The RDM case may become the first test for the Netherlands’ new anti-corruption legislation and for its will and ability to prosecute corporations for making foreign bribes.
The RDM bribery scandal dates back to 1998 when the company sold 202 Leopard tanks to the Chilean army. The Rotterdam-based company had purchased the tanks as scrap metal from the Dutch Department of Defense and rebuilt them. It then paid bribes to Chilean army officials facilitating the sale.
Joep van den Nieuwenhuyzen, the Dutch businessman, and officials of his company—who offered and facilitated the bribes—have never been prosecuted in relation to this case. The Dutch Public Prosecutor’s Office told CorpWatch that at the time of RDM’s bribes, the Netherlands had no laws against offering bribes to officials overseas. Legislation to make these practices illegal was introduced in 2001. Further muddying the waters, RDM went bankrupt in 2006, and Joep van den Nieuwenhuyzen, its owner, was jailed for fraud. He was released two years ago.
The current Dutch government investigation will delve further into the extent and mechanics of the bribery scheme, and interview key politicians active at the time. A Dutch parliamentary team is following up on the case in the Netherlands and in Chile. Key targets of the investigation include Edmundo Perez Yoma, Chile’s former minister of defense and currently its interior minister, along with his then deputy Mario Fernandez, now member of the Constitutional Court. Both are suspected of facilitating the bribery. Chile has announced similar investigations.
One Dutch official at the time of the tank sales, then Minister of Defense Joris Voorhoeve, joined the call for parliament to undertake a broad investigation into RDM’s bribes. He defended his own role. While Voorhoeve acknowledges that he issued an export license for the 202 Dutch Leopard tanks, he maintains he is appalled and shocked by the allegations of bribery. “The Netherlands government would never agree to pay bribes to get a deal closed,” he said, “nor participate in any other form of corruption.” The sales were justified, he said, because when they took place in 1998, Chile had become a democracy and General Augusto Pinochet, who had ruled from 1973 to 1990, was no longer president. But in fact, the former dictator still wielded considerable influence as senator for life and commander-in-chief of the armed forces, positions he retained until his death in 2006.
The parliamentary investigation, while welcomed by many, is late in coming. For years politicians ignored requests by the Netherlands Socialist Party for a formal investigation—again, sparked in part by CorpWatch’s reporting on the money RDM paid to the former dictator and his entourage.
According to a Swiss newspaper, van den Nieuwenhuyzen, currently a Swiss resident, said that he was not aware that the company he once owned was under investigation for payments to Chilean army officials.
But former RDM workers and associates charged that the company paid millions to Chilean colonels and brigadier generals through a third party, with $1.6 million going to a private consultant to the late general Pinochet. RDM said the $1.6 million was a donation to the Pinochet Foundation, a Santiago-based organization that promotes the general’s legacy.
Chilean and cooperating Dutch private investigators that examined the Pinochet’s overseas bank accounts have found that the dictator had stashed almost $28 million overseas, mainly in European bank accounts. Dutch investigators will look for links between that money, the two recently jailed Chilean army officers, and Pinochet.
The spokesperson of the Dutch Socialist Party in Rotterdam told CorpWatch that there have been no successful prosecutions of corporations in the Netherlands for foreign bribes, because it is extremely difficult to secure evidence in foreign countries. Of the scores of cases under consideration, none have yet reached the courts. If RDM is charged, it will be the first time Dutch officials or businesspeople are prosecuted under the new regulations.
These days just about every large corporation would have us believe
that it is in the vanguard of the fight to reverse global warming.
Companies mount expensive ad campaigns to brag about raising their
energy efficiency and shrinking their carbon footprint.
Yet a bold article in the latest issue of business-friendly Bloomberg Markets
magazine documents how some large U.S.-based transnationals are
complicit in a process that does more to exacerbate the climate crisis
than anything else: the ongoing destruction of the Amazon rain forest.
While deforestation is usually blamed on local ranchers and loggers, Bloomberg
points the finger at companies such as Alcoa and Cargill, which the
magazine charges have used their power to get authorities in Brazil to
approve large projects that violate the spirit of the country’s
Alcoa is constructing a huge bauxite mine that will chew up more
than 25,000 acres of virgin jungle in an area, the magazine says, “is
supposed to be preserved unharmed forever for local residents.” Bloomberg
cites Brazilian prosecutors who have been waging a four-year legal
battle against an Alcoa subsidiary that is said to have circumvented
the country’s national policies by obtaining a state rather than a
federal permit for the project.
Bloomberg also focuses on the widely criticized grain port
that Cargill built on the Amazon River. Cargill claims to be
discouraging deforestation by the farmers supplying the soybeans that
pass through the port, but the Brazilian prosecutors interviewed by Bloomberg expressed skepticism that the effort was having much effect.
Apart from the big on-site projects, Bloomberg looks at
major corporations that it says purchase beef and leather from
Amazonian ranchers who engage in illegal deforestation. Citing
Brazilian export records, the magazine identifies Wal-Mart, McDonald’s,
Kraft Foods and Carrefour as purchasers of the beef and General Motors,
Ford and Mercedes-Benz as purchasers of leather.
The impact of the Amazon cattle ranchers was also the focus of a Greenpeace report published in June. That report put heat on major shoe companies that are using leather produced by those ranchers.
Nike and Timberland
responded to the study by pledging to end their use of leather hides
from deforested areas in the Amazon basin. Greenpeace is trying to get
other shoe companies to follow suit.
Think of the Amazon the next time a company such as Wal-Mart tells
us what wonderful things it is doing to address the climate crisis.
After thirteen years and
countless hours by lawyers, community members, and activists around the
world, Royal Dutch Shell finally settled the Wiwa v Shell case in a New York court for $15.5 million.
Plaintiffs in the case, which included Ken Saro-Wiwa Jr., and the
families of other Ogoni men hanged in November 1995, charged the
Royal Dutch/Shell company, its Nigerian subsidiary, and the former
chief of its Nigerian operation, Brian Anderson, with complicity in the
torture, killing, and other abuses of Ogoni leader Ken Saro-Wiwa and
other non-violent Nigerian activists in the mid-1990s in the Ogoni
region of the Niger Delta.
they settled the case as a "humanitarian gesture" to the Ogoni. Does
anyone really believe that after fighting for more than a decade to
keep this out of court, Shell suddenly woke up and felt great
compassion for the Ogoni? Please.
Shell settled because they were scared, and they knew the evidence
against them was overwhelming. They publicly say they had nothing to do
with the execution of Ken Saro-Wiwa and the other Ogoni, and yet there
were documents and video that they fought hard to keep out of the public eye.
Evidence that was to be introduced in the case included an internal Shell memo
where the head of Shell Nigeria offered to intervene on Saro-Wiwa's
behalf, if only Saro-Wiwa and others would stop claiming that Shell had
made payments to the military.
Witness were set to testify that they saw Shell vehicles
transporting Nigerian soldiers, that they saw Shell employees
conferring with the military, that they saw money being exchanged
between Shell employees and military officers, and that they heard
military officers, including the brutal Major Okuntimo of the Rivers
State Internal Security Task Force, make admissions regarding the work
they were doing on behalf of Shell.
We have known some of Shell's involvement in this tragedy for a long
time. In early May of 1994, Ken Saro-Wiwa Sr. faxed me a memo authored
by Major Okuntimo which read "Shell operations still impossible unless ruthless military operations are undertaken for smooth economic activities to commence" and further called for "pressure on oil companies for prompt regular inputs."
I received that fax and immediately called Ken. He said "this is it.
They're going to kill us all. All for Shell." It was the last time I
talked with him. Several weeks later he was arrested on the trumped up
charges for which he was ultimately hanged.
In the last day, lots of people have asked me if $15.5 million is
enough to compensate for the hanging of nine men, the death of
thousands more, and for the destruction of an ecosystem. No of course
not. But was it on par with what a jury would have awarded in this
case? Yes, lawyers tell me, for sure.
More importantly, does the settlement bring relief to Ken Wiwa Jr.
and the families of the other men who were executed? If you read Ken's thoughtful and moving piece in the Guardian, the answer is clearly yes. That alone should be cause for celebration.
Ken Sr.'s famous last words from the gallows were "lord take my soul
but the struggle continues." In this moment, perhaps more than ever
before, we need to heed that call to action. The settlement in this
case brings satisfaction to the plaintiffs for an event that happened
14 years ago. It in no way, shape or form excuses or absolves Shell of
their ongoing destruction of the Niger Delta environment.
One of the central complaints of Niger Delta communities for forty
years has been gas flaring, which sends plumes of toxic pollutants into
the air and water of the Niger Delta. Gas flaring endangers human
health, harms local ecosystems, emits huge amounts of greenhouse gases,
wastes vast quantities of natural gas, and is against Nigerian law.
Shell does it nowhere else in the world in volumes that are even
remotely comparable to what they flare in the Delta.
But Shell is still flaring gas in Nigeria.
While there is no doubt that the settlement represented a
significant victory for the plaintiffs' in this one human rights case
against Shell, true justice will not be served as long as the people of
Nigeria continue to suffer the terrible impact of Shell's operations.
Shell estimates it would cost about $3 billion -- only 10% of just
their last year's profits -- to end Shell's gas flaring in Nigeria once
and for all.
But instead of putting their great "humanitarian concern" into
action, Shell points the finger at the Nigerian government and demands
that they pay to end this practice.
Send a message to Shell's CEO
Jeroen van der Veer, and let him know that if he really wants to prove
his great concern for the Ogoni people, he'll end gas flaring once and
When people with strong ideological perspectives are often outraged
by media coverage of their pet issues. When both sides are mad, you
know you're doing something right. But how often do you hear
corporations furious about they way they are covered in the business
section? The section seems to lend itself to favor-currying and
In the lead-up to Chevron's annual shareholders meeting tomorrow in San Ramon, the company landed a puff piece on KGO focusing on its efforts to decrease its water usage. No mention of the Amazon controversy, and no mention of outside pressure on Chevron, EBMUD's largest water user.
I'm disappointed to say that a Chronicleinterview
with the company's top lawyer also softballs the issues, while giving
Chevron the opportunity to present its side of the story with no
opportunity for response from the company's many critics. [Update: Chron editors tell me there will be more coverage of Chevron later in the week.]
Well, Chevron's opponents, including San Francisco's Amazon Watch, have taken matters into their own hands, releasing an alternate annual report that presents the externalities
not listed in the company's balance sheet, which shows a record profit
of $24 billion, making the company the second most profitable in the
Did you know that Chevron's Richmond refinery was built in 1902 and emitted 100,000 pounds of toxic waste in 2007, consisting of no less than 38 toxic substances? The EPA ranks it as one of the worst refineries
in the nation. With 17,000 people living within 3 miles from the plant,
you'd think the San Ramon-based company would take local heat from more
than just a couple dozen activists.
Chevron has sought to brand itself an "energy" company, one eagerly pursuing alternatives to petroleum. Its aggressive "Will You Join Us?"
ad campaign asked regular folks to reduce their energy consumption,
suggesting that Chevron was doing the same. In actuality, the company
spent less than 3 percent of its whopping capital and
exploratory expenditures on alternative energy. And it has refused to
offer better reporting on its greenhouse gas emissions, despite strong
shareholder support for it. (The aggressive, and misleading, ad
campaign seems to have ired the report's researchers as well: The
report is decorated by numerous parodies, and some have been
wheat-pasted around town.)
It's a very well researched report, written by the scholar Antonia Juhasz,
clearly divided into regional issues, and it's a much needed
counterbalance to the friendly coverage Chevron is otherwise getting.
(Juhasz was interviewed on Democracy Now this morning.)
For information on protesting the shareholder meeting early tomorrow morning, click here.
Posted by Laura Carlsen on April 3rd, 2009 Americas Policy Program, Center for International Policy
At the end of
March, the Inter-American Development Bank (IDB) celebrated its 50th
anniversary in Medellin. The occasion presents an opportunity to revise
concepts and move toward a fairer development model. It is logical to
think that among the festivities, a process of evaluation and
self-critique would begin regarding the bank's actions and work in the
The circumstances demand it. The continent has been plunged into a
grave economic crisis, in part because of the string of structural
reforms, deregulation, foreign market dependence, and privatization
that the IDB has supported in the region. Limits on the use of
non-renewable fuels have become more and more obvious while climate
change threatens to affect the production of basic foods and increase
the frequency of natural disasters. Forced migration characterizes
modern life and growing inequality has become the most important
challenge faced by all the countries in the region.
Medellin: site of the 50th anniversary of the IDB. Photo: www.skyscraperlife.com.
In spite of this gray outlook, it seemed that until now everything
suggested that the IDB would prescribe more of the same medicine. They
predicted an increase in loans to the region for the record figure of
US$18 billion for 2009 as a response to the crisis. This will generate
a new wave of debt in the recipient countries, while at the same time
the development model behind the loans faces a crisis of credibility
due to its dubious results. For the IDB, development is seen as a
process of ensuring the transnational mobility of capital, enabling
foreign investment, the transfer of goods, and access to natural
resources. In recent years, this model has been imposed on regions that
were previously closed off due to their geographical location or
because of little interest from big business. Now that the value of
natural resources is increasing and national economies have opted for
exports, mega-projects including transportation infrastructure and
hydroelectric power plants, among others, have become attractive again.
They generally target regions with a low population density, and, in
many cases, significant indigenous populations. While these communities
are often forgotten by their national governments and suffer high
levels of marginalization, at the same time their territories are rich
in both culture and biodiversity.
The IDB has been a major promoter of infrastructure mega-projects
designed to drive this vision. Two mega-project master plans have been
of particular interest to the IDB: The Plan Puebla-Panama (also known
as the Mesoamerican Integration and Development Project) and the
Initiative for the Integration of Regional Infrastructure in South
America (IIRSA). These plans include the construction of
super-highways, dams, electricity networks, and more. The projects
signal a drastic change in the use of land and resources. Local,
regional, and national markets—which generate more jobs and constitute
the majority of food distribution—are seen as a hindrance, and natural
resources—conserved by indigenous communities—are considered the spoils
of transnational business.
Among its objectives, the IDB aims to generate development in these
regions. However, a recent study revealed that the mega-projects
financed by the IDB in many cases end up displacing thousands of people
who are supposed to be the beneficiaries. The construction of dams is
the clearest example because it entails the involuntary displacement
through the flooding of vast areas which often include pre-existing
communities. One example is the La Parota hydroelectric dam in
Guerrero, Mexico which would displace around 25,000 people and has
currently been halted due to popular resistance. A group of 43
grassroots organizations met prior to the IDB meeting in Medellin. They
presented studies and testimonies on the impacts of these projects in
an effort to change the IDB's policies. Through the campaign known as
"The IDB: 50 years financing inequality," these groups argue that,
rather than alleviate the issue of poverty, mega-projects channel the
profits gained from natural resources into the hands of the private
sector and destroy the social fabric and community networks necessary
for indigenous survival.
The solution to poverty that the IDB fundamentally proposes would
seem to be: reduce poverty by expelling the poor. The two meetings—that
of the IDB authorities and that of the organizations which question its
practices—present an opportunity to revise the concept of development
and move toward a fairer development model.
Amid the worst financial and economic crisis in decades, the U.S.
business press tends to get caught up in the daily fluctuations of the
stock market and, to a lesser extent, the monthly changes in the
unemployment rate. By contrast, London’s Financial Times is looking at the big picture. It recently launched a series
of articles under the rubric of The Future of Capitalism. In addition
to soliciting varying views on this monumental question, the paper
published a feature this week presuming to name the 50 people around the world who will “frame the way forward.”
Kicking off the series, the FT’s Martin Wolf was blunt in asserting
that the ideology of unfettered markets promoted over the past three
decades must now be judged a failure. Sounding like a traditional
Marxist, Wolf writes that “the era of liberalisation [the European term
for market fundamentalism] contained seeds of its own downfall” in the
form of tendencies such as “frenetic financial innovation” and “bubbles
in asset prices.”
in the series by Gillian Tett casually notes that “naked greed, lax
regulation, excessively loose monetary policy, fraudulent borrowing and
managerial failure all played a role” in bringing about the crisis.
Richard Layard of the London School of Economics weighs in with a piece
arguing that “we should stop the worship of money and create a more
humane society where the quality of human experience is the criterion.”
Did editorial copy intended for New Left Review mistakenly end up in the FT computers?
Wolf finished his initial article
with the statement: “Where we end up, after this financial tornado, is
for us to seek to determine.” Yet who is the “we” Wolf is referring to?
Following the damning critique of markets and poor government
oversight, the last ones we should turn to for leadership are the
powers that be. Yet that is exactly the group that dominates the list
of those who, according to the editors of FT, will lead the way
forward. The 50 movers and shakers include 14 politicians, starting
with President Obama and Chinese Prime Minister Wen Jiabao; ten central
bankers; three financial regulators; and four heads of multinational
institutions such as the IMF and the WTO. Also included are six
economists, including Paul Krugman and Obama advisor Paul Volcker, and
three prominent investors, among them George Soros and Warren Buffett.
The list also finds room for three chief executives (the heads of
Nissan, PepsiCo and Google) and, amazingly, the chiefs of four major
banks: Goldman Sachs, JPMorgan Chase, HSBC and BNP Paribas. It even
includes two talking heads: Arianna Huffington and Rush Limbaugh.
Except for Olivier Besancenot of France’s New Anticapitalist Party,
who is included among the politicians in a way that seems a bit
condescending, there is not a single person on the list directly
involved in a movement to challenge corporate power or even to
significantly alter the relationship between business and the rest of
society. There is not a single labor leader, prominent environmental
advocate or other leading activist. The editors at FT seem never to
have heard of civil society.
Then again, the problem may not be thickheadedness among FT editors.
Perhaps the voices for radical change have simply not been loud enough
to earn a place on a list of those who will play a significant role in
the shaping capitalism’s future. In fact, one of the articles in the FT
that in Europe neither the Left nor the labor movement has taken a
leadership role in responding to the crisis, even as spontaneous
protests have erupted in numerous countries.
In the United States, where those forces are weaker, anger at the
crisis has to a great extent been channeled into support for the
Keynesian policies of the Obama Administration. That’s unavoidable in
the short term, but it doesn’t address the need for fundamental
alteration of economic institutions. If, as the Financial Times suggests, the future of capitalism is up for grabs, let’s make sure we all join the fray.
While the Norwegian Council of Ethics full recommendation mentions conflicts involving Barrick in Chile, Tanzania, and the Philippines, the panel acknowledged that, "due to limited resources," it restricted its investigation of Barrick to the Porgera mine in Papua New Guinea. The Porgera mine has been a prime target for criticism for its use of riverine tailings disposal, a practice banned in almost every country in the world.
"It's unbelievably embarrassing," admitted Green Party deputy leader Adriane Carr. "It's got to be bad news for Canada when a foreign government says it's going to sell its shares in a Canadian company they figure is unethical."
This isn't the first time that Norway's Fund has divested from a gold mining company. In fact, looking at a list, the fund – with the notable exception of Walmart – divests exclusively from mining (primarily gold mining) corporations and corporations that produce nuclear weapons or cluster munitions... an interesting juxtaposition highlighting the comparable nature of mining to the production of weapons of mass destruction, especially in terms of long-term environmental consequences.
Compare that to Canada's treatment of gold mining companies. Just this last December, Peter Munk, the chairman and founder of Barrick Gold, received the Order of Canada, Canada's highest civilian honor. Additionally, within Toronto he is honored as a philanthropist, with the Peter Munk Cardiac Center and the Munk Centre for International Studies at the University of Toronto both adorning his name. Similarly, Ian Telfer, the chairman of Goldcorp, the world's second largest gold miner behind Barrick, has the Telfer School of Management at the University of Ottawa bearing his name.
These symbolic gestures, along with the fact that several Canadian Pension funds and even Vancouver-based "Ethical Funds" are still heavily invested in Barrick Gold, show that Canada has a long way to go in demanding that its companies honor human rights and halt its colonial-style, exploitative economic regime. In fact, by its own admittance, Canada's Standing Committee on Foreign Affairs and International Trade stated that "Canada does not yet have laws to ensure that the activities of
Canadian mining companies in developing countries conform to human
rights standards, including the rights of workers and of indigenous
peoples." Since the date of that landmark confession, Canada has yet to adopt any intervening structures (like an ombudsperson) or develop any mandatory regulations for Canadian companies operating abroad.
Gold mining produces an average of 79 tons of waste for every ounce of gold extracted, 50 percent of it is carried out on native lands, and about 80 percent of it is used for jewelry, according to the "No Dirty Gold" campaign, a project of Oxfam and Earthworks. It is no wonder that in a portfolio with plenty of human rights abuses, the Norwegian Pension Fund decided to concentrate on gold miners, cluster munition manufacturers and nuclear weapon producers first. It is time that the rest of the world catch up.
It was only a few years ago that a group of offshore outsourcing
companies based in India seemed poised to take over a large portion of
the U.S. economy. Business propagandists insisted that work ranging
from low-level data input to skilled professional work such as
financial analysis could be done faster and much cheaper by workers
hunched over computer terminals in cities such as Bangalore. The New York Times once described one of these offshoring companies as “a maquiladora of the mind.”
Among the most aggressive of the Indian firms was Satyam Computer
Services Ltd., which signed up blue-chip clients such as Ford Motor,
Merrill Lynch, Texas Instruments and Yahoo. In a 2004 report
I wrote for the U.S. high-tech workers organization WashTech, I found
that Satyam was also among the offshoring companies that were doing
work for state government agencies. It was hired, for example, as a
subcontractor by the U.S. company Healthaxis to develop a system for
handling applications for medical insurance services provided by the
Washington State Health Care Authority. As it turned out, Healthaxis’s
contract was terminated, allegedly because of late delivery and poor
quality in the work done by Satyam.
The Washington State fiasco may have been an early omen of things to come. Satyam has just admitted that for years it cooked its books and engaged in widespread financial wrongdoing. The revelation came in a letter
sent to the company’s board of directors by Satyam founder and chairman
B. Ramalinga Raju (photo), who simultaneously tendered his resignation.
Raju wrote that what started as “a marginal gap between actual
operating profit and the one reflected in the books” eventually
“attained unmanageable proportions” as the company grew. The fictitious
cash balance grew to more than US$1 billion. “It was like riding a
tiger,” Raju colorfully wrote, “not knowing how to get off without
While admitting that he engaged in very creative accounting, Raju
insisted he did not personally benefit from the fraud, denying for
instance that he had sold any of his shares in the company. I guess it
is meant to be some consolation that among his sins Raju is not guilty
of insider trading.
Apart from Raju, the party most on the hot seat is the company’s
auditor, PriceWaterhouseCoopers, whose Indian unit gave Satyam’s
financial reports a clean bill of health.
The Satyam scandal is being called India’s Enron. It should probably
also be called India’s Arthur Andersen as this seems to be another case
in which an auditor was either oblivious to widespread accounting
misconduct by one of its clients or complicit in it.
Some soul-searching is probably also in order for the many large
U.S. corporations that have not hesitated to take jobs away from
American workers and ship the work off to Indian companies such as
Satyam. The revelation that much of the work has been going to a
crooked company is all the more galling.
Why would "criminals" set fire to millions worth in mine equipment?
How was it that these "intruders" had an estimated 3,000 - 4,000 people backing them up?
In what appears to be a spontaneous civilian movement against Barrick Gold, the world's largest gold miner, thousands of people invaded Barrick`s
North Mara Gold Mine this week in Tarime District and destroyed equipment worth
$15 million. Locals say that the uprising was sparked by the killing of a local, identified as Mang'weina Mwita Mang'weina. According to a Barrick Public Relations officer (as reported by the Tanzanian Guardian newspaper), "the intruders stoned the security personnel relentlessly until they
overpowered them. The guards abandoned their posts and retreated to
Barrick implies that "high levels of crime" are the cause of this
recent outbreak, recent reports suggest a different picture.
Allan Cedillo Lissner, a photojournalist who recently documented mine life near the North Mara mine, explains:
Ongoing conflict between the mine
and local communities has created a climate of fear for those who live
nearby. Since the mine opened in 2002, the Mwita family say that they
live in a state of constant anxiety because they have been repeatedly
harassed and intimidated by the mine's private security forces and by
government police. There have been several deadly confrontations in
the area and every time there are problems at the mine, the Mwita
family say their compound is the first place the police come looking.
During police operations the family scatters in fear to hide in the
bush, "like fugitives," for weeks at a time waiting for the situation
to calm down. They used to farm and raise livestock, "but now there are
no pastures because the mine has almost taken the whole land ... we
have no sources of income and we are living only through God's wishes.
... We had never experienced poverty before the mine came here." They
say they would like to be relocated, but the application process has
been complicated, and they feel the amount of compensation they have
been offered is "candy."
Evans Rubara, an investigative journalist from
Tanzania, blames this action on angry locals from the North Mara area
who are opposed to Barrick's presence there. "This comes one week after
Barrick threatened to leave the country based on claims that they
weren't making profit," comments Evans after explaining that Barrick
does not report profit to avoid taxes in the country. "This is a sign
to both the government of Tanzania and the International community
(especially Canada) that poor and marginalized people also get tired of
oppression, and that they would like Barrick to leave."
Only one week prior, Barrick's African Region Vice President, Gareth Taylor threatened
to leave Tanzania due to high operating costs, claiming that the company did not make profits there. Barrick's Toronto office
quickly denied this report, stating that "the company will work with
the government to ensure
the country's legislation remains 'competitive with other
jurisdictions so that Tanzanians can continue to benefit from
Interestingly, Taylors threat came shortly after he attended a workshop to launch the Extractive Industries Transparency Initiative (EITI) in Dar es Salaam.
One thing is clear, though; these reports of hundreds, backed by thousands, of villagers attacking mine infrastructure reflects a resentment that goes beyond mere criminal
action. And this surge in violence should be examined in the context of
the on-going exploitation and repressive environment surrounding the
Back in the good old days of the Cold War, everybody’s favorite secret agent, James Bond, fought villains like Dr. No, an evil scientist out to sabotage U.S. missile tests, and Mr. Big, a Soviet agent using pirate treasure to finance espionage in America. But as Bond’s friend Mathis tells him in Quantum of Solace, released this month, “When one is young, it’s easy to tell the difference between right and wrong. As one gets older, the villains and heroes get all mixed up.”
The reference is to a shady new Bond villain, agent of the Quantum organization – one Dominic Greene. In public, Greene is a leading environmentalist whose organization, Greene Planet, buys up large tracts of land for ecological preserves. But behind the scenes, Greene has another agenda. As he says to his co-conspirators, “This is the most valuable resource in the world and we need to control as much of it as we can.”
The film makes a number of plays on the assumption that the resource in question is oil – but oil is so…twentieth century.
By the time Bond has pursued Greene from Italy to Haiti, from Haiti to Austria, and crash-landed his plane in a sinkhole in the high, barren desert of Bolivia, we make the discovery that this vital resource is – surprise! – water.
Colluding with Greene is a cast of evil characters taken straight from the history books. We have General Medrano, the ex-dictator of Bolivia, to whom Greene says, “You want your country back? My organization can give it to you.” We have the U.S. Ambassador, myopically sticking to the familiar program: “Okay, we do nothing to stop a coup, and you give us a lease to any oil you find.” And we have the British foreign office, continually wrangling with M15, Bond’s spy agency. When Bond’s boss, M, tells him that Greene is not an environmentalist but a villain, the Foreign Minister says, “If we refused to do business with villains, we’d have almost no one to trade with.” Ain’t it the truth.
The fact that Quantum of Solace makes water the villain’s object of greed, replacing oil, gold, diamonds, and mutually assured destruction, is telling of the point we’ve reached. More telling still is the fact that our villain’s cover has him acting as an environmentalist, the ultimate corporate greenwasher. The fact that the action winds up in Bolivia – the country where, in real life, both Bechtel and Suez have tried and failed to take control of community water resources during and shortly after the reign of former-dictator-turned-neoliberal President Hugo Banzer – brings the plot frighteningly close to reality. The privatization of water in Bolivia back in 2000, and the massive popular response that turned out rural water stewards and urban ratepayers to riot for months until the multinational transgressor was ousted, was the spark that set social movements worldwide on red alert. Since then, numerous private water companies have been refused contracts on the grounds that popular movements, and, increasingly, governments, recognize the need to treat water as a human right and a public good – not a commodity.
If only the water movement had a few organizers with the physique, the gadgets, and the, er, style of Bond.
While we have many great documentaries telling the story of the global water wars, including this year’s Flow and Blue Gold, one is forced to wonder if 007 does a greater service to the water movement than even our most highly talented documentarians. After all, who better than Hollywood to characterize the greenwashing corporate water profiteers as straight up evil, sans the need to justify the hyperbole?
Matieu Amalric, the actor who played Dominic Greene, wanted to wear make-up for the role, but director Marc Forster “wanted Greene not to look grotesque, but to symbolize the hidden evils in society.” Similarly, the original screenplay had Greene having some “hidden power.” But in the final cut, the director seems to have decided that corporate power was power enough.
One wonders if Dominic Greene – had he not died drinking motor oil to quench his thirst in the Bolivian desert – might give the keynote speech at the upcoming World Water Forum in Istanbul (WWF). After all, the World Water Council (WWC) that puts on the forum is presided over by Loïc Fauchon, a former executive at one of the French subsidiaries of Suez, the world’s largest private water corporation.
As we learn from the WWF website, “One of the benefits of joining the WWC is the Council's ability to influence decisions related to world water management that affect organizations, business, and communities.” Perhaps their secret meetings will also be attended by executives of the Worldwide Fund for Nature, whose recent partnership with Coca-Cola aims to help the global soft-drink giant become “the most efficient company in the world in terms of water use,” with “every drop of water it uses…returned to the earth or compensated for through conservation and recycling programs.” And, with this blending of fact and fiction, it would hardly be surprising to find Greene’s signature on the CEO Water Mandate, which has companies with such devastating environmental track records as Dow Chemical, Shell Oil, Unilever, and Nestlé pledging to “help address the water challenge faced by the world today.”
When M, Bond’s overweening boss at M15, finds out about Quantum, she demands, “What the hell is this organization, Bond? How can they be everywhere and we know nothing about them?”
Well, my darling M, the answer is simple: like transnational corporations, and like the large NGO’s that work with the private sector to reform its practices and green its reputation, and like the International Finance Institutions whose interests are increasingly endangering the United Nations’ mandate to defend and protect human rights, they can be everywhere because their particular form of villainy works best when hidden in plain sight.
Thankfully, the world’s water is safe, because, behind the scenes, secret agent 007 is on the job.
There's no question that this morning's announcement from the Treasury
Department, Federal Reserve and Federal Deposit Insurance Corporation
(FDIC) is remarkable.
It was also necessary.
Over the next several months, we're going to see a lot more moves like
this. Government interventions in the economy that seemed unfathomable
a few months ago are going to become the norm, as it quickly becomes
apparent that, as Margaret Thatcher once said in a very different
context, there is no alternative.
because the U.S. and global economic problems are deep and pervasive.
The American worker may be strong, as John McCain would have it, but
the "fundamentals" of the U.S. and world economy are not. The
underlying problem is a deflating U.S. housing market that still has
much more to go. And underlying that problem are the intertwined
problems of U.S. consumer over-reliance on debt, national and global
wealth inequality of historic proportions, and massive global trade
Although it was enabled by deregulation, the financial meltdown merely
reflects these more profound underlying problems. It is, one might say,
Nonetheless, the financial crisis was -- and conceivably still might be -- by itself enough to crash the global economy.
Today, following the lead of the Great Britain, the United States has announced
what has emerged as the consensus favored financial proposal among
economists of diverse political ideologies. The United States will buy
$250 billion in new shares in banks (the so-called "equity injection").
This is aimed at boosting confidence in the banks, and giving them new
capital to loan. The new equity will enable them to loan roughly 10
times more than would the Treasury's earlier (and still developing)
plan to buy up troubled assets. The FDIC will offer new insurance
programs for bank small business and other bank deposits, to stem bank
runs. The FDIC will provide new, temporary insurance for interbank
loans, intended to overcome the crisis of confidence between banks.
And, the Federal Reserve will if necessary purchase commercial paper
from business -- the 3-month loans they use to finance day-to-day
operations. This move is intended to overcome the unwillingness of
money market funds and others to extend credit.
But while aggressive by the standards of two months ago, the most
high-profile of these moves -- government acquisition of shares in the
private banking system -- is a strange kind of "partial
nationalization," if it should be called that at all.
Treasury Secretary Henry Paulson effectively compelled the leading U.S.
banks to accept participation in the program. And, at first blush, he
may have done an OK job of protecting taxpayer monetary interests. The
U.S. government will buy preferred shares in the banks, paying a 5
percent dividend for the first three years, and 9 percent thereafter.
The government also obtains warrants, giving it the right to purchase
shares in the future, if the banks' share price increase.
But the Treasury proposal specifies
that the government shares in the banks will be non-voting. And there
appear to be only the most minimal requirements imposed on
So, the government may be obtaining a modest ownership stake in the banks, but no control over their operations.
In keeping with the terms of the $700 billion bailout legislation,
under which the bank share purchase plan is being carried out, the
Treasury Department has announced guidelines
for executive compensation for participating banks. These are
laughable. The most important rule prohibits incentive compensation
arrangements that "encourage unnecessary and excessive risks that
threaten the value of the financial institution." Gosh, do we need to
throw $250 billion at the banks to persuade executives not to adopt
incentive schemes that threaten their own institutions?
The banks reportedly will not be able to increase dividends, but will
be able to maintain them at current levels. Really? The banks are
bleeding hundreds of billions of dollars -- with more to come -- and
they are taking money out to pay shareholders? The banks are not obligated to lend with the money they are getting. The banks are not obligated to re-negotiate mortgage terms with borrowers -- even though a staggering one in six homeowners owe more than the value of their homes.
"The government's role will be limited and temporary," President Bush said in announcing today's package. "These measures are not intended to take over the free market, but to preserve it."
But it makes no sense to talk about the free market in such
circumstances. And these measures are almost certain to be followed by
more in the financial sector -- not to mention the rest of economy --
because the banks still have huge and growing losses for which they
have not accounted.
If the U.S. and other governments are to take expanded roles in the
world economy -- as they must, and will -- then the public must demand
something more than efforts to preserve the current system. The current
system brought on the financial meltdown and the worsening global
recession. As the government intervenes in the economy on behalf of the
public, it must reshape economic institutions to advance broad public
objectives, not the parochial concerns of the Wall Street and corporate
The 2008 Beijing Olympic Games
have been referred to as the “People’s Games,” the “High Tech Games”
and the “Green Games,” but they could be more aptly described as the
Commercialism is overrunning the Olympics. It is undermining the
professed ideals of the Olympic Games, and subverting the Olympics'
veneration of sport with omnipresent commercial messaging and branding.
The Olympics have auctioned off virtually every aspect of the Games to
the highest bidder. In addition to multimillion-dollar sponsorship
deals between the International Olympic Committee and international
companies, smaller firms are paying for designations from “official
home and industrial flooring supplier” to the “frozen dumplings
exclusive supplier” of the Beijing 2008 Olympic Games.
Corporate sponsors are showering money on each tier of the Olympic
organizational committees: the International Olympic Committee, the
Beijing Organizing Committee of the Olympic Games (BOCOG) and the
International Federations governing each individual sport, to each
country’s National Organizing Committees. Corporations are sponsoring
many Olympic teams and national governing bodies for particular sports
-- including virtually every national governing body in the United
States -- and individual athletes themselves.
To its credit, the Olympics do prohibit advertising in sports stadia or
other venues. The Olympics also prohibit advertisements on uniforms
(other than uniform maker logos).
Everywhere else, Olympic spectators, viewers and athletes, and the
citizens of Beijing should expect to be overwhelmed with
A record 63 companies have become sponsors or partners of the Beijing
Olympics, and Olympics-related advertising in China alone could reach
$4 billion to $6 billion this year, according to CSM, a Beijing
marketing research firm.
The Olympic Partners (TOP) program,
run and managed by the International Olympic Committee (IOC) since
1985, includes 12 companies for the Beijing Olympics. These 12
companies -- among them, Coca-Cola, GE, Johnson & Johnson, Lenovo,
Panasonic and Visa -- have paid $866 million to the International
The U.S. Olympic system is awash in corporate sponsor money. Well over
100 corporations are sponsoring the U.S. Olympic Committee or U.S.
Besides celebrating sport, there is an official ideology of the Olympics, called "Olympism." It aims to promote a pure blend of sport, culture and education.
Sports, of course, remain at the center of the Olympics, but
commercialism has overwhelmed whatever other values the Olympics hope
to embody. The overwhelming cultural influence at the Olympics is now
commercial culture; and the overwhelming informational message is: buy,
Commercial relations interfere with proper functioning of the Olympics.
In at least one notable case, commercial entanglements have called into
question the integrity of a national sports governing body. A lawsuit
and accusations around the activities of USA Swimming and the national
team coach -- both sponsored by swimwear maker Speedo -- charge Speedo,
the national team and the coach with antitrust violations. The lawsuit,
filed by Tyr, a Speedo competitor, alleges the coach has trumpeted the
benefits of LZR Racer, a new, high-profile Speedo suit, because of his
financial ties to the company. Tyr says its Tracer Rise swimsuit,
introduced weeks before the LZR Racer, is comparable to the Speedo
The Olympic race for corporate sponsors has also put the Olympics in unhealthy -- and sometimes quite unpleasant -- company.
+ The International Olympic Committee will not partner with hard liquor
companies, but the IOC tolerates sponsorships by beer and wine
companies. Anheuser-Busch says it is a sponsor of 25 national Olympic
Committees, including those of China, Japan, Great Britain and the
United States. A tequila maker, Jose Cuervo, is a sponsor of the U.S.
+ Notwithstanding the fundamental principles of "Olympism," which
celebrate healthful living, two of the 12 Olympic TOP sponsors run
businesses centered around the sales of unhealthy food: Coca-Cola and
McDonald's. Snickers, the candy bar made by Mars, is an official BOCOG
supplier. Hershey's is a sponsor of the USOC. Coca-Cola is a sponsor of
FIFA, the international soccer federation. McDonald's and Sprite are
sponsors of USA Basketball. McDonald's and Sierra Mist are sponsors of
the U.S. Soccer Federation. Coca-Cola is a sponsor of USA Softball.
Hershey's is a sponsor of USA Track & Field.
+ Many of the sports apparel and equipment makers partnered with the Olympics and official Olympic bodies -- among them Adidas, Nike and Speedo -- source their products from sweatshop factories. In a very disturbing development just before the start of the Olympics, Adidas reportedly announced it was transferring large amounts of its production out of China because wages set by the government were "too high" (!).
+ At least two major Olympic partners, the China National Petroleum Corporation (CNPC) and Sinopec, have been linked to gross human rights violations in Sudan. Both companies are sponsors of the Beijing Organizing Committee of the Olympic Games.
There is no doubt that the horse is out of the barn on Olympic
sponsorships, and the world is unlikely to see a commercial-free Games
Nonetheless, the most egregious problems with the Olympics' pervasive sponsorship arrangements can and should be addressed.
The IOC, National Olympic Committees, and international and national
sports governing bodies can and should scale back the number of
They can and should develop safeguards to ensure apparel and equipment
sponsorships do not compromise sports governing bodies' decisions.
Coaches of national teams should be prohibited from serving as paid
spokespeople or consultants for apparel and equipment makers.
They can and should refuse to accept sponsorships from any alcohol
company, including beer and wine companies. This recommendation does
not reflect a prohibitionist impulse. It merely extends the insight in
the present IOC ban on hard liquor sponsorships: promoting more alcohol
consumption is unhealthful, and inappropriate for an event with
enormous appeal to children.
They can and should end partnerships and sponsorship arrangements with
junk food, soda and fast food companies. These companies' operations
are incompatible with Olympic ideals of promoting fitness and healthful
living, and the companies use the association with the Olympics to
remove some of the tarnish of their unhealthy products.
They can and should insist that official, sponsoring apparel and
equipment makers disclose where their products are manufactured, and
ensure that their products are manufactured in a fashion that respects
core labor standards.
They can and should refuse to enter into sponsorship arrangements with
companies connected to gross human rights abuses. This is a simple
ethical standard, and one required by the Olympic commitment to
demonstrate "respect for universal fundamental ethical principles."
Will the IOC and other committees move in these directions? They
refused to respond to repeated requests for comment. It may be,
however, that it will be the corporate sector driving reduced
commercialization of the Olympics. The opportunity to project a
high-profile in China's fast-growing market has made the Beijing
Olympics uniquely attractive; but already leading sponsors
have indicated they do not intend to continue paying for the right to
besiege the planet with Olympics-related marketing in connection with
The recent decision by the U.S. Supreme Court to slash the damage
award in the Exxon Valdez oil spill case and the indictment of Sen. Ted
Stevens on corruption charges are not the only controversies roiling
Alaska these days. The Last Frontier is also witnessing a dispute over
a proposal to open a giant copper and gold mine by Bristol Bay, the
headwaters of the world’s largest wild sockeye salmon fishery. Given
the popularity of salmon among the health-conscious, even non-Alaskans
may want to pay attention to the issue.
The Pebble mine project
has been developed by Vancouver-based Northern Dynasty Ltd., but the
real work would be carried out by its joint venture partner Anglo
American PLC, one of the world’s largest mining companies. Concerned
about the project and unfamiliar with Anglo American, two Alaska
organizations—the Renewable Resources Coalition
and Nunamta Aulukestai (Caretakers of the Land)—commissioned a
background report on the company, which has just been released and is
available for download on a website called Eye on Pebble Mine (or at this direct PDF link). I wrote the report as a freelance project.
Anglo American—which is best known as the company that long
dominated gold mining in apartheid South Africa as well as diamond
mining/marketing through its affiliate DeBeers—has assured Alaskans it
will take care to protect the environment and otherwise act responsibly
in the course of constructing and operating the Pebble mine. The
purpose of the report is to put that promise in the context of the
company’s track record in mining operations elsewhere in the world.
The report concludes that Alaskans have reason to be concerned about
Anglo American. Reviewing the company’s own worldwide operations and
those of its spinoff AngloGold in the sectors most relevant to the
Pebble project—gold, base metals and platinum—the report finds a
troubling series of problems in three areas: adverse environmental
impacts, allegations of human rights abuses and a high level of
workplace accidents and fatalities.
The environmental problems include numerous spills and accidental
discharges at Anglo American’s platinum operations in South Africa and
AngloGold’s mines in Ghana. Waterway degradation occurred at Anglo
American’s Lisheen lead and zinc mine in Ireland, while children living
near the company’s Black Mountain zinc/lead/copper mine in South Africa
were found to be struggling in school because of elevated levels of
lead in their blood.
The main human rights controversies have taken place in Ghana, where
subsistence farmers have been displaced by AngloGold’s operations and
have not been given new land, and in the Limpopo area of South Africa,
where villagers were similarly displaced by Anglo American’s platinum
High levels of fatalities in the mines of Anglo American and
AngloGold—more than 200 in the last five years—have become a major
scandal in South Africa, where miners staged a national strike over the
issue late last year.
Overall, the report finds that Anglo American’s claims of social
responsibility appear to be more rhetoric than reality. Salmon eaters
Almost twelve years ago, when a group of us started CorpWatch, we did so because it seemed then that a few hundred transnational companies were intent on remaking the earth in their image. As we saw it, the corporate version of globalization undermined community, ecology and democracy. At that moment the Internet had just appeared on the scene, and it seemed to us, and to many others, a vehicle through which to build an alternative – a form of grassroots globalization that fostered human rights and environmental rights, and that helped hold corporations accountable across the globe. Thus CorpWatch was born.
In the ensuing dozen years, the corporate encirclement of the earth has only
grown – as has the grassroots response to it in every corner of the planet.
The Internet has boomed and become on the one hand, more corporatized than we might once have imagined and yet also an increasingly powerful tool for building democratic participation and communication (and I’m very proud that CorpWatch is still part of it). This dual nature of the Internet embodies a fundamental paradox of globalization. While globalization seems to concentrate power in the hands of a few in most every realm it touches, it also increasingly interconnects us, interweaving universal values into a multinational tapestry of cultures and politics.
I see this here in Argentina, where I’ve had the good fortune to live for the past year. As numerous people here will tell you, once, this country was so isolated from the rest of the world that a lot of folks were not aware of the magnitude of the horrors unleashed by the military dictatorship between 1976 and 1983. People knew enough and saw enough and felt enough to be afraid, and tens of thousands felt the direct impact as they or their loved ones were arrested, tortured, “disappeared.” But the truth was hard to come by; there was heavy local censorship, and there was no Internet. People abroad knew more about what was going on in Argentina, than many here did.
Today, the country, like most of the rest of the world, is dialed-in, networked to the hilt, totally online. It seems almost unthinkable that something similar could happen here again. There is a strong consciousness of and commitment to human rights, and an understanding of the connection between what Argentina went through, and similar histories and battles elsewhere in the Latin American region and the world. Argentina pulled itself out of the horrors of dictatorship, and as it has re-evolved as a nation, it has benefited in this way from globalization.
At the same time, the country is suffering many of the attendant ills. I asked my twelve year-old daughter what she had learned about the United States from spending a year outside of the country. Her reply was quick and clear – I’ve learned that the US controls the media in the rest of the world. From the mouths of babes...but after all, she learned to speak Spanish, in part, by watching American sitcoms dubbed into Spanish on the local TV. Meanwhile, although the country has reaped significant economic benefit from its agricultural prowess as a giant in the world soy market – the control of this commodity is increasingly in the hands of a few transnational corporations: Cargill, ADM and others. And the country’s forests are suffering as more and more trees are felled to make room for more and more soybeans. These facts will remain true, no matter the outcome of the current conflict between President Kirchner and the country’s farmers.
Finally, globalization and all its contradictions hits home directly for me here in the Buenos Aires neighborhood I’m living in. Once a zone of automechanics and warehouses, Palermo Viejo is today one of the hippest and most popular destinations in this wonderful city. Now known as Palermo Hollywood, it is a barrio in the midst of a vast transformation. Many of our neighbors have lived here for forty or more years – they are old-school butchers, bakers, antique dealers, bar owners. Yet they are increasingly surrounded by trendy boutiques and fashionable restaurants. Many are being squeezed out by big corporate real estate that has entered the scene and is speculating on a series of high-end apartment towers that will forever change the face of this low-slung old time neighborhood. In the midst of it all are a throng of artists, ex pats, and activists organizing for the soul of the barrio.
Don’t get me wrong; it ain’t all bad. To be honest, all the paradoxes and contradictions of the gentrification of this globalizing hub make it an exciting and wonderful place to live (for the moment). I decided to try and document the intersection – the convergence and contradiction – of these various separate realities-the old and the new of Palermo Viejo. You can check out my photo essay on the subject at http://www.palermobuenosaires.blogspot.com.
Josh Karliner is Founder and a board member of CorpWatch.
Wal-Mart Stores has put out a press release
patting itself on the back for promising the equivalent of about
$430,000 for disaster relief and reconstruction for the area of China
hit by a massive earthquake this week. The gesture was laudable but the
amount was less than impressive.
After all, the giant retailer would be nowhere today without the
countless Chinese workers who toil in sweatshops so that American
consumers can be offered the cheap goods that are at the core of the
company’s business model. Last year those largely Chinese-made goods
brought Wal-Mart profits of $12.7 billion, or about $1.4 million every
hour of every day. The $430,000 contribution thus represents less than
20 minutes of profit.
Wal-Mart also profits from Chinese consumers. The company operates more than 200 stores in
China (through joint ventures and minority-owned subsidiaries), several
of which have been shut down because of the tremblor. Wal-Mart was so
eager to operate stores in China that it agreed to let its employees
there be represented by unions (though of the government-dominated
Wal-Mart has a history
of using relatively inexpensive amounts of disaster relief to boost its
reputation. After Hurricane Katrina hit the U.S. Gulf Coast in 2005,
Wal-Mart maneuvered to get maximum exposure for its prompt delivery
of relief supplies. A fairly routine operation for a company possessing
the most advanced logistics infrastructure was seen as nearly
miraculous, given the ineptitude of federal and state public officials.
The company made an initial faux pas (quickly reversed) in
announcing that employees at its stores shut down by the storm would be
paid for only three days.
It also started out offering a measly $2 million in relief but soon
overcame its parsimonious instincts and upped the figure by $15 million, thereby winning wide praise. The wave of favorable coverage went on for several months, thanks at least in part to the efforts of
its army of p.r. operatives from Edelman and a conservative blogger who
was paid to tout Wal-Mart’s hurricane work in the blogosphere.
Wal-Mart may have to part with more than $430,000 to get a similar public relations bonanza from China’s suffering.
The world of global accounting is girding up for a trans-Atlantic battle. Last month L'Oreal, Royal Dutch Shell, and Unilever, all gigantic companies, asked the U.S. Securities and Exchange Commission (SEC) to allow them to choose which accounting standards they want to use. (The companies belong to the European Association of Listed Companies, who delivered the letter.)
The reason is that U.S. Generally Accepted Accounting Principles (GAAP) is 25,000 pages long (which are based on very specific rules) and they don't like it. By comparison, the International Financial Reporting Standards (IFRS), is just one tenth the length (which are based on principles which can be more open to interpretation).
There are other good arguments for using the global rules - there are now more than 100 countries either using or adopting international financial reporting standards, or IFRS, including the members of the European Union, China, India and Canada.
But L'Oreal, Royal Dutch Shell, and Unilever, don't just want the easier rules, they want to choose which version of IFRS they can use - a European Commission version that allows them to choose how they value certain assets.
Financial Week, an industry magazine, in New York is up in arms.
" Imagine signing a contract and not having to hold up your end of the bargain. Or being able to say "I do" at the altar when you might sometimes mean "I don't." Having it both ways in such matters sure provides flexibility, to put it charitably. Yet that's exactly what a group of European companies want when it comes to accounting standards for global companies tapping the U.S. capital markets," editors of Financial Week, wrote earlier this month. (see "Converging on Chaos")
Another industry magazine, Accountancy Age in London, has also been critical of companies that use the more flexible European Commission rules. A couple of years ago, Taking Stock, the magazine's blog, asked Rudy Markham, the finance director of Unilver, why he was using flexible IFRS rules in reporting for the company, but he refused to comment, leading them to poke fun at him:
" TS understands that the biggest accounting change for a generation can be a complete turn off. We assume the numbers involved didn't mean that much to Markham anyway - a billion off the top line there, a billion on the bottom line there. He did, after all, personally take home just over £1.1 million last year. Money, money, money, as Abba used to sing... "
Today the International Accounting Standard Board, which drew up the IFRS, appointed a new chairman, Gerrit Zalm, a former Dutch finance minister, who has already announced that he would try to prevent local variations of the global rules: "One of my first priorities will be no new carve-outs in Europe and trying to get rid of the existing carve-out, because if Europe is doing this, other countries could get the same inspiration and then all the advantages of the one programme fade away," Zalm told the Financial Times. "The fragmentation of standards is costly for the enterprise sector and it doesn't help in creating clarity for investors."
We look forward to his efforts to create a single global standard. Stronger global rules are always welcome, especially if they are easier to follow, but weaker ones that cater to nationalistic interests are not.
Transit riders switching trains at the Montgomery BART subway station in downtown San Francisco will find it difficult to miss the new ads covering the walls, the floor and even the stairs with pictures of Sudanese refugees. The advertisements' message is attention catching: "Are you invested in genocide?" As part of the Save Darfur Coalition's Divest for Darfur campaign, the ads urge transit users to visit their website, where they are asked to demand that investment firms - specifically JP Morgan, Franklin Templeton, Fidelity Investments, Capital Group (American Funds), and Vanguard - withdraw investments from companies like the Chinese National Petroleum Corporation (CNPC), which are, according to the website, "filling the coffers of the Sudanese government and helping fund the government's actions in Darfur." (As a side note, the use of the term "genocide" by groups like Save Darfur to describe the conflict in Sudan is highly controversial. For more information, read the transcript of Professor Mahmood Mandani's June 4th interview with Amy Goodman on Democracy Now!, titled "The Politics of Naming: Genocide, Civil War, Insurgency."
The CNPC has been heavily censured for continuing to do business in Sudan, despite the ongoing conflict there. Attempting to place pressure on firms invested in the state-owned CNPC, rather than on the CNPC itself, is a way for activists to circumvent the "no strings attached" stance of the Chinese government toward investment in Africa and other parts of the world. China prides itself on having a different approach to investment than western lending organizations like the World Bank or IMF, which have numerous development and human rights stipulations attached to investments. In Sudan, this means that the government doesn't have to bend to international pressure to, say, allow UN troops into Darfur. Many African governments welcome Chinese investment specifically because of this hands-off approach. In a recent article in the New York Times, Lydia Polgreen comments on the increasing presence of Chinese companies in Africa, especially in the rich natural resources and mining sector. Manganese mines in South Africa, uranium pits in Nigeria and cobalt mines in the Congo are all areas of investment for state-owned Chinese companies, like the Nonferrous Metals Corporation.
African citizens view Chinese investment with ambivalence. Some see economic relationships with China as a source of much needed income and a step up from paternalistic relationships with the West. "Let the Chinese come," said Mahamat Hassan Abakar, a lawyer in Chad. "What Africa needs is investment. It needs partners. All of these years we have been tied to France. Look what it has brought us." Others are more critical, seeing China as just another country robbing Africa of its resources and in the process enriching local elites, bolstering repressive governments and perpetuating Africa's secondary economic status. Cheap Chinese goods flooding Africa inhibit local manufacturing and the jobs that accompany it. Unsafe working conditions lead to industrial accidents like the 2005 blast at a Chinese-owned explosives factory in Chambishi, Zambia, which killed 51 people.
The investment of Chinese state-owned companies in Africa is hardly a win-win situation, but it is easy to recognize the attraction for African governments doing business with Chinese companies. In judging if China is a partner or colonizer in Africa, the answer is probably, a little of both.
In the next few days Pope Benedict plans to issue his second encyclical – the most authoritative statement a pope can issue – which apparently will focus on social and economic inequity in a globalized economy. In the statement, he is expected to denounce the use of tax havens as socially-unjust and immoral in cheating the greater well-being of society.
According to the Times (UK) newspaper, the statement may have been inspired by a recent request to the Vatican by Romano Prodi, the Italian prime minister, who urged church leaders to speak out on tax evasion.
Prodi’s government plans to seek taxes on undeclared earnings of €60 million ($84 million) by Valentino Rossi, the world motorcycling champion. How about also asking Gucci and Prada, some of Italy’s best known fashion designers, to move their tax headquarters back to home turf (from the tax-saving Netherlands, see below) and contribute to Italy’s budget deficit?
As global capital has progressively unbound itself from traditional national constraints, excessive off-shore wealth seemingly knows no shame, with wealthy individuals and corporations setting up front companies abroad to avoid paying taxes, supported by a new class of financial services specialists.
While Caribbean island resorts are often assumed to be the places where the wealthy stash their money away for retirement, some European countries (and I don't mean Lichtenstein) have also newly seen the light.
A favored location is the Netherlands -- check out the November 2006 report by Dutch-based SOMO, "The Netherlands: A Tax Haven?" The report is the first comprehensive analysis of the complex system of double tax treaties, tax incentives, the relationship with the Netherlands Antilles and the now 20,000 and counting mailbox corporations operating within the borders of this small European nation. According to SOMO, "examples of companies with tax-induced headquarters in the Netherlands are Volkswagen, IKEA, Gucci, Pirelli, Prada, Fujitsu-Siemens, Mittal Steel, and Trafigura."
The issue has been in the news, mostly because big name musical artists (like Bono and Mick Jagger) and famous athletes (think David Beckham) have also been getting in on the act. When it comes to evading taxes on lucrative licensing and royalties, the Netherlands is fast emerging as the hip tax haven of choice because Holland levies no tax on earnings royalties.
In an article titled “Gimme Tax Shelter”, the New York Times reported on this in February 2007 as newly public documentation surrounding the assets and wealth-transfer plans of the Rolling Stones demonstrated that the wily rockers have paid a mere 1.5% (as opposed to the British tax rate of 40%), or $7.2. million, on $450 million in earnings routed through the land of tulips with the help of their company Promogroup.
"The Caribbeans are thinking about trading profits, not royalties, so the smaller European countries like Holland have had to be creative, tax-wise,'' David Pullman, an investment banker in New York who caters to entertainers and athletes told the New York Times. ''They are going for the high-end stuff and don't want to be seen as shady like some Caribbean haven.''
More scandalous was the 2006 revelation that super-rockers U2 had transferred their song-publishing catalog from Ireland to Holland's Promogroup, in order to avoid a change in Irish tax law introducing taxes on royalties earned in excess of 250,000 Euros per year. Much ado was made of Bono's unwillingness to pony up his share of the tax obligation in service of the global debt relief and poverty eradication for which he so famously advocates.
Another European country that has figured they can make money out of tax evasion is Ireland -- whose “Celtic Tiger” growth is largely the product of charming huge corporations like Dell, Google, Microsoft and Sun Systems to move much of their intellectual property patents over to subsidiaries in the land of Eire -- where the corporate tax rate is 12.5%, but no taxes are charged on royalties.
Microsoft has been a major beneficiary of this scheme for the last four or so years -- it slashed billions in tax receipts to the U.S. Treasury -- by setting up subsidiaries Round Island One and Flat Island Company in Dublin. Recently Microsoft took things a step further by re-registering the two patent-holding entities as unlimited liability companies which have no obligation to file their accounts publicly.
The Irish law exempting patent income from taxes also provides a sweet loophole for corporate executive pay. In November 2005 it was reported that Dell Ireland’s top executives were reaping the fruits of sumptuous pay, and saving the company taxes: between them the senior management shared nearly $3.8 million in tax-free dividends since 2003.
These corporate tax breaks have earned Ireland the distinction of being hailed “the world’s 7th freest economy” in 2007 by the conservative, DC-based Heritage Foundation, which says that “Ireland’s economy is 81.3 percent free.”
Most of this tax evasion, is sadly, quite legal. But ordinary citizens around the world who think that Microsoft and Mick Jagger should pay taxes, can take heart from the fact that some members of the global elite have been punished -- take the recent conviction of media mogul Conrad Black of Hollinger International. In July, Canadian and U.S. press reported on the lawsuits, corporate and civil, that are following his conviction for obstruction of justice and mail fraud, seeking remuneration from assets, including purported millions stashed in the Caribbean:
…"Not satisfied with receiving $20 to $40 million a year in excessive management fees, Black and the Ravelston insiders then directed significant portions of those fees to Moffat Management and Black-Amiel Management, which were empty shell companies registered in Barbados," a special report from Hollinger’s board stated.
"Even though these entities did nothing to earn fees, and did not have either employees or real operations, paying management fees to them on the pretense that they performed services allowed the recipients the prospect of transforming a portion of the enormous management fees that would otherwise most likely have been taxable in Canada (where the payments were received), or possibly the U.S. (where services were largely performed), into dividends received in Barbados (where nothing occurred)," the report stated.
This week's CorpWatch feature highlights the plight of indigenous people in Papua New Guinea, where landowners feel that they are cheated out of their resources, livelihoods, and just compensation by the world's largest gold producer, Barrick Gold.
We depend on our land. You depend on money. Money is not need, it is only a want, but it is need in western society. I live on land, which is my stomach. I grow food from this land and then I survive. But now, where can I get food?
Also, the fact that mineral deposits, including oil, copper, and gold, account for two-thirds of PNG's export earnings leaves them susceptible to the Dutch Disease, or the phenomenon wherein resource exports raise the exchange rate for a country's currency, thereby making their labor less desirable. While this only accounts for a tiny part of the negative consequences of mining, it does illustrate that even within an economic paradigm, mining carries negative consequences for 'development', especially open pit mines because they require less human labor. Large mineral exports also make countries more susceptible to corruption because of the negotiating power held with government gatekeepers.
"There is not sufficient disclosure in an
understandable form for citizens or civic groups to determine whether
they are indeed benefiting as they should according to current law in
The fact that gold is a largely useless metal (that is already hoarded and unused in large quantities) makes the destruction caused by it's extraction all the more tragic. According the No Dirty Gold Campaign, 80% of the gold is used by the jewelry industry. On average, the production of one gold wedding ring produces 20 tons of waste.
Metal prices are booming, and Canadian mining companies are taking advantage of the same prejudicial conditions to expand into all corners of the globe, manipulating, slandering, abusing, and even killing those who dare to oppose them, displacing Indigenous and non-Indigenous communities alike, supporting repressive governments and taking advantage of weak ones, and contaminating and destroying sensitive ecosystems.
Barrick's plans to "relocate" three glaciers - 816,000 cubic meters of ice - by means of bulldozers and controlled blasting, is seen by mine-opponents as symbolic of the company's utter insensitivity to the environment. As headwaters for a water basin in an arid region receiving very little rainfall, many opponents are gravely concerned for the ice. They say the mechanical action involved in moving the glaciers will irreversibly melt much of it, jeopardizing a delicate ecological balance further downstream.
While Barrick originally planned to "relocate" three glaciers to another area, since being denied their original plan, the project now aims to build an open-pit mine next to the glaciers. However, most alarmingly, since construction has started on the mine, the glaciers have been depleted an estimated 50-70 percent, according to Chilean General Office of Waters (DGA). Barrick attempted to blame global warming for the melting, but those claims have been disproven.
Mining in the U.S.
In the U.S., Western Shoshone lands now account for the majority of gold produced within the United States and almost 10 percent of world production. The scale of development is unprecedented and will leave a legacy of environmental impacts for centuries into the future.
The Paris tribunal will examine the 1999 Erika tanker disaster that poured 20,000 tonnes of oil into the sea, polluted 250 miles of coastline and caused $1.3 billion in damage. At least 150,000 seabirds were found dead on the coast and up to 10 times as many were probably lost in the oil-blackened seas. Observers say this may also turn into a trial of the "globalized" international shipping system as the Erika was crewed by Indians, sailing under a Maltese flag, chartered by a shipping company registered in the Bahamas for a French oil company.
Meanwhile, a lawsuit between the state of New York against Exxon and four other companies has recently been announced. This suit addresses an oil spill from the 1950's that was several times the size of the Exxon Valdez oil leak in Alaska, but lay undiscovered until 1978. According to New York state attorney Andrew Cuomo, Exxon has been slow to clean up, with an estimated eight million gallons of oil and petroleum byproducts still underground and toxic vapors from the ground threatening neighborhood health.
"There are people who live above this that still don't know about it,'' said Basil Seggos, chief investigator for Riverkeeper, an environmental group that sued in 2004 to try to force Exxon Mobil to clean up the creek. Others in Greenpoint have become spill experts, according to Seggos, and they say the fumes that rise from basements and sewers are especially bad when the barometer drops before a storm. "The locals tell you they know when it's going to rain because they can smell the oil.''
The report quotes Gbabor Okrika, the councilor representing the affected communities:
"Chevron is not bothered about the health of the people they are only concerned about their operations and they have now started a process that can only divide the people and create further division among them."
Also, last month's massive leak in the Chad Cameroon Pipeline caused a storm of criticism regarding the environmental safety of this project. This Exxon-managed pipeline extends from landlocked Chad through Cameroon and extends 11 kilometers off the coast into the Atlantic. This project, which is overseen by the World Bank, has already received much criticism due to money from this project fueling conflict in Chad.
IRIN News quoted Kribi Mayor Gregoire Mba Mba:
"Our town lives on fishing and tourism. If more incidents like this or worse occur it is the economic future of the town that is threatened."
Environmental groups are warning that a similar spill could happen in the Baku-Ceyhan pipeline operated by BP that transports crude 1750 kilometers from the Caspian to the Mediterranean Sea. On Monday, a coalition of Azeri, British and US watchdog groups leaked a report from the U.S. Overseas Private Investment Corporation, which says that cracks and leakages in the coating of the pipeline will need to be monitored closely.