State Government’s Selective Disclosure

In November, the Corporate Research Project of Good Jobs First released a report called The State of State Disclosure, which surveyed the quantity and quality of state government transparency relating to subsidies, procurement contracts and lobbying.

In it, we mentioned that numerous states have been adopting new disclosure programs relating to public spending. These initiatives provide useful information but often fail to name names relating to subsidies and contracts. I have just completed a quick update of the transparency wave and found that the newest disclosure sites also have deficiencies.

Kansas’s KanView allows for searching of the names of vendors selling goods and services to any state agency. It covers the past two fiscal years. For now, though, the new site is less complete than the existing online database of the Kansas Department of Administration, which has a deeper archive and includes the full texts of contract awards.

While KanView allows for vendor searches throughout the state government, two other recent arrivals are more limiting. South Carolina’s Spending Transparency site simply provides total annual expenditures by agency. You can also view each agency’s monthly spending during the past year and drill down for details. This is more cumbersome than the existing state procurement website, which allows for general vendor-name searches.

Oklahoma’s new Open Books site also requires you to choose a specific agency or government function in order to view a list of vendors. The state already had an online list of recipients of recent contract awards as well as a list of statewide contracts, though the latter is not easily searchable by vendor name.

In short, it is unclear that new spending transparency measures provide much in the way of additional information, especially in the ability to see which companies are making the most money out of their dealings with state governments. This limitation may be a reflection of the forces that are pushing for such transparency. They are led by the likes of Grover Norquist, head of Americans for Tax Reform (whose website, by the way, has the most complete overview of legislative efforts on spending transparency).

Yes, the same Grover Norquist who was on the Daily Show the other night promoting his new book Leave Us Alone: Getting the Government’s Hands Off Our Money, Our Guns, Our Lives. For Norquist, transparency is apparently a tool in the effort to shrink government to its bare minimum. His priority seems to be highlighting the true extent of social spending rather than fully exposing those corporations that are milking the public sector through lucrative contracts.

The news is more encouraging on the subsidy disclosure front, where progressive groups are taking the lead and have brought about new transparency measures in states such as New Jersey and Wisconsin.

Note: this item is also being posted on the new Good Jobs First blog CLAWBACK.

The South or the Global South? – BMW in South Carolina

The overall U.S. economy may be headed for the crapper, but today there were celebrations in South Carolina after BMW announced plans to invest an additional $750 million at its auto assembly plant in Spartanburg County and add 500 new jobs.

These days, any American job creation, especially in manufacturing, is going to be seen as good news. But BMW’s announcement cannot be seen as a vote of confidence in the vitality of the U.S. economy, Instead, it seems to be ploy to take advantage of the cheap dollar—and more importantly, cheap labor. Manufacturing workers in South Carolina earn only about one third of what autoworkers are paid in Germany, where BMW is simultaneously cutting employment by more than 7 percent.

Today BMW officials were praising South Carolina’s distribution infrastructure, but what they were really lauding was the anti-union climate in the state, where only 5.4 percent of manufacturing workers (and none at BMW) are represented by union contracts. Cheap labor and weak or non-existent unions: the U.S. South is looking more like the Global South all the time.

Another similarity is compliant government. Ever since the early 1990s, when BMW chose South Carolina as the location of its U.S. assembly operation, the state has been more than accommodating. The German company was given some $150 million in tax breaks and other subsidies in connection with its initial investment, and its subsequent expansions have been rewarded with many millions more in giveaways. BMW said today it may yet seek job development tax credits in connection with the new expansion. The company is apparently so confident of getting what it wants that it doesn’t bother nailing down the details ahead of time. That’s [Global] Southern hospitality.

The Outsourcing Threat Behind the Southwest Airlines Scandal

As I write this, Google News says it contains nearly 900 current stories about the scandal over maintenance lapses at Southwest Airlines—lapses that prompted the Federal Aviation Administration yesterday to propose a record $10.2 million civil penalty against the carrier. Yet fewer than ten of those stories make any reference to the broad threat against airline safety: outsourcing.

Among the handful of items mentioning outsourcing is a statement put out today by Teamsters President James Hoffa. (The mechanics at Southwest are actually represented by an independent union.) Less than a month ago, the Teamsters and the Business Travel Coalition co-sponsored what they called a national summit on aircraft maintenance outsourcing. In addition to a video presentation by Rep. James Oberstar of Minnesota—who today revealed more dirt about Southwest and the FAA—the event included a speech by William McGee of Consumer Reports, whose March 2007 article on maintenance outsourcing was titled “An Accident Waiting to Happen?”

The safety threats from outsourcing have also been cited for years by the Inspector General of the Department of Transportation (FAA’s parent agency).  A 2003 report by the IG found that major carriers were outsourcing some 47 percent of their total maintenance costs. The IG’s examination of conditions at a sample of repair stations used in the outsourcing found that 86 percent had “discrepancies” such as the use of improper parts and equipment and outdated manuals. A 2005 follow-up report found that the majors had upped the outsourced portion of their maintenance spending to 53 percent, with Southwest well above the average at 64 percent (see page 8).

Last June, the IG told Congress that the majors were now spending 64 percent of their maintenance dollars on contractors. He went on to point to the “challenges” facing the FAA in dealing with the continuing growth of outsourcing, including the fact that it did not have a good system for assigning its inspectors. But the agency told the IG it was addressing the problem—by commissioning a study from…a contractor.

Congress Scrutinizes Compensation of Financiers and Contractors

Through war and peace, recession and expansion, bear market and bull—there is one constant in the American economy: Large corporations will pay their top executives ridiculous amounts of money. As the country focuses more on a weakening economy, some members of Congress are raising questions about the eternal boom in CEO compensation.

Today, the House Committee on Oversight and Government Reform, chaired by Rep. Henry Waxman of California, issued a preliminary report on the research its staff has done in preparation for a hearing tomorrow on the compensation and retirement packages awarded in recent years to the chief executives of three companies implicated in the mortgage crisis: Angelo Mozilo of Countrywide Financial Corporation, E. Stanley O’Neal of Merrill Lynch, and Charles Prince of Citigroup. (O’Neal and Prince no longer hold those jobs.)

In addition to looking at SEC filings, the committee obtained thousands of pages of documents directly from the companies, including board minutes and internal e-mails—some of which the committee has put online.

The report raises a series of pointed questions, no doubt foreshadowing tomorrow’s interrogatories, particularly about Mozilo’s personal stock sales last year, the exceptionally generous “change in control” provision in his employment contract, and the lucrative way in which his cash bonuses have been calculated. Mozilo is estimated to have received a total of about $250 million in pay over the past decade. Uncomfortable questions also appear to be in store for O’Neal and Prince about discrepancies between their personal compensation and the fortunes of their firms amid the mortgage meltdown.

Meanwhile, the Oversight Committee’s Subcommittee on Government Management, Organization and Procurement is considering a slate of contracting reforms, one of which would require all companies—whether publicly traded or privately held—that receive more than 80 percent of their revenue from doing business with Uncle Sam (and get at least $5 million in annual revenue from such contracts) to submit data on their top executives’ compensation for inclusion in a public database. The disclosure bill, H.R. 3928, was introduced by Rep. Christopher Murphy (D-Conn.) in response to the controversy surrounding contracts held by the mercenary supplier Blackwater.

Although the bill would cover only a limited number of larger companies that are heavily dependent on government business, industry representatives testifying at a hearing last week strongly opposed the measure. Their dubious argument, echoed by a Bush Administration official, was that the disclosure would have a “chilling effect” on the willingness of companies to compete for contracts. The idea that companies receiving more than three-quarters of their revenue from the federal government would walk away from that market is laughable.

For a good assessment of the disclosure bill and the other contractor reform measures being considered by the subcommittee, see the prepared testimony submitted by Scott Amey, General Counsel of the Project On Government Oversight.

The “Toxic Ten” – The Start of an Antidote to Greenwashing

Portfolio, the Condé Nast business magazine that debuted last year, started out looking as if it would be little more than a glossy celebration of the corporate world’s movers and shakers. It has, however, shown a willingness at times to address the seamier side of capitalism, such an October 2007 story on links between Chiquita Brands and death squads in Colombia.

The new (March) issue of the publication has another article that shows business at its worst. “The Toxic Ten” by Harry Hurt III is a welcome antidote to the endless stories published these days about the ways in which big business has supposedly gotten religion about the environment. Hurt shows that there are still large companies that are dumping toxic substances in rivers, spewing mercury out of power plants, using harmful materials in their products and contributing mightily to global warming. His list is not meant to be a ranking but instead an assortment of companies that “could be doing better, given their resources and position in their industry.”

The “Toxic Ten” consists of:

  • J.R. Simplot (the potato king generates lots of waste products)
  • Cargill (the $88 billion agribusiness giant contaminates air and water)
  • Ford Motor (has dragged its feet on producing truly fuel-efficient vehicles)
  • Boeing (has been evasive about its carbon footprint and has been involved in water pollution)
  • Apple (uses toxins such as polyvinyl chloride and brominated flame retardants)
  • Southern Co. (operates some of the dirtiest power plants in the country)
  • American Electric Power (operates some of the other dirtiest power plants)
  • Massey Energy (mines coal via mountaintop removal)
  • Chevron (is involved in more than 90 active Superfund sites)
  • Alcoa (operates power plants for its smelters that are heavy polluters)

The list could have gone on much longer. To begin with, how did Exxon Mobil not make the cut? Most of the top air polluters on a list assembled by the Political Economy Research Institute at the University of Massachusetts are also missing. In fact, several of the companies on the Institute’s list—including DuPont and General Electric—appear (along with the likes of Wal-Mart) in a sidebar to Hurt’s article called “The Green 11: Some of America’s Most Eco-Savvy Corporations.”

If by “eco-savvy” Portfolio means those companies that have been most successful in giving the appearance of environmental responsibility, then those slick purveyors of greenwashing do indeed deserve to be singled out.

The Times Falls for Wal-Mart’s “Authenticity”

The New York Times gave a boost today to Wal-Mart’s effort to raise its coolness quotient. Its account of a new blog that the giant retailer is allowing some of its merchandise buyers to produce was filled with references to “candor,” “speak[ing] frankly,” and “uncensored rambling.” Much is made of the fact that the posters have made unflattering comments about some of the offerings of Wal-Mart’s suppliers. Wal-Mart is said to have learned its lesson from earlier disasters with blogs created in the name of bogus front groups. This new initiative, the Times assures us, is the real thing.

It is indeed the case that the site allows reader comments that are critical of certain company practices. For example, a posting by an “associate” named Alex saying he might use spend his federal economic stimulus check to purchase a TV or a laptop was followed by comments on how that would do more to help the foreign economies where such products are made. One person asked: “what happened to the campaign WalMart used to run advertising its committment to support American manufacturers?”

Yet, it appears that the Times was hoodwinked by Wal-Mart. The appearance of authenticity and candor is just another technique used by advertising agencies and public relations consultants to win over skeptical audiences.

As for those critical comments, it’s significant that “Alex” thanked all those who had corrected a spelling error in his post but had nothing to say about the company’s sourcing practices. In fact, that the only real topic covered in the posts apart from product assessments is “sustainability.”

Those items are posted in the name of Rand Waddoups, who is no lowly buyer but rather the company’s senior director of business strategy and sustainability. His part of the blog, at least, fits in neatly with the company’s dubious campaign to depict itself as the environmental leader of the corporate world.

As I have previously noted, Wal-Mart’s green crusade places all the burdens on its suppliers, while the moves taken by the retailer itself (improving energy efficiency, etc.) are in fact nothing more than cost-cutting measures that boost its bottom line. Until Wal-Mart makes some hard choices itself—such as paying all its workers a living wage—nothing it does in the blogosphere or elsewhere is going to be very authentic.

Exposing Corporate Front Groups

The Center for Media and Democracy recently joined with Consumer Reports WebWatch to create a new site called Full Frontal Scrutiny, which “seeks to shine a light on front groups—organizations that state a particular agenda, while hiding or obscuring their identity, membership or sponsorship, or all three.”

Full Frontal Scrutiny is an extension of the work that the Center has long been doing to expose corporate manipulation of public opinion. That work has been widely disseminated through the PR Watch journal and website as well as the Sourcewatch wiki.

Consumer Reports WebWatch, which calls itself “the internet integrity division” of the venerable watchdog group Consumers Union, says its mission is to “provide unbiased and practical research on Web site publishing and business practices; help devise guidelines for credibility; expose practices that are a cause for consumer concern; and recognize good practices.”

In its initial posts, Full Frontal Scrutiny has dealt with perennial opinion manipulators such as Big Pharma, the tobacco industry and “clean” coal producers.

Corporate America’s Crock of Inconsistency

Given all the extravagant environment claims being made by major corporations these days, it is strangely refreshing when a business chieftain puts aside the greenwash and speaks his Neanderthal mind. That was the case recently, when General Motors Vice Chairman Bob Lutz told a closed-door session with journalists that he considered global warming “a total crock of shit.” He also reportedly stated that hybrid automobiles “make no economic sense.”

When word of his candor got out, Lutz did a bit of a mea culpa on GM’s FastLane company blog. Yet his argument was bizarre: “My beliefs are mine and I have a right to them, just as you have a right to yours…My thoughts on what has or hasn’t been the cause of climate change have nothing to do with the decisions I make to advance the cause of General Motors. My opinions on the subject—like anyone’s—are immaterial.”

I’m not sure whether we should be relieved that Lutz apparently doesn’t let his retrograde thoughts get in the way of his job—or dismayed that GM is paying more than $8 million a year to someone who leaves his brain at home.

Corporate ideological inconsistency is not limited to GM’s executive suite. A recent survey of top executives published by the Boston Center for Corporate Citizenship and the Hitachi Foundation demonstrates the opposite problem from Lutz: embracing noble ideals but doing nothing to implement them. Nearly three-quarters of the respondents said that good “corporate citizenship” should be a priority for business, but only 39 percent said such considerations are part of their planning process.

An article distributed by Social Funds quoted the lead researcher for the survey as saying: “We think the gap between aspirations and actions is to be expected at this time because business is going through a significant transformation.” Or, to put it another way: Many corporate leaders apparently think that living up to their rhetoric is a crock.