Phil Mattera

Standing Up to the Bully of Bentonville

The spreading job actions by Wal-Mart workers around the country, while still involving modest numbers, come across as a kind of catharsis. They inspire the same uplifting emotion as those movie scenes in which a long-suffering victim of bullying finally fights back against the tormentor.

Wal-Mart, probably more than any other large corporation, deserves the title of bully. For decades it has demonstrated utter contempt for the rights of its employees to act in concert to improve their conditions of work, which are in serious need of amelioration. It rules over a vast army of underpaid “associates” who in many cases are involuntarily limited to part-time status and thus denied even the meager benefits provided to full-timers, forcing them, with the cynical encouragement of management, to apply for taxpayer funded health coverage such as Medicaid that is not meant for employees of a $460 billion corporation.

Such impacts are not limited to those actually on Wal-Mart’s payroll. Since it is by far the largest U.S. private-sector employer, Wal-Mart’s abominable labor practices have set an example that makes it easier for many other employers to commit similar sins.

In the hope that we are indeed seeing a major turning point in the relationship between the giant retailers and its workforce, it is worth looking back at the company’s record to recall just how bad its behavior has been.

While some have sought to romanticize founder Sam Walton and pin the blame for the company’s retrograde policies on his successors, the exploitative approach was there from the start. As Bob Ortega points out in his 1998 book In Sam We Trust, Wal-Mart Sam Walton deliberately used superficial forms of paternalism to gain the loyalty of his workers while keeping labor costs at rock bottom. “We really didn’t do much for the clerks except pay them an hourly wage,” Walton wrote in his autobiography, “and I guess that wage was as little as we could get by with at the time.”

When Walton learned in the 1970s that some of his workers were talking about unionization, he did not try to address their concerns. Instead, he brought in a union-busting consultant named John E. Tate, who devised the policy of uncompromising resistance that would characterize Wal-Mart’s labor relations posture for decades to follow. That applied not only at the company’s stores, but also at its large network of distribution centers. For example, after nearly 50 percent of workers at a warehouse in Searcy, Arkansas signed cards in support of Teamsters representation in the early 1980s, Tate and his staff used the run-up to the election to scare the workforce into ultimately voting more than three-to-one against the union.

This scenario would play out again and again, both in the United States and Canada. For example, in 1997 the Ontario Labor Relations Board ruled that Wal-Mart had violated Canadian law by intimidating workers in the period preceding a representation election involving the United Steelworkers union. As a result, the board certified the Steelworkers, even though a majority of workers had voted against the union. The company, however, simply refused to bargain with the union.

When Wal-Mart used the same intimidation tactics during a 1997 election at one of its stores in Wisconsin, the National Labor Relations Board criticized the company but did not take the same sort of action as its Ontario counterpart. Later in 1997, exasperated United Mine Workers officials decided to call off an organizing drive at a Wal-Mart in Fairfield, Alabama less than 24 hours before the representation was scheduled to take place.

In 2000 a small group of courageous meatcutters at a Wal-Mart Supercenter in Jacksonville, Texas voted for representation by the United Food and Commercial Workers (UFCW). Within two weeks, the company announced that it was shutting down the meatcutting operations at that store and at more than 175 more in six states. The NLRB later ruled that the company had violated federal labor law by refusing to discuss the closing with the workers who had chosen union representation.

In 2001 the UFCW said it was launching a national organizing drive at Wal-Mart, but it focused on a few areas such as Las Vegas, where it engaged in a fierce battle with a slew of anti-union specialists flown in from corporate headquarters in Bentonville, Arkansas. Years later, the NLRB found that the company had engaged in various unfair labor practices, but by then the organizing effort had fizzled out. Looking back on the situation, the Las Vegas Sun published an article headlined WAL-MART BREAKS THE LAW, GETS PUNISHED, WINS ANYWAY.

While the UFCW largely turned away from individual store organizing in the United States, it continued the effort in Canada, on the assumption that the legal environment would be more conducive there. Yet Wal-Mart continued to run roughshod over Canadian law as well.

When workers at a store voted for representation, Wal-Mart simply refused to bargain with the union. If it was forced to do so, it turned to the same tactic it employed in Texas: shutting down the store or department where workers had asserted their desire for collective bargaining, pretending that the step was being taken for economic reasons.

After such a move in 2005 involving a store in Jonquiere, Quebec, Wal-Mart CEO Lee Scott defended the action in an interview with the Washington Post, saying that he “saw no upside to the higher labor costs” that union representation would have brought and that he “refused to cede ground to the union for the sake of being ‘altruistic.’”

That, in a nutshell, is Wal-Mart’s view of the world—that its desire to keep costs, especially those relating to labor, at the absolute minimum is all that matters. Any measures in furtherance of that goal are justified.

Along with fighting unions tooth and nail, the religion of cost minimization led to other practices that made life hellish for the company’s workforce. This included the systematic use of wage theft to cheat workers out of overtime pay as well as gender and racial discrimination. Over the past decade, the company has paid hundreds of millions of dollars to settle lawsuits over wage and hour violations. In 2005 it paid $11 million to settle federal charges related to the illegal use of undocumented immigrants—who were found to be working some 56 hours a week—to clean its stores. And Wal-Mart would have paid much more in damages for sex discrimination if the U.S. Supreme Court had not come to its rescue and derailed a massive class action suit (though other more limited suits took its place).

Wal-Mart’s employment practices have been so egregious that they go beyond regulatory infractions and enter the realm of human rights abuses. It’s thus no surprise that Human Rights Watch, which typically analyzes atrocities in dictatorial governments, once published a report concluding Wal-Mart violated the right of its workers to freedom of association.

So here’s hoping that the freedom fighters of the Wal-Mart workforce succeed in fully taming the bully of Bentonville.

—————-

New in CORPORATE RAP SHEETS: Dossiers on water villains Nestlé and Coca-Cola Company.

Corporate Rap Sheets

American Express is penalized $85 million for deceptive credit card practices. The Bear Stearns unit of JPMorgan Chase is sued for defrauding purchasers of mortgage-backed securities. These are just a single recent day’s contribution to the never-ending wave of corporate malfeasance—bribery, tax evasion, price-fixing, defrauding of government or consumers, environmental violations, unfair labor practices and much more. Given the frequency of these scandals, it is difficult to remember which corporation has done what.

A new feature of the Dirt Diggers Digest site (and that of the Corporate Research Project) will make it easier to keep track of these misdeeds. Corporate Rap Sheets are dossiers summarizing the most significant crimes, violations and other questionable activities of the world’s largest and most controversial companies. The rap sheets provide readable accounts of a company’s history on major accountability issues and, wherever possible, include links to key documents or other information sources.

These dossiers are not limited to formal legal actions and regulatory proceedings. They also look at the general behavior of the companies in areas such as environmental protection, labor relations, taxes and subsidies. They also list watchdog groups as well as books and reports about the company.

The Corporate Rap Sheets project is designed to contribute to the tradition of tabulating corporate misbehavior that began with Edwin Sutherland’s 1949 book White Collar Crime, resumed three decades later in works such as Everybody’s Business: The Irreverent Guide to Corporate America, and today is pursued on the web by sites such as the Project On Government Oversight’s Federal Contractor Misconduct Database and the Business & Human Rights Resource Centre. (I have prepared a fuller account of this tradition to go along with the rap sheets.)

I am launching the project with a set of 20 dossiers that focus on four industries known for their checkered accountability record: automobiles (General Motors, Ford Motor and the major Japanese and German producers); military contracting (Boeing, Lockheed Martin, Northrop Grumman and the like); mining (the big global resource companies such as BHP Billiton, Rio Tinto and Anglo American); and petroleum (the four remaining members of what used to be called the Seven Sisters: Exxon Mobil, Chevron, BP and Royal Dutch Shell).

In the months to come, I plan to add more rap sheets for the giants of other controversial industries such as pharmaceuticals, tobacco, agribusiness and banking. New rap sheets will be announced at the end of Dirt Diggers Digest weekly posts.

Here are some tidbits from the first batch of rap sheets:

HONDA. The company’s more fuel efficient cars have given it a relatively benign environmental reputation, yet in 1998 Honda had to pay up to $267 million to settle U.S. government allegations that it programmed millions of its cars to ignore spark-plug failures that could result in much higher emission levels. The company paid a civil fine of $12.6 million and $4.5 million to fund environmental projects, while spending up to $250 million to serve and repair the vehicles involved.

NORTHROP GRUMMAN. In April 2009 the company agreed to pay $325 million to settle federal charges that TRW, prior to its acquisition by Northrop, had failed to properly test parts (which turned out to be defective) used in spy satellites built for the National Reconnaissance Office.

ROYAL DUTCH SHELL. In 2004 the company admitted that it had overstated its proven oil and natural gas reserves by 20 percent. It later came out that top executives knew of the deception about the reserves back in 2002. The company ended up paying penalties of about $150 million to U.S. and British authorities.

GENERAL MOTORS. In 2011 workers at GM’s subsidiary in India went on strike to protest a speed-up and unsafe conditions. In 2012 GM was confronted with worker protests over its move to eliminate jobs and cut costs at some of its operations in South America. In Colombia, a group of former workers staged a hunger strike, alleging that they were fired after sustaining serious injuries resulting from unsafe conditions on GM assembly lines.

BOEING. In 1999 the U.S. Labor Department accused Boeing of impeding an investigation into racial discrimination at the company. Boeing later agreed to pay $4.5 million to settle claims of both racial and gender discrimination involving more than 4,000 women and 1,600 minority employees in six locations. The settlement with the U.S. Labor Department was the first in which a firm committed to a company-wide program to eliminate discriminatory pay disparities. Nonetheless, Boeing was hit with a class action sex discrimination lawsuit that was settled in 2004 when the company agreed to pay up to $72.5 million in damages and to revamp many of its personnel practices. The settlement was preceded by reports that Boeing had suppressed evidence in the case.

BHP BILLITON. The company has been a frequent target of criticism over its treatment of communities displaced or otherwise affected by its mining operations. For example, in 2005 Survival International accused the company of exploring for diamonds in the Gana and Gwi Bushmen’s reserve in Botswana without their consent. In 2007 a complaint was filed with the Organization for Economic Cooperation and Development accusing BHP of using forced eviction and destruction of a town in Colombia to provide land for the company’s Cerrejon open-cut coal mine. To resolve the dispute, the company agreed to consult more closely with local communities and to spend more on local sustainability projects.

Read more at the Corporate Rap Sheets page.

Corporate Recidivism

The announcements by the Justice Department and the Securities and Exchange Commission that they had each charged Tyco International with engaging in foreign bribery was not just another all-too-familiar instance of corporate misconduct. It is an indicator of how a large corporation can be repeatedly drawn to illicit behavior even after being embroiled in a huge scandal that shook it to its core.

In the early 2000s, Tyco ranked with Enron and WorldCom as the leading symbols of the sleazy side of big business. In 2002 its chairman and CEO Dennis Kozlowski resigned amid reports that he was being investigated for evading more than $1 million in sales taxes due on artwork for his $18 million apartment on Park Avenue.

That was just the beginning. Kozlowski and Tyco’s former chief financial officer Mark Swartz were then indicted in a racketeering lawsuit charging them with looting the company of some $600 million through stock fraud, falsified expense accounts and other means. During their trial, details were revealed about Kozlowski’s lavish lifestyle—including what would become an infamous $6,000 shower curtain—based on what the prosecution called his misappropriation of company funds. In 2005, the two men were convicted of fraud, conspiracy and grand larceny; they were sentenced to 8-25 years in prison.

While the actions of Kozlowski and Swartz were meant to enrich themselves, Tyco benefited from other questionable maneuvers, such as the transfer of its corporate domicile offshore to Bermuda to avoid paying some $400 million a year in federal income taxes. In December 2002 the company, acknowledging what had long been suspected, admitted that for years it had engaged in financial gimmickry to inflate its reported earnings.

An internal investigation documented that Tyco managers had been openly encouraged to engage in creative accounting to give investors a misleadingly rosy view of how the company was performing. At the time, Tyco reduced its stated earnings by $382 million and later reported another $1 billion in accounting irregularities. In 2006 Tyco agreed to pay $50 million to settle SEC charges related to the accounting improprieties, and the following year it paid $3 billion to settle related class-action investor lawsuits.

In an effort to improve its reputation with shareholders, Tyco has undergone several restructurings and spinoffs. It also moved its legal headquarters from Bermuda to Switzerland, where the tax avoidance possibilities are apparently even more attractive.

Yet the one thing that should have been the top priority—ending its ethical shortcomings—apparently fell off the list, if the new SEC complaint is any indication.

According to the agency, Tyco repeatedly violated the Foreign Corrupt Practices Act through illicit payments to officials in more than a dozen countries during a period that began before 2006 and continued at least until 2009. After settling its earlier case with the SEC, Tyco allegedly continued to cook its books to disguise the bribes its subsidiaries were paying in places such as Turkey, China, Thailand, Malaysia, Egypt and Saudi Arabia.

At the same time the SEC and Justice Department revealed their actions against Tyco, the agencies announced that the company had settled the civil and criminal charges by agreeing to pay a total of $26 million—less than what it paid the SEC six years ago.

This comes across as a slap on the wrist for a company which had previously been accused of serious accounting fraud and which was supposed to cleaning up its act. The fact that Tyco could be granted a non-prosecution agreement for the criminal conspiracy charge is especially odious.

Both the SEC and Justice seemed to be trying to justify the light penalties by praising Tyco for cooperating in the investigation of the bribery. Yet this is the same company that was supposed to have rooted out its culture of corruption long ago.

It didn’t do a very good job of that, and the $26 million penalties—for a company with more than $17 billion in annual revenue and $1.7 billion in profits—does not create much pressure to end the profitable misconduct.

If there’s one thing that can be said for Kozlowski and the others who looted Tyco and cooked its books, it’s that they thought big. The prosecutors deciding on penalties for the company’s misdeeds should do the same.

Corporations are the Real Moochers

The firestorm over Mitt Romney’s closed-door comments depicting nearly half the U.S. population as parasites is coming mainly from those defending seniors, the poor and the disabled. But what’s really wrong with the Ayn Rand worldview Romney was parroting is that it ignores those who are the biggest moochers of all: giant corporations.

If, as Romney suggested, moocherism begins with the failure to pay federal income taxes, then that label can easily be applied to many of the country’s major companies. A November 2011 report by Citizens for Tax Justice and the Institute on Taxation and Economic Policy found that more than one-quarter of large companies paid zero taxes in at least one of the three years examined.

Quite a few of those companies arranged their affairs so that they had negative tax rates, meaning that the IRS sends them checks. And many of those that paid taxes did so at what CTJ and ITEP called “ultra low” rates of 10 percent or less.

Corporate tax avoidance is just the beginning of the story. The dependence on government that has Romney so upset is at the heart of the business plan for much of Corporate America. What libertarian types tend to overlook is that much of the public spending they disdain comes in the form of purchases from businesses. It’s estimated that more than $500 billion a year in federal outlays occurs via private-sector contracts.

Some companies rely so heavily on that spending that they are as government-dependent as any Medicaid or food stamp recipient. Aerospace giant Lockheed Martin, for example, derives more than 80 percent of its revenue from the federal government, especially the Pentagon; for its competitor Raytheon the figure is about 75 percent.

A large portion of what is called entitlement spending, especially in healthcare, ends up in the pockets of corporations, including drug makers, medical device manufacturers and for-profit hospital chains. The largest of the latter, HCA, gets more than 40 percent of its revenue from Medicare and Medicaid.

Corporations can get federal grants as well as contracts. The Commerce and Agriculture Departments have a slew of programs that assist businesses in marketing their products or that underwrite some of their costs. And, of course, a large portion of the billions paid each year in farm subsidies goes to agribusiness giants rather than family farmers.

Despite the recent Republican demagoguery on Solyndra, targeted federal spending to develop new energy technologies is nothing new. The Recovery Act’s billions for solar and wind companies was completely in line with federal programs that have subsidized everything from coal gasification to nuclear power plants. Before the Fukushima Daiichi disaster in Japan, the U.S. government was promoting a loan guarantee program to encourage the construction of a new generation of nukes by major utility companies.

Giant corporations also depend on the federal government to help them sell their goods abroad. The Export-Import Bank of the United States spends more than $30 billion each year providing various forms of insurance, loan guarantees and direct loans for the likes of Boeing, General Electric and Caterpillar. The federal government’s Overseas Private Investment Corporation helps U.S. companies do more business offshore by providing political risk insurance and other types of financial assistance.

Another form of corporate dependency on government is the ability of natural resources companies to operate on public lands and pay either no royalties or artificially low ones . Mining corporations, for example, take advantage of an 1872 law that allows them to extract gold, silver and other hardrock minerals from public lands royalty-free.

Assistance from the federal government can be a matter of life and death for some companies, as in clear in the cases of General Motors and Chrysler as well as the banks that were brought back from the brink by the TARP bailout and then thrived on the influx of billions in essentially free money from the Federal Reserve.

Hearing all the ways in which the federal government makes life easier and more profitable for big business, a newly arrived Martian might expect giant corporations to be grateful boosters of the public sphere. Instead, as we know all too well, most large companies are disdainful of government and are constantly whining about regulation and taxes they can’t avoid paying.

To make things worse, many government-dependent companies are less than honest when it comes to their dealings with the public sector. The Project On Government Oversight’s Federal Contractor Misconduct Database identifies hundreds of examples of contract fraud and other offenses. Healthcare providers such as HCA, not satisfied with the vast amount of honest business they get from Medicare and Medicaid, have defrauded taxpayers out of billions more.

If Romney wants to find the real moochers—and often crooked ones at that—he can find them in the corporate world that is his natural habitat.

Corruption and Concentration

The United States has by far the fattest military budget in the world, but soon the biggest company providing much of that weaponry could be European. Britain’s BAE Systems and Airbus parent EADS have announced plans to join forces, creating the world’s largest aerospace and military contracting corporation.

Business analysts are focusing on the challenge such a merger would pose to the companies’ U.S. rivals Boeing and Lockheed Martin, while little mention is being made of the fact that the deal would bring together two of the most ethically challenged large corporations in the world today.

For most of the past decade, BAE has been confronted with allegations that the company engaged in widespread bribery in its dealings with foreign governments. The charges began to receive significant attention in June 2003, when The Guardian reported that the U.S. government had privately accused BAE of offering bribes to officials in the Czech Republic. The Guardian went on to report that BAE was facing bribery allegations in three additional countries: India, South Africa and Qatar. Among the charges was that BAE had paid millions of pounds in secret commissions to obtain a huge deal, backed by the British government, to sell Hawk jets to South Africa. There were subsequent allegations that the company had formed a £20 million slush fund (later said to be £60 million) for paying bribes to officials in Saudi Arabia in the 1980s.

Despite denials by the company, Britain’s Serious Fraud Office (SFO) launched a criminal investigation of the bribery charges, focusing on the allegations regarding Saudi Arabia. BAE and the Saudi embassy reportedly lobbied intensively to have the probe terminated, and in December 2006 their effort paid off. The British government called a halt to the case because of national security concerns. (In April 2008 Britain’s High Court ruled that the termination of the investigation was unlawful, but in July 2008 the House of Lords overruled the court.) The SFO did, however, continue to investigate BAE’s questionable behavior in six other countries. The company was also being investigated by Swiss officials for possible money laundering violations.

Unable to escape these allegations, BAE announced in June 2007 that it would commission its own purportedly independent examination of the issues led by Lord Woolf, former lord chief justice of England and Wales. The Woolf Committee’s 150-page report, released in May 2008, stated that BAE’s top executives “acknowledged that the Company did not in the past pay sufficient attention to ethical standards and avoid activities that had the potential to give rise to reputational damage.” However, the report seems to have bowed to the wishes of the company that the focus be placed on the future rather than the past. The report provided what it called “a route map for the Company to establish a global reputation for ethical business conduct.” Among its 23 recommendations is that BAE “continue to forbid facilitation payments as a matter of global policy.” Given the less than draconian nature of the recommendations, it is no surprise that BAE agreed to adopt all of them.

A new front in BAE’s problems with questionable payments opened in late July 2008, when the Financial Times reported that it had seen documents suggesting that the company had paid at least £20 million to a company linked to a Zimbabwean arms trade close to controversial President Robert Mugabe.

In February 2010 BAE reached settlements with the U.S. Justice Department and the U.K. Serious Fraud Office concerning the longstanding bribery charges. The company agreed to pay $400 million in the U.S. and the equivalent of about $47 million in Britain to resolve the cases.

Confidential U.S. government cables given leaked to the press by Wikileaks in 2011 indicated that BAE had paid more than £70 million in bribes to Saudi officials to support its help win a contract for fighter jets.

EADS has been embroiled in its own corruption controversies. In mid-2006 a scandal emerged regarding EADS co-chief executive Noel Forgeard. French and German market regulators announced that they were looking into the timing of substantial sales of EADS stock by Forgeard and members of his family that occurred just before the company announced delays in the production of the Airbus A380 superjumbo jet. Forgeard initially claiming the timing was coincidental, but within a few weeks he was forced to resign, as was the head of Airbus, Gustav Humbert.

That did not put an end to the insider trading investigation. In December 2006 French police searched the Paris headquarters of EADS and that of its main French shareholder, the Lagardère conglomerate. In April 2008 a formal complaint was filed against EADS as well as more than a dozen current and former executives. The following month preliminary charges were brought against Forgeard and then against former deputy chief executive Jean-Paul Gut. In December 2009, however, French authorities concluded there was insufficient evidence against the executives.

Prior to the insider trading affair, EADS and/or Airbus had been named in numerous scandals around the world involving alleged bribery. A 2003 article in The Economist described a pattern of foreign bribes paid by Airbus throughout its history, noting that the French government tolerated such payments until 2000.

One of the most significant controversies occurred in Canada, where former Prime Minister Brian Mulroney was investigated over charges that he took bribes from German businessman Karlheinz Schreiber to induce Air Canada (then government controlled) to purchase $1.2 billion worth of Airbus planes in 1988. Mulroney denied the allegation vehemently and sued his own government, winning an apology and a cash settlement. The allegations were kept alive when Schreiber brought a civil suit against Mulroney, but Schreiber ended up making contradictory statements about the matter.

In December 2007 the government of India cancelled a $600 million order for military helicopters from Eurocopter after allegations that there had been corruption in the bidding process.

Just last month, it was reported that Britain’s SFO has launched a criminal probe of claims that a unit of EADS bribed officials in Saudi Arabia to win a $3 billion communications contract. The company asked PricewaterhouseCoopers to conduct a parallel investigation.

Given the records of these two corporations, the regulators who will be deciding whether to approve the merger should also consider what conditions could be imposed on the combined company to get it to put an end to its legacy of corruption.

Dealing with a Rigged System

Bill Clinton may have stolen the show at the Democratic convention, but it was the speaker preceding him who had the more powerful message.

Declaring that “the system is rigged,” Elizabeth Warren delivered perhaps the most candid statement ever made at a mainstream U.S. political event about corporate domination of American life.

While both speeches were meant to make the case for the reelection of Barack Obama, they took two starkly different approaches that highlighted a tension within the Democratic Party as intense as the one between it and the Republicans.

Clinton, basking in the nostalgia many people feel for the relative prosperity of the 1990s, did a good job in contrasting the GOP’s ideology of “you’re on your own” to a Democratic philosophy of “we’re in this together.” His call for a shared prosperity was based on a vision of “business and government actually working together to promote growth.” He insisted that “advancing equal opportunity and economic empowerment is both morally right and good economics.”

While Clinton derided the Republican narrative that every successful person is completely self-made as an “alternative universe,” he is living in a fantasy world of his own. That’s one in which corporations that have pursued self-interested policies that put the economy on the brink of disaster and ravished the living standards of most of the population are suddenly going to get religion about economic justice.

Clinton captured the absurdity of the Republican argument against Obama’s re-election: “We left him a total mess. He hasn’t cleaned it up fast enough. So fire him and put us back in.” Yet the “we” in that statement actually includes more than George W. Bush and Republican members of Congress. The mess was caused primarily by the big banks, whose orgy of speculation was ushered in by the bipartisan financial deregulation of the Clinton era.

A more accurate rebuttal of the GOP’s bogus rugged individualism was provided by Warren: “Republicans say they don’t believe in government. Sure they do. They believe in government to help themselves and their powerful friends.” The Massachusetts senatorial candidate, refusing to kowtow to the sector that many Democrats turn to for campaign contributions, added: “Wall Street CEOs—the same ones who wrecked our economy and destroyed millions of jobs—still strut around Congress, no shame, demanding favors, and acting like we should thank them.”

Unlike Clinton, Warren acknowledged that contemporary big business is rife with corruption. She repeatedly depicted the economic system as being “rigged” and referred to the “rip-offs” perpetrated by the big banks. And in a rare linkage between conventional and corporate crime, she called for a society in which “no one can steal your purse on Main Street or your pension on Wall Street.”

This gets to the dilemma for Democrats. Do they ignore corporate crime, as Clinton chose to do, and make the far-fetched claim that government partnership with business will suddenly result in broad-based prosperity rather than widening inequality? If instead they follow Warren’s lead and highlight the venality of corporations, what kind of solution can they offer?

The Consumer Financial Protection Bureau championed by Warren is a good start. As Warren noted in her speech (without naming the culprit), the CFPB recently brought an enforcement action, the agency’s first, against Capital One for deceptive marketing of credit cards.

Yet the Obama Administration overall has shown little stomach for taking tough action against corporate criminals. Obama does not hesitate to talk about how bad things were when he took office, yet his Justice Department has done little to prosecute the banksters who created the crisis.

“President Obama believes in a level playing field,” Warren dutifully declared. “He believes in a country where everyone is held accountable.” But belief is not enough. If he is reelected, Obama will have to take on corporate misconduct and stonewalling on job creation in a much more aggressive way.

After Clinton finished his speech at the convention, Obama came out on stage to embrace him and share in the enthusiastic response of the audience. Yet in a second Obama term, he would do better to align himself with Warren’s call to show that “we don’t run this country for corporations, we run it for people.”

We Subsidized It

We Built It. The Romney campaign and the wider conservative movement believe they have a winner in a slogan designed to refute President Obama’s comment about the role of government assistance to business in favor of an idealized Ayn Rand-style entrepreneurship that needs no stinkin’ public infrastructure.

They are so confident, in fact, that they asked a strangely inapt group of messengers to promote the theme at the Republican Convention: a slew of governors. Since Ronald Reagan, the right has ignored the incongruity of having public officials play a leading role in denouncing the public sector. Yet the GOP governors who took to the stage in Tampa to celebrate up-by-one’s-bootstraps free enterprise raised this hypocrisy to new heights.

Despite their frequently expressed laissez-faire beliefs, they have each presided over deals in which huge sums of taxpayer money have been handed over to large corporations in the name of economic development. The Romney campaign, which has been making deceitful allegations about Obama Administration changes in welfare work requirements, chose to have its big convention theme delivered by some of the biggest proponents of corporate welfare.

Take South Carolina Gov. Nikki Haley. She used her convention speech to honor her immigrant parents and the clothing company they created, adding: “So, President Obama, with all due respect, don’t tell me that my parents didn’t build their business.” She also gave praise to Boeing, saying that her state “was blessed to welcome a great American company that chose to stay in our country to continue to do business.” She failed to mention that Boeing’s decision to locate its second Dreamliner assembly line in Charleston was more than a little influenced by a state and local subsidy package estimated to be worth more than $900 million.

That deal was originally negotiated by her predecessor Mark Sanford but Haley enthusiastically carried it out and went to great lengths to defend Boeing against Machinists union charges that the move to South Carolina was prompted by anti-union animus. Haley has also made subsidy deals of her own, including the $9 million recently given to Michelin for a tire plant (photo). Haley subsequently told a tire industry conference: “We want to help you do more business in South Carolina and we want to make sure that you grow. That’s our job.”

Virginia Gov. Bob McDonnell—who told the convention “Big government didn’t build America: You built America!—agreed to give up to $14 million in subsidies to Northrop Grumman to relocate its headquarters to northern Virginia. The move was motivated by a need to be near the company’s dominant customer, the Pentagon, so the subsidies were probably unnecessary and could be seen as a reward for the large contributions the company made to his election campaign.

Ohio Gov. John Kasich, another member of the we-built-it chorus, has given in to job blackmail demands by companies threatening to move their operations out of state unless they got big subsidy deals. Kasich’s administration negotiated $100 million packages with both Diebold Inc. and American Greetings Corp.

Wisconsin Gov. Scott Walker, a rightwing hero for his campaign against public worker collective bargaining rights, used his convention speech to emphasis the importance of letting people “control their own destiny in the private sector.” In July, Walker announced that the state had awarded $62 million in tax credits to Kohl’s to get the retailer to expand its headquarters in the Milwaukee suburb of Menomonee Falls.

And then there’s conservative bad-boy idol Chris Christie, who gave the keynote address at the convention. The New Jersey governor’s administration has been handing out lavish tax credit deals to companies moving from one location in the state to another, including $250 million to Prudential Insurance, $100 million to Panasonic and $81 million to Goya Foods. Since taking office in 2010, Christie has given away more than $1.5 billion in subsidies to corporations.

The examples above focus on bigger deals involving larger companies, since those are the ones with the biggest giveaways of taxpayer funds. Yet many state subsidy programs also serve smaller firms. My colleagues and I at Good Jobs First have assembled data on more than 200,000 subsidy awards from state and local governments around the country in our Subsidy Tracker database. Most of the recipients are not in the Fortune 500.

I cannot resist mentioning that one of those small recipients is First State Manufacturing, a business run by Sher Valenzuela, who is running for Lt. Governor in Delaware on a tea party platform and who was given time at the Republican convention to tell her “I built it” story. In addition to the federal contracts and Small Business Administration loans revealed by Media Matters, information gathered for Subsidy Tracker shows that First State has received more than $29,000 in reimbursements for training costs through Delaware’s Blue Collar Training Grant program—a modest amount but another indication of business dependence on government.

Claims about the autonomy of the private sector are one of the Big Lies of modern conservatism. The real objective of the Right is along the lines of what Gov. Haley told that tire industry conference: to make sure government serves business through subsidies, deregulation, tax minimization and weakening of unions.

To the companies receiving these forms of assistance to expand their business, one could easily adopt the language of President Obama and say “you didn’t build that alone.” The truth is that both liberals and conservatives believe that government should aid the private sector. The difference between the two is in what is expected in return. Liberals make an effort (albeit inadequate) to impose some accountability, whereas the Right believes that business should be able to take all it wants with no strings attached. The debate over whether to limit government should really be one on whether there will be limits on corporate power.

Extraction and Disclosure

The U.S. Securities and Exchange Commission often behaves like a watchdog with no teeth, but it has just stood up to intense pressure from big business and finally approved two rules that will shine a light on dealings between some of the world’s largest corporations and the poor countries from which they extract vast amounts of natural resources.

One of the final rules will require companies engaged in resource extraction to report on all payments to foreign governments, such as taxes, royalties, fees and presumably bribes. The other will require companies to disclose their use of certain resources originating in the Democratic Republic of Congo, where warring groups that have committed frequent human rights violations finance themselves through the sale of what are known as conflict minerals, which can end up being used in the production of goods ranging from jewelry to iPhones.

These rules derive from some of the lesser known provisions of the 2010 Dodd-Frank financial reform legislation, which the corporate world has been seeking to undermine in the rulemaking process after losing in Congress. Business lobbyists have fought the same kind of rear-guard action against the disclosure requirements that they have mounted in opposition to the central portions of Dodd-Frank.

Comments submitted to the SEC by companies and trade associations were filled with the usual kneejerk criticisms of regulation and far-fetched claims about potential harm. The American Petroleum Institute warned that public disclosure of “unnecessarily detailed information” on foreign payments would place companies at a competitive disadvantage and “jeopardize the safety and security of our member companies’ operations and employees.”

Exxon Mobil seconded API’s positions but also threw in the preposterous argument that the disclosure rule could be harmful by “inundating and confusing investors with large volumes of data.” Chevron argued that the information should be submitted to the SEC on a confidential basis, and the agency would then make public only aggregate amounts by country. It also urged the SEC to limit reporting to payments of a “material” amount, which would have meant that only huge ones would be revealed.

It takes a lot of chutzpah on the part of Chevron and Exxon Mobil to resist greater transparency, given that predecessor companies of theirs were at the center of the scandals that first brought the issue of questionable foreign payments to national attention in the 1970s.

Congressional investigations of the Nixon Administration’s Watergate crimes also brought to light widespread corruption by major corporations in the form of illegal campaign contributions and payoffs to foreign government officials. Under pressure from the SEC, these companies investigated themselves and disclosed what they found.

Exxon (prior to its merger with Mobil) admitted to making more than $50 million in foreign payments that were illegal, secret or both. Gulf Oil (which later merged into what is now Chevron) admitted to more than $4 million in such payments, including $100,000 used to purchase a helicopter for one of the leaders of a military coup in Bolivia. Smaller oil companies also spread around the cash. Ashland Oil, for example, paid $150,000 to the president of Gabon to retain extraction rights.

Foreign payoffs were not unique to the oil industry. Aerospace giant Lockheed disclosed more than $200 million in questionable payments, while its competitor Northrop admitted to $30 million. The revelations extended to numerous other sectors as well.

These revelations seriously tarnished the image of big business and paved the way to the enactment of the Foreign Corrupt Practices Act. They were also a big part of the impetus for the modern corporate accountability movement, which has put expanded disclosure at the center of its reform agenda.

It is thus no surprise that corporate accountability and human rights groups—many of which participate in the Publish What You Pay coalition—promoted the inclusion of the disclosure provisions in Dodd-Frank and welcomed the SEC’s vote to move ahead with the rules. Yet there is frustration that on several points the agency caved in to industry pressure. Global Witness, for instance, said it was “extremely disappointed” that the final rule concerning conflict minerals gives larger companies two years and smaller ones four years to determine the origin of the minerals they use.

The SEC also acceded to the demands of giant retailers such as Wal-Mart and Target that they be exempt from conflict minerals reporting requirements relating to products sold as store brands but produced by outside contractors not operating under the retailer’s direct control.

Efforts by large companies to weaken the disclosure rules are yet another sign of how they resist serious regulation in favor of less onerous industry initiatives. Many of those arguing against the proposed SEC rules said they were unnecessary given the existence of the Extractive Industries Transparency Initiative. The EITI is laudable, but it is voluntary and less than fully rigorous.

Business never gives up on its effort to make us think that, despite the prevalence of corporate crime, it can police itself. It has never done so effectively and never will.

Corporate Greed is the Real Threat to Medicare

Now that fiscal hatchet man Paul Ryan is on the Republican ticket, the presidential race has turned into a free-for-all over the future of Medicare.

Recognizing the unpopularity of their goal of slashing entitlement spending, Ryan and Romney are instead straining credulity by painting themselves as defenders of Medicare against $700 billion in cuts scheduled under the Affordable Care Act.

This, of course, is a reprise of the tactic long used by opponents of healthcare reform of deliberately conflating Obamacare’s negotiated cuts in payments to healthcare providers with cuts in actual services to seniors.

Such obfuscation can have some success because most people continue to view Medicare solely as a government social program, when it is also a massive system of contracts that transfer more than $500 billion in taxpayer funds each year to the private sector. Medicare took the profit out of providing health insurance to seniors but it left untouched the profit motive in the delivery of their medical services. In fact, Medicare’s billions have played a central role in building the commercial healthcare industry into the leviathan it is today.

Not content with making a reasonable amount of money from serving this huge market legitimately, providers regularly try to bilk the system for more than what they are entitled to. This is not just a matter of the proverbial Medicare mills in which individual physicians or small operations charge for services provided to imaginary patients or else overbill when treating real ones.

Some of the biggest instances of Medicare fraud have been perpetuated by Fortune 500 companies such as for-profit hospital operators, medical device manufacturers and pharmaceutical producers.

Let’s start with the drugmakers, since they have been at the center of several recent cases involving the illegal marketing of their pills for unapproved purposes, which among other things results in more high-priced medications getting prescribed for Medicare patients, thus inflating system costs. A few weeks ago, Glaxo SmithKline agreed to pay $3 billion to resolve federal criminal and civil charges relating to the improper marketing of its best-selling anti-depressants.

In May, Abbott Laboratories agreed to pay $1.5 billion to settle similar charges relating to the off-label marketing of its drug Depakote. Although Depakote was approved only for treating seizures, Abbott created a special sales force to pressure physicians to use it for controlling agitation and aggression in elderly dementia patients. This was both a safety risk and an added financial burden for Medicare and Medicaid. Illegal marketing charges had previously been settled with companies such as Novartis, AstraZeneca, Pfizer and Eli Lilly—in other words, pretty much the whole industry.

Medical device makers also contribute to escalating Medicare costs by pressing doctors to use their expensive products in place of cheaper alternatives or perhaps when they are not really medically necessary. Last December, Medtronic paid $23.5 million to resolve federal charges that it paid illegal kickbacks to physicians to induce them to implant the company’s pacemakers and defibrillators. Several months earlier, Guidant paid $9 million to settle federal charges of having inflated the cost of replacement pacemakers and defibrillators for Medicare and Medicaid patients.

And then we have the for-profit hospitals. A decade ago, HCA, one of the pioneers of the industry and still its biggest player, paid a total of $1.7 billion in fines in connection with charges that it defrauded Medicare and other federal health programs through a variety of overbilling schemes. Chief executive Rick Scott—now the Republican governor of Florida—was ousted but managed to avoid prosecution.

It now looks HCA is at it again. The New York Times just published a front-page exposé of how the company—now controlled by a group of private equity firms including Bain Capital—is making fat profits through “aggressive” billing of Medicare as well as private insurers. The Times reported that HCA’s tactics are now “under scrutiny” by the Justice Department.

The debate over Medicare’s supposedly out-of-control costs is surprisingly devoid of discussion of how much of the problem is the result of aggressive billing or outright fraud by the likes of HCA, the device makers and the pharmaceutical producers. Seniors cannot be expected to suffer cuts in their benefits as long as the giant corporate healthcare providers continue to gouge the system.

Regulators Draw Flak Meant for Corporate Perps

When a mobster or street criminal declares “I was framed” and expresses disdain for police and prosecutors, we dismiss it as part of their sociopathic tendencies. Yet when corporate transgressors do essentially the same thing by criticizing government regulators, they are taken much more seriously. All too often, business perps succeed in portraying themselves as the victims.

This charade is being played out yet again amid the current wave of scandals involving major U.S. and British banks. In the latest case, Britain’s Standard Chartered has been accused by New York State banking regulator Benjamin Lawsky of scheming with the Iranian government to launder billions of dollars in funds that might have been used to support terrorist activists.

Rather than being outraged by the fact a major financial institution may very well have provided substantial material support to a regime that the governments of the United States and other western countries spend so much time vilifying, most of the criticism seems to be aimed at Lawsky.

Some of this criticism, not surprisingly, is coming from Standard Chartered itself, which insists that 99.9 percent of its dealings with Iranian parties were legitimate and that it was already cooperating with other regulatory agencies in investigating the matter. Those other agencies, including the Federal Reserve and the Office of Foreign Assets Control, seem to be siding with Standard Chartered. An article in the New York Times served as a conduit for allegations by unnamed federal officials seeking that Lawsky’s case was seriously flawed.

The accusations against Standard Chartered are hardly unprecedented. Only two months ago, the Justice Department announced that the Netherlands-based ING Bank had agreed to pay $619 million to settle charges of having violated federal law by systematically concealing prohibited transactions with Iran and Cuba. Last month, the Senate Permanent Subcommittee on Investigations issued a report of more than 300 pages on the poor record of the British bank HSBC in avoiding money-laundering transactions linked to terrorism and drug dealing.

The unfriendly response to the Lawsky allegations is not just a matter of the usual tension between federal and New York State regulators when it comes to financial sector investigations. Disapproving comments have also come from officials in Britain, with one member of parliament making the ridiculous suggestion that anti-British bias was involved.

There’s something much larger at stake. We’re in the midst of an ongoing corporate crime wave, with major banks among the most prominent perpetrators. As the Times points out, large corporations are on track to pay as much as $8 billion this year to resolve allegations of defrauding the federal government, a record amount and more than twice the amount from last year.

We should be focusing our criticisms on the companies involved in these and other cases that have not yet reached the settlement stage—not the regulators and prosecutors trying to control the corporate misconduct.

If there is any criticism to be made of regulators, it is that too few of them resemble Lawsky. They are more likely to treat corporations with kid gloves, given that too many of them either come from the private sector or end up there after their stint in government. Or else they simply fail to take decisive action. In the other major financial scandal of the day—the manipulation of the LIBOR interest rate index by Barclays and other major banks—regulators such as the Federal Reserve Bank of New York knew of the abuses years ago and were slow to do anything. The inaction was brazenly used by former Barclays CEO Bob Diamond as a way of spreading the blame for the rate-rigging.

No discussion of regulation would be complete without mentioning the problem that many of the rules are too weak to begin with. The individual most responsible for this during the Obama Administration—Cass Sunstein—recently announced that he will be leaving the Office of Information and Regulatory Affairs to return to academia. An indication of the damage inflicted by Sunstein can be gauged by the fact that both the Business Roundtable and the U.S. Chamber of Commerce bemoaned his departure. Hopefully, Sunstein’s successor will make it harder for corporate malefactors to ply their trade.