Archive for the ‘Workplace Safety & Health’ Category

Labor Unenforcement

Thursday, March 16th, 2017

Once upon a time, a key component of American populism was the demand for stricter controls over big business: in other words, regulation. Today, the country’s purported populist in chief is instead promoting the dubious claim that deregulation is what will benefit the masses. Through executive orders and now with his administration’s budget blueprint, Donald Trump is seeking an unprecedented rollback of workplace, environmental and consumer protections.

There are signs that at least one agency in the Trump Administration may not waiting for the legal changes to take effect before providing relief to business. In the eight weeks since the inauguration, the regulatory arms of the Labor Department appear to have been in a near state of suspended animation, at least in terms of their announced enforcement activity.

Take the case of the Occupational Safety and Health Administration. Since the inauguration it has not posted a single press release about an enforcement matter on the DOL website. This compares to more than 70 releases — about the filing of cases or the imposition of penalties — posted during the same period last year.

This can’t be explained by delays in a new administration getting up and running. During the comparable time period for the newly installed Obama Administration in 2009, OSHA made more than 30 enforcement announcements.

A similar pattern can be seen at DOL’s Wage and Hour Division, which under the Obama Administration aggressively pursued employers that violated minimum wage, overtime and other provisions of the Fair Labor Standards Act. Since January 20, the WHD has made only one case announcement. By contrast, during the same period last year WHD announced 35 cases in which an employer was being sued or had settled allegations by agreeing to pay back wages and sometimes a monetary penalty. In 2009, right after Obama took office, the WHD announced 14 cases in the same period.

Other parts of the Labor Department are also quiet. The Office of Federal Contract Compliance Programs, which makes sure government contractors comply with anti-discrimination laws, has not issued a single press release since inauguration day — on enforcement matters or anything else.

Enforcement is handled by career employees of the DOL, whose activities should not be affected by the delays in filling the Labor Secretary’s job, unless their work is being impeded by Trump’s appointed “beachhead” officials now running the department.

There are no indications that the work of DOL agencies has been suspended. Yet the almost complete disappearance of enforcement announcements may indicate that the Trump appointees have been holding up case resolutions or are choosing not to publicize those matters that have been resolved.

In any event, this enforcement lethargy may be a rehearsal for things to come. The Trump budget blueprint calls for a 21 percent reduction in DOL funding, and while the document provides limited details on what would be targeted, a cut of that size is bound to impair enforcement. How many workers who voted for Trump were seeking more dangerous conditions on the job and greater vulnerability to wage theft?

UPDATE: It’s been pointed out to me that despite the absence of OSHA press releases the agency is still posting enforcement actions on its website on this page, which shows numerous cases since Inauguration Day.

The 2016 Corporate Rap Sheet

Thursday, December 22nd, 2016

The two biggest corporate crime stories of 2016 were cases not just of technical lawbreaking but also remarkable chutzpah. It was bad enough, as first came to light in 2015, that Volkswagen for years installed “cheat devices” in many of its cars to give deceptively low readings on emissions testing.

Earlier this year it came out that the company continued to mislead U.S. regulators after they discovered the fraud. VW has agreed to pay out more than $15 billion in civil settlements but it is not yet clear what is going to happen in the ongoing criminal investigation.

Brazenness was also at the center of the revelation in August that employees at Wells Fargo, presumably under pressure from managers, created more than one million bogus accounts in order to generate fees from customers who had no idea what was going on. The story came out when the Consumer Financial Protection Bureau announced that the bank would pay $100 million to settle with the agency and another $85 million in related cases.

But that was just the beginning of the consequences for Wells. CEO John Stumpf was raked over the coals in House and Senate hearings, and he subsequently had to resign. Criminal charges remain a possibility.

The other biggest corporate scandal of the year involved drugmaker Mylan, which imposed steep price increases for its EpiPens, which deliver lifesaving treatment in severe allergy attacks. The increases had nothing to do with rising production costs and everything to do with boosting profits. The company’s CEO was also grilled by Congress, which however could do little about the price gouging.

Here are some of the other major cases of the year:

Toxic Securities. There is still fallout from the reckless behavior of the banks leading up to the 2008 financial meltdown. Goldman Sachs paid more than $5 billion to settle a case involving the packaging and sale of toxic securities, while Morgan Stanley paid $2.6 billion in a similar case.

Mortgage Fraud. Wells Fargo had to pay $1.2 billion to settle allegations that during the early 2000s it falsely certified that certain residential home mortgage loans were eligible for Federal Housing Administration insurance. Many of those loans later defaulted.

False Claims Act. Wyeth and Pfizer agreed to pay $784 million to resolve allegations that Wyeth (later acquired by Pfizer) knowingly reported to the government false and fraudulent prices on two of its proton pump inhibitor drugs.

Kickbacks. Olympus Corp. of the Americas, the largest U.S. distributor of endoscopes and related equipment, agreed to pay $623 million to resolve criminal charges and civil claims relating to a scheme to pay kickbacks to doctors and hospitals in the United States and Latin America.

Misuse of customer funds. Merrill Lynch, a subsidiary of Bank of America, agreed to pay $415 million to settle Securities and Exchange Commission allegations that it misused customer cash to generate profits for the firm and failed to safeguard customer securities from the claims of its creditors.

Price-fixing. Japan’s Nishikawa Rubber Co. agreed to plead guilty and pay a $130 million criminal fine for its role in a conspiracy to fix the prices of and rig the bids for automotive body sealing products installed in cars sold to U.S. consumers.

Accounting fraud. Monsanto agreed to pay an $80 million penalty and retain an independent compliance consultant to settle allegations that it violated accounting rules and misstated company earnings pertaining to its flagship product Roundup.

Consumer deception. Herbalife agreed to fully restructure its U.S. business operations and pay $200 million to compensate consumers to settle Federal Trade Commission allegations that the company deceived customers into believing they could earn substantial money selling diet, nutritional supplement, and personal care products.

Discriminatory practices. To resolve a federal discrimination case, Toyota Motor Credit Corp. agreed to pay $21.9 million in restitution to thousands of African-American and Asian and Pacific Islander borrowers who were charged higher interest rates than white borrowers for their auto loans, without regard to their creditworthiness.

Sale of contaminated products. B. Braun Medical Inc. agreed to pay $4.8 million in penalties and forfeiture and up to an additional $3 million in restitution to resolve its criminal liability for selling contaminated pre-filled saline flush syringes in 2007.

Pipeline spills. To resolve allegations relating to pipeline oil spills in Michigan and Illinois and 2010, Enbridge agreed to pay Clean Water Act civil penalties totaling $62 million and spend at least $110 million on a series of measures to prevent spills and improve operations across nearly 2,000 miles of its pipeline system in the Great Lakes region.

Mine safety. Donald Blankenship, former chief executive of Massey Energy, was sentenced to a year in prison for conspiring to violate federal mine safety standards in a case stemming from the 2010 Upper Big Branch disaster that killed 29 miners.

Wage theft. A Labor Department investigation found that Restaurant Associates and a subcontractor operating Capitol Hill cafeterias violated the Service Contract Act by misclassifying employees and paying them for lower-wage work than they actually performed. The workers were awarded more than $1 million in back pay.

False advertising. For-profit DeVry University agreed to pay $100 million to settle Federal Trade Commission allegations that it misled prospective students in ads touting the success of graduates.

Trump University. Shortly after being elected president, Donald Trump agreed to pay $25 million to settle fraud allegations made by the New York State Attorney General and others concerning a real estate investment training course.

Remember: thousands of such cases can be found in the Violation Tracker database my colleagues and I at the Corporate Research Project of Good Jobs First produce. Look for expanded coverage in 2017.

Monsanto’s German Suitor Has Its Own Tainted Record

Thursday, May 26th, 2016

Monsanto, one of the most controversial corporations in the United States, now finds itself the target of a takeover campaign by German pharmaceutical and chemical giant Bayer. Would a change in ownership improve the behavior of the biotechnology company dubbed “Mutanto” by its critics?

Answering that question requires a look at Bayer’s own track record, which is far from unblemished. Most Americans associate Bayer with aspirin. The company created the analgesic in 1899, but during World War I the U.S. government seized Bayer’s American assets and allowed other firms to sell aspirin under the Bayer name until the German company bought back the rights in 1994.

In the 1920s Bayer was absorbed into the massive IG Farben cartel, which used slave labor and supported the Nazi regime. After the Second World War it re-emerged as one of the companies created through the break-up of IG Farben. During the 1950s it began to return to the U.S. market through efforts such as a joint venture with Monsanto (in its pre-agribusiness era) called Mobay Chemical.

As Bayer has stepped up its U.S. involvement over the past two decades it has gotten embroiled in one scandal after another. In 1997 one of its subsidiaries based in New Jersey pled guilty to criminal price-fixing and had to pay a $50 million fine. In 2000 Bayer had to pay $14 million to the federal government and the states to settle allegations that it inflated prices on drugs sold to the Medicaid program. In 2001 it was accused of price-gouging on the antibiotic Cipro, which was then in high demand because of the anthrax scare. It later had to pay $257 million to settle a federal lawsuit on Cipro overcharging.

In 2003 documents emerged suggesting that Bayer was aware of serious safety problems with its cholesterol drug Baycol long before the medication was withdrawn from the market. In 2004 Bayer had to pay a $66 million fine in another criminal price-fixing case. A 2008 explosion at a Bayer pesticide plant in West Virginia that killed two workers led to regulatory penalties including a $5.6 million settlement with the EPA. A report found that management deficiencies played a significant role in creating the conditions that caused the explosion.

That’s just the quick version of Bayer’s controversies. For more see the website of the Coalition against BAYER-dangers, a German watchdog group that has been monitoring the company for more than 30 years.

Perhaps most troubling is the fact that Bayer has already been active in the businesses in which Monsanto has gained its checkered reputation: agricultural chemicals and genetically modified seeds. Before the Monsanto bid, Bayer was in the news most often because of concerns that its pesticides were responsible for sharp drops in bee populations.

The chances that a Bayer takeover of Monsanto will get the U.S. company to clean up its act seem slim indeed. In fact, the combined company will probably be an even bigger threat.

Remembering Fallen Workers and Negligent Corporations

Thursday, April 28th, 2016

workers memorialWorkers Memorial Day (April 28) is not one of those holidays on which to give thanks and feel good. It is a time to be angry about the fact that nearly 5,000 people each year are killed on the job in the United States in accidents that in many cases were the result of management negligence. Millions more are injured or contract occupational illnesses. The just-published 25th edition of the AFL-CIO’s Death on the Job annual report makes for sobering reading.

While this day is a time to “remember those who have suffered and died on the job,” it should also be an occasion to point the finger at those corporations which have done the most to cause those outcomes. A list can be found by consulting Violation Tracker, the database my colleagues and I at the Corporate Research Project of Good Jobs First introduced last fall.

We identified thousands of individual companies that have been hit with serious, willful and repeated violations by the Occupational Safety and Health Administration since the beginning of 2010, and we linked many of those to parent companies. These large firms, which have the resources to ensure safe conditions, probably bear the most responsibility for workplace harms. Here’s a dishonor roll of big business occupational safety culprits.

BP. The British oil giant with extensive U.S. operations is a poster boy for safety lapses. Since the beginning of 2010 it has had to pay more than $60 million to settlement OSHA cases — an amazing amount given the pitifully low levels at which the agency’s standard penalties have been kept by Congress. Most of the penalty total derived from an explosion at the company’s Texas City refinery that killed 15 workers and injured 180 others.

Louis Dreyfus Group. This French conglomerate is on the list because of its ownership of Imperial Sugar, which in 2010 had to pay OSHA $6 million to settle more than 120 violations linked to a 2008 explosion at its plant in Port Wentworth, Georgia.

Tesoro. Criticized by the United Steelworkers for its safety shortcomings, the oil refiner has accumulated some $2.5 million in OSHA penalties since 2010. A report by the U.S. Chemical Safety Board cited “safety culture deficiencies” as among the causes of a 2010 explosion at a Tesoro refinery in Anacortes, Washington that killed seven workers.

Dollar Tree. This deep-discount retailer has racked up more than $2 million in OSHA penalties since 2010 because of repeated violations for piling boxes in storage areas of its stores to dangerous heights and blocking emergency exits.

Ashley Furniture. This retailer and manufacturer was fined $1.8 million last year for 38 willful, serious or repeated violations at a plant in Wisconsin stemming from the company’s failure to protect workers from moving equipment parts. One worker lost three fingers while operating a woodworking machine lacking required safety protections. OSHA later proposed another $431,000 in fines for similar problems at another Ashley facility.

Chevron. The petroleum giant has been hit with more than $1 million in OSHA fines since 2010, most of that amount coming from a slew of serious violations relating to a 2012 fire at the company’s refinery in Richmond, California.

While remembering fallen workers let’s not forget these companies and others whose negligence was often to blame.

Trump and Workplace Safety

Thursday, March 31st, 2016

trump_sohoLike the other Republican candidates, Donald Trump bashes federal regulation of business. He’s called the Environmental Protection Agency “a disgrace,” saying it is “making it impossible” for companies to function. Yet it’s difficult to find any statements by Trump on another favorite regulatory whipping boy for conservatives: the Occupational Safety and Health Administration.

Trump’s silence on the subject is all the more significant given that in his business career he has had personal experience with workplace safety issues. Those dealings have not always put him in the best light.

The biggest controversy he has faced in this area involves the Trump SoHo New York. During construction of the high-rise hotel in January 2008, a portion of the top two floors buckled while concrete was being poured, sending one worker, Yurly Yanchytsky, plummeting 42 stories to his death and injuring three others, one of whom survived only because he fell into protective netting (photo).

All of the workers were employees of DiFama Concrete, a subcontractor which was charged by OSHA with various violations of regulations relating to cast-in-place concrete and fall protection. The agency initially imposed 10 violations with total penalties of $104,000. The company negotiated those down to five violations and penalties of $44,000.

This was not the first blemish on DiFama’s safety record. According to the OSHA inspection database, during the previous four years the company had been cited by OSHA for about a dozen serious violations and initially penalized $97,000 (negotiated down to about $67,000). One of those cases also involved a fatality. DiFama, by the way, was founded by Joseph Fama, who had been identified as an associate of the Lucchese organized crime family. In 2005 he divested his interest in the firm because he was being imprisoned after pleading guilty to federal racketeering and extortion charges.

Trump initially distanced himself from the accident, saying that he had simply licensed his name to the project. Yet the New York Daily News reported last year that a top official at Bovis Lend Lease, the general contractor for the project, stated in a deposition that Trump had personally reviewed the agreements with the subcontractors, including the one with DiFama. The Trump SoHo is currently listed on the Trump Organization website as part of its real estate portfolio and its hotel collection.

The SoHo hotel is not the only Trump-related property to have had problems with workplace safety. The OSHA inspection database lists other violations at places such as the Trump International Hotel & Tower Las Vegas. Undoubtedly, there are many more listed under the names of the contractors and subcontractors hired on the various projects. Inspection records from the 1980s show numerous violations at the Atlantic City casinos Trump owned at the time but subsequently had to sell.

Trump has boasted that he would be “the greatest jobs president that God has ever created.” It remains unclear how important it is to him that those jobs be free from undue safety and health risks.

Amazon Delivers Exploitation

Thursday, January 28th, 2016

workhardThe 2015 financial results just announced by Amazon.com leave no doubt: the “everything store” is well on its way to dethroning Wal-Mart as the king of retail. Unfortunately, it also seems intent on taking over the role of the worst employer.

Amazon’s revenues leaped 20 percent last year to $107 billion as it dominated online commerce, especially during the holiday season. Profitability remained weak, but that’s a result of heavy spending to build a network of distribution centers enabling superfast delivery. It’s not because Amazon is generous to its 150,000 employees.

On the contrary, lousy working conditions have been a fact of life at Amazon since its earliest years. In 1999 the Washington Post published a story about the pressure put on customer service representatives to work at breakneck speed. “If it’s hard for you to go fast,” one Amazon manager told the newspaper, “it can be hard for you here.”

Amazon — which adopted the employee motto “Work hard, have fun and make history” — successfully opposed union organizing drives at its distribution centers using traditional retrograde employer tactics such as captive meetings and the closing of facilities where pro-union sentiment ran too high.

In the absence of unions, Amazon was able to go on using temp agencies to hire workers, who could thus be easily terminated if they did not meet the company’s unreasonable productivity demands. Amazon even skimped on things such as providing a tolerable temperature level in its vast warehouses. In 2011 the Allentown (Pennsylvania) Morning Call published a lengthy exposé on working conditions at Amazon’s sprawling Lehigh Valley distribution center, where temperatures rose so high during the summer that the overtaxed workers suffered from dehydration and other forms of heat stress. People collapsed so frequently that Amazon arranged for ambulances to be standing by outside the facility. It was only after the story gained national coverage that Amazon broke down and installed air conditioning.

The intense pace of work has also contributed to accidents. In June 2014 the Occupational Safety and Health Administration cited third-party logistics company Genco and three staffing services for serious violations in connection with a December 2013 incident in which a temp worker was crushed to death at an Amazon distribution center in Avenel, New Jersey. OSHA proposed fines of $6,000 against each of the companies. The agency said it was also investigating a fatality at another Amazon distribution center in Carlisle, Pennsylvania. Amazon itself was fined $7,000 at its warehouse in Campbellsville, Kentucky.

Amazon has also been the subject of complaints regarding violations of the Fair Labor Standards Act, including the failure to compensate workers for time spent waiting in long lines at the end of shifts to be searched to make sure they aren’t stealing merchandise. In October 2015 drivers for the Amazon Prime Now delivery service in California filed a class action lawsuit charging that they were being misclassified as independent contractors and thus denied protection under state laws governing minimum wages, overtime pay and business expense reimbursement.

Reports about harsh working conditions have also surfaced in connection with Amazon’s facilities in Europe. In 2013 a German television program documented the brutal treatment of temp workers brought in from Poland, Spain and other countries to help with the Christmas rush at Amazon’s German distribution centers. The abuses were said to be carried out by black-uniformed guards employed by a security company hired by Amazon, which responded to the scandal by ending its relationship with the firm. Amazon was also confronted by its regular German distribution center employees, who began staging strikes to support demands for higher pay. Amazon, unlike most domestic and foreign employers, refused to cooperate with the country’s powerful labor unions.

Labor protests have also taken place in response to conditions at Amazon distribution centers in the United Kingdom. In 2013 the BBC sent an undercover reporter to work at one of those centers and aired a program describing the hectic work pace and quoting an academic expert as saying that it created “increased risk of mental illness and physical illness.”

Rather than improving working conditions, Amazon has focused on replacing workers with automation, a move assisted by the 2012 purchase of the robotics company Kiva Systems. A February 2015 article in the Seattle Times reported that a new Amazon warehouse in Washington was “teeming with hundreds of Kiva robots. Those are the squat, coffee table-sized gadgets that buzz around, lifting and moving shelves of products, delivering them to workers who pluck items to be shipped off to customers.” It seems that the robots are not making things easier for workers; instead, they are probably helping to intensify the pace at which the reduced workforce is expected to toil.

Labor controversies are not limited to distribution centers. Charges of abysmal working conditions have also been raised in connection with Mechanical Turk, a service created by Amazon to parcel out repetitive online tasks to thousands of individuals who are paid on a piecework basis. It’s been estimated that these “crowdworkers” earn an average of about $2 an hour.

In August 2015 the New York Times published an investigation of Amazon’s white-collar workforce, describing a situation in which employees were compelled to work long hours and were encouraged to criticize one another mercilessly. The rigid system was said to be governed by a series of principles promulgated by company founder and CEO Jeff Bezos that everyone was expected to follow. Those who failed to adjust to the system were dismissed.

When Amazon released its diversity data for the first time in 2014, the percentage of the U.S. workforce that was black or Hispanic was nearly 25 percent, far higher than at other tech companies. Yet subsequent data indicated that many of those minorities were employed at its warehouses and in other relatively low-skill jobs. Just 10 percent of Amazon’s executive and technical employees are black or Hispanic.

Speed-up, wage theft, union-busting, safety and health abuses: Amazon stocks the full inventory of exploitative labor practices.

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New in Corporate Rap Sheets: Food giant ConAgra, touting its Healthy Choice brand, has been involved in a long series of food and workplace safety controversies.

A Struggling Arch Coal Deserves Little Sympathy

Thursday, January 21st, 2016

archcoalArch Coal recently became the latest and largest coal producer to seek protection in Chapter 11. The company has also lost its listing on the New York Stock Exchange. Arch vows to go on operating but faces a very uncertain future.

It’s difficult to summon much sympathy for Arch or its struggling competitors. While its workers deserve a just transition to new livelihoods, Arch deserves to fade away. The main reason, of course, is the coal industry’s outsize contribution to the climate crisis, but a look at Arch’s track record shows a string of other major negative impacts.

Pollution. Arch’s first big environmental controversy occurred in 1996, when a massive mine waste spill at the operations of its Lone Mountain subsidiary in Virginia contaminated 30 miles of rivers and streams, killing thousands of fish. The company was hit with a $1.4 million state fine, one of the largest in Virginia’s history.

Arch also became a bigger target for environmental activists when it escalated its involvement in mountaintop-removal mining in Appalachia. It took advantage of the Bush Administration’s support for the controversial practice and resisted when the Obama Administration moved to tighten the rules. In 2010 an Arch subsidiary sued the Environmental Protection Agency over the planned revocation of a permit for a large mountaintop project in West Virginia that the agency decided would do irreversible damage to the environment. The EPA stood its ground, and when the revocation for the Spruce No.1 Mine was formally announced, Arch said it was “shocked and dismayed” and charged that the decision “will have a chilling effect on future U.S. investment.” Arch took the case all the way to the Supreme Court and was rebuffed at every stage.

In 2011 the EPA and the Justice department announced that Arch would pay $4 million to settle alleged violations of the Clean Water Act in Kentucky, Virginia and West Virginia. As part of the settlement, Arch was required to take steps to prevent an estimated two million pounds of pollution from entering waterways, including the implementation of a system to reduce selenium discharges. That same year, Arch paid $2 million to settle a lawsuit brought environmental groups over the selenium issue in West Virginia.

In 2015 Arch had to pay another $2 million to the federal government to settle similar alleged violations by 14 subsidiaries connected to its International Coal Group operations in five states.

Federal Leasing. Arch is one of a handful of companies taking advantage of a non-competitive program that allows coal operators to lease federal land at below-market rates. A 2012 report by the Institute for Energy Economics and Financial Analysis estimated that over 30 years the Treasury lost $28.9 billion in revenue from the failure to obtain fair market value for the coal extracted from the Powder River Basin of Wyoming and Montana, the country’s largest coal-producing region. A report released by the U.S. Government Accountability Office in 2014 also found a pattern of undervaluing coal leases, as did a 2015 report by Headwater Economics estimating that two reform options would have generated additional revenue ranging from $850 million to $5.5 billion for the 2008-2012 period.

In 2014 the Western Organization of Resource Councils and Friends of the Earth filed a lawsuit asking that the Interior Department’s Bureau of Land Management be required to prepare a comprehensive environmental impact review of the federal leasing program. The last time such an assessment was done was in 1979. Arch’s Chapter 11 filing came just days before the Obama Administration announced the suspension of new federal coal leases.

Mine Safety. A 2003 inspection of Arch Coal’s Black Thunder mine in Wyoming by the federal Mine Safety and Health Administration resulted in more than 50 violations. Two miners had been killed at the massive operation in the previous 12 months. In 2015 MSHA issued an imminent danger order at Black Thunder.

There have been other fatalities at Arch operations, including one at a Kentucky mine in 2013 that MSHA found had occurred after the company knew of a significant danger but failed to take proper precautions.

The most serious accident associated with Arch was the 2006 disaster at the Sago Mine run by a subsidiary of International Coal Group, which became part of Arch in 2011. Twelve miners died in a methane gas explosion at the West Virginia operation, which had been cited by MSHA for “combustible conditions” and “a high degree of negligence.” During 2005 the mine had received more than 200 violations, nearly half of which were serious and substantial. Investigations of the accident by the state and the company suggested that lightning had set off the explosion, whereas a United Mine Workers report concluded that sparks generated by falling rocks inside the mine were the cause.

According to the Violation Tracker database, Arch’s current operations have been fined a total of more than $6.4 million by MSHA since the beginning of 2010.

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Note: This post is drawn from my new Corporate Rap Sheet on Arch Coal, which can be found here.

The 2015 Corporate Rap Sheet

Thursday, December 17th, 2015

gotojailThe ongoing corporate crime wave showed no signs of abating in 2015. BP paid a record $20 billion to settle the remaining civil charges relating to the Deepwater Horizon disaster (on top of the $4 billion in previous criminal penalties), and Volkswagen is facing perhaps even greater liability in connection with its scheme to evade emission standards.

Other automakers and suppliers were hit with large penalties for safety violations, including a $900 million fine (and deferred criminal prosecution) for General Motors, a record civil penalty of $200 million for Japanese airbag maker Takata, penalties of $105 million and $70 million for Fiat Chrysler, and $70 million for Honda.

Major banks continued to pay large penalties to resolve a variety of legal entanglements. Five banks (Citigroup, JPMorgan Chase, Barclays, Royal Bank of Scotland and UBS) had to pay a total of $2.5 billion to the Justice Department and $1.8 billion to the Federal Reserve in connection with charges that they conspired to manipulate foreign exchange markets. The DOJ case was unusual in that the banks had to enter guilty pleas, but it is unclear that this hampered their ability to conduct business as usual.

Anadarko Petroleum agreed to pay more than $5 billion to resolve charges relating to toxic dumping by Kerr-McGee, which was acquired by Anadarko in 2006. In another major environmental case, fertilizer company Mosaic agreed to resolve hazardous waste allegations at eight facilities by creating a $630 million trust fund and spending $170 million on mitigation projects.

These examples and the additional ones below were assembled with the help of Violation Tracker, the new database of corporate misconduct my colleagues and I at the Corporate Research Project of Good Jobs First introduced this year. The database currently covers environmental, health and safety cases from 13 federal agencies, but we will be adding other violation categories in 2016.

Deceptive financial practices. The Consumer Financial Protection Bureau fined Citibank $700 million for the deceptive marketing of credit card add-on products.

Cheating depositors. Citizens Bank was fined $18.5 million by the CFPB for pocketing the difference when customers mistakenly filled out deposit slips for amounts lower than the sums actually transferred.

Overcharging customers. An investigation by officials in New York City found that pre-packaged products at Whole Foods had mislabeled weights, resulting in grossly inflated unit prices.

Food contamination. In a rare financial penalty in a food safety case, a subsidiary of ConAgra was fined $11.2 million for distributing salmonella-tainted peanut butter.

Adulterated medication. Johnson & Johnson subsidiary McNeill-PPC entered a guilty plea and paid $25 million in fines and forfeiture in connection with charges that it sold adulterated children’s over-the-counter medications.

Illegal marketing. Sanofi subsidiary Genzyme Corporation entered into a deferred prosecution agreement and paid a penalty of $32.6 million in connection with charges that it promoted its Seprafilm devices for uses not approved as safe by the Food and Drug Administration.

Failure to report safety defects. Among the companies hit this year with civil penalties by the Consumer Product Safety Commission for failing to promptly report safety hazards were: General Electric ($3.5 million fine), Office Depot ($3.4 million) and LG Electronics ($1.8 million).

Workplace hazards. Tuna producer Bumble Bee agreed to pay $6 million to settle state charges that it willfully violated worker safety rules in connection with the death of an employee who was trapped in an industrial oven at the company’s plant in Southern California.

Sanctions violations. Deutsche Bank was fined $258 million for violations in connection with transactions on behalf of countries (such as Iran and Syria) and entities subject to U.S. economic sanctions.

Air pollution. Glass manufacturer Guardian Industries settled Clean Air Act violations brought by the EPA by agreeing to spend $70 million on new emission controls.

Ocean dumping. An Italian company called Carbofin was hit with a $2.75 million criminal fine for falsifying its records to hide the fact that it was using a device known as a “magic hose” to dispose of sludge, waste oil and oil-contaminated bilge water directly into the sea rather than using required pollution prevention equipment.

Climate denial. The New York Attorney General is investigating whether Exxon Mobil deliberately deceived shareholders and the public about the risks of climate change.

False claims. Millennium Health agreed to pay $256 million to resolve allegations that it billed Medicare, Medicaid and other federal health programs for unnecessary tests.

Illegal lobbying. Lockheed Martin paid $4.7 million to settle charges that it illegally used government money to lobby federal officials for an extension of its contract to run the Sandia nuclear weapons lab.

Price-fixing. German auto parts maker Robert Bosch was fined $57.8 million after pleading guilty to Justice Department charges of conspiring to fix prices and rig bids for spark plugs, oxygen sensors and starter motors sold to automakers in the United States and elsewhere.

Foreign bribery. Goodyear Tire & Rubber paid $16 million to resolve Securities and Exchange Commission allegations that company subsidiaries paid bribes to obtain sales in Kenya and Angola.

Wage theft. Oilfield services company Halliburton paid $18 million to resolve Labor Department allegations that it improperly categorized more than 1,000 workers to deny them overtime pay.

A Chemical Industry Marriage Not Made in Heaven

Thursday, December 10th, 2015

dow-dupontA corporation once known as the Merchant of Death because it dominated the gunpowder market wants to unite with a company that became notorious for its production of napalm and Agent Orange during the Vietnam War. The proposed merger of DuPont and Dow Chemical is not a marriage made in heaven.

The more recent track records of the two chemical giants are also seriously tarnished, raising questions as to whether the plan for a merger and then breakup is really a ploy to evade liability — something each of the companies has done in the past.

DuPont’s feel-good postwar campaign promoting “better living through chemistry” gave way to a series of environmental controversies. In the 1970s and 1980s the issue was the company’s production of chlorofluorocarbons (CFCs) like Freon, which were destroying the earth’s ozone layer. After resisting for years, DuPont finally agreed to phase out production of CFCs but sought to use substitutes that were also harmful.

In 1989 evidence emerged that the Savannah River nuclear weapons plant, which DuPont had built and operated for the federal government since 1951, had serious structural flaws and safety problems that the company failed to report. Numerous accidents at the South Carolina facility, which made plutonium and the tritium gas needed in nuclear warheads, were also kept secret.

DuPont was a pioneer in developing perfluorinated compounds (PFCs), one of the most highly toxic, extraordinarily persistent and likely carcinogenic group of chemicals that work their way into the bloodstream of humans and wildlife. DuPont’s highest profile PFC-based product was Teflon, best known for its use in non-stick cookware. In 2004 the EPA charged that for two decades DuPont failed to report signs of health and environmental problems linked to perfluorooctanoic acid (or PFOA), the PFC used in making Teflon. Residents living near the plant in West Virginia where DuPont produced PFOA sued the company, which agreed to pay about $100 million to settle the case and spend up to $235 million on medical monitoring of residents, which is ongoing. DuPont also paid $16.5 million to settle the EPA charges and later agreed to gradually phase out PFOA.

In 2014 a leak of methyl mercaptan (used in the production of pesticides) at a DuPont plant in LaPorte, Texas caused the death of four workers. In July 2015 OSHA proposed fines of $273,000 in connection with the accident and put DuPont on its severe violator list.

This year, DuPont spun off numerous facilities with tainted environmental and safety records into a new company called Chemours. There was immediate concern expressed by groups such as Keep Your Promises DuPont that the ownership change would impair the commitments DuPont had made to deal with toxic waste sites and other contaminated areas. One of those areas was Parkersburg, West Virginia, where DuPont had produced Teflon.

DuPont’s initial SEC filing about Chemours disclosed that the new company would begin life with some $298 million in environmental liabilities but acknowledged that the total could rise to 3.5 times that amount.

Dow Chemical was involved in one of the most controversial cases of liability evasion: its decision to do nothing for the victims of the Bhopal disaster after acquiring Union Carbide, the company whose subsidiary operated the pesticide plant where in 1984 a vast quantity of highly toxic methyl isocyanate gas was released. More than 8,000 people died in the immediate aftermath of the incident, and many thousands more suffered serious harms from exposure to the gas, including genetic damage that affected their offspring.

Union Carbide paid compensation of $470 million, far below what many advocates felt was necessary to care for the victims and their families. After the merger, Bhopal advocates began to pressure Dow to do more, but the company insisted that it had not assumed Union Carbide’s liabilities and thus had no responsibility to help.

Dow’s sins are not all inherited. In the 1980s its Dow Corning subsidiary was hit with class action lawsuits filed by women claiming that they had developed autoimmune diseases as a result of silicone leakage from breast implants produced by the company. In 1992, following a review of Dow Corning internal company documents suggesting that the implants had been rushed to market without complete safety tests, the U.S. Food and Drug Administration called for a moratorium on new implants. The New York Times reported that the documents revealed that Dow Corning executives had delayed conducting critical safety studies for more than a decade.

In 2011 Dow had to pay $2.5 million to settle EPA allegations that the company’s complex in Midland, Michigan violated the Clean Air Act and Clean Water Act in a host of ways at its chemical, pharmaceutical, and pesticide plants.

Given the histories of these two companies, the proposed merger of DuPont and Dow deserves the utmost scrutiny so that the needs not only of shareholders but also their victims are addressed.

The Corporate Wrongdoers Sticking with ALEC

Thursday, December 3rd, 2015

ALECexposedLogo_400x400vt_logo-full_1If a group of major drug dealers, identity thieves and bank robbers were to put out a statement calling for relaxation of the criminal code, no one would take it very seriously.

Yet complaints about the regulatory system coming from large corporations — including many with repeated environmental and safety violations — are regarded as important pronouncements by too many policymakers and political candidates. Corporate interests don’t simply complain. They use their money and influence to urge lawmakers to alter the rules in their favor.

One of the main vehicles by which big business pushes its deregulatory agenda is the American Legislative Exchange Council. ALEC, which is currently holding one of its periodic gatherings of corporate lobbyists and legislators, takes aim at agencies such as the EPA, which it likes to call a “regulatory train wreck.”

Since my colleagues and I at the Corporate Research Project of Good Jobs First released our Violation Tracker database recently, I’ve been comparing notes with the ALEC watchers at the Center for Media and Democracy. What we’ve found is a substantial overlap between the corporations that remain loyal to ALEC (more than 100 have left in response to public pressure) and the companies in Tracker with the largest penalty totals. Mary Bottari of CMD has posted a piece that focuses on the energy companies in the two groups. Here I look at the full overlap.

The current list of ALEC corporate members includes 11 corporations that rank in the Violation Tracker top 100 (in a few cases the membership is held by a subsidiary). These parents and their subsidiaries have racked up a total of $1.7 billion in federal environmental, health and safety penalties and settlements since the beginning of 2010:

  • Pfizer: $563,357,650
  • Novartis: $422,569,368
  • WEC Energy Group: $310,621,475
  • Duke Energy: $112,150,534
  • Honeywell International: $93,641,829
  • Berkshire Hathaway: $46,810,063
  • Exxon Mobil: $46,285,706
  • Energy Transfer: $25,467,251
  • Dominion Resources: $14,168,658
  • Norfolk Southern: $11,675,325
  • Chevron: $11,373,376

Pfizer is in the news because of its deal to merge with a smaller drug company and move its legal headquarters to Ireland, all to dodge federal taxes. It has amassed more than half a billion dollars in penalties in the past five years largely because of cases involving the illegal marketing of drugs for purposes not approved as safe by the Food and Drug Administration. In 2009, the year before Violation Tracker’s coverage begins, Pfizer had to pay $2.3 billion to settle Justice Department civil and criminal charges relating to the illegal marketing of the painkiller Bextra and three other medications. John Kopchinski, a former Pfizer sales representative whose complaint helped bring about the federal investigation, told the New York Times: “The whole culture of Pfizer is driven by sales, and if you didn’t sell drugs illegally, you were not seen as a team player.”

Novartis has also been accused of illegal marketing of drugs and has had to pay more than $400 million in penalties. Not yet included in Violation Tracker is a case in which federal prosecutors are seeking $3 billion in penalties from the company for paying illegal kickbacks to get pharmacies to encourage use of expensive drugs for kidney-transplant patients covered by Medicare and Medicaid.

WEC Energy Group, whose subsidiaries North Shore Gas and Peoples Gas are ALEC members, is on the top violators list mainly because of a $307 million settlement another subsidiary, Wisconsin Public Service Corporation, reached with the Justice Department and the EPA to resolve Clean Air Act violations at two of its power plants. Most of the settlement involves mandatory spending on new pollution control technology at the facilities.

Duke Energy earned its spot on the top violators list mainly because of a case from earlier this year in which three of its subsidiaries pled guilty to criminal violations of the Clean Water Act and paid $102 million in penalties in connection with a massive coal ash spill into the Dan River in North Carolina.

The largest portion of Honeywell International‘s $93 million in penalties comes from a 2013 case in which it agreed to pay a $3 million civil penalty and spend $66 million on new pollution control equipment to resolve Clean Air Act violations at its plant in Hopewell, Virginia.

Conglomerate Berkshire Hathaway is on the list because one of its major subsidiaries, BNSF Railway, is an ALEC member. While it has not been involved in any large cases like those above, since 2010 BNSF has accumulated more than 600 violations from the Federal Railroad Administration with total penalties of $7 million (the FRA’s fines tend to be less than onerous). BNSF was also pressured by OSHA to change its practices that the agency said discouraged workers from reporting on-the-job injuries.

Exxon Mobil‘s penalty total comes largely from its subsidiary XTO Energy, which focuses on fracking. For example, in 2013 XTO had to pay $20.1 million to the EPA to settle Clean Air Act violations linked to the discharge of wastewater in Pennsylvania.

These cases illustrate the track record of the companies that are sticking with ALEC, presumably with the hope that the organization can bring about policy changes that will allow them to continue business as usual and pay less in the way of penalties. ALEC may be correct that the regulatory system is a “train wreck,” but that’s because the rules are too weak, not too stringent.