Wal-Mart: The High Cost of Low Price movie poster

Eduardo Castro-Wright, the former CEO of Walmart Stores USA, has been accused of leading a $24 million scheme to pay off Mexican city governments in return for permission to open supermarkets around the country.

Walmart, based in Bentonville, Arkansas, runs giant discount retail stores that sell consumer goods at rock bottom prices. It has grown to become the world’s largest private employer with 2011 sales of $421.85 billion.

Company bosses turned a blind eye to the scheme of Mexican bribes (called “gestores” in Mexico) when informed about it in 2005, according to an investigation just published in the New York Times.  Michael T. Duke, now Walmart’s CEO, was also informed at the time but did nothing.

Castro-Wright was described by Forbes magazine at the time as “one of the sharpest executives in the land watching over his 3,250 U.S. stores” in a fawning write-up in January 2006.

The Texas A&M graduate took over the Mexico operations in 2002. Over the next four years, Forbes cited his ability to grow Walmart’s Mexican business by slashing “prices and expenses, squeez(ing) suppliers” and a “knack for public relations … when merchants protested the construction of a Wal-Mex store near an archaeological site.”

The magazine did not mention bribes.

In reality, the company grew quickly mostly because of a bribery scheme that was run by Sergio Cicero Zapata, a former executive, according to the New York Times investigation. Cicero, who was in charge of obtaining construction permits for the new stores, called the scheme “the dark side of the moon.”

The money was typically paid out to local governments via two of Cicero’s friends from law school: Pablo Alegria Con Alonso and Jose Manuel Aguirre Juarez. These bribes “bought zoning approvals, reductions in environmental impact fees and the allegiance of neighborhood leaders” according to the New York Times. “Permits that typically took months to process magically materialized in days.” The “gestores” helped catapult Walmart into becoming the largest employer in the country with 209,000 workers.

Cicero blew the whistle in September 2005 when he felt he was not promoted fast enough. When H. Lee Scott Jr. - then Walmart’s CEO - was informed, he covered up the matter and “rebuked internal investigators for being overly aggressive.”

José Luis Rodríguezmacedo Rivera, the general counsel of Wal-Mart de Mexico, who allegedly authorized the bribes, was hired to investigate the matter. Not surprisingly he found his colleagues innocent.

Castro-Wright left Mexico in late 2005 and returned to the U.S. The bribes stopped. But instead of being suspended or fired, Castro-Wright was promoted to vice-chairman of Walmart in 2008.

Paying bribes anywhere in the world is illegal for U.S. companies under the Foreign Corrupt Practices Act and Walmart is required to inform the Department of Justice of any violation. Walmart did not do this until December 2011, six years later, when it learned of the New York Times investigation

Walmart has not denied the charges. In a press release issued as soon as the New York Times article came out, David Tovar, Walmart's vice president of corporate communications says: "Many of the alleged activities in The New York Times article are more than six years old. If these allegations are true, it is not a reflection of who we are or what we stand for. We are deeply concerned by these allegations and are working aggressively to determine what happened."

None of Walmart’s aggressive expansion tactics in Mexico will come as a total surprise to activists in the U.S. like Food & Water Watch and the Institute for Local Self-Reliance (ILSR). The two groups issued a new report last week titled “Top 10 Ways Walmart Fails on Sustainability.”

“Walmart … forces smaller farmers and companies to get big or get out of business,” said Wenonah Hauter, executive director of Food & Water Watch. The activists noted that the company added 1,100 new stores in the U.S. since 2005, ignoring environmental objections, such as paving over land with endangered species.

Walmart has also been accused of “greenwashing” –  a tactic by which companies “preserve and expand their markets by posing as friends of the environment and enemies of poverty.”

In 2005 Walmart hired public relations advisers and teamed up with the Environmental Defense Fund (EDF) in 2005, an NGO that has a history of working with big business.

With the help of EDF, the company released a report last week that touted numbers such as a claim that Walmart had kept “80.9 percent of all waste generated by our U.S. operations out of landfills. This has the potential to prevent 11.8 million metric tons of CO2 emissions annually.”

In reality, the company’s energy use has increased greenhouse gas emissions by 14 percent since 2005. In fact Food & Water Watch and ILSR note that barely one percent of Walmart’s Chinese suppliers have actually implemented waste reduction programs; that most of its products are so shoddy that they actually increase waste; that the company only sources four percent of its energy from renewable sources (other retailers like Whole Foods are already at 100 percent)

Bribery and greenwashing do make a business grow more quickly, after all.

EFSA Cartoon. Source: Corporate Europe Observatory

Should lobbyists for biotech and food companies be allowed to make the rules on scientifically questionable products sold in the supermarket and - by default - your kitchen? The companies like the idea because they stand to make a huge profit. Yet the European Food Safety Agency (EFSA) appears to have failed to properly regulate such conflicts of interest.

EFSA, based in Parma, Italy, investigates food and feed safety, nutrition, animal welfare, plant protection and health. The agency’s assessments – which are conducted by expert panels - are used by the European Commission in Brussels to decide whether to authorize products on the European market.

Meet Mella Frewen, our exhibit #1. She was a food lobbyist for Monsanto, the U.S. biotechnology giant and Cerestar, then Europe’s biggest starch producer. Then she moved to become director general of the Confederation of the Food and Drink Industries of the EU and now EFSA wants to appoint her to their management board.

Would that be a conflict of interest? Nina Holland from the Corporate Europe Observatory (CEO) thinks so. “The EU Commission is not doing ESFA any favours by nominating a food lobbyist as candidate for the agency’s management board. If EFSA is to regain its independence in the future, people with ties to industry should be excluded from the (expert) panels as well as from the management board,” she says.

This revolving door works both ways. The men and woman at EFSA know that they can get good jobs in industry if they quit, to help lobby their former colleagues to weaken regulations.

Meet exhibit #2: Suzy Renckens, who ran EFSA´s GMO (genetically modified organisms) unit from 2003 to 2008. In 2008, Suzy Renckens was hired by biotechnology corporation Syngenta, which produces and markets genetically engineered plants, to become a lobbying for the company in Brussels.

Catherine Geslain-Lanéelle, the executive director of EFSA, recently admitted to European Union Ombudsman in Strasbourg that the agency had “regrettably” made a mistake by not properly examining the potential conflicst of interest. “Before leaving EFSA, Ms Renckens did not provide substantial details about her new employment. EFSA was still unfamiliar with this kind of occurrences and no specific processes were in place at the time,” wrote Geslain-Lanéelle in a letter that was released to the public yesterday.

Now for exhibit #3: Harry Kuiper was the chair of the so-called GMO panel at EFSA for nearly ten years. In that time, EFSA moved from a ban on genetically modified organisms, to approving two and eventually 38. Throughout that period, Kuiper had strong ties with the International Life Sciences Institute (ILSI), which is funded by agrochemical companies and the food industry.

“We urgently need more clarity. Harry Kuiper has been involved in each and every case of risk assessment of genetically engineered plants since the start of EFSA,” says Christoph Then of Testbiotech in Munich, Germany, who brought a complaint against Kuiper to the EU Ombudsman in March. “The public has a right to know if consumers and the environment were really protected in the best possible way.”

Testbiotech and CEO says the Renckens case also want further action by EFSA to show that they are serious about banning conflicts of interests. “EFSA should have admitted its problems much earlier. (I)t is still not clear if EFSA will stop such a move to industry in the future,” says Then.

(Full disclosure: This writer serves on the advisory board of the Corporate Europe Observatory)

Wal-Mart: The High Cost of Low Price movie poster

Is Walmart going green? Mike Duke, the company’s CEO, says in a new 126 page report that the company is becoming more sustainable and responsible while “building meaningful, long-term change.” Activists disagree. Walmart’s “environmental impact has only grown over the last seven years” they say in a counter-report.

Walmart, based in Bentonville, Arkansas, runs giant discount retail stores that sell consumer goods at rock bottom prices. It has grown to become the world’s largest private employer with 2011 sales of $421.85 billion. The company has been a major target for union activists like United Food and Commercial Workers which started the Wake Up Wal-Mart campaign and the Service Employees International Union which started Walmart Watch (The two unions have since merged and so has the campaign) It was also the subject of a critical film: “The High Cost of Low Price” produced by Robert Greenwald in 2005.

Walmart responded by hiring public relations advisers and teaming up with the Environmental Defense Fund (EDF) in 2005. It was an easy solution - EDF has a history of working with big business: For example, in 1990 EDF signed a partnership with McDonald’s to begin a recycling program, one of the first instances of “greenwashing” – a tactic by which companies “preserve and expand their markets by posing as friends of the environment and enemies of poverty.” (as defined by Kenny Bruno in the Greenpeace Book On Greenwash issued in 1992) The New York-based NGO has since signed agreements with the Carlyle Group, Citibank and FedEx.

On Monday, Walmart released a list of top ten “sustainability” achievements which included such notables as the design of a new icon “Great for You” to encourage consumers to identify “healthy food options.”

The company also touted some numbers such as the claim that it had kept “80.9 percent of all waste generated by our U.S. operations out of landfills. This has the potential to prevent 11.8 million metric tons of CO2 emissions annually.”

Not everyone is convinced that the numbers add up. Food & Water Watch and the Institute for Local Self-Reliance (ILSR) have issued a new report titled Top 10 Ways Walmart Fails on Sustainability.

“No amount of greenwash can conceal the fact that Walmart perpetuates an industrialized food system that diminishes our natural resources, causes excessive pollution, and forces smaller farmers and companies to get big or get out of business,” said Wenonah Hauter, executive director of Food & Water Watch.

The two groups note that barely one percent of Walmart’s Chinese suppliers have actually implemented waste reduction programs; that most of its products are so shoddy that they actually increase waste; that the company only sources four percent of its energy from renewable sources (other retailers like Whole Foods are already at 100 percent) and in fact the company’s energy use has increased greenhouse gas emissions by 14 percent since 2005.

The activists contend that the company has added 1,100 new stores since 2005, sometimes paving over land with endangered species. The company’s “organic” milk comes from cows are housed in factory farms and fed grain (as opposed to grass)

“Once again, Walmart is using sustainability as a marketing tool to improve its public image and propel its growth," said Stacy Mitchell, senior researcher at ILSR.

Photo: Martin Wurt/Oxfam Australia

Adidas, the German sportswear company, is making Olympics uniforms for the UK team at sweatshops in Tangerang city, near the main international airport of Jakarta, Indonesia. Young female workers are paid 5,000 rupiah (54 cents) an hour for a 65 hour work week, according to revelations made in the Independent newspaper.

The new scandal comes on the heels of widespread protests against the Olympic stadium sponsorship by Dow Chemical, the new owner of Union Carbide Corporation, responsible for the 1984 Bhopal gas disaster which killed more than 15,000 people.

Britain’s new uniforms were designed by Stella McCartney, daughter of the former Beatles singer. The manufacturing contract was awarded to Adidas, a company with an annual revenue of $16 billion, which in turn outsourced production to a number of Indonesian contractors like Taiwanese-owned Shyang Yao Fung which manufactures women's sports shoes, PT Panarub Industry who make football boots, as well as PT Golden Castle and PT Tuntex which make clothing emblazoned with the Olympic logo.

Kathy Marks, the reporter who uncovered the story for the Independent, says she discovered that four of the nine contractors paid less than the minimum wage. (Adidas defended itself claiming that only one company did so!) Workers also complained about long working hours and bad working conditions.

"The management says that overtime is compulsory," a worker named Sobirin at Shyang Yao Fung told the newspaper. "And there are many times when workers are working without payment on overtime, or are not paid properly. Every day there's a worker who passes out because they're exhausted or unwell."

"It's hard to get permission even to go to the bathroom," said Yuliani, a 23-year-old seamstress told the Independent. "If you're forced to go, the pile of work becomes so high that you get shouted at by the production line leader. They call you a dog, brainless, uneducated. Sometimes we have to sacrifice our lunch break to reach the target."

The use of sweatshop labor to manufacture clothing is very commonplace. BehindTheLabel, an activist group, estimates that over 2 million people work in garment sweatshops producing clothes for U.S. retailers with about 80 percent of them working “under conditions that systematically violate local and international labor law.” http://www.behindthelabel.org/specialreports.php

Adidas has come under criticism before for its labor practices in south-east Asia. For example, 90,000 workers went on strike at the Pou Yuen Adidas suppler in Ho Chi Minh City last August against low wages and inhumane treatment, according to the Committee to Protect Vietnamese Workers. Campaign groups like Oxfam Australia have launched online protests to bring attention to the plight of workers. (see “Sneaky Business”)

The company also faces protests in the U.S. where students at the University of Michigan have called on the chancellor to cancel sponsorship contracts with the company for shutting down factories in Indonesia and El Salvador without paying workers backwages.  Similar protests have taken place at the the University of California at Berkeley and at the University of Wisconsin in Madison.

Vampire Squid puppet. Photo: M.V. Jantzen. Used under Creative Commons license

In U.S. sports jargon, a “huddle” is the term used to describe players gathering in a tight circle to plan game strategy. When the Securities and Exchange Commission (SEC) discovered that Goldman Sachs researchers had weekly “huddles” with investment bankers and traders to provide them with stock tips, however, they called foul.

“From 2006 to 2011, Goldman held weekly huddles sometimes attended by sales personnel in which analysts discussed their top short-term trading ideas and traders discussed their views on the markets,” said the SEC in a press release issued earlier this week. “In 2007, Goldman began a program known as the Asymmetric Service Initiative (ASI) in which analysts shared information and trading ideas from the huddles with select clients.”

Insider trading – as we have noted before – is the practice of cashing in on information that is not known to the general public. Although it is not illegal in many other countries, the U.S. takes it very seriously and will jail violators and sometimes ban them from trading. Bigger companies – like Goldman Sachs – will typically pay out large sums in order to avoid such punishment.

This is not the first time that Goldman Sachs has been accused of insider trading. In 2003, the investment bank paid out $110 million as part of a $1.4 billion settlement with the New York state attorney general Eliot Spitzer to resolve claims of conflicts of interest. Business Week magazine’s Robert Kuttner described it thus: “(R)esearch analysts" were acting as stock touts for the firms' investment banking business instead of providing objective, independent analysis to investors.”

Three years later, it appears that the company was doing much the same thing. In 2009, the Wall Street Journal uncovered evidence: Susanne Craig published an article in which she gave specific example of a Goldman analyst named Marc Irizarry who rated mutual-fund manager Janus Capital Group Inc. as a "neutral" in early April 2008. Later that month, at an internal huddle, Irizarry said that he expected Janus to climb. The following day Goldman staff called some 50 preferred clients like Citadel Investment Group and SAC Capital Advisors, both hedge fund groups, to give them the tip. Less powerful clients had to wait six days for Irizarry’s bullish report, by which time the stock had already gained 5.8 percent.

In June 2011, Goldman Sachs paid state regulators in Massachusetts a $10 million fine to resolve the allegations of huddles. “We verified that there was a preference of some customers at the expense of others,” William F. Galvin, the state’s chief financial regulator, told the New York Times.

More details followed: An internal e-mail, written in November 2008, noted that over half of 115 accounts that were contacted by Goldman Sachs staff reported an increase in revenue. “The commercial value of these calls in the form of more revenue to GS … (is) substantial,” the complaint recorded one business manager saying. “In general we have seen about a 50 percent rise in revenue.”

This week’s settlement with the SEC requires Goldman Sachs to pay a fine of $22 million. “Despite being on notice from the SEC about the importance of (higher-order) controls, Goldman failed to implement policies and procedures that adequately controlled the risk that research analysts could preview upcoming ratings changes with select traders and clients,” said Robert S. Khuzami, the SEC’s enforcement director in a press release.

Goldman issued a statement saying that it “neither admitted or denied the charges.”

Given this history, it is hardly a surprise that Goldman Sach’s business model was recently caricatured by Matt Taibbi in Rolling Stone thus: “The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”

Dicarded Risperdal Receipt. Photo: Mindful One. Used under Creative Commons license

Johnson & Johnson has been fined $1.2 billion over sales of Risperdal, an antipsychotic drug. Tim Fox, a circuit judge in Arkansas, ruled that the company has to pay $5,000 for each of the 240,000 prescriptions that were paid for by the state’s Medicaid program. (The program provides health care for low-income citizens, financed by the taxpayer)

Risperdal was introduced in 1994 by Janssen Pharmaceuticals Inc., a subsidiary of New Jersey-based Johnson & Johnson. It is prescribed for treatment of schizophrenia and short term episodes of bipolar disorder (manic depression) as well as irritability connected to autism in children.

In 2004 the U.S. Food and Drug Administration (FDA) forced the company to put labels on the drug to warn that Risperdal places elderly patients with dementia at an increased risk of strokes, seizures, major weight gain, possible diabetes and fatally high blood sugar, as well as potential death.

Fletch Trammell, a Houston lawyer acting on behalf of Arkansas, told jurors that the company had previously sent out a letter saying the drug did not increase the risk of developing diabetes. Tramell noted that some patients gained 60 to 100 pounds (27 to 45 kilos) in weight as a result of taking the medication, which in turn increased the risk of diabetes.

"The law is broken once they tell a lie," Trammell said. "You have to ring the bell. You have to tell the public.” He noted that patients in rural Arkansas were not able to get up to date information from specialists.

Jurors in the Arkansas trial were also told that the company avoided such labels because of the potential impact on its share price, which could have reached $200 million.

But Johnson & Johnson says that Arkansas has no grounds to sue them because it did not pull the drug at the time. “They didn’t run off and sound the alarm at the time this suit was filed,” James Simpson, a lawyer for the companies, told the jury. He says Arkansas should have told patients: “Whoa, whoa, whoa, this stuff is dangerous.”

Dozens of states have sued the company. Last year, Johnson & Johnson and Janssen was fined $327 million in South Carolina and in January, Texas settled a lawsuit against the company for $158 million.

The Arkansas fine is the biggest so far. “Johnson & Johnson and Janssen Pharmaceuticals lied to patients and doctors because they cared more about profits than people,” said Arkansas attorney general Dustin McDaniel.

The company has said it will appeal. "Janssen firmly believes it did not violate the Arkansas Medicaid Fraud False Claims Act or the Arkansas consumer fraud statute. ... It is our position that an individual state should not penalize a pharmaceutical company for using an FDA-approved package insert or decide for itself whether a company complies with FDA rules," the company said in a statement.

Johnson & Johnson is also facing lawsuits over its hip-replacement technology. DePuy, a division of Johnson & Johnson, recalled 93,000 XL Acetabular metal-on-metal hips in August 2010 after experiencing a 13 percent failure rate. Some 5,000 product liability lawsuits have since been filed against the company. An FDA advisory panel of experts is to examine this issue in late June.

William Weldon, the company’s outgoing CEO, was confident that the company's finances will recover from the string of lawsuits because of their target audience. “Populations in the developed world are ageing rapidly, and we consume more healthcare as we grow older,” Weldon said. “Our investments continue to be aligned with these market opportunities.”

GPS record of felled tree within the Amazon basin. Photo: Hans Berninzon, Environmental Investigation Agency

Francesco Mantuano, an Italian living in Peru with a timber concession in Loreto region, was puzzled when he got a request in July 2010 from a merchant named Mauro Paredes Sandoval to certify hundreds of trees harvested after just eight days of logging. The wood was to be exported by Madrera Bozovich, a Peruvian company, to its sister company in Alabama.

"After putting two and two together, Mantuano concluded that Paredes was only interested in obtaining (his forest transport permits) in order to launder timber which had already been illegally extracted from other areas, ," write the authors of a new report“The Laundering Machine” just published by the Environmental Investigation Agency (EIA), a Washington DC NGO. "The average harvest operation lasts months - but the low water levels and lack of rain at that time of year in Loreto make it difficult to transport timber on the rivers.

The biggest culprit that EIA uncovered is Grupo Bozovich, a family business set up in the late 1940s by Batrich Bozovich when he arrived from former Yugoslavia and set up business in Oxapampa, in central Peru. The group – which now includes Maderera Bozovich in Peru, Bozovich Timber Products in Alabama and a third company in Mexico – is the biggest exporter of hardwoods from Peru and the biggest importer of such hardwoods into the U.S.

The report alleges that at least 45 percent of shipments made Grupo Bozovich “included wood of illegal origin” such as big leaf mahogany and cedar, which are protected under the under the Convention on International Trade in Endangered Species of Flora and Fauna (CITES)

Surveys of forestry concessions used by Grupo Bozovich by the Supervisory Body for Forest and Wildlife Resources (OSINFOR) found some astonishing discrepancies: In the Productores Forestales Atacuaric concession, just one tree was actually cut down but its “extraction” yielded 311 cubic meters of wood. (The harvested tree in question measured just over 12 cubic meters and was found abandoned in the forest)  In the Oroza Wood S.A.C. concession, government investigators found 14 cedar stumps that turned out to be “disks of roundwood cut from logs and planted in the ground for the benefit of the supervisors.”

“Sometimes intentionally, sometimes through sheer negligence, each of the actors and agencies involved in this system are working as gears in a well-oiled machine that is ransacking Peru's forests and undermining the livelihoods and rights of the people that depend on them," write the EIA investigators. The cost to Peru is estimated to be $250 million a year.

The company denies the allegation. "Bozovich's exports to USA comply with the terms and condition of Lacey Act and the Convention on International Trade in Endangered Species of Wild Fauna and Flora," a U.S. spokesman told Inter Press Service.  (The 2008 Lacey Act requires buyers to practice "due care" to make sure that their products are legal. This is typically done by examining the export certificates)

Experts say that the problem is global. "Justice for Timber" - a March 2012 World Bank report explains the extent of the problem: “Every two seconds, across the world, an area of forest the size of a football field is clear-cut by illegal loggers. In some countries, up to 90% of all the logging taking place is illegal. Estimates suggest that this criminal activity generates approximately US $10-15 billion annually worldwide-funds that are unregulated, untaxed, and often remain in the hands of organized criminal gangs.”

Ten year old Mohammad Abd el Aal of Lebanon was injured by a cluster bomb on 27 March 2009. Photo: Cluster Munitions Coalition

Lockheed Martin and General Dynamics of the U.S. face divestment from major UK banks, for manufacturing cluster bombs. The Guardian newspaper has exclusively reported that Aviva, the UK’s largest insurance company; Scottish Widows (part of the Lloyds Banking Group) and the Co-op Bank will sell shares in these companies, following a similar move by the Royal Bank of Scotland last year after 10,000 people signed protest letters in a campaign led by Amnesty International.

Cluster bombs are made of dozens of “bomblets” that are delivered in a single larger weapon that scatters them on impact. The wide dispersal of these small bombs makes them hard to trace. Many linger for years – long after conflict has ended - before exploding when civilians dig or pick up unusual pieces of metal. For example, 200 civilians were killed in Lebanon after the conclusion of the August 2006 invasion by Lebanon. The Cluster Munition Coalition – an activist collaborative – estimates that a third of the casualties are children.

A treaty to ban the production, transfer and stockpiling of cluster munitions was signed by 94 countries in Oslo in December 2008. The Convention on Cluster Munitions became international law on 1 August 2010, after 30 countries ratified it in February 2010. (A similar treaty banning land mines was signed in Ottowa in 2007).

The UK has signed and enforced the treaty and has even expelled companies promoting such munitions from trade fairs in the country. However, a number of other countries - Brazil, China, India, Israel, Pakistan, Russia and the U.S. for example – all of which manufacture such weapons, have refused to sign the treaty.

The UK banks are using a list compiled by Ethix, a Swedish ethical investment consultancy, of the major manufacturers of cluster bombs. This includes Alliant Techsystems (US), Aryt Industries (Israel), Doosan Corporation (South Korea), GenCorp (US), General Dynamics Corporation (US), Hanwha Corporation (South Korea), L-3 Communications Corporation (US), Lockheed Martin Corporation (US), Poongsan Corporation (South Korea), Poongsan Holdings Corporation (South Korea), Singapore Technologies Engineering (Singapore) and Textron (US).

"The Aviva board has now determined that this exclusion should also be applied to Aviva policyholder funds. We are currently working to implement this decision and will provide an update when this is complete," a spokesperson told the Guardian. Aviva held $65 million worth of bonds in Lockheed Martin and $67 million in Textron in 2010.

"We are now well advanced in a process of identifying and divesting from overseas companies where there is strong evidence of involvement in activities prohibited by the convention,” a spokesperson for the Scottish Widows Investment Partnership told the newspaper.

"All of our active portfolios are no longer invested in such holdings and no further investments in such companies have or will be made through these funds," a spokesman from Co-op Asset Management told the Guardian. "By the end of this month we will also have divested all of our passive, tracker funds, which are non-retail funds owned by the Co-operative's life fund, from these companies."

Barclays and HSBC are the two other major UK banks that have yet to announce a policy on cluster bomb manufacturers.

Despite the official commitment to ban cluster bombs, the UK has been reported to be working behind the scenes with the US to “permit the use of cluster bombs as long as they were manufactured after 1980 and had a failure rate of less than one per cent” according to a report in the Independent newspaper last November.  The attempt failed.

Sukhdev Sahoo mourns the loss of his betel farm. Photo: Basant Sahoo

Two controversial multinational projects in Orissa, an eastern Indian state, face high level decisions in the next few weeks: a bauxite mine in the Niyamgiri hills planned by Vedanta of the UK and an iron and steel refinery in Jagatsinghpur being developed by POSCO of South Korea.

CorpWatch has reported on both in the past: the bauxite mine threatens the sacred hills of the Dongria Kondh people while the iron and steel refinery threatens traditional betel nut farmers.

As we noted last year, these two battles “encapsulate the chasm between two competing visions of how the second most populous country in the world should develop within the modern world. Jawaharlal Nehru, the country's first prime minister referred to dams and factories as the "temples of modern India," and his successors have gone cap-in-hand to international agencies such as the World Bank to fund major development projects such as the Narmada Valley Dams.

“Rural communities – with the help of city-based activist groups – have struggled to stop the mega-projects. They argue that the displacement of traditional communities, as well as the major environmental impacts of these projects, outweigh the financial benefits. The Narmada dams, for example, while generating electricity and irrigating great areas, would destroy villages and traditional farmland, displacing millions of people.”

Vedanta went before the Indian Supreme Court today to appeal an August 2010 decision by the Indian environment ministry blocking the mine from going forward because of the impact on the indigenous community. The court adjourned without making a decision but justices K S Radhakrishnan and C K Prasad are expected to rule  before the summer vacations. The court may refer the matter to the brand new National Green Tribunal which started hearing cases last year.

The Tribunal which was created in 2010 is “a specialized court with expert members having extraordinary powers to provide remedies to environmental problems.”

One of the Tribunal’s most significant decisions so far has been the suspension of POSCO’s permit last week. The ruling was made when Prafulla Samantray, an activist from Bhoinagar, brought suit over the fact that a comprehensive environmental impact assessment (EIA) report was not done for the 12 million tonne production project. Ritwick Dutta, the lawyer for the activists, told CNN-IBN TV: "Strangely enough the environmental impact assessment studies (were) done only for a 4 million tonne project.”

These two important cases will demonstrate whether or not the National Green Tribunal is up to the task of protecting local communities and the environment in India. Blocking either or both projects will not stop other multinational corporations from continuing to try to exploit the country, but it will surely give them pause in the knowledge that powers that be in New Delhi will listen to communities that organize and push back successfully against irresponsible development and human rights abuse.

As Dongria elder Dodhi Sikaka told Survival: “We are fighting for our own people, for our ancestral land, for Niyamgiri. Those who are fighting for their rights are beaten up and put behind bars. Now all we Dongrias are together in resisting this.”

For a recent and very vivid description of what the Dongria Kondh face, see Bianca Jagger’s latest. She notes: “According to the UN, companies have a responsibility to respect human rights wherever they do business. It is deplorable that local inhabitants should have to implore and appeal to the better nature of shareholders and company executives to protect their human rights, their homes and their livelihoods. Companies who violate this fundamental right should be held accountable in a court of law.”

Adds Jagger: “In the 21st century, we need to redefine the meaning of "development." It must be sustainable. Any development project must take into account the needs and aspirations of the local communities, and should benefit all sectors of society.”

Ian Hannam, a senior JP Morgan banker and ex-soldier, who helped finance a number of flamboyant and controversial mineral extraction projects over the last couple of decades, has resigned, after being fined $720,000 for insider trading by the UK Financial Services Authority (FSA).

Among the projects Hannam helped bankroll were multinational comglomerates digging for gold in Afghanistan and Tanzania, drilling for oil in Kurdistan, digging for bauxite in India, copper in Kazakhstan, gold and silver in Mexico and iron in the Ukraine.

In India, Hannam financed Vedanta Resources, a UK company, that is threatening to despoil the Niyamgiri Hills in Orissa, home to the Dongria Kondh tribal people. In Tanzania, Hamman raised money for African Barrick Gold, where local police have killed local scavengers. In Kurdistan, Hannam helped Tony Buckingham, chairman of Heritage Oil and a former partner in Executive Outcomes, the now defunct South African mercenary operation.

Hannam raised tens of millions for each of these operations as JPMorgan’s global chairman of equity capital markets, attracting fawning attention from the world’s business elites. “In his wake, mountains are razed, villages electrified, schools built, and fortunes made,” wrote Fortune magazine last May in a glowing tribute to his plans to dig for gold in northern Baghlan province, Afghanistan. “If anyone can wrest a fortune from Afghanistan's rubble, it is this man, Ian Hannam.”  Others were a little more critical. “There are those who feel he’s an unguided missile,” a South African banker told the Financial Times last September. “But the thing about missiles is they can be very effective.”

Hannam came unstuck when he fired off two emails to a business associate in Kurdistan in September 2008. The first suggest that Heritage Oil shares would soon be worth as much as £4 ($6.40) almost twice as much as the price at the time. The second email read: “PS - Tony has just found oil and it is looking good.” (Hamman was referring to a Heritage project in Uganda which later proved to be correct)

This is classic insider trading, giving out information that is not known to the general public, which allows the recipient to cash in quickly. Although it is not illegal in many countries, the U.S. frowns heavily on this and the U.K is starting to crack down on such violations.

The person Hamman emailed did not cash in on Heritage but was sufficiently impressed to hire the JP Morgan banker to set up a Kurdish investment fund.

Hannam told the FSA that the emails were an "honest error or errors of judgment” that he made "at a time of extreme turbulence in the financial markets, when he was under extreme pressure at work.”

The Financial Times has both praised and lamented the fines on Hamman. “City is right to crack whip on market abuse,” writes John Gapper. “The curse of the rainmaker strikes. Ian Hannam is the investment banker who helped turn London into the go-to financial centre for mining companies,” writes the Lex column. “(F)inancial centres such as London need to make sure that relationship banking continues to find a home.”

We agree with Gapper. But we are not so sure that the Lex column’s suggestion that “relationship banking” (read borderline insider trading) is such a good thing, especially when its purpose is to enrich a few at the expense of many, such as farmers and scavengers in Tanzania, as well as that of the sacred lands and environment of indigenous communities like the Dongria Kondh.

Karoo, South Africa. Photo: flowcomm. Used under Creative Commons license

The Karoo is not as well known as Kruger National Park with its elephants, leopards and lions. Located in the Western Cape region of South Africa, it is a desert area that is home to tortoises and eagles, and has been the subject of recent experiments to resettle the black rhino and resurrect the quagga, an unusual zebra like creature that went extinct in 1998. But today the people, flora and fauna of the Karoo are threatened by companies like Shell, the Anglo-Dutch oil company, which wants to drill for natural gas.

Like many ancient lands, the Karoo has fossil fuels trapped underground. Royal Dutch Shell, Falcon Oil & Gas and Bundu Oil & Gas want to explore 90,000 square kilometres for the natural gas using a controversial new technology called “fracking”

Bonang Mohale, the chairman of Shell South Africa, recently described the business potential as “bigger than the discovery of gold in Gauteng”

However, a coalition of concerned citizens - Treasure the Karoo Action Group (TKAG) – has sprung up to oppose the plan. Their mission to their fellow citizens is simple: “South Africa cannot afford to gamble with your water supply, food security, the health of your family, and the heritage of your children in pursuit of a short-term gain for foreign oil companies and our government.”

TKAG is supported by Greenpeace, who attempt to explain what this technology does: “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.”

Chris Hartnady, a well known geologist, says that fracking could have a huge impact on the Karoo desert especially because it will deplete the dwindling water supply. “Shale gas production would become a serious competitor for water, requiring as much as four times the current annual usage of the groundwater in all three of the Shell exploration areas,” he said at the Shale Gas Southern Africa conference in Cape Town earlier this week.

Hartnady noted that surface water might also become contaminated with fracking fluids and waste water. Indeed, 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.

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

Syringe. Photo: prashant_zi. Used under Creative Commons license

U.S. imports of sodium thiopental - often called the “truth serum” – have been banned by a judge because of the poor quality of imports, particularly from the UK. The ruling has struck a serious blow against the death penalty in the U.S., because of the key role the drug plays in lethal injections. Not surprisingly, the state of Texas, which carries out the largest number of executions in the country, is furious.

The United States is the only Western country that executes prisoners. It ranks fifth in the world of countries that do so, after China, Iran, Saudi Arabia, and Iraq, just ahead of Yemen, according to Amnesty’s latest report on the death penalty. Authorities typically administer sodium thiopental as the first of cocktail of three drugs, to kill prisoners on death row.

Hospira, the only U.S. manufacturer of the drug, initially suspended production in the summer of 2010 because of quality control issues and then decided to exit the market altogether. This was because after the patent for the drug expired, the price plummeted to the point where the company could no longer compete with generic versions produced in other countries like India.

Enter Dream Pharma, a one-man operation above a driving school in Acton, West London. Mehdi Alavi, an Iranian-British businessman, who runs the company, did a brisk business selling of sodium thiopental to states like Arizona and Georgia.

The trouble with Alavi’s scheme was that the U.S. Food and Drug Administration has never approved the import of sodium thiopental. Arizona inmate Donald Edward Beaty and several others sued in February 2011 to stop executions over this discrepancy. Beaty was executed with pentobarbital sodium injection instead last year, but the case eventually went before U.S. District Judge Richard Leon who ruled that the imports were illegal.

"The FDA appears to be simply wrapping itself in the flag of law enforcement discretion to justify its authority and masquerade an otherwise seemingly callous indifference to the health consequences of those imminently facing the executioner's needle. How utterly disappointing!" Leon wrote in his final opinion.

Maya Foa, an investigator with Reprieve, a UK charity that campaigns against the death penalty, said:  "Judge Leon's strong judgment in this case is most welcome, and will hopefully spell the end of the sordid scramble for execution drugs which we've witnessed over the past 18 months."

Reprieve, which exposed Alavi’s contracts with the state of Georgia, is now leading a campaign to get pharmaceutical companies to sign a tailor-made “Pharmaceutical Hippocratic Oath” that states: “We dedicate our work to developing and distributing pharmaceuticals to the service of humanity; we will practice our profession with conscience and dignity; the right to health of the patient will be our first consideration; we condemn the use of any of our pharmaceuticals in the execution of human beings.”

On March 28, 2012, Lundbeck, a Danish company, became the first to sign the oath. The company which is the only licensed U.S. producer of pentobarbital sodium (one of the drugs used to kill Beaty) has already stated that it will not sell Nembutal to prisons in U.S. states that carry out executions.

Texas authorities are furious. In a letter sent to the state attorney general, the Texas Department of Criminal Justice, says that Reprieve "crosses the line from social activists dedicated to their cause to authoritarian ideologues who menace and harass private citizens who decline to submit to Reprieve's opinion on the morality of capital punishment by lethal injection.”  

The prison authority goes on to compare Reprieve’s tacticts to "classic, hallmark practices comparable to practices by gangs incarcerated in the TDCJ who intimidate and coerce rival gang members and which have erupted into prison riots.”

However the Texas Department of Criminal Justice stops short of suggesting the death penalty for human rights activists.

Mad Graffiti Week Iran Poster. Photo: United4Iran. Used under Creative Commons license

Big Brother is watching Iranians with a little help from Chinese and European companies. Reuters revealed last week that ZTE Corporation, a major Chinese telecommunications company, had sold Tehran surveillance technology that is “capable of monitoring landline, mobile and internet communications.” This comes in wake of revelations late last year by the Wall Street Journal that Creativity Software in the UK and Huawei in China had sold the Iranians location tracking equipment.

Steve Stecklow of Reuters reported on March 22 that Shenzhen-based ZTE sold Telecommunication Company of Iran (TCI) a $130.6 million package of networking equipment. TCI is the biggest telecommunication provider in Iran while ZTE sold equipment to more than 500 buyers in more than 160 countries for an annual revenue of $10.6 billion in 2010.

The ZTE equipment in question is called the ZXMT system which does "deep packet inspection” – that allows buyers to reconstruct individual web and email traffic and block users from accessing certain web sites.

Li Erjian, a ZTE spokesman in China, initially emailed Reuters to say that there was nothing unusual about the sale: "We sell standard equipment in Iran as we do globally,” he wrote. But Mahmoud Tadjallimehr, a former telecommunications project manager in Iran, told Reuters that the equipment was able "to locate users, intercept their voice, text messaging ... emails, chat conversations or web access."

And Privacy International says that ZTE has pursued business in Iran for a while. The London-based NGO obtained a copy of a May 2008, ZTE presentation to the Iran Telecommunication Research Center about the "ZTE Lawful Intercept Solution” among other products.

ZTE surveillance equipment was also found in Libya after the fall of Gaddafi’s regime.

ZTE pulled back from the project immediately after the Reuters report came out. The very next day, ZTE spokesman David Shu told Reuters: "We are going to curtail our business in Iran.” On March 27, the Chinese company sent out a statement that said: “"Due to local issues in Iran and its complicated relationship with the international community, ZTE has restricted its business practices in the country since 2011. ZTE no longer seeks new customers in Iran and limits business activities with existing customers."

ZTE is not the only company to sell such equipment to Iran. In 2009, Nokia Siemens Network was revealed to be supplying Iran with surveillance equipment. The company subsequently backed out of Iran because of protests and sanctions.

Last October, after the Journal revealed Creativity Software and Huawei's role in Iran, Bloomberg followed up with a report that Stockholm-based Ericsson AB and Dublin-based AdaptiveMobile Security Ltd. had sold Iran location tracking and text-message monitoring equipment.

Ericsson initially sold a mobile- positioning center for customer billing purposes to MTN Irancell Telecommunications Services Company, Iran’s second-largest mobile provider. Ericsson decided in October 2010 that it would stop selling products to Iran because of sanctions. AdaptiveMobile offered Iran equipment to “filter, block and store cell phone text messages” according to Bloomberg. The company claims the technology is to beat spam, viruses and “inappropriate content” not for repression, but has also decided to pull out of Iran because of sanctions. Huawei did the same.

The technology provided by Creativity Software allows buyers to get reports every 15 seconds about mobile phone users location. The company maintains, however, that it has not sold equipment for human rights abuse. “Any connection implied between technology supplied by CS and any alleged human rights abuses in Iran in 2009 are clearly erroneous,” the company announced in a statement issued last November. “Please also be aware that the use of the term “Surveillance equipment” in describing location based services technology is both pejorative and inappropriate, the statement added.

For more information on the boom in surveillance technology sales to governments around the world, please see: “State of Surveillance”

Constance Lyttle reported to work at the AT&T office in New Castle, Pennsylvania, from 2002 to 2010. A major part of her job involved answering calls from Nigerian nationals, who claimed to be deaf, to help them order goods from U.S. stores with stolen credit cards, and have them sent to Nigeria.

Once Lyttle realized she had inadvertently become part of a scam, she reported her findings to her supervisor, Jean Ulica. But the managers at AT&T, the 20th largest telecommunications company in the world, were in a bind. The cost of the call – as much as $1.30 a minute - was borne by U.S. taxpayers to help deaf speakers communicate, under an agreement with the Federal Communications Commission (FCC).

The way the system worked was as follows: a person calls AT&T’s Telecommunications Relay Service (TRS) using a device known as a teletypewriter (TTY) and asks a communications assistant to place a call on their behalf and read out typed messages. By law, the phone number and location of the assistant are blocked so the person being called has no idea who they are talking to.

In 2008, under pressure from the FCC, AT&T set up a system under which they mailed postcards to deaf users with a ten digit identifying number to use TRS to limit the fraudsters. New Castle managers soon realized that this would cut off the cash cow, because as many as 95 percent of the calls they were processing were suspect.

“We are expecting a serious decline in [internet relay] traffic because fraud will go to zero (at least temporarily) and we haven’t registered nearly enough customers to pick up the slack,” Burt Bossi, an AT&T manager, told other members of the technical team on September 22, 2009, according to the lawsuit. The slowdown threatened the existence of the New Castle office which employed as many as 150 communications assistants at the location at any given time.

Instead AT&T told the communications assistants to simply ask callers to provide a U.S. address. So long as the address was real, the calls were connected. The company billed the U.S. government $16 million for such services after December 2009.

When Lyttle refused to participate in the scheme, she was fired on February 25, 2010. She retaliated with a whistleblower lawsuit against the company on October 23, 2010 which the U.S. Department of Justice agreed to join last week.

“Federal funding for Telecommunications Relay Services is intended to help the hearing- and speech-impaired in the United States,” Stuart Delery, acting assistant attorney general for the Justice Department’s civil division, said in a statement. “We will pursue those who seek to gain by knowingly allowing others to abuse this program.”

AT&T has a lot at stake – it is a major beneficiary of federal government contracts. The Project on Government Oversight’s Federal Contractor Misconduct Database estimates that the company has $681 million in government contracts.

AT&T doesn’t like to say no to Washington either – it has been more than willing to help the National Security Agency install software from Narus to spy on U.S. citizens. Mark Klein, a retired engineer provided evidence in support of the Electronic Frontier Foundation class action lawsuit against the company but the courts refused to hear the case.

This time AT&T is not likely to be so lucky. If the company settles – and it probably will - Constance Lyttle will get a big payout, (whistleblowers get as much as 20 percent of the money recovered) Nigerian scammers will lose out but AT&T will get to keep its lucrative deals with Washington.

Chevron Spoof Ad. Photo: The Yes Men. Used under Creative Commons license

Brazil has demanded that 17 Chevron and Transocean executives surrender their passports while they await the outcome of criminal charges brought against them for a spill that took place off the coast of Rio de Janeiro last November. The company has also been sued for $11 billion in damages by a Brazilian federal prosecutor.

Chevron has issued a statement claiming the charges are "outrageous and without merit.”  “We have sought to perform our operations in full compliance with Brazilian laws and industry practices and to comply with all applicable licenses and authorizations,” says a company press release issued Wednesday.

The jury is still out on the facts of the case. But it is hard to sympathize with a company that has played fast and loose with national justice systems in order to avoid paying compensation for toxic spills of immense proportions in the Ecuador by Texaco, a company that Chevron merged with in 2001.

Between 1964 to 1992 Texaco admitted to dumping more than 16 billion gallons of toxic “water of formation” into the streams and rivers used by local inhabitants for their drinking water, decimating indigenous groups and causing dramatically increased rates of cancer, according to a summary from Rainforest Action Network.

In 2002, Chevron asked for a trial in Ecuador to avoid a U.S. court battle. Eight years and 220,000 pages of evidence later, the courts ordered the company to pay $18.2 billion in damages. Chevron appealed but the Ecuadorean appellate court ruled against them on January 3, 2012. Now the company is attempting to have the judgement thrown out by a secret arbitration panel under a provision in the U.S. Ecuador Bi-Lateral Trade Agreement.

“Chevron won’t pay to clean up the toxic oil waste it deliberately dumped in the Ecuadorian Amazon, which has resulted in a human health crisis for the people living in the region. But it will pay thousands to lobby state leaders and ambassadors to extend its extreme investor rights, and continue to evade justice elsewhere,” said Ginger Cassady, campaign director at Rainforest Action Network.

Transocean, which is one of the largest offshore drilling contractors, has also been in trouble over oil spills. The U.S. company, which is headquartered in Switzerland was implicated in the Deepwater Horizon explosion that killed 11 men on April 10, 2010. Approximately 4.9 million barrels of oil were spilled into the Gulf of Mexico which caused major damage to the local marine environment and the fishing and tourism industries.

A Wall Street Journal review found that the company was involved in “three of every four incidents that triggered federal investigations into safety and other problems on deepwater drilling rigs in the Gulf of Mexico since 2008.” The newspaper noted that Transocean has accounted for 24 of the 33 incidents investigated by the U.S. Minerals Management Service despite during that time owning fewer than half the Gulf of Mexico rigs operating in more than 3,000 feet of water.

Oil companies rank among the most profitable in the world. Chevron pulled in $26.9 billion in profits last year and Transocean made close to a billion dollars. Surely they could spare some of that money to pay for the clean-up of the mess they leave behind?

Combined Systems tear gas canisters retrieved by protestors from Tahrir Square. Photo: omarroberthamilton. Used under Creative Commons license

A mysterious ship laden with weapons is expected to dock in Port Said, Egypt, this week. The MV Schippersgracht left Southport in North Carolina, the Pentagon’s largest ammunition port, on March 3, 2012. The ship is on contract to the U.S. Navy's Military Sealift Command, which refuses to explain what weapons are on board or what the ultimate destination of the weapons are, claiming security concerns.

Data on the MV Schippersgracht shipment came from an investigative collaboration between Amnesty International, Transarms and the International Peace and Information Service (IPIS).

Brian Wood, Amnesty International’s head of arms control, raised the alarm: “This ship of shame should not be allowed to unload its dangerous cargo in Egypt, and there is a substantial risk that this is what it plans to do,” he said in an Amnesty press release.

There is good reason to worry – the U.S. is one of the major sources of weapons that both the current and the previous regimes in Cairo have used against their citizens.

For example, a shipment for the Egyptian Ministry of Interior arrived from the US on November 26, 2011, carrying at least seven tons of "ammunition smoke" – which includes chemical irritants and riot control agents such as tear gas – from Combined Systems, Inc. of Jamestown, Pennsylvania. A U.S. State department spokesperson later confirmed that they had approved licenses for the export of such devices to Egypt.

That very month, more than two dozen people were killed and hundreds injured during protests against the ruling Supreme Council of the Armed Forces (SCAF). Protestors picked up spent cartridges in Tahrir Square marked with the logo of Combined Systems Inc.

Nor was that the first time that Combined Systems Inc. weaponry has been used against protestors. In late January 2011, during the first protests of the Arab Spring, protestors collected similar tear gas canisters stamped with the logo of Combined Systems Inc.

"These licences were authorized during a period where the Egyptian government responded to protests by using excessive and often lethal force. It is inconceivable that the US authorities did not know of evidence of widely documented abuses by the Egyptian security forces. These licences should not have been granted," says Wood.

The U.S. accounts for 30 percent of global arms sales, according to a new report out from the Stockholm International Peace Research Institute (SIPRI). Russia is close behind at 24 percent, according to the annual publication. (The report does not track China, which is believed to be a close contender for first or second place.)

Among the details in SIPRI’s new report - Syria, which has embarked on a major crackdown on democracy activists and dissidents in the last 12 months - has increased its arms purchases by 580 percent since 2002, mostly from Russia.

European countries are just as deeply involved in militarizing the Middle East. Der Spiegel has obtained a report from the European Commission that shows that combined exports from European Union member states a delivered at least €3.3 billion ($4.34 billion) worth of military equipment and licenses to Saudi Arabia in 2010. While Saudi has not seen the mass crackdowns that Syria is experiencing, it has supplied weapons to neighboring Bahrain which has violently suppressed protests.

This coming July, government negotiators from around the world are expected to convene in New York, to discuss how to address this burgeoning traffic in small arms with a new global treaty. Not surprisingly, countries like the U.S. and Russia are reluctant to commit to any binding agreements. We’ll keep you posted on the arms companies and governments that attempt to water down this important new legislation.

£50 banknotes. Photo: Images_of_Money. Used under Creative Commons license

Rich Ricci, Jerry del Missier and Bob Diamond took home paychecks of $15 million or more from Barclays bank last year, continuing a tradition of excessive pay in the UK. Bob Diamond, the CEO, made just shy of $28 million (£17.7 million), while Jerry del Missier and Rich Ricci, co-heads of Barclays Capital, made $17 million (£10.8 million) and $15 million (£9.7 million), respectively.

Of course this pales compared to what U.S. hedge fund managers make  - 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.

Such pay-outs make Goldman Sach’s vice president Greg Smith’s estimated salary of $500,000 look like pocket change.

The UK salaries have become public knowledge because of a pact made by the banking sector with the UK government, as part of Project Merlin signed in February 2011. The plan – named after the fictional wizard – was intended to boost bank lending for small businesses. The project has been a failure so far with lending falling every quarter instead.

Yet Project Merlin has been successful in revealing how well bankers are paid, often despite doing very badly for investors, he most scandalous revelation so far comes from the Royal Bank of Scotland (RBS), which received $70 billion (£45 billion) of taxpayer funds. Despite the fact that the loss-making bank is now effectively 83 percent state owned, RBS handed out shares worth almost $44 million (£28 million) to nine of its top executives in 2010. All told it paid out nearly $1.5 billion (nearly £1 billion) to its senior employees – even as it reported losses of $1.7 million (£1.1 billion) for 2010 and slashed pension payments to its employees.

Shareholders protested at the RBS annual meeting last April. "You should not be paying yourselves anything until the debt is paid off to the government and to the people," said one attendee, characterising the pay scales as "really obscene to the degree of greed and corporate theft."

And it's not just the average citizen who thinks salary levels are excessive. Three out of four financial workers in the City of London who responded to a survey by St Paul's Institute thought the wealth divide was too big.

In 2010, five of Barclays top managers also shared a payout of £110 million. That year, the bank's top two earners were also Jerry del Missier and Rich Ricci , who made over $15 million each last year. It needs to be noted that Ricci, del Missier and Diamond are not the highest paid people at Barclays. That distinction goes to company traders, whose salaries do not have to be revealed under UK rules (as opposed to bankers).

Perhaps one of the most curious facts to emerge from the banker’s pay scandals in the UK are the fact that some of the bankers are employed and paid outside the banks themselves. For example Stuart Gulliver, HSBC's highest paid banker, is not employed by the bank's main holding company despite taking over as chief executive but by a Dutch-based company called HSBC Asia Holdings. Part of his salary is paid into a Jersey-based defined contribution scheme called Trailblazer . And Bob Diamond, chief executive of Barclays, is seconded to the bank from a Delaware subsidiary known as Gracechurch. The banks say that there is no tax benefit to the arrangement.

Vampire Squid puppet. Photo: M.V. Jantzen. Used under Creative Commons license

Greg Smith, a Goldman Sachs employee in London, has quit the company with a fiercely critical op-ed in the New York Times in which he accuses the Wall Street investment bank of losing its moral compass.

“It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail,” Smith wrote.

The financial world is in an uproar over the incident. Some have praised his candor like Iain Martin in the Daily Telegraph: “It is refreshing when we rediscover that a knee in the nuts, in the form of an op-ed in a newspaper, can still have a serious impact.”

The Wall Street Journal has reacted with disdain: “A person familiar with the matter said Mr. Smith’s role is actually vice president, a relatively junior position held by thousands of Goldman employees around the world. And Mr. Smith is the only employee in the derivatives business that he heads, this person said.”

Readers of the Guardian say that his description of Wall Street should be no surprise: “I think this is the kind of revelation that would come as a complete shock out of the blue to the kind of people who believe in the Tooth Fairy.” 

Many have mocked Smith. Blogger Deadspin says Smith was “trolling for a new job!” under a headline “Bronze Medal Ping Pong God Bravely Resigns From Goldman Sachs" noting “I like how he got the Stanford mention in right off the bat. Smith goes on to list his accomplishments at the firm: "I was selected as one of 10 people (out of a firm of more than 30,000) to appear on our recruiting video." "I managed the summer intern program in sales and trading." " My clients have a total asset base of more than a trillion dollars."

The Daily Mash has done a very funny re-write, titled: “Why I am leaving the Empire, by Darth Vader,” in which they advise Goldman Sachs to “Make killing people in terrifying and unstoppable ways the focal point of your business again. Without it you will not exist. Weed out the morally bankrupt people, no matter how much non-existant Alderaan real estate they sell. And get the culture right again, so people want to make millions of voices cry out in terror before being suddenly silenced.”

Smith himself paid homage to previous criticisms of Goldman, citing Matt Taibbi’s Rolling Stone feature of the company in which Taibbi described the company thus: “The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”

But honestly, is anyone really surprised that people at Goldman Sachs try to make as much money for themselves as they can? And can the vampire squid grow another tentacle to replace Greg Smith?

Real criticism of Goldman Sachs would delve into how they have ripped off the taxpayer and ordinary workers, and ruined the global economy. For that, once again, go read Matt Taibbi’s article in which he lays out the real story.

Here’s the short version from Taibbi:

“(Goldman)'s unprecedented reach and power have enabled it to turn all of America into a giant pump-and-dump scam, manipulating whole economic sectors for years at a time, moving the dice game as this or that market collapses, and all the time gorging itself on the unseen costs that are breaking families everywhere — high gas prices, rising consumer credit rates, half-eaten pension funds, mass layoffs, future taxes to pay off bailouts … The bank is a huge, highly sophisticated engine for converting the useful, deployed wealth of society into the least useful, most wasteful and insoluble substance on Earth — pure profit for rich individuals.”

Pills. Photo: e-magineart.com.. Used under Creative Commons license

The decision by PH Kurian, the controller general of patents, designs and trademarks in India, to allow a local company to manufacture Sorafenib, a drug used to treat advanced kidney cancer and liver cancer, is a welcome move that supports the access of poor people to cheap life-saving drugs.

Bayer, a German multinational, has 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) Natco Pharma, an Indian company which applied for permission to manufacture and sell the drug, will now be able to sell the drug for $176 a month.

Kurian’s decision is based on an Indian law which is aimed at keeping prices from skyrocketing beyond patients' reach and World Trade Organization rules that allow compulsory licenses for drugs for public health reasons. Few countries do this, however, for fear of the legal challenges that the companies can bring against them. To reinforce his decision, Kurian also noted that Nexavar was often hard to buy in major Indian cities even at the inflated price.

“Bayer has made billions from Sorafenib, and made little effort to sell the product in India, where its price is far beyond the means of all but a few persons,” says James Love of Knowledge Ecology International, an activist group in Washington DC. “The controller rightly rejected the several Bayer's defenses, and granted the compulsory license.”

This is the first time that the Indian law has been used since 2005, when India ended three decades of refusing to recognize international patents on essential drugs in order to keep prices affordable. Another key decision on this matter is expected soon when the Indian Supreme Court hears a case brought by Novartis, a Swiss company, to force Indian companies to stop selling generic versions of Gleevec which is used to treat a deadly form of leukemia. Novartis sells Gleevec for $70,000 a year in the U.S. versus the Indian version which retails for roughly $2,500 a year.

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.

Indian activists have long lobbied the government to take action in support of cheap generic drugs. Amit Sen Gupta from the Indian Peoples Health Movement was one of three groups that put out a press release in 2009 to underscore the importance of the Sorafenib case: “The Bayer case has implications for drug access, not just for patients in India, but for poor people in large parts of the world. It would mean giving sanctity to higher standards of patent protection than what is required even by the TRIPS agreement. Bayer not only seeks to safeguard its own monopoly right, the company also wants to set a precedent that other corporations can benefit from. In essence it would mean that the entry of generic versions of life saving drugs would be delayed.”

Philipp Mimkes from the Coalition against Bayer Dangers, an international network based in Germany, added: “The interest of patients is at risk if marketing approvals are linked with patents. Countries like India must have the possibility to issue compulsory licenses to generic companies or to impose price controls in order to make available affordable drugs. We demand that Bayer quits this suit! Safeguarding public health must take precedence over patents and monopoly profits of drug companies!”

Others have noted that such precedents may also help AIDs patients. “As the HIV crisis continues to escalate, patients cannot continue to be denied access to life-saving drugs,” wrote Priti Radhakrishnan, the co-director of the Initiative for Medicines, Access & Knowledge (I-MAK). “The burden on people living with HIV and on the Indian government’s own health resources will be unbearable if prices escalate.”

Ironically many major pharmaceutical companies take advantage of cheap labor in India to help them boost their profits. “India took (China’s) place as the world’s pharmacy, and in recent decades has been the largest provider of cheap, lifesaving medicines in poor countries across the globe,” write Vikas Bajaj and Andrew Pollack in the New York Times. Doctors Without Borders estimates that 80 percent of the generic AIDS drugs that it distributes to 170,000 patients in Africa are made in India.

Poker Winnings. Photo: dcJohn. Used under Creative Commons license

Sherkhan Farnood, the founder of Kabul Bank in Afghanistan, is the focus of a front page New York Times article today. The 51 year old international poker player is held up as a symbol of the “pervasive graft (that) has badly undercut the American war strategy” noting that he owes the bank $467 million. But in reality, the powerful men behind the bank - Mahmoud Karzai, brother to the Afghan president, Hamid Karzai, and Abdul Hasin Fahim, brother to the vice-president, General Qasim Fahim – are the real symbols of corruption in the country.

Kabul Bank has become the country’s best known institution because it runs the electronic system that pays out the salaries of 250,000 government employees in Afghanistan. But it has also played another role – financing businesses that sells goods and services to the U.S. military, such as Zahid Walid, which is owned by Hasin Fahim, as CorpWatch has chronicled in the past.

Zahid Walid was started by Hasin Fahim with the help of his warlord brother who had been a key ally of the U.S. during the 2001 invasion. The company won a series of lucrative contracts to pour concrete for a NATO base, as well as portions of the U.S. embassy being rebuilt in Kabul and the city's airport, which was in a state of disrepair.

Next the company started importing Russian gas, and not long after that, Abdul Hasin set up the Gas Group, which markets bottled gas to households and small businesses. More lucrative deals followed - beginning in the winter of 2006, Zahid Walid won over $90 million in contracts from the Afghan ministry of energy and water to supply fuel to the diesel power plants in Kabul.

In 2007, Fahim and his fellow shareholders at Kabul Bank, approached Mahmoud Karzai with an offer – they would lend him $5 million to take an ownership stake in the bank. “The only way to get contracts and protection is to have support in the political system … That was political survivalism. They knew they needed a Karzai,” an Afghan political leader told the New York Times.

The money flowed freely: Kabul Bank loaned $14 million to Fahim and Karzai to start Afghan Cement. The two men borrowed more money from Kabul Bank to buy villas in Dubai. Karzai even bought a villa from none other than Sher Khan Farnood.

In early 2009, Hasin Fahim and Mahmoud Karzai approached the president with a suggestion – why not take on General Fahim as vice-president? After Hamid Karzai agreed, Kabul Bank, together with another politically connected bank, Ghazanfar, donated millions to his re-election campaign.

Mahmoud Karzai soon tired of Farnood. "The thing is, he's not sophisticated enough for today's global economy,” he told the Daily Telegraph.

It is true that Farnood was not a sophisticated jet-setter like Karzai (who has run restaurants from Boston to San Francisco) nor related to warlords or senior politicians. Born into a poor family in Kunduz, he made his money running money lending operations in Moscow and gambling on the side. He made rash business judgements – his airline acquired planes with forged documents – leading to a fatal crash.

But it isn’t the only time that the U.S. government and its political allies have entrusted large sums of money to neophytes willing to do their bidding in the War on Terror. In Iraq, the U.S. hired Ziad Cattan, a Polish Iraqi used-car dealer, to work at the Ministry of Defense where he spent $1.3 billion on military equipment that was “shoddy, overpriced or never delivered” such as aging Russian helicopters and underpowered Polish transport vehicles. "Before, I sold water, flowers, shoes, cars — but not weapons," Cattan told the Los Angeles Times. "We didn't know anything about weapons."

"He was somebody we recruited, and we were taking a chance on him just like on everybody else," said Frederick Smith, a former Defense Department official told the newspaper. "Ziad is not a choirboy. But he was willing to serve."

The same goes for 21 year old Efraim Diveroli, who was awarded a $300 million contract in 2007 to supply weapons to the Afghan security forces. Diveroli and his partner David Packouz sent decades-old Kalashnikov ammunition in corroded packaging to the war, and repackaging and obscuring the origins of Chinese cartridges procured from Albania. "I didn't know anything about the situation in that part of the world. But I was a central player in the Afghan war — and if our delivery didn't make it to Kabul, the entire strategy of building up the Afghanistan army was going to fail,” Packouz later told Rolling Stone. “Here I was dealing with matters of international security, and I was half-baked (high on marijuana). It was totally killing my buzz.”

Handing over millions to flower sellers, stoners, poker players –  who gamble the money away - is it that surprising that the money for the War on Terror isn’t going very well