Archive for the ‘Corporations & Human Rights’ Category

Injustice Incorporated

Thursday, March 13th, 2014

Pages from pol300012014enIt’s been clear for a long time that oil drilling in Ecuador’s rain forests dating back to the 1960s caused severe environmental damage. Yet for more than two decades a lawsuit against the lead drilling company, Texaco, and its new owner, Chevron, has meandered through Ecuadoran and U.S. courts.

Chevron, fighting a $19 billion judgment against it in Ecuador (later reduced to $9.5 billion), has sought to turn the tables on the plaintiffs and their U.S. lawyer, Steven Donziger. Recently, a U.S. court ruled in favor of the company, bolstering its refusal to pay anything in compensation.

The challenges faced by the plaintiffs in the Chevron case are, unfortunately, the rule rather than the exception. It is often next to impossible to get a large transnational corporation to fully rectify serious environmental, labor or human rights abuses.

This frustrating reality is analyzed at great length in a new 300-page report from Amnesty International entitled Injustice Incorporated. The study begins with a primer on the relationship between corporations and international human rights law. Amnesty points out a key dilemma:

In some respects the corporate model is antithetical to the right to effective remedy; by admitting and addressing human rights abuses companies expose themselves to financial liability and reputational harm which shareholders (if not the directors and officers of the company themselves) see as entirely contrary to their interests.

Consequently, Amnesty points out, corporations tend to respond in ways that can compound the abuse: “deals with governments, denying victims access to vital information and using vastly greater financial means to delay and frustrate attempts to bring cases to court.”

Another problem highlighted by Amnesty is that large companies tend to be structured as a collection of separate legal entities whose liability is compartmentalized. While recognizing that it is not realistic to try to change this well-entrenched feature of corporation-friendly legal systems, Amnesty argues that “a counter-balance is needed to protect public interest and the international human rights framework.”

Amnesty amplifies its analysis through four detailed case studies. The first is the 1984 Bhopal catastrophe, in which a massive leak of toxic methyl isocyanate gas at a facility owned by a subsidiary of Union Carbide killed thousands and caused debilitating illnesses in tens of thousands more. Union Carbide paid what the victims considered grossly inadequate compensation while its CEO, with the help of the U.S. government, evaded extradition on criminal charges. Dow Chemical, which acquired Union Carbide in 2001, has refused to do anything more to help the victims.

The other situations examined in the Amnesty report are not as well known. The first is the Omai gold mine in Guyana, where the rupture of a tailings dam in 1995 spilled a vast quantity of effluent laced with cyanide and heavy metals into two rivers. The mining operation and the dam were run by Omai Gold Mines Limited, a company controlled at the time by Canada’s Cambior Inc. Soon after the accident, Cambior paid out modest amounts in compensation to local residents while vigorously contesting legal actions brought both in Guyana and in Canada. The company, which later merged with another Canadian firm, Iamgold, never paid out anything more.

Amnesty’s third case study deals with the Ok Tedi mine in Papua New Guinea, where for many years waste products were dumped into a river used by some 250 communities of indigenous people. In 1994 a lawsuit on behalf of local residents was filed in Australia, the home country of the company, Broken Hill Proprietary, which at the time was the primary operator of the mine. BHP, now part of BHP Billiton, eventually agreed to an out-of-court settlement that included the equivalent of $86 million in compensation but did not require it to build a long overdue tailings dam.

The final case study in the Amnesty report is also the most recent. In 2006 the Dutch oil trading company Trafigura signed a dubious agreement with a small firm in Ivory Coast that allowed it to dump petroleum waste products at various sites in the city of Abidjan. Thousands of residents exposed to the substances suffered from nausea, headaches, breathing difficulties, stinging eyes and burning skin. At least 15 were reported to have died. Trafigura reached a settlement that Amnesty labels as insufficient.

Amnesty finishes its report with an analysis of what it calls the three biggest obstacles in such cases: the legal hurdles to extraterritorial action, the lack of information needed to support claims for adequate reparations and the unwillingness of the governments of the countries involved to hold foreign corporations to full account. While offering a set of reforms aimed at alleviating these challenges, Amnesty harbors no illusions about the difficulty of bringing about such changes. Legal systems, it admits, exist primarily to protect powerful corporate interests.

Pfizer’s Long Corporate Rap Sheet

Thursday, November 22nd, 2012

The Dirt Diggers Digest is taking a break from commentary for the Thanksgiving holiday, but the Corporate Rap Sheets project marches on. I’ve just posted a dossier on drug giant Pfizer. Here is its introduction:

Pfizer made itself the largest pharmaceutical company in the world in large part by purchasing its competitors. In the last dozen years it has carried out three mega-acquisitions: Warner-Lambert in 2000, Pharmacia in 2003, and Wyeth in 2009.

Pfizer has also grown through aggressive marketing—a practice it pioneered back in the 1950s by purchasing unprecedented advertising spreads in medical journals. In 2009 the company had to pay a record $2.3 billion to settle federal charges that one of its subsidiaries had illegally marketed a painkiller called Bextra. Along with the questionable marketing, Pfizer has for decades been at the center of controversies over its pricing, including a price-fixing case that began in 1958.

In the area of product safety, Pfizer’s biggest scandal involved defective heart valves sold by its Shiley subsidiary that led to the deaths of more than 100 people. During the investigation of the matter, information came to light suggesting that the company had deliberately misled regulators about the hazards. Pfizer also inherited safety and other legal controversies through its big acquisitions, including a class action suit over Warner-Lambert’s Rezulin diabetes medication, a big settlement over PCB dumping by Pharmacia, and thousands of lawsuits brought by users of Wyeth’s diet drugs.

Also on Pfizer’s list of scandals are a 2012 bribery settlement; massive tax avoidance; and lawsuits alleging that during a meningitis epidemic in Nigeria in the 1990s the company tested a risky new drug on children without consent from their parents.

READ THE ENTIRE PFIZER RAP SHEET HERE.

Patriotism is for the Little People

Thursday, June 14th, 2012

ING’s “Your Number” ad campaign touts the financial services company’s ability to help customers figure out how much they need to save for retirement.  We’ve just learned that ING’s own number is $619 million, the amount it had to pay to settle charges of having violated federal law by systematically concealing its prohibited transactions with Iran and Cuba.

The penalty agreed to by Netherlands-based ING is the largest in a series of cases in which major banks have been accused of doing business with countries targeted by U.S. economic sanctions. One of those banks is JPMorgan Chase, whose CEO Jamie Dimon just appeared before Congress to explain billions of dollars in trading losses and was treated with deference by most members of the Senate Banking Committee. It was just ten months ago that JPMorgan paid $88 million to resolve civil charges related to thousands of prohibited funds transfers for Iranian and Cuban parties.

JPMorgan got off a lot cheaper than some European banks, which were hit with criminal as well as civil charges. Apart from ING, Lloyds Banking Group paid $350 million in 2009, Credit Suisse paid $536 million that same year, and Barclays paid $298 million in 2010. Yet even those amounts did not cause much pain for the large institutions. In fact, they were undoubtedly happy to pay the penalties as part of arrangements that allowed them to avoid more serious legal consequences. They all were granted deferred prosecution deals under which they avoided a formal criminal conviction by vowing to clean up their act. A frustrated federal judge in the Barclays case called the settlement a “sweetheart deal” but approved it nonetheless.

The most comprehensive U.S. economic sanctions currently in force are aimed at Cuba, Iran, Burma/Myanmar, Sudan and Syria. More limited sanctions regimes apply to various other countries such as North Korea and Somalia. The Cuban sanctions, which date back to 1962, were adopted under the rubric of the World War I-era Trading with the Enemy Act. More recent restrictions are based primarily on the International Emergency Economic Powers Act of 1976.

Starting in the George W. Bush Administration, attention was directed from countries as a whole to designated individuals and organizations from those countries and others deemed to be acting against U.S. interests, including alleged terrorists and terrorist financiers. These parties are included in a list of Specially Designated Nationals and Blocked Persons maintained by the Treasury Department’s Office of Foreign Asset Controls (OFAC), which enforces the civil provisions of the sanctions laws.

Violations of these laws did not begin with the recent bank cases. In 2002 the Corporate Crime Reporter obtained documents from OFAC revealing previously unreported enforcement actions against companies such as Boeing, Citigroup, General Electric, Merrill Lynch and Morgan Stanley. The agency had brought 115 cases over a four-year period. Over the past decade, OFAC has been more open about its enforcement actions, but fewer U.S. companies are being targeted.

The reason is not that American firms have gotten more ethical, but rather because many of them have in effect been allowed to sidestep the law. In December 2010 the New York Times revealed that the Treasury Department has been granting licenses to many large companies to sell goods to Iran under an exceedingly broad interpretation of the agricultural and humanitarian exemptions. Among the products that sneaked in under those loopholes were cigarettes and chewing gum.

Whatever one thinks of the wisdom or efficacy of economic sanctions, the way in which large companies have related to them says a lot about corporate power. It’s clear that, whenever possible, they will put their commercial interests ahead of strict compliance with the law and adherence to the foreign policy objectives of their own government and those of its allies. When individuals collaborate with enemy nations they risk indefinite detention. When corporations do so, they receive affordable fines while avoiding serious legal consequences. Even admitted violators such as ING, Credit Suisse, Lloyds and Barclays do not end up on OFAC’s blacklist.

The late real estate tycoon Leona Helmsley once said that paying taxes is only for the little people; apparently, patriotism falls into the same category.

Another Supreme Court Boost for Corporate Unaccountability?

Thursday, March 8th, 2012

Global corporations often think they are above the law, but for more than a decade some of the most egregious human rights and environmental violators have had to answer for their overseas actions in U.S. courtrooms. It now appears that the conservatives on the Supreme Court want to put an end to this key tool of corporate accountability.

The controversy surrounds a once-obscure 1789 law known as the Alien Tort Statute or the Alien Tort Claims Act (ATCA). It allows foreign citizens to bring civil actions in U.S. courts involving violations of international law or a treaty signed by the United States. The long dormant law was revived in the 1980s by the Center for Constitutional Rights (CCR) as a vehicle for pursuing individual human rights violators and later came to be used against corporations as well.

One of the latter cases, involving Royal Dutch Petroleum, the parent of Shell Oil, made its way to the Supreme Court, where during recent oral arguments justices such as Alito and Kennedy expressed disdain for ATCA. Disposing of any remnant of American exceptionalism when it comes to human rights enforcement, Justice Alito insisted that allegations of Royal Dutch complicity in torture in Nigeria have “no connection” to the United States. “What business does a case like that have in the courts of the United States,” he complained.

Following the oral arguments, the Supreme Court seemed to signal that it wants to address (and quite possibly strike down) ATCA cases against individuals as well as corporations. It asked for additional briefs to be filed by June and will hear new arguments during the court’s next term. This move puts off the day of reckoning for ATCA for some months, but if the tenor of the recent oral arguments reflected the thinking of the justices, ATCA will not be with us for much longer.

To get a sense of what we may be losing, it is worth taking a look at how ATCA has been used to address corporate transgressions. Apart from the Royal Dutch matter still before the Supreme Court, here are some of the main cases that have been brought:

Doe v. Unocal. This pioneering corporate ATCA case was filed in 1996 by a group of Burmese citizens against U.S.-based Unocal (later taken over by Chevron), which was accused of complicity in abuses such as forced relocation, forced labor, murder, rape and torture by the Burmese military during the construction of a gas pipeline project sponsored by the company and the military. The case, brought with the help of CCR and EarthRights International (ERI), was settled out of court in 2005.

Wiwa v. Royal Dutch Petroleum/Shell Oil. In 1996 CCR and ERI helped bring an earlier case against Royal Dutch and Shell involving human rights abuses in Nigeria, especially the execution of Ogoni activist Ken Saro-Wiwa in 1995. On the eve of a trial in 2009, the companies agreed to a $15.5 million settlement.

Bowoto v. Chevron. In 1999 a group of Nigerians of the Niger Delta region, where Chevron is engaged in oil production, brought suit against the company, which they accused of complicity in torture, summary execution and other human rights abuses carried out by the Nigerian police and military against people protesting environmental violations on the part of the company. In 2008 a federal jury ruled in favor of the company, but the plaintiffs, who have been aided by CCR and ERI, filed an appeal which is pending.

Sarei v. Rio Tinto. In 2000 a group of residents of the island of Bougainville in Papua New Guinea (PNG) brought an ATCA suit against this mining giant, alleging that it was complicit in crimes against humanity committed by the PNG army during a secessionist conflict. The plaintiffs also accused the company of environmental crimes. The case has gone through a series of twists and turns over the past decade and is still pending after the U.S. Court of Appeals reversed a lower court’s dismissal of the case last October.

John Doe v. Exxon Mobil.  In 2001 a group of villagers from the Indonesian province of Aceh, working with the International Labor Rights Fund (ILRF), brought an ATCA case accusing the oil giant of complicity in human rights abuses committed by Indonesian security forces. For more than a decade the case has made its way through various courts and remains unresolved.

SINALTRAINAL et al. v Coca-Cola et al. In 2001, several individuals and the Colombian trade union SINALTRAINAL, with the help of ILRF and U.S. unions, brought suit against Coca-Cola and two of its Latin American bottlers in connection with the torture and murder of trade unionists by paramilitary groups. A federal judge removed Coca-Cola from the case, which was later dismissed in its entirety (though a related campaign continues).

It’s clear from this brief review that ATCA cases have faced high hurdles and protracted legal maneuvering on the part of the defendants, and only rarely have they achieved success in the form of a settlement. In 2004 the Supreme Court, amid intense pressure from the corporate world and the Bush Administration, declined to ban ATCA cases, though it insisted that only a narrow category of cases could be brought under the statute.

A majority of the current Court seems less interested in such compromises and more inclined to sweep away ATCA in a Citizens United-type affirmation of corporate unaccountability that will be celebrated by repressive governments and their foreign investors around the world.

Note: A list of pending ATCA cases can be found on the website of International Rights Advocates. An excellent resource on ATCA cases and other issues involving the conduct of global corporations can be found on the website of the Business and Human Rights Resource Centre.

What the Shell?

Thursday, August 18th, 2011

United Nations Environment Program photo of oil contamination in Nigeria.

It seems that the multinational oil giants are taking turns having spills. After BP’s big mess in the Gulf of Mexico last year and Exxon Mobil’s accident in Montana this year, it is now Royal Dutch Shell that is spewing oil where it should not be going.

More than 50,000 gallons have leaked from a Shell pipeline off the coast of Scotland in the worst North Sea oil spill in more than a decade. Shell has had difficulty locating the source of the leak and identifying its cause.

Just as the Exxon Mobil accident could be seen as a warning about the perils of the giant Keystone XL pipeline project extending from Canada to Texas, so can the Shell accident be viewed as a reminder about the dangers of another petroleum initiative: the proposal by Royal Dutch Shell’s U.S. subsidiary, Shell Oil, to begin drilling exploratory wells in the Chukchi Sea off the northern coast of Alaska. The North Sea accident occurred only days after the U.S. Interior Department gave Shell conditional approval for the Alaska project.

The gods seem to strike back each time the Obama Administration decides to give a green light to offshore oil activity. BP’s gulf disaster happened only days after Obama opened vast coastal areas to new drilling.

There are countless environmental reasons why Shell’s Alaska initiative is a bad idea. It should also be blocked for another reason: Shell cannot be trusted.

For the past three decades or more, Shell has been involved in a long series of accidents, spills and other mishaps at many of its offshore and onshore facilities around the world. It also has a checkered history with regard to human rights and was implicated in a scandal about false reporting about its oil reserves. Here are some of the more notorious features of the company’s track record, which I compiled for a profile on the Crocodyl wiki:

  • A 1988 explosion at a Shell refinery in Louisiana killed seven workers, whose families sued the company and collected more than $40 million in damages.
  • In 1989 Shell paid $19 million to settle federal charges relating to a spill at its refinery in Martinez, California that the company did not disclose for four weeks.
  • In 1995 Shell agreed to pay $3 million to settle a lawsuit brought by the California Public Interest Research Group charging that the company had dumped illegal amounts of selenium into San Francisco Bay and the Sacramento-San Joaquin River Delta.
  • In 1995 Royal Dutch Shell was also the target of a boycott and other protests in Europe over a plan by the company and its joint venture partner Exxon to sink an obsolete offshore oil storage facility known as Brent Spar in the North Sea rather than dismantling it. Environmental groups, led by Greenpeace, warned that the structure, which contained oil sludge, heavy metals and some low-grade radioactive waste, could damage the food chain for fish in the area. The company gave in the pressure and brought the Brent Spar to shore.
  • In 1998 Shell Oil agreed to pay $1.5 million to settle federal charges that its refinery in Roxanna, Illinois was responsible for illegal discharges of pollutants into the Mississippi River.
  • In 2001 Shell Oil and three other major petroleum companies settled a lawsuit filed in California by agreeing to clean up some 700 sites in the state that had been contaminated by the gasoline additive MTBE.
  • In 2005 Shell was fined £900,000 in connection with the 2003 deaths of two workers on a North Sea oil platform as the result of a major gas leak.
  • In the late 2000s, Royal Dutch Shell found itself facing increasing criticism for its huge liquefied natural gas project on the island of Sakhalin in the Russian Far East. Pacific Environment, a San Francisco-based advocacy group, collaborated with Russian activists to form Sakhalin Environment Watch, which challenged the offshore Sakhalin project because it threatened the survival of the world’s most endangered species of whales—Western Pacific Grays. In 2008 the British newspaper The Observer reported that it had obtained dozens of internal e-mails showing that Shell officials in London sought to influence the conclusions of a purportedly independent environmental review of the Sakhalin project.
  • Shell has also been heavily involved in the environmentally disastrous tar sands industry in Canada.

Shell’s tarnished human rights record dates back to the 1980s, when it was targeted for its investments in apartheid-era South Africa. In the early 1990s Shell began to face protests over its oil operations in Nigeria. In 1994 the Movement for the Survival of the Ogoni People, then led by Ken Saro-Wiwa, began blockading contractors working on Shell’s facilities to bring attention to the large number of pipeline ruptures, gas flaring and other forms of contamination that were occurring in the Ogoniland region. The group described Shell’s operations as “environmental terrorism.”

The Nigerian government, a partner with Shell in the operations, responded to the protests with a wave of repression, including the arrest of Saro-Wiwa, who was hanged in 1995. Shell denied it was involved, but critics pointed to the role played by the company in supporting the military dictatorship. A lawsuit charging Royal Dutch Shell with human rights violations in Nigeria was later filed in U.S. federal court under the Alien Tort Claims Act. In 2009, just before a trial was set to begin, the company announced that as a “humanitarian gesture” it would pay $15.5 million to the plaintiffs to settle the case.

A report recently released by the United Nations Environment Program estimates that a clean-up of oil industry contamination in Ogoniland will cost at least $1 billion and take up to 30 years.

On its corporate website, Shell insists that “we are qualified to do the job right — to explore for offshore oil and gas in Alaska in a very safe and careful way.” On the Other Earth, perhaps. But not on this one.

Mubarak’s Foreign Corporate Backers

Thursday, February 3rd, 2011

Pro-Mubarak thugs charged into Tahrir Square on horses and camels in an effort to save the embattled Egyptian dictator. It was not long ago that the regime was being propped up by a different breed of supporter: foreign investors arriving on corporate jets with billions of dollars in capital.

Long overdue attention is being paid to the foreign arms contractors that have equipped the Egyptian military with weapons funded by U.S. aid programs. Also deserving of close scrutiny are the major U.S. and European corporations that have invested heavily in Egypt, thereby shoring up the regime. Here are some of the main culprits.

BP. Formerly known as British Petroleum, BP has a long history in the Middle East in general and Egypt in particular. The company’s website makes no bones about its huge involvement in Egypt during the Mubarak regime: “BP Egypt has been a significant part of the Egyptian oil and gas industry for more than 44 years. During this time, we’ve been responsible for almost half of Egypt’s entire oil production and we are the single largest foreign investor in the country…Over the years we’ve established strong relationships with the Egyptian Government and the Ministry of Petroleum.” In July 2010 BP agreed to sell some of its Egyptian assets to Apache Corporation as part of a divestment effort to raise funds to pay for the cleanup of its massive oil spill in the Gulf of Mexico.

Nestlé. Just a week before protests broke out in Cairo, this Swiss food giant announced that it would invest some $170 million to expand its existing factories and distribution centers in Egypt, adding 500 new jobs to its 3,000-person workforce. After the announcement, the country’s Ministry of Investment put out a press release quoting Nestlé’s CEO as saying that the move was based on studies “that had proven Egypt to be a promising market with security, stability and high profitability in the long term.”

Procter & Gamble. In June 2010 P&G laid the cornerstone on a huge new diaper manufacturing plant outside Cairo. The $176 million facility would nearly double the value of P&G’s operations in Egypt, which currently involve the production of products such as detergents, soaps and other personal care products.

Electrolux. The Swedish appliance company announced last October that it would spend about $475 million to buy a controlling interest in Egypt’s Olympic Group, the largest producer of household appliances in the Middle East and North Africa.

Saint-Gobain. In July 2010 the large French construction materials firm opened a $100 million glass production plant in Ain El Sokhna on Egypt’s Red Sea coast.

PepsiCo. In December 2009, International Dairy and Juice Limited, a joint venture between PepsiCo and Almarai, announced that it had acquired Egypt’s International Company for Agro-Industrial Projects (Beyti).

Deals such as these – some of which are now on hold – helped to make Egypt the second largest recipient of foreign direct investment among African nations (behind Angola). In 2008 the U.S.-based National Outsourcing Association named Egypt its “Outsourcing Destination of the Year.”

The appeal of Egypt for foreign investors is not just better access to a market of 80 million consumers. As in China, a repressive political environment has weakened the power of labor and kept down wages to the advantage of major employers, both foreign and domestic.

Egyptian workers have been attempting to build a movement that would help raise their standard of living. A series of labor protests helped pave the way for the current uprising. The group that is credited with sparking the revolt, the April 6 Movement, takes its name from the effort to support workers who launched an aborted general strike in 2008. Hundreds of workers took to the streets of Cairo last May to call for an increase in the country’s pitiful minimum wage while also calling for an end to Mubarak’s rule. And amid the current revolt, Egyptian workers formed a new independent labor federation.

Large corporations try to have it both ways. They promote the view that the expansion of “free” markets goes hand-in-hand with the growth of free societies, yet they do not hesitate to do business in the most repressive societies. And they are quick to take advantage of repression’s side effects, above all weak unions.

However the uprising in Egypt turns out, it has served to highlight the hypocrisy not only of the U.S. government but also that of big business when it comes to selective support for democracy. And like the Obama Administration, major corporations will have to scramble to avoid ending up on the wrong side of history.

European Companies Behaving Badly

Thursday, September 9th, 2010

Many American workers are irate these days about the jobs that are supposedly being taken away from them by undocumented foreign laborers. A new report from Human Rights Watch shows that the real threat to our living standards may come not from Mexican farmworkers, chambermaids or carwashers but from another group of “illegal” immigrants: European transnational corporations investing in the United States.

These companies – which include the likes of T-Mobile parent Deutsche Telekom, DHL Express parent Deutsche Post, French construction materials giant Saint-Gobain and Britain’s Wal-Mart rival Tesco – are illegal in the sense that they fail to comply with international labor norms when it comes to their U.S. operations.

Human Rights Watch, usually preoccupied with the mistreatment of dissidents and others in countries such as the Democratic Republic of Congo, Senegal and Kyrgyzstan, has not hesitated to point out that when it comes to the workplace, the United States is far from a paradigm of respect for individual rights. In 2000 it published a report called Unfair Advantage, which showed how workers’ freedom of association is routinely violated by employers.

Its new report, titled A Strange Case, shows how this pattern of abuse is practiced not only by domestic companies used to a climate of lax labor enforcement, but also by European companies that have much friendlier relations with unions in their home countries and that claim to abide by the principles regarding labor rights included in the declarations and conventions of the International Labor Organization, the Organization for Economic Cooperation and Development, and other global bodies.

Noting that these companies “exploit the loopholes and shortcomings in U.S. labor law” to engage in union avoidance and unionbusting practices, the report states: “The European Dr. Jekyll becomes an American Mr. Hyde.” Another way of putting it is that these companies behave like proper Westerners who indulge in sex with children when traveling to Southeast Asia: they are willing to do things abroad that they would never consider at home.

The Human Rights Watch report documents intimidation tactics used, for example, by T-Mobile in response to an organizing drive led by the Communications Workers of America and by DHL Express in response to a drive launched by the American Postal Workers Union. It also shows how European companies have tried to remove unions already organized, such as the decertification effort by Saint-Gobain against the United Auto Workers at a plant in Massachusetts.  Other case studies show how companies such as Norway’s Kongsberg Automotive use tactics such as the lockout of union workers during contract negotiations that, as the report puts it, are “unheard of in Europe.”

The report points out that these European companies exploiting the lax U.S. labor rights environment are invariably ones that profess to be practitioners of corporate social responsibility (CSR) and that claim to have policies of cooperating with worker organizations throughout their operations. This, along with the fact that environmental criminals such as BP can claim to be CSR advocates, shows that the organizations that rate firms on corporate responsibility have to do a lot more than take company statements at face value.

Although the Human Rights Watch report doesn’t address it, another factor in the ability of European companies to behave badly in the United States is the unwillingness of the unions in their home countries to take aggressive action on this issue. Some of those unions have spoken out forcefully in support of their beleaguered American cousins, but that has not been enough to stop the abuses.

Yet the central problem is not CSR hypocrisy or inadequate labor solidarity, but rather the dismal condition of labor law in the United States. It would be nice if European companies decided on their own accord to treat American workers as they do employees at home, but even better would be if the federal government compelled both foreign and domestic companies to respect the collective bargaining rights of all U.S. workers.

A “Poster Child for Corporate Malfeasance”

Thursday, March 25th, 2010

One of the cardinal criticisms of large corporations is that they put profits before people. That tendency has been on full display in the recent behavior of transnational mining giant Rio Tinto, which has shown little regard for the well-being not only of its unionized workers but also of a group of executives who found themselves on trial for their lives in China.

The China story began last July, when four company executives — including Stern Hu, a Chinese-born Australian citizen — were arrested and initially charged with bribery and stealing state secrets, the latter offense carrying a potential death penalty. The charges, which most Western observers saw as trumped up, were made during a time of increasing tension between Rio and the Chinese government, one of the company’s largest customers, especially for iron ore.

Earlier in the year, debt-ridden Rio had announced plans to sell an 18 percent stake in itself to Chinalco, the state-backed Chinese aluminum company, for about $20 billion. Faced with strong shareholder and political opposition, Rio abandoned the deal in June 2009. The arrests may have been retaliation by the Chinese for being denied easier access to Australia’s natural riches.

Although Rio claimed to be standing by its employees, the case did not curb the company’s appetite for doing business with the deep-pocketed Chinese. Rio continued to negotiate with Beijing on large-scale iron ore sales. It seems never to have occurred to the company to terminate those talks until its people were freed. In fact, only weeks after the arrests, Rio’s chief executive Tom Albanese was, as Canada’s Globe and Mail put it on August 21, “trying to repair his company’s troubled relationship with China.”

Before long, Rio was negotiating with Chinalco about participating in a copper and gold mining project in Mongolia. One thing apparently led to another. In March 2010 — after its still-imprisoned employees had been officially indicted and were about to go on trial — Rio announced that it and Chinalco would jointly develop an iron ore project in the West African country of Guinea.

When that trial began a couple of weeks later, the Rio managers admitted guilt, but not to the more serious charge of stealing trade secrets. Instead, they said they had engaged in bribery — but as recipients rather than payers. While the four defendants may have been guilty of some impropriety, it is likely that the admissions were a calculated move to gain a lighter sentence in a proceeding whose outcome was predetermined. And that was the case in large part because their employer decided that its business dealings were more important than demanding justice for its employees.

Rio is no more interested in justice when it comes to its operations outside China. It has been accused of human rights violations in countries such as Indonesia and Papua New Guinea. And it has a track record of exploiting mineworkers in poor countries such as Namibia and South Africa while busting unions in places such as Australia. Recently, Rio showed its anti-union colors again in the United States.

On January 31 its U.S. Borax subsidiary locked out more than 500 workers at its borate mine in Kern County, California. The workers, members of Local 30 of the International Longshore & Warehouse Union had the audacity of voting against company demands for extensive contract concessions. The company wasted no time busing in replacement workers.

In a press release blaming the union for the lockout, U.S. Borax complained that ILWU members earned much more than workers at the company’s main competitor Eti Maden. The release conveniently fails to mention that Eti Maden’s operations are in Turkey.

Also missing from the company’s statement is the fact that the biggest driver of demand for boron – a material used in products ranging from glass wool to LCD screens – is the Chinese market. If U.S. Borax busts the ILWU in a way that keeps down boron prices, then the ultimate beneficiary may be Rio Tinto’s friends in China.

It is no surprise that mining industry critic Danny Kennedy once wrote that Rio Tinto “could be a poster child for corporate malfeasance.”

Shell’s Self-Serving “Humanitarian” Gesture

Thursday, June 11th, 2009

whaleOne of the advantages for a corporation in resolving a sensitive lawsuit out of court is that it can proclaim innocence and insist it is settling for other reasons. Royal Dutch Shell has done just that in a case brought in connection with the 1995 execution of author Ken Saro-Wiwa and eight other activists who campaigned against the oil company’s operations in the Ogoniland region of Nigeria.

Shell actually was even more brazenly self-serving than the typical company that says it is settling in order to put the case behind it. The Anglo-Dutch transnational insisted that its willingness to pay the plaintiffs US$15.5 million – $5 million of which will go into a trust fund for the Ogoni people – was a “humanitarian gesture.” It was unusual for Shell to allow the amount of the settlement to be disclosed, but it was apparently worth it to draw attention away from the lawsuit’s charges that the company collaborated with the repressive military regime that ruled Nigeria in the 1990s and that put Saro-Wiwa and the others to death after a sham trial. The suit  – brought in U.S. federal court under the Alien Tort Claims Act, the Torture Victim Protection Act and racketeering statutes – also accused Shell of being complicit in crimes against humanity, torture, inhumane treatment, arbitrary arrest, wrongful death, assault and battery, and infliction of emotional distress.

It is understandable why the plaintiffs and their lawyers – led by the Center for Constitutional Rights and EarthRights International – would feel a need to settle a case that had dragged on for 13 years and provide some financial assistance to the Ogoni community. Yet it is frustrating to see Shell trying to turn an outrage into an opportunity to burnish its image, even though other Ogoni claims are still pending.

The frustration is compounded by the fact that Shell continues to engage in dubious behavior in other parts of its global operations. For example, the company has a problematic relationship with another undemocratic government as part of its deep involvement in a massive oil and gas project in the Russian Far East. That offshore project, known as Sakhalin II, has been the subject of a great deal of controversy because it threatens the survival of one of the world’s most endangered species of whales – Western Pacific Grays (photo).

Groups such as Pacific Environment, collaborating with Russian activists who formed Sakhalin Environment Watch, have pressured Shell and its partners to adopt stronger environmental protections or abandon the project. Shell’s largest partner is Gazprom, a publicly traded gas monopoly that is controlled by the Russian government, which has used the company to advance Russian foreign policy goals vis-à-vis Eastern Europe by cutting off gas supplies at various times. Shell has acknowledged that it is interested in developing a new Sakhalin III project in collaboration with Gazprom.

Last year, there were reports that Shell had sought to influence the outcome of a purportedly independent environmental audit of Sakhalin II. Previously, Shell gained notoriety for overstating its proven petroleum reserves by 20 percent. The company ended up paying about $150 million to U.S. and British authorities to settle the charges. It did not try to depict that payment as a humanitarian gesture, but it is possible that one day Shell may have to put a positive spin on millions paid to settle claims stemming from the harms caused in Sakhalin.

Note: If you want to keep track of the far-flung operations of U.S.-based transnationals, check out a new tool called Croctail, which provides an easy way to search the names of domestic and foreign subsidiaries that publicly traded companies report in their 10-K filings to the Securities and Exchange Commission. Croctail is an extension of the Crocodyl wiki of critical corporate profiles sponsored by CorpWatch and other groups (full disclosure: I am a contributor and advisor to Crocodyl).

Giant Mining Firm’s Social Responsibility Claims: Rhetoric or Reality?

Friday, August 1st, 2008

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 find 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 operations.

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 beware.