Our biggest concern is spilled oil getting into the ocean and affecting the marine mammals that we depend upon. Your clean-up ability is not adequate,” Robert Thompson, a village of Kaktovik on the edge of the Arctic Ocean in Alaska, told shareholders.
Others indigenous activists spoke out also about Shell’s impact in other countries. “Shell has failed to address our concerns in Canada’s tar sands, by not meeting environmental standards and past agreements, and refusing to address their impacts on our constitutionally-protected treaty rights, leaving us with no option but to sue them,” said Eriel Deranger from Athabasca Chipewyan First Nation (ACFN). “Our Chief has said ‘Enough is enough!’ We fully intend to challenge all Shell’s future projects until they can demonstrate a true willingness to implement our rights.”
According to a report from the UK Tar Sand Network, five protestors wearing masks that combined Shell’s logo with a skull stood silently throughout the meeting reminding the shareholders of the grave human rights and environmental injustices Shell has brought to communities in Nigeria, Rossport (Ireland), the Arctic and Canada.
Repsol Sues Argentina for $10 Billion Over YPF Nationalization
Posted by Carmelo Ruiz-Marrero on May 18th, 2012
|Cordoban youth poster supporting the takeover of YPF. Photo: Chupacabras. Used under Creative Commons license|
Repsol, a multinational based in Spain, has brought a class action lawsuit in New York courts against the Argentine government for the re-nationalization of YPF, the former Argentine state oil company. The company has also lodged a complaint with the World Bank's International Center for Settlement of Investment Disputes (ICSID).
President Cristina Fernández de Kirchner of Argentina signed a bill on May 4 seizing 51 percent of the company’s shares after over 80 percent of legislators in both the lower and upper houses of parliament voted in favor. Respol, which owned 57 percent of YPF, wants $10.5 billion in compensation although it may find it hard to collect since Buenos Aires has ignored previous ICSID fines.
"When corporate interests are not aligned with national interests, when companies are concerned only with profits, that's when economies fail, which is what happened globally in 2008 and what happened to Argentina in 2001," Fernández said in a speech on May 3 to explain her motives in pushing for the takeover alleging that Repsol under-invested in the company and paid out excessive dividends, essentially stripping out the value.
Fernández’s move has rattled international financial markets but drawn extensive praise from some popular movements.
The Battle Against Privatization in South America
In the 1970s, most oil companies in South America were state owned, just like most utilities. Following the debt crisis of the 1980s, governments in the region were persuaded by the World Bank and the International Monetary Fund to privatize many of these state assets. A number of European multinationals – like Repsol of Spain and Suez of France - jumped at the opportunity to capture lucrative new sources of production and revenues. Financial institutions hailed this wave as an opportunity for the region to attract capital for modernization and to get rid of unnecessary bureaucracy.
Carlos Menem, who was elected the president of Argentina at this time, became the darling of global financial markets for his aggressive privatization strategy that brought in foreign direct investment, cut inflation and boosted productivity, although his policies also caused major unemployment. At the same time Menem also increased borrowing from the International Monetary Fund and failed to control the flight of capital out of the country by the country’s elite. In 2001, the Argentine economy collapsed again.
In 2003 President Néstor Kirchner was elected. He chose to turn his back on the international financial institutions and renegotiate the national debt at favorable terms and engineer an economic recovery. In 2006 he canceled Argentina’s contract for water supply to Buenos Aires with the French company Suez.
He was succeeded in 2007 by his wife, Cristina Fernández, who maintained his policies of keeping the international institutions and multinationals at bay.
The partial nationalization of YPF (49 percent of the company will remain in the hands of local and foreign private investors) repudiates the advice of international economists but is wildly popular in Argentina. It could bring an influx of cash to the Argentine economy but could also backfire, if it does not.
Then there is the threat of Western interests who do not take kindly to being kicked out. Notably, the government of Spain has not taken the news well. Spanish president Mariano Rajoy has threatened economic sanctions against Argentina, and vice president Soraya Saenz de Santamaria has stated that Spain and its allies "will protect the juridical safety of European investments worldwide". The European Union is considering bringing a case against Argentina to the World Trade Organization.
Fernandez says she has a very pragmatic reason for pushing for nationalization: Argentina’s bills for energy imports hit $9.4 billion last year affecting the country’s trade surplus.
Environmental Impact Questionable
She has the backing of some community activists.
"Repsol is still in debt to the people of Argentina and to nature,” proclaimed the National Peasant and Indigenous Movement (MNCI) on their website. “The REPSOL corporation must assume responsibility for the environmental harms it has caused and damages to natural resources, economically compensating the country and the peasant and indigenous communities that have been affected."
But not all movements are convinced that a state owned YPF will be that different. "As an ecologist collective, and being plainly conscious that the Argentina government was not thinking of environmental issues when it made its decision, we will remain vigilant of (YPF's) future actions," said Noelia Sánchez of the Spanish group Ecologistas en Acción.
Indeed Repsol-YPF has been tried three times by the Permanent Peoples Tribunal for environmental and human rights violations and found guilty. For example in 2010 YPF was accused of trampling on the rights of the Lonko Purran community of Mapuche people in the Cerro Bandera oil field.
Others note that YPF plans to exploit the country's "unconventional" oil and gas finds, such as the Vaca Muerta oil deposit in the province of Neuquen, using hydraulic fracturing (fracking) will mean business as usual, no matter who owns the company: "The future scenario could be one of profound environmental and social risk for much of the country, as experience abroad (of the environmental impact of fracking) has demonstrated,” warns Diego Di Risio, a spokesman for Petroleum Observatory South (Opsur)
U.S. Courts to Try Contractors for Torture at Abu Ghraib
Posted by Pratap Chatterjee on May 17th, 2012
|CorpWatch report: Outsourcing Intelligence in Iraq|
Two U.S. companies can be prosecuted for the alleged role of their employees in torture at the Abu Ghraib prison in Iraq, a U.S. federal court ruled last week. The companies are CACI of Arlington, Virginia, which provided the interrogators at the prison, and L-3/Titan of New York city, which provided translators at the same location.
Two lawsuits are pending. The first was brought on June 30, 2008 against CACI by Suhail Najim Abdullah Al Shimari, Taha Yaseen Arraq Rashid, Sa’ad Hamza Hantoosh Al-Zuba’e and Salah Hasan Nusaif Jasim Al-Ejaili. The second was also filed June 30, 2008 by Wissam Abdullateef Sa’eed Al-Quraishi and 71 other plaintiffs against L-3/Titan.
Shimari says he was subjected to electric shocks, deprived of food, threatened by dogs, and kept naked while forced to engage in physical activities to the point of exhaustion. Rashid says he was placed in stress positions for extended periods of time, deprived of oxygen, food, and water, shot in the head with a Taser gun, and beaten so severely that he suffered from broken limbs and vision loss.
Al-Zuba’e says he was tortured by being subjected to extremely hot and cold water, his genitals were beaten with a stick, and he was detained in a solitary cell in conditions of sensory deprivation for almost a full year. Al-Ejaili says he was stripped and kept naked, threatened with dogs, deprived him of food, beaten and kept in a solitary cell in conditions of sensory deprivation
The other 72 Iraqis who sued L-3/Titan alleged that they were subjected to “electric shocks, rape and other forms of sexual assault, forced nudity, broken bones, and deprivation of oxygen, food and water” by the contractors during their detention.
CACI and L-3 say that since they were working for the federal government during combat, they cannot be judged by a court because of “absolute official immunity” and “sovereign immunity” respectively.
The court dismissed this argument. “(T)here is no indication … that the Supreme Court intended to construe the law-of-war defense as an immunity from suit, rather than merely an insulation from liability,” wrote Judge Robert Bruce King of the Court of Appeals for the Fourth Circuit in his opinion issued on May 11, 2012. Ten other judges supported him and three disagreed.
“Today’s ruling provides an opportunity for victims of torture at Abu Ghraib to tell their stories to an American court and to obtain justice from the private military contractors who played such a prominent role in one of the most shocking episodes of abuse in recent American history,” said Baher Azmy of the Center for Constitutional Rights, who co-argued the case for the plaintiffs.
“The ruling is especially important in light of the unprecedented rise in the use of private military contractors in war zones,” says Susan Burke, lead counsel on the case. “Ultimately, these cases should be about whether the actions of the defendants constituted war crimes and torture in violation of the law and not about whether or not the perpetrators should receive impunity even if they engaged in torture.”
The New York Times agrees. “Hawks may spin the Fourth Circuit’s decision as a victory for bleeding heart liberals,” writes Andrew Rosenthal, the newspaper’s editorial page editor. “But really this is about preserving the most traditional legal principle there is: that criminals should answer for their crimes.”
L-3/Titan’s work in Iraq has been the subject of a lengthy investigation by CorpWatch “Outsourcing Intelligence in Iraq.” Amnesty International provided a set of recommendations on how the federal government should address the role of contract interrogators and translators in the field.
Budweiser's Buddies in Brussels
Posted by Pratap Chatterjee on May 16th, 2012
|Jean-Luc Deheane. Photo: European Movement Belgium. Used under Creative Commons license|
“This Bud’s for you,” is a popular Budweiser ad jingle. Apparently Jean-Luc Dehaene, a Member of the European Parliament from Belgium, takes it personally, since he recently accepted shares worth $4.2 million in the company that makes the beer. What’s remarkable is that he forgot to mention this as a potential conflict of interest.
Dehaene is a former prime minister of Belgium and now a Member of the European Parliament. In this position, he has the ability to vote on regulations on the European food and drink industry, including the brewery sector.
When Dehaene served on the board of Anheuser Busch InBev – a Belgian company which manufactured and sold $39 billion worth of goods last year including Budweiser, Stella Artois and Beck’s beer – he was given stock options worth as much as €3 million. He left the board in March 2011 and as of April 30th is now able to cash in.
Yet Dehaene has failed to mention the shares in his official declaration of interests which he filed on February 12 of this year, despite the official rules that state that “a conflict of interest exists where a Member of the European Parliament has a personal interest that could improperly influence the performance of his or her duties as a Member.”
In a letter issued Tuesday and addressed to Martin Schulz, the president of the European Parliament, four activist groups – Corporate Europe Observatory, Friends of the Earth Europe, Lobby Control and SpinWatch – drew attention to this discrepancy. They write: “How will the parliamentary authorities guarantee that proper safeguards are put in place to avoid potential situations of conflict of interest in this particular case?”
Dehaene has come under scrutiny in the past as chairman of Dexia bank, which was bought up by the Belgian government for €4 billion euros ($5.4 billion) last October when it was on the verge of collapse because of its purchases of Greek government bonds and U.S. sub-prime mortgages. Dehaene refunded his compensation from the company to prevent any appearance of impropriety although he “signaled” that he did not wish to resign from his position.
“Jean-Luc Dehaene and Pierre Mariani, the chief executive officer, are responsible for the fiasco at Dexia,” Paul de Grauwe, a member of the economic advisory group to Jose Manuel Barroso, president of the European Commission, told the Mail on Sunday. “It is dangerous to speculate, to gamble with the money of ordinary citizens. The big problem is that Dexia abandoned traditional banking and started speculating to earn more. That ended miserably.”
“Known as ‘the plumber’ during his time as Prime Minister of Belgium, due to his ability to resolve crises, this time he appears to have drilled through the main standpipe,” commented the Mail.
Dehaene was also heavily criticized as prime minister for ordering the retreat of Belgian troops in Rwanda in 1993 just prior to the mass slaughter of the minority Tutsis.
A number of MEPs have recently come under close scrutiny for conflicts of interest after four of their number agreed to put forward “amendments” for fictitous clients in exchange for cash, by a team of reporters at the Sunday Times newspaper.
“You send me the amendment and what your client wants to change. Yes?” Ernst Strasser, former Austrian interior minister, told the reporters. “Of course I’m a lobbyist, yes, and I’m open for that, yes?” Strasser was forced to resign after the report was published.
Under a new code of conduct, approved last December, the politicians are now expected to list potential conflicts of interest that amount to over €5,000 a year. There is no law against such conflicts, however, and several have been discovered.
For example EuroPolitics notes that Klaus-Heiner Lehne, earns over €10,000 as a lawyer and partner at international law firm Taylor Wessing, while he chairs the Committee on Legal Affairs. Elmar Brok, who earns between €5,001 and €10,000 per month as an advisor at Bertelsmann AG, the media conglomerate, is chair of the Committee on Foreign Affairs.
That’s small beer compared to what Dehaene might make from selling his Anheuser Busch InBev stock.
Elsevier Versus Wikipedia: Academics Revolt Against Giant Publisher
Posted by Pratap Chatterjee on May 11th, 2012
|Graphic: Giulia Forsythe. Used under Creative Commons license.|
Over 11,000 academics have pledged to boycott Elsevier, the Dutch publishing giant, for profiting off their work and making it unavailable to the general public. Now Jimmy Wales, the founder of Wikipedia, is about to turn the world of corporate academic publishing on its head, in the same way that his website effectively took over from Encyclopedia Britannica as a quick reference guide.*
Elsevier is part of the Anglo-Dutch company Reed Elsevier, which had 2010 revenues of $9.3 billion and annual profits of over $1.67 billion. It publishes over 250,000 articles in some 2,000 journals a year that range from global publications like the Lancet to more specific ones like the Journal of the Egyptian Mathematical Society.
Some of these journals are very expensive. Biochimica et Biophysica Acta, for example, sells for $31,000 to Japanese subscribers and $25,000 a year to European and Iranian subscribers. (The rest of the world can buy it for a mere $20,930 a year!) There is a market: University libraries in the UK alone spend over $320 million to make these publications available to their students.
Publishers like Elsevier knew they were onto a good thing because before the arrival of the Internet, there was no other way for researchers to tell their peers about the important work they were doing, or vice versa. Plus getting published in a respectable journal was also the key to keeping academic jobs and getting promotions, so the researchers and professors – like rock musicians and best-selling writers – were leery about giving away their work for free.
“(P)ublishing companies became the de facto gatekeepers to scientific knowledge, restricting who could see the latest ideas rather than allowing ideas to spread as far as possible,” writes Aloke Jha in the Guardian.
But unlike rock musicians and best-selling authors, the market for these journals often number in the few hundreds or even less, specifically the relatively well endowed world of universities. Both the original research as well as the universities – ironically – are paid for by the general public, since most academic research is heavily subsidized by the government.
Professors have been chafing for a while. “We mathematicians produce the papers, serve as editors, and serve as referees, all for free (except of course for our support by our universities and employers). Then with relatively small improvement to the product, publishers turn around and sell it to our libraries at (in many cases) a very high price,” wrote Ron Kirby at the University of California at Berkeley in 1997 in a “Dear Colleague” letter.
“Why do we mathematicians put up with this? (W)e are human and like to see the fruits of our labor printed on high quality paper with elegant typesetting; it validates our hard work.”
On January 21, 2012, a Cambridge mathematician Tim Gowers posted a similar message on his blog and posed a question: “Why can’t we just tell Elsevier that we no longer wish to publish with them? (W)hy do we allow ourselves to be messed about to this extraordinary extent, when one would have thought that nothing would be easier than to do without them?
Gowers issued a call to action: “(I)f all libraries were prepared to club together and negotiate jointly, doing a kind of reverse bundling — accept this deal or none of us will subscribe to any of your journals — then Elsevier’s profits (which are huge, by the way) would be genuinely threatened. However, it seems unlikely that any such massive coordination between libraries will ever take place. What about coordination between academics?”
A few days later Gowers was contacted by Tyler Neylon, a mathematician based in Mountain View, California. The two of them set up a website called “The Cost of Knowledge”
“Numbers could quantify the scope, the revenue, the profit margins, and the number of people who cannot afford publishers' prices. But to me, these all fail to qualify the true consequences of sitting still, of doing nothing. The cost of doing nothing is the cost of knowledge,” Neylon wrote in the Guardian.
The response was overwhelming. By May 1, 2012, over 11,000 academics had taken the pledge and Elsevier took notice. (A back-and-forth between Gowers and Elsevier can be read here.)
Elsevier decided to retreat a little. It dropped support for the Research Works Act (RWA) in the U.S. Congress that would prevented taxpayer-funded research to be made freely accessible online. (An alternative bill is now pending: the Federal Research Public Access Act which will expand the NIH system to all government agencies)
On Wednesday, David Willetts, UK universities and science minister announced a plan to make all UK government funded research available to the general public under a collaboration with Jimmy Wales. "Giving people the right to roam freely over publicly funded research will usher in a new era of academic discovery and collaboration, and will put the UK at the very forefront of open research," he said.
* Editor's note. The original sentence was amended from "effectively took down Encyclopedia Britannica" following a complaint from Encyclopedia Britannica. The publishing company noted in an email to CorpWatch: "Sales and print runs for the set plummeted in the 1990s, and it had become a marginal product, long destined for eventual extinction, by the time Wikipedia was born in 2001."
Enbridge, Bank of America CEOs Targeted for Extreme Energy Impacts
Posted by Pratap Chatterjee on May 10th, 2012
|Yinka-Dene Alliance newspaper ad.|
War has been declared on Enbridge, a Canadian oil company, by a chief from the Nadleh Whut'en in British Columbia. Chief Martin Louie was attending the company annual general meeting in Toronto where he spoke out Wednesday against the environmental impact of the company’s tar sands operations.
"How far are they willing to go to kill off the human beings of this country? Enbridge and the government are going to go on fighting us," said Louie. “The war is on."
Some 700 miles directly south of the Enbridge meeting, on the very same day, Bob Kincaid of Coal River Mountain Watch leveled similar charges against Brian Moynihan, the CEO of Bank of America at their annual general meeting in Charlotte North Carolina, for the impact of mountaintop removal mining.
"You are part of the poisoning of Appalachia and so is every one of your directors and so is every one of your shareholders," Kincaid said. "You are part of the destruction of an entire region of the country."
These two new and unconventional fossil fuel sources –tar sands and mountain top coal together with shale rock – have been dubbed “extreme energy” sources by Professor Michael Klare of Hampshire College, to signify the extraordinary and expensive technology needed to extract energy from them. The rush to exploit these source - from rural North Dakota (see “North Dakota Shale Boom Displaces Tribal Residents”) to the deserts of South Africa (see “Fracking South Africa”) that has sparked angry protests because of the devastating environmental consequences.
This week the battle against extreme energy was taken to the company annual meetings by environmental and social justice groups. The Nadleh Whut'en were part of the Yinka-Dene Alliance which is protesting Enbridge’s $5.5-billion project that would pipe crude from tarsands in Alberta over 1,100 kilometres to the West coast where the fuel is to be loaded on supertankers to take to Asia.
The protestors brought with them a declaration that read in part:
“We are the Indigenous nations of the Fraser River Watershed. We are many nations, bound together by these waters. Enbridge wants to build pipelines to pump massive amounts of tar sands crude oil through the Fraser’s headwaters. An oil spill in our lands and rivers would destroy our fish, poison our water, and devastate our peoples, our livelihoods, and our futures. Enbridge has many pipeline oil spills every year, including this year’s large spill into Michigan’s Kalamazoo river. We refuse to be next.”
The company claims it is doing a good job. "We wouldn't be proposing this project if we didn't have utmost confidence that we could both construct and operate the project with utmost safety and environmental protection," Enbridge spokesman Todd Nogier told CBC TV.
Brian Moynihan responded the same way to the activists in North Carolina who told him that Bank of America was poisoning Appalachia. "Sir, our environmental team will take a look at it. We look at it all the time,” he told the shareholders who booed him.
Coal River Mountain Watch activists disagreed. “A human health crisis is exploding in Appalachia and Bank of America lights the fuse every day," said Bob Kincaid, noting that as much as five million pounds of explosives are used every day in Appalachia to extract coal. Kincaid estimated that the practice caused 4,000 deaths a year in West Virginia: "That's a newborn who never knows a clear breath, a 4-year-old who never gets to be a 5-year-old, a mother who never gets to be a grandmother.”
At the same annual general meeting on Wednesday, Bank of America also saw a number of protestors speak out against the company’s mortgage practices. For example Sister Barbara Busch, a Catholic social justice worker who runs a Cincinnati-based homeowner advocacy group called Working In Neighborhoods, told Moynihan that his bank was the hardest to deal with (41 percent of her customers have their loans managed by Bank of America) “(W)we have no one to talk to. They do not call us back,’ she said of the loan officers. “I understand, Mr. Moynihan, that you really believe that you've done something, but ... you've got to do something about your mortgage servicing."
The North Carolina protests were coordinated by the Unity Alliance which brought together groups like Grassroots Global Justice Alliance, Jobs with Justice, the National Day Laborers Organizing Network, the National Domestic Workers Alliance, the Pushback Network, and the Right to the City Alliance.
Although the Bank of America protests are now over, the activists plans to be back – for the Democratic National Convention slated to take place in the city this coming September.
Shareholder Spring Spreads: CEOs Ousted in the UK, Bank of America Protested
Posted by Pratap Chatterjee on May 9th, 2012
|Bank v America Boxing Match. Photo: Jed Brandt. Used under Creative Commons license.|
Thousands of community activists gathered in Charlotte, North Carolina, on Wednesday to protest at Bank of America’s annual shareholder meeting. A boxing match billed as “Bank v America” was staged outside while inside, protestors from the mountains of Appalachia to homeowners in Ohio stood up to speak out against the company.
This is the latest in what has been perhaps the most diverse, widespread and sizeable protests of corporate annual meetings around the world to date. Traditionally these company gatherings are held in the spring after the publication of annual reports in April of each year. They tend to be dull affairs hosted by company management and attended by analysts from Wall Street and the City of London and a handful of shareholders.
Occasionally, church groups and environmental groups attend to speak out in favor of progressive resolutions that gather no more than five percent of votes from the big institutional investors who own the bulk of company shares. And sometimes there are a rallies outside led by the same groups.
But the scale of the protests 2012 has been different, first because of the return of the Occupy protestors who were evicted by police or winter conditions. These activists have bolstered the numbers outside the annual general meetings: in Detroit, hundreds of Occupy protestors marched to protest General Electric on April 25, 2012 to protest the way the company avoids paying taxes. Occupy also turned out in force to protest Peabody Coal in St. Louis, Missouri and Wells Fargo Bank in San Francisco last month.
We wrote about some of the initial protests last month:
“Wearing blue eagle masks and garlands of money, protestors gathered outside the Barclays bank shareholder meeting in London, while a giant, cigar-smoking inflatable rat accompanied activists at the Wells Fargo annual meeting in San Francisco. Meanwhile shareholders in Dallas voted overwhelmingly against a multi-million dollars pay package for Citibank’s CEO while almost a third did the same at the Credit Suisse meeting in Zurich.”
In the last week or so, this anger has spread, led surprisingly by institutional shareholders. The Financial Times and the Telegraph newspaper in the UK have labeled the phenomenon “shareholder spring” in which a number of CEOs have seen their multi-million dollar pay packages voted down under so-called “say on pay” rules that allow shareholders to reject excessive payments. In a May 4 editorial titled “Irresistible Rise of the Angry Investor” the Financial Times says: “Shareholders want executives to perform for their pay. Is that so much to ask?”
In a similar vein, the Observer newspaper in the UK noted: “Just weeks after the Occupy protesters were chucked out of the City, the sharp-suited fund managers who picked their way through the tents to get to their desks each morning have staged their own protest against fat-cat capitalism. On Thursday alone, five companies felt the wrath of investors and suffered revolts over their pay policies.”
The list of companies affected to date is impressive: more than half of the shareholders of Aviva, the top UK insurance company, voted against the pay package of Andrew Moss, the CEO, forcing him to resign. Sly Bailey, CEO of Trinity Mirror, the country’s biggest newspaper group (publishers of Daily Mirror, Sunday Mirror and People as well as the Sunday Mail in Scotland) has decided to step down after shareholders are expected to vote against her £1.7 million ($2.7 million) pay tomorrow. David Brennan, CEO of AstraZeneca, the Anglo-Swedish pharmaceutical company, has decided to retire early for the same reasons and Ralph Topping, the CEO of William Hill, a major UK betting company, is hanging on for dear life after 49.9 percent of shareholders voted against his £1.2 million ($1.92 million) pay package.
Last week saw significant protest votes against Kaspar Villiger, chairman of UBS bank in Zurich, and Ivan Glasenberg, the CEO of Swiss mining company Xstrata, on May Day. Two days later Andrew Sukawaty, the executive chairman of Inmarsat, the satellite phone company, saw a shareholder revolt against his £2.66 million salary ($4.25 million) and 3M, makers of Scotch Tape, saw protests against the companies corporate lobbying in St. Paul, Minnesota yesterday.
Next month Sir Martin Sorrell, the CEO of advertising giant WPP, who is paid £13 million a year ($21 million) expects to see protests when the company holds its annual meeting on June 13.
It’s not just CEOs, board members have also come under fire. Alison Carnwath, a banker who sits on many UK boards, was protested at both Barclays bank as well as at hedge fund Man Group. “Alison Carnwath is the embodiment of "crony capitalism" that allows a small group of City figures to set each other's pay and bonuses without having to worry about the real world” wrote Jill Treanor and Rupert Neate in the Guardian.
One of the reasons that executives have managed to get away with excessive pay packages so far is the nature of corporate boards. Lord Myners, the former head of a hedge fund, told the Observer that the problem lay with the fact that company boards are handpicked by the chairman: "(W)e have the North Korean model, in which each candidate is re-elected
every year, and 99.99% of them get voted in with 99.99% of the vote.
Stay tuned: tomorrow we will have more reports on the protestors on the outside – at the Bank of America annual meeting in Charlotte and the Enbridge meeting in Toronto, Canada.
Hedge Funds Handed New Loophole to Make Money
Posted by Pratap Chatterjee on May 7th, 2012
|$100 bills. Photo: Adam Kuban. Used under Creative Commons license
Hedge funds, a publicity-shy sector of the financial industry where the super wealthy invest their money in the hope of making above-average profits, were just handed an opportunity to make even more money under a new law signed by President Barack Obama. Consumer advocates say that unsophisticated investors may be at risk as a result.
Most U.S. investment funds are regulated under the Securities Exchange Act of 1934 and the Investment Company Act of 1940 which restrict how much the fund managers are paid and what they do in order to protect naïve investors. Many hedge funds are designed to get around these restrictions by raising money from a select few sophisticated investors.
For example, big hedge funds seek “qualified purchasers” – who have at least $5 million in money – who are exempt from these restrictions under section 3(c)(7) of the 1940 Securities Exchange Act. Smaller hedge funds seek as many as 100 “accredited investors” - those with a net worth of over $1 million (not including their houses) or a minimum annual income of $200,000 (or $300,000 for married couples) – under the 3(c)(1) of the Investment Company Act of 1940.
Like any other exclusive club for the wealthy, hedge funds tend to be very secretive. Some of this is the law: “private placements” of securities are banned from advertising publicly but also because companies with less than 500 shareholders are exempt from publishing annual reports under the Securities Exchange Act of 1934.
In “More Money Than God: Hedge Funds and the Making of a New Elite” Sebastian Mallaby estimates that the hedge funds make some 11 percent profit, more than double other investment vehicles. This allows fund managers to ask for higher fees than regular bankers – typically they take between one and four percent of the investment every year as well as between 10 and 50 percent of profits in return for attempting to beat the stock market.
Some hedge fund managers mint money: Raymond Dalio of Bridgewater Associates was paid an estimated $3 billion in 2011, Carl Icahn of Icahn Capital Management earned $2 billion. The top European hedge fund manager in 2011 was Alan Howard of Brevan Howard Asset Management, who earned $400 million last year. All told, the 40 highest paid hedge fund managers were paid a combined $13.2 billion in 2011, according to a Forbes magazine survey.
Under the Jumpstart Our Business Startups (JOBS) Act, signed into law by Obama on April 5, 2012, the threshold for publishing annual reports has been raised to 2,000. It also allows hedge funds to conduct “general advertising” although specifics will have to be spelt out by the Securities and Exchange Commission (SEC) within 90 days.
Barbara Roper, director of investor protection at Consumer Federation of America told Reuters that she was worried that hedge funds might exploit unwary people. “Accredited investors are not necessarily sophisticated investors,” she said. “It will do more harm than good.”
Writing in the Financial Times Robert Pozen, a senior lecturer at Harvard Business School and Theresa Hamacher, president of the National Investment Company Service Association, recommend that the SEC should take two specific steps to protect these smaller investors. “First, it should update the definition of accredited investor, which was established 30 years ago, in 1982. To be a realistic proxy for sophistication in the present age, accredited investors should have an annual income of $600,000 and net worth of at least $3m, again excluding their home.
“Second, the SEC should establish uniform standards for reporting performance by hedge funds. Because reporting hedge fund returns is voluntary, managers can hide the performance of a poorly performing fund—either by not reporting it or by closing down the fund. As a result, the average reported return of hedge funds is overstated by more than three percentage points per year, according to several studies.”
The SEC, for its part, says it is intent on cleaning up the industry with the help of data that hedge funds have to provide under new disclosure rules enacted into law by the Dodd-Frank Act of 2010. "Pick your fraud of the day and the question is, 'Can we extract information from this data system together with the other databases we have access to and home in on problems before they do damage?'" Robert Plaze, deputy director in the division of investment management for the Securities and Exchange Commission, told the Wall Street Journal.
KLM's 'Green' Planes Fly Into Controversy
Posted by Pratap Chatterjee on May 4th, 2012
|Photo: fluffymuppet. Used under Creative Commons license|
KLM, the Dutch airline, has been forced to backtrack from a plan to use oil from jatropha seeds grown in Indonesia for commercial flights. After Friends of the Earth Netherlands (FOE NL) put out a report criticizing the potential impact on local food supplies, the airline company scrapped the idea earlier this month.
The February 2012 FOE NL report: “Biokerosene: Take-off in the wrong direction” examined the impact of a Dutch company named Waterland International, as well as the “dangerous myth of green flights.”
KLM and Lufthansa have been conducting biofuel flights since last July. The pilot scheme is intended to reduce dependency on fossil fuels like petroleum and to slow down climate change. In reality, biofuels produce as much greenhouse gases as other carbon based fuels, and create a different set of problems.
The plan for “sustainable” airline flights is partly state supported. In Europe, KLM was awarded a subsidy of €1.25 million ($1.61 million) by the Dutch ministry for transport in April 2010 to pursue “bio-fuels” while Lufthansa was given €2.5 million ($3.25 million) by the German federal ministry of economics and technology. Meanwhile the Indonesian government backed a scheme to grow jatropha plants on government-owned lands controlled by the State Forest Company, notably on a former Dutch colonial teak estate in central Java.
“Jatropha, it was promised, would grow well on marginal and waste lands, was inedible and so would not compete with food production,” write the authors of Biokerosene. “It would help with reforestation, and prevent further soil erosion, even enriching the soil with nutrients. Jatropha would not require a lot of attention once planted, no fertilizers, herbicides or any significant amounts of water. Farmers would be able to lie back and watch the money grow in the form of jatropha oil seeds.”
Geert Ritsema, international affairs coordinator at FOE NL, decided to investigate. A team traveled to central Java in late 2011 to meet with the jatropha farmers. They interviewed Suwarto, a farmer who was appointed supervisor of Wono Rejo, a farmers’ cooperative in a village named Tirem that had been convinced to grow jatropha plants from Waterland.
Suwarto says he earned 200,000 rupiah ($22) from the crop, a third of what he would have made had he planted corn. Moreover, people could have eaten the corn and the leaves could have been fed to the cattle. The jatropha plant had no such practical uses.
“At one point they got so mad, that they even turned their sickles on me,” Suwarto told FOE NL. “I asked Waterland, what they would do to help, when things turned violent and people were being physically threatened. Would they be there to protect me?”
Mrs Rumiyati, a laborer, confirmed the financial hardships created from jatropha cultivation. “If we go to help in other people’s rice or corn fields, we get 15,000 rupiah ($1.70) for half a day’ s work, and we get a free breakfast,” she told told FOE NL. “Picking jatropha for Waterland just earns us 7,000 rupiah ($0.78) at best, and no breakfast. This is really very, very low.”
“Not a single word was said about the Javanese farmers and workers, who have converted some of their land from food to fuel crops, in return for ridiculously low payments. For them, the introduction of jatropha has led to a fall in income, conflict and frustration,” concluded FOE NL.
After the report was released in February, KLM seems to have reconsidered the scheme. “KLM has informed Milieudefensie that it will not do business with Waterland. KLM has also told Milieudefensie that it has no current or future plans to directly or indirectly purchase raw materials to produce biokerosene from Waterland,” says a press release from the environmental group.
FOE NL says that more needs to be done: “The only solution to the problem is to reduce air traffic, foremost in Europe,” writes FOE NL in Biokerosene. “This might not be a welcome message for the aviation industry or for frequent fliers, but it is a blessing for poorer people in the South who suffer twice: from the effects of climate change and from the loss of valuable land which is used to grow fuel instead of food.”
Fighting Malaria: Big Pharma or Better Aid Coordination?
Posted by Pratap Chatterjee on May 2nd, 2012
|The Fever Book, Sonia Shah (Farrar, Straus & Giroux, 2010)|
Why don’t drug companies invest enough money in treating malaria and tuberculosis? A recent study published in the Lancet magazine estimates that 1,238,000 people died from malaria in 2010. A similar number are believed to die from tuberculosis, together accounting for between one in ten and one in twenty disease related deaths around the world. Surely a wonder drug that stops these diseases would be wildly profitable?
The first problem is that most of the victims are poor people in the Third World but there is another major issue that puts off Big Pharma. “Because (malaria and tuberculosis) drugs are expensive to develop, and yet, the more people buy them, the faster the drug becomes obsolete and un-sellable,” writes Sonia Shah, author of “The Fever: How Malaria Has Ruled Humankind for 500,000 Years” “As a result, very few drug companies spend much time or money developing anti-microbial drugs anymore. It’s bad for business.”
For decades chloroquine has been the drug of choice to treat malaria, a disease carried by the female anopheles mosquito. When chloroquine-resistant malaria was discovered, artemisinin was chosen to take its place, promoted by international donors and the World Health Organization (WHO). This is a drug that was developed from the sweet wormwood plant by Chinese military scientists in the 1970s after a long and painstaking screening process of thousands of traditional medicines.
Now Novartis, a Swiss company, sells 100 million packets of Coartem, a version of the original Chinese drug, one of the most successful drugs in history. The company does so under a unique partnership with the World Health Organization (WHO) to distribute Coartem for pennies a dose to the poorest people in the world.
Unfortunately, recent reports now suggest that malaria parasites in western Cambodia have also become resistant to artemisinin. “Call it the revenge of the microbes. The more poison we throw at them, the faster they learn to circumvent our chemicals,” writes Shah.
So Novartis as well as other companies like GlaxoSmithKline, Pfizer, Ranbaxy, Sanofi and Shin Poong are putting some money into developing new drugs. Last week Ranbaxy, based in Gurgaon, India, announced a new drug: Synriam, on the occasion of the World Malaria Day.
While it is true that Big Pharma has played a role in some of the drug development (Novartis invented a child friendly version of artemisinin, for example, as well as done most of the manufacturing) mere capitalism and profit from the sale of “wonder drugs” would never have advanced the cause of global health.
Most of the progress made in fighting the disease is really as a result of government research and donors that have increased aid efforts from $200 million to $1.6 billion a year, over the course of the last decade, to help pay for access to basic drugs and improve methods of prevention.
“The single biggest challenge is financial rather than biological,” Rob Newman, head of the malaria programme at the World Health Organisation (WHO) told Andrew Jack of the Financial Times. “The thing we most need is to make sure the money keeps coming.”
There are also many important tasks other than sales of Coartem to continue to fight malaria: tests to track resistance as soon as it appears and more targeted use of drugs to make sure that they are not used too heavily. Another way to prevent malaria is to provide and make sure that families use mosquito nets and environmental management of standing bodies of waters where they breed as well as improving hospital hygiene.
China and Cuba are providing money for such projects but the West is wary of their traditional enemies. Writing in the Financial Times, Jack summarizes the worries and fears of Big Pharma and Western aid donors: “China’s malaria health centres in Africa have lacked sufficient technical support and training, while Cuba’s promotion of killing off mosquito larvae is viewed as a diversion from more effective measures.”
Shah agrees with the WHO. “Slowing the spread of drug-resistant malaria will take time and resources,” she writes. “But it’s better than the alternative: the loss of yet another wonder drug and a new era of unstoppable infections.” And the Financial Times concludes: “In an age of austerity, co-operation and co-ordination will be more important than ever.”
Amen to that.
Middle Eastern Investors “Grab” Sudan Farmland
Posted by Pratap Chatterjee on April 30th, 2012
|Salah, Sudanese farmer. Photo: Al Jazeera TV|
Dalla Al Baraka, a Saudi conglomerate with an estimated $5 billion in annual revenue, has acquired two million acres of farmland in eastern Sudan, to produce food for export to the Middle Eastern kingdom. While the investors are hoping to wean Saudi Arabia off imports from South America, such agreements have also caused concern among local Sudanese farmers.
Sporadic protests have occurred in Jazira state where much of best land is being bid on by foreign investors. "The farmers are complaining, because the price they are being offered for their land is not fair," Majdi Selim, a local lawyer and political activist told Agence France Press last year. Their concerns are part of a trend that is accelerating around the world according to multiple reports tracked by farmlandgrab.org, a website run by GRAIN, an international NGO.
Sudan, which was divided into two countries in 2011, is expecting a sharp downturn in its export income because most of its oil deposits became part of the new nation of South Sudan. This has served as an impetus for Khartoum to seek other forms of income. Ali Mahmood Abdel-Rasool, the finance and national economy minister, led a delegation to Saudi Arabia in March to seek foreign investment.
Sheikh Saleh Kamel, the founder of Dalla Al Baraka, told the Sudan Tribune that the two million hectares that he has obtained will be considered a “free trade” zone: that is to say his company would neither have to pay taxes nor follow Sudanese laws. He is not the only outside investor - Essa Abdullah Al Ghurair of Al Ghurair Foods in the United Arab Emirates has just leased 100,000 hectares of farmland in Sudan. And Mustafa Abdul Jalil, the chairman of Libya’s ruling National Transitional Council, says this government is also considering investment in Sudanese land.
Local farmers in Sudan are say they have not been consulted on the plans to lease off the country’s land. “The whole process is not clear to me because part of it is the sale of land, part is rent and part is lending,” Salah of the Al Jazira Land Owners Group told Mohamed Vall of Al Jazeera television in an interview about the subject this past January. “Agricultural land is the basic source of living for most people here, so if all the arable land is given to big companies, what are those people going to live on?” (the word “jazeera” means peninsula, and is a common business title)
Others think the new investors can help. “There is vast area of empty fertile (land) with plenty of water. This land has remained empty for hundreds, if not thousands of years and it will remain (that way) It needs mechanization, it needs capital,” Mamoun, Salah’s cousin, who is also a local farmer, told Al Jazeera TV.
Sudan is not the only country to be targeted for export agriculture. Indeed a new “gold rush” on farmland has begun in the Third World, say studies by GRAIN, a global think tank based in Barcelona, the International Land Coalition (ILC), based in Italy, and Oxfam in the UK. ILC and Oxfam have created a ‘Land Matrix’ of deals which suggest that 71 million hectares have been “grabbed” by international investors. Africa accounts for almost half at 34 million hectares, followed by Asia with some 29 million hectares and South America with about 6 million hectares.
These investments or “landgrabs” have fomented anger and even violence, on occasion. In neighboring Ethiopia, Saudi Star, a similar Saudi Arabian project in Gambella province, the extremely fertile southwestern region of the country, was attacked on April 28 evening. Ten people, most of whom were agricultural experts from Pakistan, were allegedly killed at the 10,000 hectare agricultural rice farm owned by the billionaire Al Amoudi.
Bankers Bonanzas Protested By Blue Eagles and A Cigar-Smoking Rat
Posted by Pratap Chatterjee on April 27th, 2012
Wearing blue eagle masks and garlands of money, protestors gathered outside the Barclays bank shareholder meeting in London, while a giant, cigar-smoking inflatable rat accompanied activists at the Wells Fargo annual meeting in San Francisco. Meanwhile shareholders in Dallas voted overwhelmingly against a multi-million dollars pay package for Citibank’s CEO while almost a third did the same at the Credit Suisse meeting in Zurich.
Annual general meeting season is in full swing and hundreds of people are showing up to protest excessive pay at banks around the world. The numbers have swollen from years past with the vigor injected from the long summer of Occupy protests around the world in 2011 that protested the failure of government to tackle the economic crisis and reign in private capital.
In London, activists with the World Development Movement and Robin Hood Tax, dressed up with blue eagle masks (mimicking the company’s logo) gathered outside the Royal Festival Hall. Some 800 shareholders attended the meeting where they heckled Bob Diamond, the CEO who was paid just shy of $28 million last year. One woman described the bank as “"ruthless, heartless, cruel" while another investor yelled: "You are all part of the same club.” Almost 27 percent voted against the company’s proposed pay package.
In Zurrich some 1,750 shareholders attended the Credit Suisse annual meeting on Thursday where almost a third of the votes recorded rejected individual pay packages as high as $9.35 million (for Robert Shafir who heads up the asset management team) "You should be ashamed of yourselves for taking so much money away from us," said Rudolf Weber, a shareholder, who spoke up during the meeting. “We are the owners of this bank, and you are our employees. We should be the ones who decide what you earn.”
On Tuesday Vikram Pandit, the CEO of Citibank, faced a revolt against his proposed salary of $15 million. Some 55 percent of shareholders voted against - the first time in history that a pay proposal at a major U.S. bank has been voted down since the law was amended to allow such voted under the Dodd-Frank act of 2010. Two days later, Stanley Moskal, a Citi shareholder, sued Pandit and the Citibank board for breaching their fiduciary duties stating that the vote had “cast doubt on the board's decision-making process, as well as the accuracy and truthfulness of its public statements."
The same Tuesday, thousands of activists gathered in San Francisco outside the Wells Fargo annual meeting at the Merchants Exchange Building to protest the bank which is the second-largest U.S. bank as measured by deposits. The crowd was joined by a fake stagecoach (the bank’s logo that reflects its Gold Rush history) labeled “Hell’s Cargo” and a giant cigar-smoking inflatable rat. A small group linked arms to prevent shareholders from attending the meeting while others went inside to protest. A total of 24 protestors – 14 inside the meeting and ten outside – were arrested.
"Wells Fargo is one of the largest and most corrupt Wall Street banks and has foreclosed on hundreds of thousands of homes," Charles Davidson of Move On East Bay told Reuters. "I think it's really important that we stand up to this or the economic crisis will continue."
However Wells Fargo shareholders failed to rally against CEO John Stumpf’s salary where over 90 percent voted for his $19.8 million pay package.
Facebook Lobbies Washington to “Like” Spying on Users
Posted by Pratap Chatterjee on April 26th, 2012
|Image courtesy: The Bureau of Investigative Journalism|
Facebook, the social network behemoth that is about to become a multi-billion dollar company, has been lobbying for a proposed new U.S. law called the Cyber Intelligence Sharing and Protection Act (CISPA) that would allow companies to share information with government agencies. Zaid Jilani at the Republic Report has been digging up details on the Washington lobbyists who are helping Facebook.
“Under CISPA, private companies may spy on user communications, whether stored or in transit, and freely pass personal information to the government as long as they claim a vague "cybersecurity" exception,” write Mark M. Jaycox and Lee Tien at the Electronic Frontier Foundation. “The bill also creates expansive legal immunity that makes companies and the government largely unaccountable to users. Companies ‘acting in good faith’ are also excused from all liability for engaging in potential countermeasures, even if they hurt innocent parties.”
This is not the first time that the U.S. Congress has tried to pass a dubious law on computer security in the name of stopping piracy. Last year, the Stop Online Piracy Act and the Protect IP Act – backed by Hollywood and opposed by Facebook, Google and Wikipedia – was defeated after a huge backlash. Opponents noted that the law – as drafted - would threaten freedom of speech and support Internet censorship.
Mike Rogers, a Republican from Michigan, and Dutch Ruppersberger, a Democrat from Maryland, are the sponsors of the new bill. Unusually for Washington, the two men work together well, according to the Washington Post. Rogers is a former Federal Bureau of Investigations agent who has been promoting the drone war, notes the Post, and the two men have the backing of people like Michael Hayden, former director of the Central Intelligence Agency and the National Security Agency. So it is small wonder that CISPA will help out the intelligence agencies by expanding their powers of surveillance.
Not surprisingly, activists like Avaaz are campaigning against CISPA and so is (surprisingly) the Obama White House, which has threatened to veto the bill if it makes it to the president’s desk.
But Facebook – which opposed the cyber-security bills last year – has decided to support CISPA. The proposed law “would make it easier for Facebook and other companies to receive critical threat data from the U.S. government,” Facebook’s Washington DC office posted on its blog. It would “impose no new obligations on us to share data with anyone –- and ensures that if we do share data about specific cyber threats, we are able to continue to safeguard our users’ private information, just as we do today.”
Well, many Facebook users would testify that the company actually does a very poor job of protecting user’s private information.
Zaid Jilani at the Republic Report points out that Facebook is actively paying a Washington lobby firm to lobby for CISPA. In his article titled “Dislike: Meet The Lobbyists Facebook Hired To Help The Government Spy On You” he reports on the people at Fierce, Isakowitz & Blalock that are working the halls of Congress to get the bill passed.
“What’s particularly interesting about all of these individuals is that every single one previously worked somewhere in the executive or legislative branches of the Federal government. They were paid by taxpayers to get the training and connections that now allow them to have high-paid lobbying jobs representing corporations,” writes Jilani.
After all, Facebook has a lot to gain from this such as the ability to “freely pass personal information to the government” and to be “excused from all liability even if they hurt innocent parties.”
On Friday, when Congress gets to vote, we will find out which members “like” Facebooks plans.
North Dakota Shale Boom Displaces Tribal Residents
Posted by Pratap Chatterjee on April 25th, 2012
|Bakken gas flare. Anonymous photo submitted to BakkenWatch|
Heather Youngbird and Crystal Deegan used to live in a trailer at the Prairie Winds Mobile Home Park in the Fort Berthold Indian Reservation in North Dakota. Last week Leroy Olsen, their landlord, removed their front door and cut off the electricity and the propane supply. The reason? New homes to be constructed for out of town oil workers coming to take part in the shale exploration boom.
“This oil boom has divided the Mandan, Hidatsa and Arikara people and pitted them against each other in a negative way,” says Kandi Mossett, a tribal member and organizer with the Indigenous Environmental Network.
In 2010, WPX Energy of Oklahoma paid $925 million for the right to explore for oil on the 86,000 acres of the Fort Berthold Indian Reservation. The company plans to squeeze oil out of shale, the most abundant form of sedimentary rock. Until recently such exploration was prohibitively expensive, but with the evolution of technology and the rise in the price of oil, many rural communities from England to the Ukraine, from Argentina to North Dakota, have become targets for the shale oil boom.
Another company profiting from the Bakken boom, which has been described as the biggest oil find in North America in four decades with an estimated 4.3 billion barrels of recoverable oil, is Continental Resources, also from Oklahoma.
Fort Berthold – the center of the oil boom - has long suffered from crumbling roads and the lack of good housing and proper sewage facilities on the reservation. The companies plan to invest in housing and infrastructure for their workers and plants, but not for local residents.
“Right now, anything that’s available that has water and sewer on it is very attractive to anybody that’s trying to continue to grow their business,” says John Reese, the CEO of the United Prairie Cooperative company, which has taken over the trailer park.
“We were not even given a formal 30 day eviction notice and now that we have been kicked out of our home we are currently homeless,” said Heather Youngbird. The remaining residents of Prairie Winds Mobile Home Park have been told that they had to leave their trailers by May 1, but the eviction date has now been postponed until August 31.
More trouble is expected for the tribal community: Environmental groups note that residents may also soon see problems with their drinking water. “Information posted hydraulic fracturing fluid chemicals on the FracFocus web site indicates that Bakken Shale oil wells may contain toxic chemicals such as hydrotreated light distillate, methanol, ethylene glycol, 2-butoxyethanol (2-BE), phosphonium, tetrakis(hydroxymethyl)-sulfate (aka phosphonic acid), acetic acid, ethanol, and napthlene,” writes EarthWorks, a Washington DC based group.
Then there is the air pollution: the oil companies are not even bothering to capture the natural gas that is generated by the drilling, partly because there are no state regulations to force them to and partly because it is expensive. Instead the gas is being “flared” or burnt off, the same way Shell does in the Niger delta with similar environmental consequences.
“Across western North Dakota, hundreds of fires rise above fields of wheat and sunflowers and bales of hay. At night, they illuminate the prairie skies like giant fireflies,” wrote Clifford Krauss in the New York Times last September. “Every day, more than 100 million cubic feet of natural gas is flared this way — enough energy to heat half a million homes for a day.”
Perhaps the greatest irony is that North Dakota has the greatest wind resource of almost any state in the country, says Mossett. She says that North Dakota could supply 1.2 trillion kilowatt-hours (kWh) of annual electricity.
Lukoil Threatens Arctic Reindeer
Posted by Pratap Chatterjee on April 23rd, 2012
|Photo: Denis Sinyakov, Greenpeace|
An oil spill in northern Russia from a joint venture between Lukoil and Bashneft has damaged fragile reindeer pastures in yet another blow to the indigenous Nenets people. Environmental activists have warned about such disasters for decades but few precautions have been taken by the oil companies.
Lukoil, which is now Russia’s largest oil company, and Bashneft are currently drilling for oil in the Trebs oil field in the Nenets Autonomous District which is estimated to hold 153 million tons of oil.
Vladimir Bezumov, chief of the local office of the Russian Environmental Agency, estimates that some 2,000 tons of oil gushed out of an exploratory well in the oil field this past weekend damaging as much as 14,000 square meters of land.
Oil exploration started in the region in the 1960s and expanded after the collapse of the Soviet Union. Activists warned that environmental problems were bound to get worse. "Western Siberia is already an ecological disaster area because of its many oil mishaps. Any oil accident would have serious consequences, that could reach upriver to the North Polar Sea," Ellen Schmidt wrote in a 1996 report for the World Wide Fund for Nature and a German environmental group called the Association for World Economy, Ecology and Development (AWEED) at the time.
Gail Osherenko, a Vermont-based anthropologist who works with the Nenets peoples, told IPS at the time that the idea oil drilling in the region would have only minimal impact was "wishful thinking."
And Russian and indigenous groups sent out an appeal in 1996 to ask the public to lobby the World Bank not to finance projects in the region. "We ask everyone to help us prevent an environmental nightmare. We ask you not to allow the use of your tax dollars, marks or kronor to facilitate further destruction of the environment," wrote Alexei Grigoriev of the Socio-Ecological Union in Russia in Taiga News.
The warnings were mostly ignored.
An Associated Press investigation by Nataliya Vasilyeva in late 2011 described some of the damage caused by the estimated half a million tons of oil spilled every year that make their way into the Arctic ocean, roughly two-thirds of the quantity of oil spilled in the Deepwater Horizon in the Gulf of Mexico. “On the bright yellow tundra outside this oil town near the Arctic Circle, a pitch-black pool of crude stretches toward the horizon. The source: a decommissioned well whose rusty screws ooze with oil, viscous like jam,” she wrote.
The indigenous communities say their traditional way of life has been devastated by the oil industry. “There is no future for us. People are dying. If oil companies behaved correctly, they would ask us, where drilling is possible and where not, which river is spawning, where fish comes for winter cabin. Fish comes to this bog in the autumn. And now all the rivers are blocked here, and fish has nowhere to go,” Valdimir Vello, a reindeer herder told Greenpeace recently for a report titled “Is there a life after oil?” “I think that there is no future. If the oil companies leave us, we can manage to save something here, to recover this place.”
Politicians are starting to pay attention. Last week, Yuri Trutnev, Russia’s minister for natural resources and ecology threatened to sue Lukoil rival, Anglo-Russian oil producer TNK-BP (owned jointly by British Petroleum and a consortium of the Alfa, Access and Renova groups) for numerous oil spills in Siberia. Trutnev said the company has 784 accidents last year.
"The land is practically flooded with oil," he said after a recent trip to the Khanty-Mansiisk region, according to a report by Gazeta.ru. "We didn't have to look for polluted places, we had to look for places that hadn't been touched by pollution."
The drilling ventures are hugely profitable so they are unlikely to be stopped but there is more than enough money to minimize some of the worst impacts. Since 2003, British Petroleum has paid out an estimated $19 billion in dividends, more than ten times more than it would cost to repair the aging infrastructure, according to an estimate by Gazprombank.