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Toyota Totals Its Corporate Social Responsibility Creds

Friday, February 5th, 2010

It would not surprise me if the people who do public relations for Toyota are flipping through their old scrapbooks to cheer themselves up amid the worst crisis in the company’s history.

They might be looking longingly at the 2003 Business Week cover story headlined: “Can Anything Stop Toyota: An Inside Look at How It’s Reinventing the Auto Industry.” Or the 2006 New York Times paean entitled “Toyota Shows Big Three How It’s Done.” Perhaps they are going back even further to the 1997 love letter from Fortune: “How Toyota Defies Gravity.”

These days Toyota is instead experiencing the unbearable heaviness of being exposed as just another unscrupulous automaker that, whether through incompetence or greed, puts many of its customers behind the wheel of a deathtrap.

New revelations that the company knew about the defective gas pedals for years before taking action are all the more scandalous because Toyota had a longstanding reputation not only for business prowess but also for social responsibility.

The company, of course, fostered this image. Its website proclaims: “Toyota has sought harmony between people, society, and the global environment, as well as the sustainable development of society, through manufacturing. Since its foundation, Toyota has continuously worked to contribute to the sustainable development of society through provision of innovative and high-quality products and services that lead the times.”

All big corporations make similar declarations, but Toyota managed to convince outside observers of its pure heart. Last year the Ethisphere Institute included the automaker on its list of “the World’s Most Ethical Companies.” Toyota is ranked 14th on the “Global 100 Most Sustainable Corporations in the World.” And it received the highest score among automakers in a 2006 CERES assessment of corporate governance changes adopted by large corporations to deal with climate change.

Toyota’s environmental reputation is not completely unblemished. In 2007 the company incurred the wrath of green groups for its opposition to an effort to toughen fuel economy standards in the United States (a stance it modified in response to the pressure). In 2003 Toyota agreed to pay $34 million to settle U.S. Environmental Protection Agency charges that it violated the Clean Air Act by selling 2.2 million vehicles with defective smog-control computers.

Overall, however, Toyota was regarded as a much more environmentally enlightened company than Detroit’s Big Three. In fact, its successful efforts to bring hybrids into the auto industry mainstream made it something of a corporate hero in green circles. Michael Brune, who was recently named the new executive director of the Sierra Club, brags that he and his wife have been driving a Prius since 2004.

Toyota’s more laudable stances on sustainability issues did not prevent it from being completely retrograde when it came to respecting the collective bargaining rights of its U.S. employees. It has successfully kept unions out of its heavily-subsidized American plants and has taken advantage of contingent workers to keep down costs in those operations.

Just as good environmental policies do not automatically lead to good labor practices, the current safety scandal shows that a company can be green and totally irresponsible at the same time.  Despite Toyota’s claim about promoting “harmony between people, society, and the global environment,” it appears the company put its business interests ahead of the safety of its customers and others with whom they share the road.

The automaker’s safety scandal is another indication that voluntary corporate social responsibility policies go only so far. It is only through rigorous government regulation, backed by aggressive environmental and other public interest activism, that major corporations can be kept honest.

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Posted in Auto industry, Corporate "Social Responsibility", Corporate Crime, Product Safety | 1 Comment »

When Malfeasance Becomes a Corporate Mission Statement

Thursday, December 3rd, 2009

BhopalForbes loves to compile lists;  in fact, for many people the magazine is synonymous with its annual ranking of the 400 richest Americans. Recently, the publication allowed its list mania to overwhelm its other obsession — defending big business — when it came out with a feature on “The Biggest CEO Outrages of 2009.”

Writer Helen Coster frames the story as an assessment of how corporate malfeasance has been faring since the arrest of world-class Ponzi schemer Bernard Madoff a year ago. She finds that “nobody managed to top Madoff’s crimes in 2009, but 10 executives showed enough greed, hubris and chutzpah to give him a run for his (stolen) money.”

Her list ranges from other alleged fraudsters such as R. Allen Stanford to accused insider trader Raj Rajaratnam of the Galleon Group hedge fund to convicted tax evader Robert Moran. She also includes Edward Libby of AIG and former Merrill Lynch head John Thain for their role in enabling questionable bonuses. Also on the list is Lloyd Blankfein of Goldman Sachs, whose main sin, according to Coster, seems to have been his comment that he was just a banker doing “God’s work.”

All of these individuals deserve some disapprobation, but Coster manages to gloss over a major distinction with regard to executive misbehavior: the difference between improper actions taken to benefit oneself and those undertaken to benefit the corporation.

Individual fraud, embezzlement, tax cheating and other forms of self-dealing are reprehensible, but do they begin to compare in their impact to major misdeeds committed in the name of advancing corporate interests? This point is especially relevant given that these days we are marking not only the first anniversary of the Madoff scandal but also the 25th anniversary of the Bhopal disaster.

Madoff brought financial ruin to numerous individuals and non-profit organizations, but what critics charge was systematic negligence on the part of executives of Union Carbide (now part of Dow Chemical) killed or seriously injured thousands of residents in Bhopal, making it the worst industrial accident ever. Madoff pleaded guilty to his crimes, but Warren Anderson, the CEO of Union Carbide, remained a fugitive rather than face criminal charges brought against him in India, and Dow Chemical has refused to take responsibility for providing adequate compensation to the Bhopal victims.

Over the past year there have been various instances of outrageous acts committed to advance corporate goals that do not begin to compare with Bhopal but have caused considerably more harm than the ones catalogued by Forbes.

Take, for example, the case of Stewart Parnell and his now defunct Peanut Corporation of America, accused earlier this year of knowingly shipping salmonella-tainted food products from a filthy plant in Georgia, thereby contributing to one of the country’s worst outbreaks of food poisoning, including about nine deaths.

Then there’s the case of the managers at Bayer CropScience, who, according to a Congressional report released in April, withheld critical information from emergency responders during an accident at a plant in West Virginia that nearly resulted in the release of methyl isocyanate, the same chemical involved in the Bhopal catastrophe.

Or what about the executives at pharmaceutical giant Pfizer who illegally marketed the painkiller Bextra, causing the company to have to agree in September to pay $2.3 billion to settle civil and criminal charges brought by federal prosecutors?  One Pfizer sales rep told prosecutors: “If you didn’t sell drugs illegally, you were not seen as a team player.”

It’s one thing for an individual executive to go bad. The real harm comes when the misbehavior becomes, in effect, the mission statement of the corporation. That, dear Forbes, is what is truly outrageous.

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Posted in Corporate Accountability, Corporate Crime | No Comments »

CIT: R.I.P.?

Thursday, July 16th, 2009

cit1When CIT Group realized it was in really big trouble, the commercial finance company apparently thought it could count on Uncle Sam to come to the rescue. About a week ago, it leaked the news that it was considering bankruptcy and waited for the Treasury Department to respond to dire warnings about the consequences for the small and medium businesses that make up most of the company’s customer base.

After all, CIT had already received $2.3 billion in TARP money last year after converting itself to a bank holding company. Other struggling TARP recipients, like Citigroup, had been able to come back for additional infusions as Tim Geithner showed himself to be a soft touch for large financial institutions.

To the surprise of CIT, it got rebuffed by the Obama Administration and will now have to file for Chapter 11 unless some deep-pocketed investors step in. CIT, with assets of about $75 billion, is a large but not a giant institution. It thus does not seem to meet the Geithner standard: it is not too big to fail.

While it is possible to understand CIT’s frustration, the company does not deserve too much sympathy. Putting size aside, there are reasons why CIT was not exactly a worthy candidate for a taxpayer handout. This is a case in which perhaps the right question to ask was whether the company in need was  too flawed to save.

For decades, CIT played a useful function in the business system with services such as commercial lending, factoring and equipment leasing. But in 1980 it developed an identity crisis as it was acquired by RCA in the first of what would be a long series of ownership changes. Two decades later it came under the control of Tyco International, the shady conglomerate headed by Dennis Kozlowski, who would later be convicted of misappropriation of corporate funds and become infamous for the extravagant lifestyle–including a $6,000 shower curtain–he enjoyed with those funds.

CIT split from Tyco in 2002 and sought to make a new name for itself. Unfortunately, the way it did that was to get into two very sleazy businesses. In 2005 it entered the student loan market. Within two years, CIT’s Student Loan Xpress was being investigated by New York Attorney General Andrew Cuomo for paying kickbacks to university officials who steered students into predatory loans. Faced with a scandal, CIT agreed in May 2007 to sign a code of ethical conduct drawn up by Cuomo. It then booted out the president of Student Loan Xpress and later exited the business.

The other new endeavor was subprime home mortgages. For a while this dubious business boosted CIT’s earnings, but when the subprime market turned sour, the company took a big hit. In 2007–shortly after telling Investment Dealers Digest that “our subprime profile is strong”–it started posting losses and was forced to write down the value of its subprime portfolio by $765 million. It ended up leaving this field as well. CIT lost some $633 million in 2008.

CIT’s reputation was also tarnished in 2005, when it and two other leasing companies agreed to a $24 million settlement of charges brought in two dozen states about their links to the crooked telecom services company NorVergence.

In recent years, CIT has promoted itself using an advertising campaign based on the tag line Capital Redefined. Apparently, the new definition of capital is to engage in unethical business practices and then expect the federal government to come to your assistance when market conditions turn against you. Large or small, that kind of company is not worth saving.

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Posted in Corporate Crime, Financial Crisis, Predatory Lending | No Comments »

Regulating Murder

Wednesday, June 24th, 2009

death-cigarettesDespite a long-running war on crime and billions of dollars spent each year on the criminal justice system, murders keep on happening. Instead of trying to end all homicides, perhaps the solution is to give up on abolition and simply regulate the practice: discourage the murder of children, put strong warning labels on guns, impose a tax on killers.

Ridiculous? Yes, but this is roughly what the federal government has just done with the tobacco industry, which legally ends far more lives each year than all the non-corporate murderers in the country combined.

The legislation just signed into law by President Obama — the Family Smoking Prevention and Tobacco Control Act — is billed as an aggressive move to bring the coffin nail industry under federal control for the first time. It starts off with what amounts to a 49-point indictment of tobacco products as a public health menace. Use of these products is called “inherently dangerous,” “addictive” and a “pediatric disease.” The tobacco industry, it is noted, still spends vast sums “to attract new users, retain current users, increase current consumption, and generate favorable long-term attitudes toward smoking and tobacco use.”

All of this is certainly true, but it seems odd to follow this denunciation with legislative language that imposes restrictions on the noxious industry but does not seek to put it out of business. In fact, the law can be seen as conferring some degree of legitimacy on tobacco producers. For example, the industry is given a statutory role in the Tobacco Products Scientific Advisory Committee, which has to be consulted before any new industry regulations are promulgated. Fortunately, the three seats on the committee given to tobacco manufacturers and growers are non-voting positions, but it is still unseemly — to put it mildly — to have representatives of such a notorious industry so involved in government oversight.

According to Corporate Accountability International, which has played a central role in promoting tobacco control policies: “Not only is the inclusion of the industry on this committee akin to letting the fox guard the henhouse, it runs counter to a treaty provision that obligates ratifying countries to safeguard their health policies against tobacco industry interference.”  Kathy Mulvey of CAI adds: “U.S. policymakers must now gird themselves for inevitable attempts by Big Tobacco to delay and thwart [the law].”

The ability of a notorious industry to go on influencing policy is reinforced by the fact that the law generally treats tobacco companies in a way that is not greatly different from other regulated corporations. The Food and Drug Administration is instructed to collect “user fees” from tobacco companies — as if they were pharmaceutical manufacturers seeking to get new drugs approved. Unless tobacco companies plan to “use” the FDA in some way, the fees should at least be called something different; perhaps reparations.

Another problem is that the law mentions that any restrictions on tobacco industry advertising and promotion must be consistent with the First Amendment. You can be sure that the industry will be screaming loudly that the law violates its free speech rights (granted by misguided court rulings). This is another drawback to regulation rather than criminalization.

While some players in the tobacco industry have ardently opposed federal regulation throughout the 15-year campaign to bring it about, some shrewd parties eventually realized that government intervention was inevitable and jumped on the bandwagon. Tobacco giant Philip Morris (now part of Altria) took this tack back in 2000, reaping years of improved p.r. and now a law that allows it and its competitors to continue selling their deadly wares with restrictions that are far from fatal to their profits. As much as corporations like to complain about regulation, sometimes it is their salvation.

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Posted in Corporate Crime, Corporate Lobbying, Regulation, Tobacco industry | 1 Comment »

Bayer Fights Safety Board “Terrorists”

Friday, April 24th, 2009

bayerblastCorporations will go to great lengths to avoid close scrutiny of their operations, but Bayer CropScience reached a new height of brazenness in its behavior following a massive explosion (photo) last year at its chemical plant outside Charleston, West Virginia. Company chief executive William Buckner admitted in testimony the other day before the House Energy and Commerce Committee that Bayer managers invoked a 2002 law designed to protect ports from terrorists to justify their initial refusal to share information about the accident with the federal government’s Chemical Safety and Hazard Investigation Board.

Apparently, what Bayer did not want the “terrorists” from the board to learn was that the company’s safety procedures were a mess. Video monitoring equipment had been disconnected, and air-safety devices were not operating. What made this disarray more disturbing was that the accident came close to causing the release of a large quantity of methyl isocyanate (MIC), the same pesticide component that killed several thousand people near a Union Carbide plant in Bhopal, India in 1984. The explosion at the West Virginia plant (which was run by Union Carbide until 1986 and taken over by Bayer in 2001) resulted in two deaths and injuries to half a dozen emergency responders.

Shortly after the accident, Bayer managers dropped the preposterous idea that they did not have to cooperate with the safety board, but they came up with other forms of obstruction. They provided thousands of pages of documents but labeled them “security sensitive” so that they could not be disclosed by the safety board. They also claimed that the plant was under the jurisdiction of the Coast Guard, given its use of barges on the Kanawha River, and thus it was up to that agency to decide which documents could be released.

Beyond Buckner’s qualified admissions, the House Energy Committee issued a report charging that “Bayer engaged in a campaign of secrecy by withholding critical information from local, county, and state emergency responders; by restricting the use of information provided to federal investigators; by undermining news outlets and citizen groups concerned about the dangers posed by Bayer’s activities; and by providing inaccurate and misleading information to the public.” Among the company documents obtained by the committee was a “community relations strategy” for dealing with a local activist group and the newspaper that diligently followed the story: “Our goal with People Concerned About MIC should be to marginalize them. Take a similar approach to The Charleston Gazette.”

All this may come as a surprise to consumers who think of Bayer Corporation as a purveyor of aspirin and other benign products such as Aleve, Alka-Seltzer, Flintstones Vitamins and Phillips’ Milk of Magnesia. But the company’s ultimate parent, Bayer AG of Germany, has one of the most shameful histories of any major corporation: During the Second World War, it was part of the notorious IG Farben conglomerate that made use of slave labor to serve the Nazi war machine and produce the lethal gas used in the death camps.

What Bayer did in West Virginia does not begin to approach its war crimes during the Nazi era, but it shows that the company still has a lot to learn about corporate ethics.

Note: For more material on Bayer’s checkered environmental record, see the website of the Dusseldorf-based Coalition Against Bayer Dangers. Charleston Gazette reporter Ken Ward Jr., who has written extensively on the Bayer explosion, also contributes pieces about the accident to the paper’s Sustained Outrage blog.

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Posted in Corporate Crime, Environment | 3 Comments »

Were Big Banks Fools or Knaves in WMD Conspiracy?

Tuesday, April 7th, 2009

morgenthau1The big U.S. banks have been accused of helping bring about the near destruction of the world financial system. According to an indictment just announced by Manhattan District Attorney Robert Morgenthau, the banks also played a role, albeit unwittingly, in a conspiracy involving the proliferation of actual weapons of mass destruction.

Morgenthau (photo) brought a 118-count indictment against Chinese national Li Fang Wei and his metallurgical company LIMMT for conspiring to deceive half a dozen major U.S. banks into transferring funds used in the sale of banned weapons material to the Iranian military. The banks are JP Morgan Chase, Bank of New York Mellon, Citibank, Bank of America, Wachovia and American Express Bank.

The banks themselves were not charged, but it is remarkable how easily they were duped by Li, whose company had been placed on a Treasury Department blacklist in 2006 because of its dealings with the Iranians, which allegedly included the sale of components for long-range missiles capable of delivering WMDs.

Morgenthau’s press release says that “U.S. banks employ sophisticated anti-fraud and anti-money laundering computer systems to detect illegal payments from sanctioned entities and people.” Yet it seems that all Li had to do to circumvent that system was to tell his customers that the English-language name of his firm had changed (he used dubious aliases such as Blue Sky Industry Corporation). In some instances he did not even bother to change his telephone and fax numbers.

Morgenthau went out of his way to exonerate the banks, but he couldn’t resist mentioning that there are “parallels” between the LIMMT case and his office’s ongoing investigation of “stripping,” a practice in which banks remove identifying information from wire transfers to enable clients to avoid restrictions on transactions involving countries under U.S. sanctions. In January, Morgenthau’s office announced that British bank Lloyds TSB would pay $350 million in fines and forfeitures in connection with a deferred prosecution agreement involving the practice. Lloyds was accused of helping Iranian and Sudanese clients circumvent the Treasury blacklist.

Is it possible that by alluding to the Lloyds case Morgenthau was hinting that the banks in the LIMMT matter were not purely innocent parties? After all, there have been numerous other cases in which large banks have been accused of helping shady clients by failing to enforce rules designed to thwart money laundering. For instance, a decade ago Citibank was accused of doing nothing to stop the brother of Mexico’s former president from transferring large sums allegedly linked to drug smuggling and influence peddling. In 2004 Japan ordered the closure of Citi’s private banking operations in that country for violations that included a failure to implement money-laundering prevention procedures. In 2007 the NASD, now the Financial Industry Regulatory Authority, fined a securities subsidiary of Bank of America $3 million for violating anti-money laundering rules in failing to collect adequate information on certain high-risk accounts.

The banks may have been the fools in the LIMMT case, but they have often been knaves when it comes to the enforcement of international banking rules that may stand in the way of profit.

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Posted in Corporate Crime | 1 Comment »

Are Banks Fleeing Accountability?

Tuesday, March 31st, 2009

It may be a coincidence, but some banks are repaying the aid they received from the federal government just as some real accountability is finally being injected into the massive financial bailout that has been going on since last fall. The repayment moves so far involve relatively small regional banks, but there have been reports that Goldman Sachs, the recipient of a $10 billion federal capital infusion, is eager to buy out Uncle Sam’s holding.

The stricter accountability that the banks may be responding to is coming not from the Treasury Department but rather from the watchdog bodies that were created in the bailout legislation enacted last year—especially the Office of the Special Inspector General for the Troubled Asset Relief Program. The SIGTARP himself, Neil Barofsky (photo), just offered some remarkable testimony to the Senate Finance Committee.

First of all, he provided a clear estimate of how much the federal government is potentially on the hook for in the dozen different bailout-related programs: up to $2.976 trillion, not counting the yet-to-be-determined cost of the capital that will be offered to banks after they are subjected to a stress test. (A breakdown of the costs can be found in the attachment at the back of his prepared testimony.)

Second, Barofsky reported that he demanded and received reports (still being analyzed) from every one of the 364 TARP recipients about how they are using federal funds and whether they are complying with restrictions on executive compensation.

Barofsky is also conducting special audits on external influences over the TARP application process, the various forms of assistance going to Bank of America, the controversial bonus payments at AIG and the payments AIG made to counterparties using federal bailout funds.

Whereas other federal officials have presented the TARP programs as impenetrable black boxes, Barofsky wants to shine a light on everything—even the initiatives that were designed before he took office and do not explicitly provide for SIGTARP oversight.

Barofsky emphasizes that his office is the only TARP watchdog that has criminal law enforcement powers, and he clearly intends to use them. He’s launched “more than a dozen criminal investigations” of possible bailout fraud and is working with the New York division of the High Intensity Finance Crime Area program, an initiative launched in the Treasury Department in 1999 to coordinate the prosecution of money laundering. Barofksy has even set up a whistleblower hotline (877-SIG-2009).

He is also working with the other TARP watchdogs, two of whom just testified with him in the Senate: Prof. Elizabeth Warren, head of the Congressional Oversight Panel, and Gene Dodaro, acting head of the Government Accountability Office.

Together, these entities are beginning to cut through the cloud of obfuscation that former Treasury Secretary Henry Paulson and, to an extent, his successor Timothy Geithner have built up around the bailouts. And some day in the not too distant future, some of the miscreants who caused the crisis and then abused the bailout may find themselves behind bars. That would be real accountability.

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Posted in Corporate Crime, Financial Crisis | No Comments »

The Corporate Crime Fighting Budget

Friday, February 27th, 2009

The call to boost taxes on the wealthy to start paying for healthcare reform is not the only refreshing thing about the budget outline just released by the Obama Administration. There is also a marked shift toward tighter regulation of business. Here are some features of what might be called the Corporate Crime Fighting Budget:

Cracking down on corporate polluters. The Environmental Protection Agency—a joke during the Bush Administration—is slated for a 34 percent increase in funding. This would result in a hike in the budget for core functions such as enforcement to $3.9 billion, an all-time high for the agency.

Cracking down on abusive employers. Obama wants the Department of Labor—another agency enervated by the Bush crowd—to get a smaller increase than EPA, but the additional funds are intended to rebuild DOL’s responsibilities in workplace monitoring. The budget document proposes to “increase funding for the Occupational Safety and Health Administration, enabling it to vigorously enforce workplace safety laws and whistleblower protections, and ensure the safety and health of American workers; increase enforcement resources for the Wage and Hour Division to ensure that workers are paid the wages that are due them; and boost funding for the Office of Federal Contract Compliance Programs, which is charged with pursuing equal employment opportunity and a fair and diverse Federal contract workforce.”

Prosecuting white-collar crooks. The section on the Justice Department in the budget document says that the Administration will seek [not yet quantified] “resources for additional FBI agents to investigate mortgage fraud and white collar crime and for additional Federal prosecutors, civil litigators and bankruptcy attorneys to protect investors, the market, the Federal Government’s investment of resources in the financial crisis, and the American public.”

Thwarting purveyors of tainted food. The Administration plans to “take steps to improve the safety of the Nation’s supply of meat, poultry and processed egg products and to ensure that these products are wholesome, and accurately labeled and packaged.” The proposed budget for the Agriculture Department “provides additional resources to improve food safety inspection and assessment and the ability to determine food safety risks. This will lead to a reduction in foodborne illness and improve public health and safety.” The Food and Drug Administration, which is under the auspices of the Department of Health and Human Services, would also get a hike in funding.

Restricting plunderers of national resources. The section of the budget document on the Interior Department outlines the Administration’s intention to rein in the windfalls long enjoyed by extraction companies with leases to drill and mine on public lands. The plan includes “a new excise tax on offshore oil and gas production in the Gulf of Mexico to close loopholes that have given oil companies excessive royalty relief” as well as the imposition of user fees and more realistic royalties for oil and gas drilling on federal lands.

Controlling drug and healthcare price gouging. The general framework for healthcare reform released by the Administration as part of the budget document contains plans to slow down the growth in Medicare costs. This includes a proposal to force providers of privatized coverage under the name of Medicare Advantage to participate in competitive bidding. Medicare drug costs would be reined in by tightening oversight of Part D spending and by preventing brand-name pharmaceutical companies from paying generic drug producers to keep their low-cost products off the market.

To these should be added tax proposals that would put an end to various boondoggles that have enriched oil companies, hedge funds and other anti-social elements. Some of Obama’s proposals (especially regarding healthcare) do not go nearly far enough, but the budget as a whole represents a major break from the priorities of the Bush Administration. Though you would hardly know that from the geeky, matter-of-fact way it is being promoted by Budget Dirtector Peter Orszag (photo).

Budget documents are, of course, merely wish lists conveyed by the executive to the legislative branch. In the short term, the main impact of Obama’s blueprint will be to launch a massive wave of business lobbying. Now it is up to Congress to resist the entreaties of those paid persuaders and make it clear that the days of unchecked corporate giveaways have come to an end.

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Posted in Corporate Crime, Corporate Lobbying, Healthcare, Mining Industry, Petroleum Industry, Product Safety, Regulation, Workplace Safety & Health | 1 Comment »

Not Quite Beyond Petroleum

Friday, February 20th, 2009

For the past eight years, the oil giant formerly known as British Petroleum has tried to convince the world that its initials stand for “Beyond Petroleum.” An announcement just issued by the U.S. Environmental Protection Agency may suggest that the real meaning of BP is Brazen Polluter.

The EPA revealed that BP Products North America will pay nearly $180 million to settle charges that it has failed to comply with a 2001 consent decree under which it was supposed to implement strict controls on benzene and benzene-tainted waste generated by the company’s vast oil refining complex in Texas City, Texas, located south of Houston.  Since the 1920s, benzene has been known to cause cancer.

Among BP’s self-proclaimed corporate values is to be “environmentally responsible with the aspiration of ‘no damage to the environment’” and to ensure that “no one is subject to unnecessary risk while working for the group.” Somehow, that message did not seem to make its way to BP’s operation in Texas City, which has a dismal performance record.

The benzene problem in Texas City was supposed to be addressed as part of the $650 million agreement BP reached in January 2001 with the EPA and the Justice Department covering eight refineries around the country. Yet environmental officials in Texas later found that benzene emissions at the plant remained high. BP refused to accept that finding and tried to stonewall the state, which later imposed a fine of $225,000.

In March 2005 a huge explosion (photo) at the refinery killed 15 workers and injured more than 170. The blast blew a hole in a benzene storage tank, contaminating the air so seriously that safety investigators could not enter the site for a week after the incident.

BP was later cited for egregious safety violations and paid a record fine of $21.4 million. Subsequently, a blue-ribbon panel chaired by former secretary of state James Baker III found that BP had failed to spend enough money on safety and failed to take other steps that could have prevented the disaster in Texas City. Still later, the company paid a $50 million fine as part of a plea agreement on related criminal charges.

In an apparent effort to repair its image, BP has tried to associate itself with positive environmental initiatives. The company was, for instance, one of the primary sponsors of the big Good Jobs/Green Jobs conference held in Washington earlier this month. Yet as long as BP operates dirty facilities such as the Texas City refinery, the company’s sunburst logo, its purported earth-friendly values and its claim of going beyond petroleum will be nothing more than blatant greenwashing.

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Posted in Corporate Crime, Environment, Workplace Safety & Health | No Comments »

Another Crooked Philanthropist?

Wednesday, February 18th, 2009

A recent article in the Wall Street Journal discussed the ways a person can enhance his or her profile on Google by creating positive material that will displace unflattering references from the top of the search results. R. Allen Stanford, who has just been accused by the U.S. Securities and Exchange Commission of engaging in a “massive, ongoing fraud,” seems to have done something similar in the management of his public image.

Until word got out recently that federal authorities were combing through records at the Houston offices of his Stanford Financial Group operation, Stanford (center in photo) had successfully cultivated his image as a flamboyant Caribbean-based financier, a leading promoter in the world of cricket and an active philanthropist. He began referring to himself as Sir Allen after being knighted by the government of Antigua.

While investors were most interested in the spectacular yields his firm provided on so-called certificates of deposit (which were actually more exotic investments), Stanford seemed to work hardest in his efforts on behalf of St. Jude Children’s Research Hospital in Memphis and his Stanford 20/20 cricket tournaments. He brought his interests in philanthropy and sports together in 2007, when Stanford Financial took over the primary sponsorship of a PGA golf tournament benefitting the children’s cancer hospital. In 2007 the event became known as the Stanford St. Jude Championship.

Until this month, Stanford’s public record in news databases such as Nexis was dominated by articles concerning his charitable and sporting side activities. A little digging, however, unearthed what Stanford may have been trying to suppress: a series of unflattering articles in the late 1990s and early 2000s about his efforts to block legislation in Congress to crack down on offshore money laundering, especially in the Caribbean, where Stanford’s offshore bank, Stanford International Bank, is based.

In June 1999 Shelley Emling of Cox News Service wrote a story suggesting that Stanford was involved in weakening money laundering regulations in Antigua, where he had taken up residence. An article by David Ivanovich published on July 16, 2000 in the Houston Chronicle provided more details on Stanford’s role in strengthening Antigua’s bank secrecy practices, which were a source of frustration for U.S. officials trying to prevent money laundering.

In 2002 Stanford was in the news again after Public Citizen published a report listing Stanford Financial Group as a major provider of soft money contributions to promote the campaign against new U.S. money laundering proposed during the Clinton Administration. The report found that major recipients of the contributions included 527 groups affiliated with Senator Thomas Daschle and Democratic Caucus Chairman Martin Frost.

The Center for Responsive Politics points out that Stanford continued to invest in the political process even after the money laundering controversy died down. The group calculates that Stanford Financial’s PAC and the firm’s employees have given $2.4 million to federal candidates since 1989, and the firm has spent $4.8 million on federal lobbying efforts during the past decades.

It is difficult to know if these contributions helped Stanford thwart earlier investigations of his money management practices. One also wonders how many other possible business crooks are out there deflecting attention from their misdeeds by wrapping themselves in heartwarming activities such as fundraising on behalf of pediatric cancer victims. It is unfortunate that worthy endeavors such as St. Jude have to depend on wealthy supporters who may have much less noble ulterior motives.

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Posted in Corporate Crime, Philanthropy | No Comments »

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