Phil Mattera

Tracking Corporate Traitors

Not too many years ago, America was up in arms about offshore outsourcing. The news media were filled with reports of the wholesale migration of both white collar and industrial jobs to low-wage havens in Asia. The mood of panic was reflected in articles such as the March 2004 Time magazine cover story Is Your Job Going Abroad?

For most people these days, the outsourcing controversy has largely been forgotten or recalled only in the context of the new NBC sitcom situated in an Indian call center. But for the folks at the AFL-CIO, offshoring is neither a laughing matter nor a thing of the past. The labor federation and its community affiliate Working America have just released both a report and a database showing that the corporate practice of shifting jobs from the United States to cheaper foreign locales is still a burning issue for American workers and the American economy.

The report cites evidence that the use of offshoring is expanding in corporate America, though many companies have learned to be more discreet about it. The true extent of the job migration is difficult to determine, the report notes, because federal statistical agencies such as the Bureau of Labor Statistics and the Bureau of Economic Analysis are not set up to measure this kind of phenomenon accurately.

For those less inclined toward policy briefs and more concerned about conditions in their community, the AFL and Working America also released a new version of their Job Tracker database. It allows one to plug in a Zip code and see a Google map with pushpins indicating workplaces that have experienced job flight, as indicated by WARN Act filings, Trade Adjustment Assistance certification and other data sources. Job Tracker also shows which workplaces have been hit with health and safety violations (from the OSHA database), labor law violations (from the NLRB database) and employment discrimination violations (from the database of the Office of Federal Contract Compliance Programs).

This is a great resource for researching bad employers, whether or not they are moving jobs offshore. The site also has a feature allowing a user to recommend a company that should be featured on Job Tracker. It would be great to see it expanded even more to cover other forms of regulatory violations as well as key data such as government contracts and subsidies.

The Job Tracker is handy for finding out how employers in specific locations export jobs, but it is also helpful to see aggregate figures for corporate behemoths. The AFL/Working America report mentions the case of IBM, whose U.S. workforce dropped from more than 40 percent of the company’s worldwide total in 2005 to just over a quarter in 2009.

IBM is far from unique. Based on figures from its 10-K SEC filings, the U.S. share of General Electric’s workforce dropped from 51 percent at the end of 2005 to 44 percent at the end of 2009. During the same period, the U.S. share at Caterpillar fell from 52 percent to 46 percent. Even at Wal-Mart, celebrated for creating American jobs (such as they are), the U.S. share declined from 72 percent to 67 percent. For many corporations it is not possible to measure the trend, given that they choose not to give a geographic breakdown of employment in their 10-K or annual report.

The tendency of large U.S.-based corporations to invest and create low-wage jobs abroad is not a new story. But the decision by such companies to expand employment overseas at the expense of U.S. jobs during a period of severe recession at home amounts to a form of economic treason. In this way, the Job Tracker is not just a database but also a corporate crime detector.

Tiananmen Square Inc.

Large corporations don’t depend on China only for cheap labor; they also seem to be adopting the practices of that country’s repressive government in the treatment of dissidents. It has just come to light that oil giant Chevron is working with Houston authorities in the prosecution of shareholder activist Antonia Juhasz, who berated executives and directors at the company’s annual meeting last May over environmental and human rights issues.

Juhasz, author of the book Tyranny of Oil and editor of an alternative annual report on Chevron, was removed from the May meeting and arrested. Rather than dropping the charges after the disruption was over, Chevron has pursued the matter. At a recent court hearing, the company pushed for Juhasz to get jail time for criminal trespass and other charges.

What happened to Juhasz was not the first time an activist was ejected from an annual meeting for speaking out. In 2004 veteran labor activist Ray Rogers was wrestled to the ground by security guards and forcibly removed from Coca-Cola’s meeting after he forcefully criticized the company for its ties to paramilitary groups involved in the murder of trade union leaders in Colombia. He was threatened with arrest but not taken into custody.

The criminal prosecution of Juhasz is a troubling turn of events. Annual meetings are the one occasion when corporations are supposed to give the semblance of being democratic institutions. CEOs and board members should endure the protests and not try to take revenge on their critics.

Some might say that the likes of Juhasz and Rogers are out to disrupt annual meetings and that they should instead work through proper channels to get their point of view across. But corporations are trying to close that avenue as well.

Corporate interests are up in arms about the Securities and Exchange Commission’s decision in August giving shareholders new powers to nominate directors to corporate boards. The move marks the beginning of the end of non-competitive board elections that have much in common with the selection of leaders in China and the old Soviet Union.

Corporations tried mightily to prevent this intrusion of democracy into their affairs. As I noted a year ago, the corporate comments submitted to the SEC about the proposal raised some ridiculous objections. The Business Roundtable claimed that the rules would violate a corporation’s First Amendment rights by forcing it to include comments by outside candidates in its proxy statement.

McDonald’s Corporation fretted that shareholders might nominate someone “who may not have even met the existing members of the Board.” Sara Lee Corporation claimed that the change would result in directors who represented a special interest rather than the interests of all shareholders – conveniently forgetting that many directors have been chosen because of their affiliation with a financial institution or other entity that has a significant relationship with the company—a suspicious practice known as corporate interlocks or interlocking directorates.

Having lost in the rulemaking process, business groups are now taking the matter to court. The U.S. Chamber of Commerce and the Business Roundtable have challenged the SEC decision in the federal court of appeals in Washington. The two groups – whose legal team is led by Eugene Scalia, son the Supreme Court Justice – depict activist shareholders as a special interest whose ability to nominate board candidates would violate the First and Fifth Amendment rights of corporations. Their brief implies that the whole idea of proxy access is a plot by unions.

Echoing the current Republican talking point, they claim that the new rules would create “uncertainty.” They even play the recession card, saying: “We respectfully submit that stewardship of the national economy during these difficult economic times counsels strongly in favor of a stay.” They conclude by saying that a failure of the appeals court to put a stop to the proxy reforms would cause “irreparable injury” to public traded corporations.

At one time, such arguments would be laughed out of court. But in the current climate, with business rights being treated as sacrosanct, the challenge has a reasonable chance of success. Democracy may not be coming to Corporate America after all.

Wal-Mart Plays the Victim

In the mid-1990s business groups such as the American Trucking Association – then led by Thomas Donohue, currently head of the U.S. Chamber of Commerce – launched a crusade to ban union corporate campaigns. The effort fizzled out, but now Wal-Mart may be trying something similar to thwart site fights pursued by community groups opposed to the opening of the giant retailer’s stores and distribution centers.

The company is pouncing on a story published in the Wall Street Journal in June reporting that rival grocery chains such as Safeway and SuperValu helped to pay for the services of a firm called Saint Consulting Group, which has worked with community groups around the country in campaigns against Wal-Mart projects. The article also reported that Saint’s fees are sometimes paid by the United Food and Commercial Workers. The UFCW does not hide the fact that it works with community groups opposed to the virulently anti-union Wal-Mart, whose expansion threatens the jobs of UFCW members at unionized competitors. The UFCW confirmed to the Journal that it has funded Saint and insisted it had every right to do so. The newspaper said that the rival chains declined to comment.

In a just-published follow-up article, the Journal reports that Wal-Mart is asking courts to compel its opponents to disclose who is paying their legal bills in various environmental lawsuits challenging the company’s expansion. This could be the first step in an effort to get courts and perhaps friendly legislatures to put restrictions on site fights and their funding. While Wal-Mart claims to be most upset about the involvement of its competitors, the company may try to use this issue to weaken community groups and the UFCW, its long-time nemesis.

It is the height of hypocrisy for Wal-Mart to complain about collusion among its adversaries. The beast from Bentonville has never hesitated to use every trick at its disposal – including the funding of front groups – to advance its expansion efforts. Over the summer it succeeded in getting permission to build a second store in Chicago by using tactics such as creating fake community groups and hiring low-income people to pose as demonstrators supposedly eager to get a Wal-Mart job. The company also pretended to have seriously negotiated with unions on wage rates for the store.

Several years ago, Wal-Mart sought to defuse criticism of its detrimental impact on local businesses by launching an “Opportunity Zone” program that amounted to little more than bribing small firms to back its agenda. In 2006 it came to light that two blogs that appeared to be written by independent supporters of the company were actually created by Wal-Mart’s public relations firm, Edelman. That was in addition to reports that the company was cultivating real bloggers, some of whom were repeating company talking points verbatim.

The amount of money Wal-Mart’s competitors have contributed to site fights probably does not compare to what Wal-Mart has spent itself. Apart from the direct costs of those site battles, the company cultivates political support through direct means such as campaign contributions and is believed to make wide use of indirect means such as giving consulting contracts to relatives of public officials.

State and local governments end up paying for the company’s campaigning through the economic development subsidies (estimated at more than $1.2 billion) they give to Wal-Mart and the forms of tax avoidance (estimated at billions more) that the company arranges for itself.

Wal-Mart may feel that the likes of Safeway and Supervalu are violating some unspoken rule by supporting site fights, but it has broken every rule in the book itself in pursuit of endless expansion. But rather than defending those rivals, the most important thing is to be sure Wal-Mart does not exploit this issue to put shackles on community groups and unions, which are often the only forces working against the company’s quest to take over everything.

Boeing’s Subsidy Coercion

For many years Boeing has complained that its European rival Airbus unfairly benefited from government subsidies as it grew to become the world’s top jet builder. The U.S. company felt vindicated when the World Trade Organization ruled last June that Airbus had indeed received improper below-market-rate loans from European governments.

But now Boeing has been hoisted by its own petard. Responding to a counter-complaint filed by the European Union, the WTO has just concluded that Boeing received its own illegitimate government help – both from research contracts awarded by federal agencies and from states that put together large incentive packages to lure production facilities for Boeing’s next-generation 787 Dreamliner. The value of the questionable payments was said to be in excess of $20 billion.

The ruling itself was not made public, but the descriptions of it that have emerged in the press undermine Boeing’s long-standing contention that its government assistance, unlike that received by Airbus, is legitimate. The company has strained to argue that the deals offered by the states are incentives and that incentives are not the same thing as subsidies. The WTO now seems to be saying that this is one of those distinctions without a difference.

Since the text of the WTO decision is not available, I thought it would be helpful to recount what kinds of assistance Boeing has received from various states. The deals were well covered but it is easy to forget how willing the company has been to make use of public giveaways.

WASHINGTON STATE. Boeing’s association with Washington State dated back to the company’s founding in 1916, but when it was making plans in the early 2000s for the Dreamliner, it forced the state to compete with around 19 others to be chosen as the location for a $500 million plant and up to 1,200 jobs.

Eager to preserve his state’s status as a center of aerospace production, Gov. Gary Locke proposed huge tax breaks for the company and pressured the legislature to approve them virtually overnight in a special session. Locke got his way, and Boeing ended up with a package of research & development tax credits and cuts in Business & Occupation taxes (the state’s substitute for a corporate income tax), sales taxes and property taxes that together were estimated to be worth $3.2 billion over 20 years. Boeing agreed to locate the Dreamliner operation in Washington after the state also agreed to overhaul the unemployment insurance system to reduce costs for employers and tighten up on workers compensation claims.

KANSAS. Hoping to persuade Boeing to perform a portion of the work on its Dreamliner at its 12,000-person operation in Wichita, the Kansas legislature in 2003 approved a plan to make available $500 million in bond financing to the company. The proceeds from the state bond issue were to be turned over to Boeing, which would be allowed to pay off the interest by diverting the state payroll taxes collected from its workers assigned to tasks relating to the new jetliner. The projected cost to the state in lost revenue over the 20-year bond payoff period was estimated at $200 million. In 2005, before it could make use of the bond financing, Boeing sold its commercial operations in Wichita to a Canadian private equity firm, which was allowed to make use of the funding at a reduced level.

SOUTH CAROLINA. The Palmetto State was one of the losers in the 2003 competition set up by Boeing to decide where to locate its initial production facilities for the Dreamliner. But the state kept wooing the airplane manufacturer as well as some of its major suppliers. In 2004 it gave a subsidy deal worth more than $100 million to one of those suppliers, Vought Aircraft Industries. In 2009 Boeing received a subsidy package initially valued at $450 million – later pegged at $900 million – to locate its second Dreamliner production line in South Carolina, where it clearly hopes to keep its workforce non-union.

ILLINOIS. Boeing played the same subsidy game in 2001 when it decided to move its headquarters from Seattle to another part of the country. It set up a competition among three cities that was won by Chicago after state and local officials put together a package of tax credits, property tax abatements and other incentives worth a total of about $56 million.

What this history shows is that Boeing not only mimicked Airbus in making use of anti-competitive subsidies, but that it did so by coercing state and local governments. For Boeing, at least, the main problem is not that it violated the WTO’s abstract notions of fair competition but that it exploited the hunger for decent jobs to extract massive sums from the pockets of American taxpayers.

European Companies Behaving Badly

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

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

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

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

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

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

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

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

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

Corporate Benevolence and Corporate Despotism

When we worry about the influence of big business on our existence these days, we generally think about a variety of companies: our employer, the financial institutions that handle our money, the drug companies that treat our ailments, the agribusiness firms that feed us, the telecoms that allow us to communicate, etc.

Yet there have been many situations in American history in which everyday life was dominated by a single corporation. This occurred when people found themselves residing in what were known as company towns.

The Company Town, an engaging new book by Hardy Green, is apparently the first general history of the efforts by a variety of capitalists in the United States to create communities in which they could control both the working life and the private life of their employees and their families. Green follows the evolution of this special form of urban planning from the textile towns of New England in the early 19^th Century to the communities hastily erected by military contractors at the onset of World War II. He also finds modern analogues in amenity-laden corporate campuses such as the Googleplex in California.

Along the way he looks at communities across the country involved in industries such as mining, steel, petroleum, railcars, shipbuilding, meatpacking and logging. The corporate sponsors of these towns included the likes of U.S. Steel, Cannon Mills, Phelps Dodge, Hormel, Maytag, Kaiser Industries and even the federal government (in connection with Oak Ridge, Tennessee, the site of the Manhattan Project).

Green is careful to distinguish between company towns such as Hershey, Pennsylvania that were experiments in corporate paternalism and the harsh communities set up by coal companies to house their miners. The first type represented a form of industrial utopianism, while Green dubs the latter model “exploitationville,” reflecting not only workplace conditions but also substandard housing and overpriced company stores.

Green does a great job in weaving together the biographies of the entrepreneurs responsible for creating many of the company towns with the histories of their firms and industries, putting it all in the context of the tumultuous labor relations of the past two centuries. (Full disclosure: Green is a friend of mine.)

While some of the company towns were created to put manufacturing operations close to the sources of raw materials (e.g. meatpacking plants sited near livestock producers), many were set up to isolate workers from the influences of union organizers and radical agitators. Yet, as Green shows in numerous cases, those influences managed to infiltrate both the paternalistic and the unabashedly exploitative company towns.

He recounts a series of labor disputes beginning with the work stoppages at the Lowell mills and continuing through to the Pullman railcar workers strike in 1894, the Phelps Dodge miners organizing drive in 1917, the Cannon Mills walkout in 1921, the Hershey workers strike in 1937, and the Hormel meatpackers strike in the 1980s.

The willingness of these workers to confront management was all the more amazing in that their employers were also their landlords, meaning that a decision to go out on strike could quickly lead to eviction from one’s home. The will to fight did not always translate into an ability to win, and Green points out that in most cases strikes and organizing drives were crushed by company-town employers – whether they were of the paternalistic or exploitative variety.

Given this oppressive history, it is surprising that when it comes time to analyze the overall lesson of company towns, Green adopts an approach that is far from condemnatory. He suggests that employers who chose the more exploitative approach may not have had a choice, given low profit margins, low skill requirements and other factors in their industries. And he argues that the more paternalistic company towns have something to teach today’s employers.

Some of the features of the best benevolent company towns – affordable housing, day care, good schools, impressive libraries and recreational facilities – certainly have their appeal, especially in today’s climate of cutbacks in public services. Yet those benefits came at a steep price: a loss of freedom, especially in connection with the right to organize for a voice at work.

I would have liked Green to provide more analysis of what the paternalistic and exploitative employers had in common and how the two approaches were simply different ways of achieving the same objective: dominating the workforce while maximizing productivity and profits.

More than the company towns themselves, the struggles of workers in those difficult circumstances provide lessons in dealing with excessive corporate power, whether it comes from one company or many.

The Dark Side of Family Business

Americans love entrepreneurship, and no form of it is more celebrated than the family business. Most of us distrust big banks and giant corporations, but who doesn’t have warm feelings about mom and pop companies or family farms? These are the types of firms that politicians of all stripes want to shower with tax breaks and other forms of government assistance.

The problem is that family enterprises, like pet alligators, may start out as small and cuddly but can grow into large and dangerous monsters. We’ve seen two examples of this recently in connection with the family-owned oil company Koch Industries and the egg empire controlled by the DeCoster Family.

Koch Industries and its principals David and Charles Koch are the subject of a detailed article in The New Yorker by Jane Mayer. Much of the information in the piece has previously come out in blogs, websites and muckraking reports by environment groups, but she does a good job of consolidating those revelations and presenting them in a prestigious outlet.

Mayer describes how the Kochs, who are worth billions, have for decades used their fortune to bankroll a substantial portion of rightwing activism and are currently the big money behind groups such as Americans for Prosperity that are helping coordinate the purportedly grassroots Tea Party movement. What makes the Kochs especially insidious is that they use the guise of philanthropy to fund organizations promoting policy positions – environmental deregulation and global warming denial – that directly serve the Koch corporate interests, which include some of the country’s most polluting and greenhouse-gas-generating operations. The Kochs also contribute heavily to mainstream philanthropic causes such as the Metropolitan Opera and the Sloan-Kettering Cancer Center to win influential allies and gain respectability.

The DeCosters, whose egg business is at the center of the current salmonella outbreak, are not in the same social circles as the Kochs, but they have an even more egregious record of business misconduct. Hiding behind deceptively modest company names such as Wright County Egg, the family, led by Jack DeCoster, has risen to the top of the egg business while running afoul of a wide range of state and federal regulations.

As journalists such as Alec MacGillis of the Washington Post have recounted, the DeCosters have paid millions of dollars in fines for violating environmental regulations (manure spills), workplace health and safety rules (workers forced to handle manure and dead chickens with their bare hands), immigration laws (widespread employment of undocumented workers), animal protection regulations (hens twirled by their necks, kicked into manure pits to drown and subjected to other forms of cruelty), wage and hour standards (failure to pay overtime), and sex discrimination laws (female workers from Mexico molested by supervisors).

Their lawlessness dates back decades. A November 11, 1979 article in the Washington Post about Jack DeCoster’s plan to expand from his original base in Maine to the Eastern Shore of Maryland states that he was leaving behind “disputes over child labor, union organizing drives and citations for safety violations.” In 1988 the Maryland operation was barred from selling its eggs in New York State after an outbreak of salmonella. In 1996 the Occupational Safety and Health Administration fined the DeCosters $3.6 million for making its employees toil in filth. Then-Labor Secretary Robert Reich said conditions were “as dangerous and oppressive as any sweatshop we have seen.”

The DeCosters were notorious enough to be featured in a 1999 report by the Sierra Club called Corporate Hogs at the Public Trough. The title referred to the fact that concentrated animal feeding operations (CAFOs) such as those operated by the DeCosters were receiving substantial federal subsidies despite their dismal regulatory track record.

Articles about Jack DeCoster invariably describe him as self-made and hard-working. “Jack doesn’t fish, he doesn’t hunt, he doesn’t go to nightclubs,” a farmer in Maine told the New York Times in 1996. “He does business — 18 hours a day.” He was recently described as a “born-again Baptist who has contributed significant amounts of money to rebuild churches in Maine and in Iowa.”

Like the Kochs, DeCoster apparently thinks that some philanthropic gestures will wipe away a multitude of business transgressions. Yet no amount of charitable giving can change the fact that these men grew rich by disregarding the well-being of workers, consumers and the earth. Such are the family values of these family businessmen.

Villainous Visionaries

It is tempting to refute the new book on business ethics by Andy Wales, Matthew Gorman, and Dunstan Hope with two letters; BP. The oil giant’s record of negligence in connection with the Gulf of Mexico disaster, its refinery accidents and its pipeline leaks in Alaska flies in the face of the thesis of Big Business, Big Responsibilities: that large corporations are in the vanguard of efforts to address the planet’s most pressing environmental and social problems.

The text of the book appears to have been completed before the blow-out of BP’s Macondo well this spring, but it is likely that the incident would not have merited mention if the timing had been different. Wales, Gorman and Hope seem to live in a world in which corporations act nobly and business crimes such as bribery, price-fixing, toxic waste dumping, mistreatment of workers and disregard for safety norms are either a thing of the past or are rare enough to ignore.

The authors – two of whom work for large corporations while the third (Hope) is on the staff of Business for Social Responsibility – would have us believe that many major companies have in a short period of time evolved from villains to visionaries.

To their credit, Wales, Gorman and Hope do not claim that this transformation happened spontaneously. They fully acknowledge the role of environmental and social justice campaigns in highlighting harmful and unfair business practices. Yet they fail to address corporate resistance to these campaigns, making it seem as if top executives promptly renounced pollution and exploitation as soon as an objection was raised.

Wales, Gorman and Hope admit that the initial boardroom motivation was to protect brands damaged by aggressive campaigners, but they insist that many large companies have gone beyond that defensive posture and are now engaged in a “proactive search for opportunities to improve social well-being and achieve corporate financial success at the same time.”

Their outlook is representative of the new corporate utopianism – the notion that the profit motive can be made to align perfectly with the public good, thus making global companies the perfect vehicle for reshaping the world.

It is easy to see why Wales, Gorman and Hope, who have built their careers on promoting corporate social responsibility, would embrace this view, and its appeal among the companies they advise is obvious.

But it is not clear why those of us with no vested interested in corporate canonization should go along. Even if we admit that some companies are doing some socially beneficial things, what took them so long? Are we expected to forget their decades of rapacious behavior?

It is also unclear how far should we trust companies that began to act responsibly only after being pressured to do so by outside forces, which according to Wales, Gorman and Hope include not just corporate campaigns but also growing consumer preference for ethical and sustainable goods and services. The only internal impulse that seems to be at work in socially responsible companies is the desire to make a buck from these new market opportunities.

So let me get this straight: responding to external pressures, giant corporations are doing the right thing, which turns out to be highly profitable – and we are supposed to believe this is some kind of great moral awakening?

Before passing judgment on the intentions of companies professing a commitment to social responsibility, perhaps we should take a step back and ask how real is the purported transformation. And this brings us back to BP, which is repeatedly praised by Wales, Gorman and Hope for its forward-thinking stance on issues such as climate change.

Given what we now know about BP’s reckless actions, as opposed to its high-minded principles, it is likely that its commitment to social responsibility is a smokescreen. Wales, Gorman and Hope don’t consider the possibility that many of the laudatory policies adopted by BP and other corporate leviathans are nothing more than greenwashing.

Big Business, Big Responsibilities could be dismissed as a work of corporate propaganda, but what makes it more insidious is the appeal the authors make to non-governmental organizations. The last page of the book calls on NGOs to be less suspicious of corporations and to accept them as full partners in environmental and social campaigns. I read this as an effort to bring about a unilateral ceasefire by watchdogs groups, which would lose their independence and start functioning as appendages of corporate public relations departments.

While a few NGOs have already moved in this direction, it would be foolhardy for serious campaigners to abandon their adversarial posture toward corporations. Without such pressure, big business would inevitably return to all its old tricks.

Stealth Disclosure

The Congressional practice of quietly attaching an unrelated provision to a larger piece of legislation at the last minute has all too often been used to benefit powerful corporate interests. In two recent cases, however, the stealth amendment process has resulted in changes that will make it easier to monitor questionable business practices by energy companies and federal contractors.

Extractive industries are complaining about language (Section 1504) slipped into the new financial reform bill that will require them to report on royalties and other payments to governments. The aim is to make it harder for those corporations to conceal bribes and other illegal transfers used to obtain petroleum or mining concessions and that often prop up corrupt regimes such as the one in Equatorial Guinea. The provision, based on a bill that had been introduced by Senators Benjamin Cardin of Maryland and Richard Lugar of Indiana, applies to publicly traded oil, gas and mining companies whose shares trade in the United States.

The law is a victory for groups such as Publish What You Pay, which has long campaigned to increase the transparency of energy corporation dealings with governments around the world. The campaign has already succeeded in getting some firms to disclose the information voluntarily, but it will be much better to have it mandated and overseen by the Securities and Exchange Commission, which will write rules covering the inclusion of the information in financial statements.

That’s why trade associations such as the American Petroleum Institute and companies such as Exxon Mobil are grousing about the law. An API spokesperson told the Wall Street Journal that Russian and Chinese oil companies not subject to the requirement “could use the data to outfox U.S. companies in deals.”

Dubious complaints are also being heard from Beltway Bandit mouthpieces in response to a swift move by Sen. Bernie Sanders of Vermont to insert a provision in the recently passed supplemental appropriations bill giving the public access to a database about contractor performance – which in many cases means contractor misconduct.

The database is the Federal Awardee Performance and Integrity Information System (FAPIIS), which was mandated as a result of 2008 legislation enacted thanks to the efforts of groups such as the Project On Government Oversight (POGO), which has its own Federal Contractor Misconduct Database covering the 100 companies doing the most business with Uncle Sam. FAPIIS is supposed to make it easier for federal agencies to review the track record of a much wider range of companies bidding on new contracts worth $500,000 or more. In addition to contract performance information collected from various federal sources, FASPIIS includes data submitted by companies with more than $10 million in contracts or grants on any criminal, civil or administrative proceedings brought against them during the previous three years.

FAPIIS was an important step forward, but it was able to get through Congress only after its sponsors agreed to restrict access to the database. POGO tested the provision by filing a FOIA request with the Pentagon for its FAPIIS information but was shot down.

A short time later, however, it came to light that the Sanders amendment survived in the supplemental spending bill President Obama signed on July 29. The provision will give the public access to FAPIIS information about contractor track records, but unfortunately it excludes past contract performance reviews by federal agencies.

Already, the Professional Services Council, the leading trade association of federal contractors, is warning that making parts of FAPIIS public “could create a politically motivated blacklist of vendors.” The PSC seems to believe that the public should not have the ability to pressure the federal government to stop doing business with crooked companies.

Speaking of blacklists, the FAPIIS change comes on the heels of an announcement by the Obama Administration that it is creating a master Do Not Pay database covering individuals and businesses that should not be receiving payments from federal agencies. At a time of growing hysteria about the federal deficit, it is good to see that attention is being paid to ways of cutting costs that are truly wasteful.

Obama’s Oil Magic

BP has been selling off small pieces of itself to help pay for its liability costs in the Gulf of Mexico. Here’s another way it can economize: eliminate its public relations staffers and outside consultants such as the well-connected Podesta Group. The oil giant doesn’t need them any longer, now that the Obama Administration has taken over responsibility for burnishing the image of the beleaguered oil giant.

BP’s new mouthpieces include Carol Browner, whose official title is Director of the White House Office of Energy and Climate Change Policy, and Jane Lubchenco, head of the National Oceanic and Atmospheric Administration. Browner has taken to the airwaves to deliver the mind-boggling message that the BP mess — which had just been declared by federal scientists to be the largest oil spill in history — has largely disappeared: “The vast majority of the oil is gone,” she told NBC’s Matt Lauer. “It was captured. It was skimmed. It was burned. It was contained. Mother Nature did her part.”

Lubchenco presided over the preparation of a five-page report claiming that one-quarter of the 200 million gallons of crude released from BP’s Macondo well “naturally evaporated or dissolved”; another quarter was dispersed “naturally” or chemically; and a third quarter was either directly recovered, burned off or skimmed from the surface, leaving a “residual” of 26 percent, among which is whatever BP collects from the shore.

In other words: Abracadabra, the oil is gone.

If BP had tried this kind of magic trick, it would have been laughed off the stage. The administration, exploiting the legitimacy of NOAA and Browner, a former head of the Environmental Protection Agency, is being taken (somewhat) seriously. In doing so, it is acting as a sort of front group for BP, giving more credence to the company’s claims of having carried out an effective clean-up operation. The remarkable claims about evaporation and dissolution could also help to reduce BP’s ultimate liability costs.

At the same time, the White House is clearly trying to protect itself. The NOAA report can be seen as a justification for the administration’s capitulation to BP on the issue of chemical dispersants. Only a few days before the announcement of the NOAA calculations, the House Select Committee on Energy Independence and Global Warming had released documents showing that the Coast Guard had repeatedly approved BP requests to apply large quantities of Corexit, despite EPA’s claim to have ordered the company to restrict its use of the controversial chemicals.

It is difficult to avoid the impression that BP and the administration have conspired to disguise the full extent of the disaster through the use of the dispersant, which reduces the amount of sludge arriving on shore but is having as yet unknown effects on the ecology of the gulf. The White House is so compromised in this situation that it seems unable to recognize the dissonance between the President’s statement that this is the “worst environmental disaster America has ever faced” and the new message, which is essentially “don’t worry, be happy.”

The positive spin is giving ammunition to figures such as Rush Limbaugh, who have been claiming for some time that the impact of the BP spill has been exaggerated. By encouraging these disaster deniers, the administration is undermining the rationale for continuing the deepwater drilling moratorium and even for the transformation of the former Minerals Management Service into a real regulatory watchdog.

If spills — including gigantic ones such as BP’s — can be brought under control so easily with dispersants and Mother Nature, why bother to restrict offshore drilling? After an incident that should have discredited that activity once and for all, the Obama Administration has in effect paved the way for a return to “Drill, Baby, Drill.” Quite a magic trick.