Phil Mattera

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.

The Risks of Being Employed

For those out of work for an extended period, unemployment can feel like a slow death.

Perhaps the only thing worse is the rapid death or serious injury experienced by many of those who have jobs but are forced to toil in unsafe conditions. As the ongoing economic crisis makes it difficult for workers to resist speed-ups and the hazards that go along with them, workplace accidents continue to mount. More than a dozen people are killed on the job each day.

New evidence of employer abuse comes in the latest statistics for the Occupational Safety and Health Administrations’ Severe Violator Enforcement Program (SVEP). According to the August 1 issue of Bloomberg BNA’s Labor Relations Week, the number of workplaces that have egregiously bad safety records has doubled in the past year, reaching 330 establishments.

OSHA created the SVEP in 2010 in an effort to focus attention on those employers that expose their workers to the most dangerous conditions, as indicated by the occurrence of serious accidents and citations for significant violations of safety and health standards. This is a laudable initiative, but it is likely that OSHA’s list includes only a small fraction of the corporate malefactors.

One of the companies missing from the compilation is BP, with which OSHA recently reached a $13 million settlement relating to the remaining unresolved violations at the company’s notorious Texas City refinery. BP previously paid more than $70 million in connection with hundreds of violations at the facility, where 15 workers were killed and more than 170 injured in a 2005 explosion (photo).

BP’s payments are far from the norm. In fact, the 2012 edition of the AFL-CIO’s overview of safety and health practices concludes that typical penalties—which after a recent increase still average only $2,100 for serious violations cited by OSHA and only $942 for those brought by state agencies—are too low to serve as a real deterrent to employer negligence.

Most of the firms on the SVEP list are smaller companies, with the largest number in the construction sector. One larger corporation is Cooper Tire & Rubber. In November 2010 Cooper was cited by OSHA for 10 violations for failing to provide adequate protection from hazardous chemicals at its plant in Findlay, Ohio. The following June, Cooper was cited for similar violations at its plant in Tupelo, Mississippi.

Failure to provide a safe work environment is not the only way that Cooper mistreats its workers. The tire maker is also among the large employers that have used the recession as a pretext for taking a hard line on collective bargaining. Last November, Cooper locked out workers in Findlay represented by the Steelworkers union after they rejected a contract offer from the profitable firm that eliminated wage guarantees and increased healthcare premiums. Back in 2008, when Cooper was losing money, the union agreed to $30 million in concessions that helped it survive. The lockout ended in February after workers approved a somewhat less onerous offer.

Cooper’s strategy is similar to that being employed by Caterpillar, which despite enjoying record profits, is seeking deep concessions from its union workers. In May more than 750 workers at Cat’s plant in Joliet, Illinois, took what is a rare step these days—they went on strike. They were willing to take the risk in the face of a company proposal to freeze wages for six years for workers with more seniority and to set wage rates for newer employees according to labor market conditions rather than collective bargaining. There appears to be no end in sight for the walkout.

Long-term unemployment can take a terrible toll on families, but many of those with jobs go to work each day facing risks to their life or their livelihood. The recession, intensified by corporate disregard for workplace safety and labor laws, weighs heavy on all of the 99%.

How to Succeed in Business

It’s only a few months to the presidential election, and the economy is still a mess, yet the candidates have been arguing over the secret of success in business.

This is an old and tired debate, and neither side is saying anything novel. Romney is reciting the chamber of commerce fairy tale that business achievement is the result purely of hard work and risk-taking on the part of lone entrepreneurs. Obama mostly accepts that narrative but meekly points out that business owners also depend on government-provided infrastructure and thus should pay a slightly larger share of the taxes needed to fund those roads, bridges and the like.

Both men talk as if we were still in an early 19^th Century economy of small enterprises that live or die based on individual effort and minimal government activity—rather than the century-old reality that megacorporations are what dominate American commerce.

When the candidates do acknowledge the existence of big business, it is mainly to offer competing proposals on how to serve its needs. For the Republicans, this means further weakening of regulation and the dismantling of the corporate income tax. While the Democrats make some noise about controlling business excesses, nothing much comes of this, and their main goal seems to be that of bribing large corporations with incentives so they don’t abandon the U.S. economy entirely.

What both sides forget is that corporations exist at the behest of government—in nearly all cases state governments, which authorize their creation. The original ones were established to enlist private participation in government initiatives such as building canals. Before the Civil War, corporations were allowed to engage only in designated activities and could not grow beyond a certain size. It was to get around these limitations that robber barons such as Rockefeller created the trusts that came to control so much of American industry, prompting the passage of the Sherman Act and other antitrust efforts.

Whatever progress started to be made in thwarting the hyper-concentration of business was undermined when New Jersey and then Delaware rewrote their corporation laws to allow companies to do pretty much whatever they pleased and to become as big as they wished in the process. Eventually, other states followed suit. The corporate form, once a privilege granted for special purposes, became an entitlement for any pool of money seeking to make a profit behind the shield of limited liability.

What presidential candidates should be debating is whether the time has come to tighten state corporation laws or replace them entirely with a federal system of chartering, as Ralph Nader and his colleagues argued in the 1970s.

Nader’s effort was prompted by a wave of revelations about corporate misconduct that came out of the Watergate investigations. Today we have our own corporate crime wave: recent cases of foreign bribery (Wal-Mart), illegal marketing of prescription drugs (GlaxoSmithKline and others), manipulation of interest rates (Barclays) and pipeline negligence (Enbridge Energy) come on the heels of the Wall Street mortgage securities fiasco, the BP spill in the Gulf of Mexico, and the Massey Energy coal mining disaster.

If we have to talk about success in business, the question we should be considering is whether any large company succeeds without engaging in illegal, or at least unethical and exploitative, behavior. In spite of all the talk about corporate social responsibility, it is difficult to find a major firm that does not cross the line in one way or another.

Take the most successful company of recent years: Apple. Thanks to a series of investigative reports, we now know that Apple’s business achievements are based on a foundation of underpaid workers, both in its foreign factories and its domestic retail stores. On top of that, the company engages in flagrant tax avoidance, and despite its gargantuan profits, it forces state governments to hand over big subsidies when it builds data centers.

Sure, Apple made use of the type of public infrastructure President Obama likes to talk about. Yet the biggest benefit it and other large companies receive from government is the unwillingness to engage in serious regulation and to prosecute corporate crime to the fullest, which would mean an end to the current practice of deferred prosecutions and other forms of wrist-slapping.

Forget about roads and bridges: the real secret of business success is government tolerance of corporate misconduct.

Through A Corporate Glass, Darkly

Conventional wisdom has it that we live in an age of hyper-transparency. That’s true if you look at what people are willing to reveal about themselves to Facebook, but it’s another story for large corporations and the 1%.

The Republican filibuster of the DISCLOSE Act and Mitt Romney’s reluctance to release more of his income tax returns are strong reminders of how those at the top of the economic pyramid seek to hide the ways they accumulate their wealth and influence public policy.

The current preoccupation with disclosure issues makes this a good time to step back and review the state of corporate transparency. Do we know enough about the workings of the huge private institutions that dominate so much of modern life?

Of course, the answer is no. Yet the quantity and quality of disclosure vary greatly depending on the structure of a given company and the aspect of its operations one chooses to examine. Depending on which piece of the business elephant we touch, corporations may seen somewhat translucent or completely opaque.

It’s also worth remembering that there are two main forms of disclosure: information that companies, especially those whose stock is publicly traded, are compelled to reveal and the data that government agencies collect about firms and release to the public. What corporations release on their own initiative is, given its selective nature, self-serving spin rather than disclosure.

Most of what U.S. companies are required to disclose is contained in the financial filings required by the Securities and Exchange Commission. It’s great that the SEC makes these documents readily available via its EDGAR online system, but the information required from companies is meant to serve the needs of investors rather than those of us concerned with corporate accountability. There is thus an abundance of data on financial results and a meager amount on a company’s social impacts. Here’s a rundown and critique of disclosure practices regarding the latter.

LEGAL PROCEEDINGS. Each company filing a 10-K annual report has to include a section summarizing significant litigation and other legal proceedings in which it is involved. For some companies, these sections can go on for pages, which says a lot about the corporate tendency to run afoul of the law. Even so, these sections are often incomplete, since companies are given discretion in deciding which cases are “material,” meaning that fines and other penalties could have a significant impact on earnings. To get a fuller picture of corporate legal entanglements, you need to search the dockets on the PACER subscription service, which for large companies will be voluminous, or use the free summaries on the Justia website.

EXECUTIVE COMPENSATION. The annual proxy statements filed by publicly traded companies provide exhaustive details on the salaries, bonuses and other compensation received by top executives (and directors). Designated in the EDGAR system as Form DEF14A, these documents seem to try to drown the reader in details to downplay the impact of lavish pay packages. Note that what is called the Summary Compensation Table does not include essential information such as the amount (shown elsewhere) that an executive realized from the exercise of stock options.

EMPLOYMENT ISSUES. Companies are required to disclose their total number of employees but do not have to provide a geographical breakdown. Some do so voluntarily, but many others can hide the tendency to create many more jobs in foreign cheap-labor havens than at home. Because the penalties are usually small, companies tend not to disclose violations of federal rules regarding overtime pay, the minimum wage and other Fair Labor Standards Act issues. Fortunately, the Department of Labor has included wage and hour compliance information in its new enforcement website.

OCCUPATIONAL SAFETY AND HEALTH. Companies also rarely mention violations of occupational safety and health, for which penalties are also meager. The U.S. Occupational Safety and Health Administration, to its credit, makes available a database of all workplace inspection results going back to the creation of the agency; the DOL enforcement website provides access to this as well. Unfortunately, there are no summaries of the compliance records of large companies across their various establishments.

LABOR RELATIONS. Companies are required to report on labor relations issues only if there is a likelihood of a work stoppage that could affect corporate profits. With the decline of unions in the U.S. private sector, many companies do not bother to mention labor relations at all. Disputes that result in a formal ruling by the National Labor Relations Board will show up on that agency’s website.

ENVIRONMENTAL COMPLIANCE. Companies frequently discuss environmental regulation in the 10-K filings and will mention major enforcement actions. Yet these accounts are usually incomplete. The Environmental Protection Agency fills in the gaps with its Enforcement and Compliance History Online (ECHO) database.

TAXES. Buried in the notes to the company’s financial statements is a section with details on how much it paid (or in many cases did not pay) in the way of taxes. This information is presented with a high degree of obfuscation, so it is fortunate that Citizens for Tax Justice publishes reports that summarize the extent to which large U.S. companies engage in flagrant tax avoidance.

SUBSIDIES. Corporate filings usually say little or nothing about the subsidies received from government, and it is often impossible to learn from other sources what those amounts may be when it comes to subsidies that take the form of federal tax breaks. There is much more company-specific data available on subsidies from state governments. In my capacity as research director of Good Jobs First, I have collected that data and assembled it in the Subsidy Tracker database.

GOVERNMENT CONTRACTS. Companies will report on government contracts only if they make up a substantial portion of their total revenue. Thanks to the work of OMB Watch in creating the FedSpending database, which the federal government adapted for its USASpending tool, it is possible to learn a great deal about how much business a given firm is doing with Uncle Sam. Data on contracts with state governments can often, though not always, be found via state procurement websites.

LOBBYING AND POLITICAL SPENDING. Corporations are not eager to disclose their efforts to shape public policy, and the SEC does not require them to do so. The Center for Political Accountability, on the other hand, was created to put pressure on companies to be more open about their political spending. The group has succeeded in getting about 100 corporations to adopt political disclosure. The inadequate information that gets disclosed at the behest of the Federal Election Commission can be found on websites such as Open Secrets, while state-level electoral data is summarized on the Follow the Money site. Both also provide access to the available data on lobbying.

Inadequate political disclosure by corporations is not limited to the United States. A recent study by Transparency International on 105 of the world’s large companies found that only 26 engaged in satisfactory reporting of political contributions. That was just one component of an analysis that looks at a variety of transparency measures that relate broadly to anti-corruption initiatives. Some of the worst results concern the simple matter of whether firms provide full country-by-country data on their operations and financial results.

The latter shows how disclosure issues of concern to investors and financial analysts can intersect with those relating to corporate accountability. When a company is allowed to use excessive forms of aggregation in its reporting, it may be hiding either poor management or corporate misconduct or both.

Note: The information sources discussed above as well as many others are discussed in my guide to online corporate research.