Phil Mattera

When Malfeasance Becomes a Corporate Mission Statement

Forbes loves to compile lists; in fact, for many people the magazine is synonymous with its annual ranking of the 400 richest Americans. Recently, the publication allowed its list mania to overwhelm its other obsession — defending big business — when it came out with a feature on “The Biggest CEO Outrages of 2009.”

Writer Helen Coster frames the story as an assessment of how corporate malfeasance has been faring since the arrest of world-class Ponzi schemer Bernard Madoff a year ago. She finds that “nobody managed to top Madoff’s crimes in 2009, but 10 executives showed enough greed, hubris and chutzpah to give him a run for his (stolen) money.”

Her list ranges from other alleged fraudsters such as R. Allen Stanford to accused insider trader Raj Rajaratnam of the Galleon Group hedge fund to convicted tax evader Robert Moran. She also includes Edward Libby of AIG and former Merrill Lynch head John Thain for their role in enabling questionable bonuses. Also on the list is Lloyd Blankfein of Goldman Sachs, whose main sin, according to Coster, seems to have been his comment that he was just a banker doing “God’s work.”

All of these individuals deserve some disapprobation, but Coster manages to gloss over a major distinction with regard to executive misbehavior: the difference between improper actions taken to benefit oneself and those undertaken to benefit the corporation.

Individual fraud, embezzlement, tax cheating and other forms of self-dealing are reprehensible, but do they begin to compare in their impact to major misdeeds committed in the name of advancing corporate interests? This point is especially relevant given that these days we are marking not only the first anniversary of the Madoff scandal but also the 25^th anniversary of the Bhopal disaster.

Madoff brought financial ruin to numerous individuals and non-profit organizations, but what critics charge was systematic negligence on the part of executives of Union Carbide (now part of Dow Chemical) killed or seriously injured thousands of residents in Bhopal, making it the worst industrial accident ever. Madoff pleaded guilty to his crimes, but Warren Anderson, the CEO of Union Carbide, remained a fugitive rather than face criminal charges brought against him in India, and Dow Chemical has refused to take responsibility for providing adequate compensation to the Bhopal victims.

Over the past year there have been various instances of outrageous acts committed to advance corporate goals that do not begin to compare with Bhopal but have caused considerably more harm than the ones catalogued by Forbes.

Take, for example, the case of Stewart Parnell and his now defunct Peanut Corporation of America, accused earlier this year of knowingly shipping salmonella-tainted food products from a filthy plant in Georgia, thereby contributing to one of the country’s worst outbreaks of food poisoning, including about nine deaths.

Then there’s the case of the managers at Bayer CropScience, who, according to a Congressional report released in April, withheld critical information from emergency responders during an accident at a plant in West Virginia that nearly resulted in the release of methyl isocyanate, the same chemical involved in the Bhopal catastrophe.

Or what about the executives at pharmaceutical giant Pfizer who illegally marketed the painkiller Bextra, causing the company to have to agree in September to pay $2.3 billion to settle civil and criminal charges brought by federal prosecutors? One Pfizer sales rep told prosecutors: “If you didn’t sell drugs illegally, you were not seen as a team player.”

It’s one thing for an individual executive to go bad. The real harm comes when the misbehavior becomes, in effect, the mission statement of the corporation. That, dear Forbes, is what is truly outrageous.

Can the Redlining of U.S. Workers Be Stopped?

wind turbine We’re meant to believe that corporations make their investment decisions based on carefully considered financial and competitive considerations. Yet a recent announcement by a Chinese manufacturer of turbines for wind energy shows how political pressure can quickly change business priorities.

In late October the company, A-Power Energy Generation Systems, announced that it had been chosen to supply some 240 turbines for a large wind farm planned for Texas. That would have been just another in a long series of manufacturing-goes-to-China stories, but for reports that the group launching the $1.5 billion project—a joint venture of China’s Shenyang Power, Texas-based Cielo Wind Power and private equity firm U.S. Renewable Energy Group—was intending to take advantage of U.S. government funding through the Recovery Act.

New York Senator Chuck Schumer raised a stink about this in an open letter to Energy Secretary Steven Chu, highlighting reports that while the Texas wind farm would create a modest number of local jobs, the much bigger employment impact—2,000 to 3,000 jobs—would be felt at A-Power’s factories in China.

The ensuing uproar—with protests coming from figures as divergent as Steelworkers union president Leo Gerard and rightwing Missouri Senator Kit Bond—got the joint venture’s attention. While not abandoning the plan to import turbines for the Texas wind farm, A-Power and U.S. Renewable Energy Group announced on November 17 that they would construct a new wind turbine factory in the United States with a workforce of about 1,000.

That’s good news for the job-starved American economy, but all the attention given to A-Power has obscured a set of larger problems concerning the U.S. renewable energy industry.

The first is that the operation of facilities such as wind farms does not generate much employment—once built, they basically run themselves. The real employment potential is in manufacturing the turbines and other components used to generate wind and solar energy.

The disturbing fact is that, with the exception of General Electric, large U.S. companies have shown little interest in domestic production of these components. This has created an opening for foreign firms such as Gamesa (from Spain), Vestas (Denmark), Siemens (Germany) and Sanyo (Japan) to capture a large share of U.S. production of wind and solar components. Over the past few years they have invested hundreds of millions of dollars in plants from Pennsylvania to Oregon—and have often received lavish state and local economic development subsidies for doing so.

Unfortunately, the economic crisis has taken its toll on this sector, and expansion plans are being curtailed or postponed. For example, wind turbine maker Vestas, which has invested heavily in Colorado and planned to boost its workforce in that state to 2,500, recently said it would slow its pace of hiring.

To make matters worse, some of the newer U.S.-based wind and solar manufacturing companies that claim to be interested in domestic production have been lured by the siren call of cheap overseas labor. Evergreen Solar, for instance, recently revealed that it plans to shift assembly of solar panels from its heavily subsidized plant in Devens, Massachusetts to Wuhan, China. It would follow in the footsteps of U.S. firms such as First Solar, which already does most of its manufacturing in Malaysia, and TPI Composites, which produces wind turbine blades in Mexico and China.

It’s also not the case that foreign firms are always worse than domestic ones when it comes to respecting the rights of workers. Within the wind and solar sector there are U.S. companies that seek to weaken their unions (such as GE) or keep them out altogether (e.g., DMI Industries, which fought a Teamsters organizing drive). At the same time, there is Spain’s Gamesa, which accepted the desire of its workers in Pennsylvania to unionize and has developed a cooperative relationship with the Steelworkers.

From a labor perspective, the issue is not whether a company is foreign or domestic. What counts is whether it is redlining U.S. workers or giving them a chance to participate in producing the components of the economy of the future.

Misbehaving Contractors are Recovery Act Winners

The federal government has awarded about $17 billion in direct contracts under the various provisions of the American Recovery and Reinvestment Act (ARRA). Given the Administration’s commitment to accountability, one hopes that the contractors were chosen with the utmost care and that any companies with serious blemishes on their record were excluded.

If the timing had been a bit different, such a review could have been accomplished much more easily. The General Services Administration is in the process of implementing legislation passed by Congress last year that mandates the creation of a database on the integrity and performance record of federal contractors and grantees. In September GSA published a notice in the Federal Register about its plans for what is being called the Federal Awardee Performance and Integrity Information System, or FAPIIS. The comment period on the plan ended earlier this month. Perhaps the system will be operational before ARRA reaches the end of its two-year life.

Unfortunately, the public will never know the details of how FAPIIS is used to vet contractors for ARRA or any other program. The reason is that Congress caved in to pressure from the contractor community and prohibited public disclosure of the database, which will be available only to federal agencies for internal use.

Fortunately, the public still has access to the Federal Contractor Misconduct Database (FCMD), which was created and is maintained by the non-profit Project On Government Oversight (POGO). It served as the inspiration for FAPIIS, though POGO and other watchdog groups pushed for a public version of the federal database. The FCMD, which covers the 100 largest federal contractors, documents more than 700 cases of misconduct since 1995 that resulted in more than $26 billion in fines and penalties. It covers a wider range of misconduct than will FAPIIS.

Apparently, most federal agencies did not pay close attention to the FCMD in awarding their ARRA contracts. An examination of the national Recovery Act contractor spreadsheet shows that many of those companies appear in POGO’s database as having been involved in cases of misconduct. They account for more than $6 billion in Recovery Act contract awards.

There are 12 contractors with more than one instance of misconduct and ARRA contracts of at least $150 million.* Here they are (listed by volume of ARRA contracts):

CH2M ($1.8 billion in ARRA contracts; 6 instances of misconduct with penalties of $2.8 million)
URS ($737 million in contracts; 4 instances and $2.4 million in penalties)
Northrop Grumman ($596 million in contracts; 29 instances and $821 million in penalties)
Battelle Memorial Institute ($522 million in contracts; 7 instances and $1.3 million in penalties)
Honeywell International ($472 million in contracts; 31 instances and $641 million in penalties)
Fluor ($469 million in contracts; 23 instances and $198 million in penalties)
SAIC ($312 million in contracts; 10 instances and $14 million in penalties)
Bechtel ($270 million in contracts; 15 instances and $359 million in penalties)
University of California ($270 million in contracts; 25 instances and $67 million in penalties)
Lockheed Martin ($180 million in contracts; 50 instances and $577 million in penalties)
University of Chicago ($163 million in contracts; 4 instances and $22 million in penalties)
Jacobs Engineering ($161 million in contracts; 2 instances and $37 million in penalties)

When the nation’s largest contractors have track records such as these, it is not surprising that Congress chose to keep its misconduct database a secret.

* In the case of joint ventures, the amount of the contract award is divided equally among the companies or institutions involved.

Stimulus Lobbying Pays Off for Major Contractors

K street Last spring, when the ink was barely dry on the $787 billion American Recovery and Reinvestment Act (ARRA), there was already concern about an emerging frenzy of lobbying on behalf of corporations seeking a slice of the stimulus pie.

The Obama Administration enacted rules designed to make ARRA lobbying more transparent. That didn’t work out very well, but the Recovery Accountability and Transparency Board recently completed the release of the first round of quarterly disclosure reports by ARRA recipients. In part, these reports serve as a score card showing which companies won the great stimulus lobbying competition.

Beginning with a list of the largest direct federal contracts, I ran the names of the prime contractors through the invaluable lobbying database maintained by the Center for Responsive Politics. Many of the largest contracts went to joint ventures set up by major engineering companies to do clean-up work at nuclear facilities owned by the Department of Energy. In those cases I searched the names of the individual parent companies (and some universities) involved.

There are a total of 52 companies and institutions involved with the 50 largest ARRA contracts. Of these, 34 show up as clients in the Center’s lobbying database. These include large corporations such as Bechtel, Lockheed Martin, Northrop Grumman, General Motors and Ford—as well as smaller players. Also on the list are educational institutions such as the University of California, Stanford University and the University of Chicago.

So far in 2009, the 34 have spent a total of $65 million on lobbying the federal government. Of course, not all that lobbying can be attributed to the quest for stimulus contracts, but it shows in general terms that the ARRA winners include some of the biggest influence-peddlers in Washington.

Moreover, there is every reason to think that a significant portion of their lobbying efforts were focused on stimulus contracts. I searched the database of lobbyist disclosure reports provided by the Senate Office of Public Records. Of those 34 contractors, 24 show up as clients in 2009 lobbying reports in which the word “recovery” or “stimulus” is mentioned in the description of the specific issues on which the lobbyists reported working.

It’s not possible to determine how much of their spending went specifically to ARRA issues. But whatever portion of the $65 million was involved, it was money well spent for the contractors. The 24 that definitely had lobbyists working on ARRA matters ended up with stimulus contracts worth some $7.4 billion. That’s an impressive return on political investment.

Now we can only hope that these and other stimulus contractors crank up their hiring so taxpayers also get something significant out of this bonanza. According to the recent ARRA recipient reports, some of the projects being carried out by those two dozen firms have already created (or retained) a substantial number of jobs. Yet others, in a pattern seen in the overall ARRA contractor data, report few or no jobs despite having already received substantial sums for the projects.

Getting Corporations to Do the Right Thing

pinklid I admit it—the Dirt Diggers Digest is guilty of focusing on the bad news about corporate misdeeds. So in this post I will write about something positive: activist groups that are succeeding in changing corporate behavior for the better.

The occasion for this shift in emphasis is the recent announcement of the winners of the BENNY awards, which are given out by the Business Ethics Network. BEN is an association of organizations and individuals involved in corporate campaigns that seek to pressure companies to end injurious practices relating to the environment, public health and the workplace. (Full disclosure: I have served on BEN’s advisory committee.)

Since 2005 BEN has been giving awards celebrating outstanding victories. During the past few years it has also honored groups that are making progress toward such victories and given individual achievement awards to veteran campaigners.

Each time attend the awards ceremony and hear the descriptions of the campaigns, I find my skeptical shell melting away in a wave of optimism about the prospects for undoing corporate harm. This year was no different.

There was a tie for 1^st place in the main BENNY award between the Campaign for Fair Food and Think Before You Pink: “Yoplait—Put A Lid On It!”

The Campaign—led by the Coalition of Immokalee Workers (CIW) and supported by the Presbyterian Church (USA) and others in the Alliance for Fair Food—has made great strides in improving the working conditions of immigrant farmworkers in southern Florida. The campaign has won a string of victories by going around the growers who are the direct employers of the workers and pressuring their major customers (fast food giants, supermarket chains, and major food service companies) to pay more for the produce with the understanding that the difference will go toward higher wages.

Think Before You Pink is a campaign led by Breast Cancer Action that has taken a critical approach toward the growing corporate practice of putting pink ribbons on their products to raise awareness of breast cancer. The campaign started out examining whether those companies are contributing a significant portion of the purchase price toward legitimate cancer research. More recently, it has challenged pink-ribbon companies that make products that have been linked to breast cancer (the campaign calls it “pinkwashing”).

One of its recent targets was Eli Lilly, which sells drugs meant to reduce the risk of breast cancer while at the same time distributing rGBH, an artificial growth hormone used by dairies that is a suspected carcinogen. Earlier this year, the Think Before You Pink campaign got General Mills to stop using rBGH in its Yoplait yogurt, which has extensively used pink-ribbon marketing.

BEN gave its first-place Path to Victory award to the Sierra Club’s Beyond Coal Campaign, which is seeking to reduce use of the climate-destroying black fuel through efforts such as organizing students at campuses which depend on coal-generated electricity. The campaign, which is targeting some schools smack in the middle of coal country, has released a tongue-in-cheek online video with the tagline “Coal is Too Dirty Even for College.”

The Individual Achievement Award went to Sister Pat Daly, a veteran shareholder activist who heads the Tri-State Coalition for Responsible Investment, an alliance of Roman Catholic groups in the New York City metropolitan area. She is best known as one of the founders of Campaign ExxonMobil, which pioneered the effort to get the giant oil company to take a less irresponsible position on climate change.

At the BEN awards ceremony, Sister Pat also described facing down former General Electric CEO Jack Welch at a company board meeting. For years, she and other activists had been pressing GE to accept responsibility for cleaning up the PCB contamination it had caused in New York’s Hudson River. And for years the company resisted. Welch’s successor Jeff Immelt eventually relented, and in May 2009 a clean-up effort financed by GE finally began. Sister Pat’s role in that victory certainly deserved to be honored.

Whether over the course of months or decades, the kinds of campaigns celebrated by the BENNY Awards show that corporations can be made to do the right thing.

Is the Recovery Act Stimulating Privatization?

AFSCME Key portions of the $787 billion American Recovery and Reinvestment Act, especially the state fiscal stabilization fund, are designed to prevent job loss among teachers and other state and local government employees. But what about the rest?

The assumption seems to be that most of the job creation and retention will take place in the private sector. Yet one question that has received little attention since ARRA was signed by President Obama in February is whether the spending will contribute to the process of privatization and contracting-out of functions previously performed by public sector workers.

On October 15 the Recovery Accountability and Transparency Board released the first batch of recipient reporting data covering some $15 billion in direct federal contracts. Although this is a small portion of overall ARRA spending (information relating to the much larger realm of federal grants to states and others will be released on October 30), it begins to shed some light on the privatization question.

My colleagues and I at Good Jobs First have been examining the universe of around 9,000 recipient reports summarized in a national spreadsheet available on the Recovery.gov website. Many of the entries are unremarkable. They involve contracts for functions such as manufacturing and construction that have traditionally been concentrated in the private sector. It is not surprising that the federal government gave an ARRA contract to Chrysler to supply vehicles and one to Clark Construction to build a new headquarters for the Coast Guard.

Yet many of the other entries appear to be part of the contracting-out phenomenon. You can tell this, first, by looking at the names of the contractors: one firm called Federal Contracting Inc. leaves little doubt as to its orientation. There are others that have a reputation for being involved in high-profile outsourcing deals. An example is IAP Worldwide Services, a politically connected firm (former Vice President Dan Quayle is on its board of directors) that got a controversial contract to take over management of the Walter Reed Army Medical Center in Washington.

Or else you can look at the description of the projects. A company called 4W Solutions got a contract from NASA for “administrative activities, configuration management of documents, procurement-related analysis and support for report integration/administrative support for Cross-Agency Support construction contracts.”

To be a bit more systematic in our analysis, my colleagues and I decided to match the Recovery.gov list of contractors to the membership list of the Professional Services Council, the leading trade association for the federal outsourcing industry.

PSC’s members range from large and notorious contractors such as KBR (formerly the Halliburton subsidiary Kellogg, Brown and Root), Xe Services (formerly Blackwater) and CACI International (linked to the Abu Ghraib torture scandal) to small and obscure consulting firms. During its 27-year history, the association has sought to banish the use of the term “Beltway Bandit” to refer to federal contractors and has pushed for legislation that would maximize the amount of federal work that gets outsourced. It has also resisted the recent move toward insourcing.

We found that, of the 382 PSC members listed on the association’s website, about 50 are on the list of ARRA federal contract recipients (name variations make an exact count difficult). In all, these members and their affiliates have been awarded about 250 ARRA contracts with a total value of more than $800 million.

Some of these involve engineering and construction services, but others deal with functions that are more inherently governmental, such as a contract given to Deloitte Consulting to provide “program management oversight” for ARRA grants made by the Federal Aviation Administration.

In an economic crisis such as the current recession, all job creation is to be welcomed. But it would be a shame if some portion of Recovery Act money is being used in ways that do little more than shift work from the public sector to the private sector.

(Thanks to Tommy Cafcas, Caitlin Lacy and Leigh McIlvaine for their research help.)

Update: I should have mentioned that KBR and Xe Services are not among the recipients of ARRA contracts, but CACI has two.

Further update: We spent more time analyzing the spreadsheet and found many more ARRA contracts that can be attributed to PSC members through joint ventures, affiliates, etc. Our tally is now about 470 contracts worth a total of about $3.5 billion. These include some huge contracts associated with clean-up projects at Department of Energy nuclear facilities.

Exposing the Executive Pay of Beltway Bandits

The recipient reporting system mandated by the American Recovery and Reinvestment Act is designed to inform the public on how federal stimulus spending is creating jobs. The just-released first phase of that system still has a considerable number of bugs to work out with regard to its job numbers, but it also represents a new step forward in making the operations of federal contractors more transparent.

The rules governing Recovery Act reporting include a requirement (FAR 52.204-11) that certain contractors disclose the amount of compensation paid to their five highest paid executives. These include companies that receive $25 million or more in federal governments as long as federal contracts account for 80 percent or more of their total revenue.

Publicly traded companies already report this information to the Securities and Exchange Commission in their proxy statements, which are made available to the public. The Recovery Act rule is unusual in that it extends executive compensation reporting to privately held firms, which typically keep such information to themselves.

In the new Recovery Act contract data, several hundred contractors provided compensation information, including many that apparently were not required to do so. As shown in the table below, 14 contractors reported compensation in excess of $1 million for their top executive (not including obvious glitches such as a modest-sized excavating company in Washington State that entered $986 million in the compensation column).

Half of the contractors are part of publicly traded companies, and their compensation amounts match what was previously disclosed by those companies. The rest are privately held, meaning that this may well be the first time the pay of their top executives has been officially disclosed.

The most interesting of these is the huge consulting company Booz Allen Hamilton, which since fiscal year 2000 has been the recipient of more than $16 billion in federal contracts. It does business with many agencies, but it is especially close with the Pentagon. Last year it was the 22^nd largest military contractor. The Recovery Act reports do not list executive names, but it likely that Booz Allen CEO Ralph W. Shrader was the one who was paid more than $8.4 million last year.

The Recovery Act does not include funding for military purposes, but it forces Pentagon contractors and other Beltway Bandits that happen to be privately held to reveal how richly they are rewarding their top executives with the help of taxpayer funds.

Top Compensation Amounts Reported by Recovery Act Federal Contractors

JOHNSON CONTROLS BUILDING AUTOMATION SYSTEMS LLC
$17,385,308

RAYTHEON TECHNICAL SERVICES COMPANY LLC
$15,056,151

BOOZ ALLEN HAMILTON INC.
$8,457,003

BALL AEROSPACE & TECHNOLOGIES CORP.
$8,111,298

ENERGYSOLUTIONS FEDERAL SERVICES, INC.
$6,336,752

ADVANCED CONSTRUCTION TECHNIQUES LTD
$2,724,660

DANYA INTERNATIONAL INC.
$2,363,143

ROLLS-ROYCE NORTH AMERICAN TECHNOLOGIES INC.
$2,025,860

WEST VALLEY ENVIRONMENTAL SERV
$1,955,909

SCIENTIFIC RESEARCH CORPORATION
$1,471,745

ORBITAL SCIENCES CORPORATION
$1,448,752

STG, INC.
$1,201,762

PARSONS INFRASTRUCTURE & TECHNOLOGY GROUP INC.
$1,128,070

ENVIRONMENTAL CHEMICAL CORPORATION
$1,016,426

Source: Analysis of the combined state spreadsheets provided at the Recipient Reported tab here.

Notes:

The figure for Johnson Controls Building Automation Systems is apparently the compensation of Stephen A. Roell, CEO of the parent company Johnson Controls Inc., which is publicly traded and thus already reported the compensation of its top officers through its SEC filings. The figure above is the same as that reported for Roell in the company’s latest proxy statement.

The figure for Raytheon Technical Services is the same as that reported for parent Raytheon’s CEO William H. Swanson in the company’s latest proxy statement.

Booz Allen is privately held. Its CEO is Ralph W. Shrader.

The figure for Ball Aerospace is the same as that reported for parent Ball Corporation’s CEO R. David Hoover in the company’s latest proxy statement.

The figure for EnergySolutions Federal Services Inc. is the same as that reported for parent EnergySolutions’ chief financial officer Philip O. Strawbridge in the company’s latest proxy statement.

Advanced Construction Techniques Ltd is privately held. Its president is James Cockburn.

Danya International Inc. is privately held. Its CEO is Jeffrey A. Hoffman.

The figure for Rolls-Royce North American is roughly the same (after currency conversion) as that reported for parent Rolls-Royce PLC chief executive Sir John Rose in the company’s annual report.

West Valley Environmental Services LLC describes itself as “a newly-formed company comprised of four companies – URS Washington Division, Jacobs Engineering Group, Environmental Chemical Corporation (ECC), and Parallax/Energy Solutions – with extensive experience conducting environmental cleanup at Department of Energy (DOE) sites across the United States.” Its compensation figure above is the same as that reported in the proxy statement of URS Corporation for URS Washington Division President Thomas H. Zarges.

Scientific Research Corporation is privately held. Its CEO is Michael Watt.

The figure for Orbital Sciences is the same as that reported by the company for CEO David W. Thompson in the company’s latest proxy statement.

STG Inc. is privately held. Its CEO is Simon S. Lee.

Parsons Infrastructure is a unit of privately held Parsons Corporation, whose CEO is Charles L. Harrington.

Environmental Chemical Corporation (which seems to prefer being called simply ECC) is privately held. Its CEO is Manjiv Vohra.

UPDATE: On October 30 Recovery.gov published a revision of the contractor data that fixed various formatting problems and added names to the executive compensation figures. For more details, see here.

Pressuring Big Business to Start Rehiring

hyatt The conventional wisdom is that the emerging economic rebound will be a jobless recovery for a long time to come. Yet there is no consensus on why this is the case.

Congressional Republicans are all too willing to cite the purported shortcomings of the Democrats’ stimulus program, but their ulterior political motives are transparent. Some claim that banks are keeping too tight a lid on business credit, while others suggest that newly frugal consumers are to blame for not spending more.

There is surprisingly little criticism being directed at those who are in the best position to do something about joblessness: employers, especially large ones. The assumption seems to be that corporations are helpless victims of economic turmoil and cannot be expected to start hiring again on their own initiative.

Now, it is being said, we need to give companies an extra incentive to replenish their payrolls. Congress and the Obama Administration are reported to be giving serious consideration to the creation of a new tax credit for job creation. This would be a boon for those who get hired, but it is more than a bit infuriating that we now need to subsidize employers to do what used to happen routinely when the business cycle began to turn around.

The coddling of the employer class is all the more questionable given that, in many cases, large-scale layoffs appear to be a matter of choice rather than necessity. Take the case of computer maker Dell, which just announced that it will obliterate more than 900 jobs as part of its decision to close an assembly plant in Winston-Salem, North Carolina that it opened in 2005 after pressuring state and local governments to cough up some $300 million in subsidies. Dell said the move was “part of an ongoing initiative to enhance the long-term value it delivers to customers by simplifying operations and improving efficiency.” Translation: the company has been selling off its production facilities to cut costs and raise profits.

Or consider Simmons Bedding Company, which has laid off 1,000 workers and will probably shed more as it heads to bankruptcy court. Its problems are less the state of the economy than the effects of having been taken over by a series of private equity firms that have milked the operation dry.

Then there’s the situation of the housekeepers at Boston-area Hyatt hotels who were forced out of their $15 an hour jobs so the company could replace them with $8 an hour temps. Before being told that they were being booted out, the housekeepers were asked to train the temps, whom they were told would be filling in during vacations. The layoffs have prompted protests in Boston and around the country (photo).

In Fremont, California, nearly 5,000 workers at the New United Motor Manufacturing plant are losing their jobs because Toyota decided to get rid of its only unionized U.S. operation after the new federally subsidized General Motors exited what had been a 25-year joint venture between the two companies.

Last month, drugmaker Eli Lilly said it would eliminate 5,000 jobs as part of a restructuring designed to “speed medicines from its pipeline to patients.”

These recent examples are part of a trend that began well before the current crisis. For the past decade, U.S. private sector employment levels have been stagnant as corporations engaged in an orgy of offshore outsourcing, union-busting, downsizing and compelling the workers who remained to produce more than ever before.

This is not to say that all job losses can be blamed on restructuring and corporate greed, but neither is it accurate to attribute them all to forces beyond the control of employers. Instead of focusing exclusively on bribing corporations to hire people, it would be good to hear some criticism of big business for failing to do enough to help the country recover from the unemployment crisis—and for causing much of that crisis through its short-sighted and self-interested practices.

For years, large corporations announced layoffs as a way of currying favor with Wall Street. It would be refreshing to have them now feel pressure to announce new hiring to appease the rest of us.

Dissension in the Corporate Ranks

donohue Business lobbyists may be gloating over the divisions in the Democratic Party on healthcare reform, but they are facing a serious schism of their own.

In recent weeks several large corporations have quit their membership in the U.S. Chamber of Commerce because of the giant trade association’s intransigent opposition to the climate legislation now being considered by Congress. The defectors include utilities Pacific Gas & Electric, PNM Resources and Exelon, while shoe giant Nike took a more limited step by resigning its seat on the Chamber’s board.

The resignations represent the most significant internal turmoil in the Chamber since the early 1990s, when the organization outraged some of its members and all of the Republican Party leadership by showing support for portions of the Clinton Administration’s economic policies and healthcare reform proposal. “The Chamber has lost its way,” Rep. John Boehner told Business Week. “It sold out its principles for 30 pieces of silver from Bill Clinton.”

While the Chamber remained appropriately reactionary on most issues, the controversy brought about a shakeup within the organization and probably contributed to the decision of its president Richard Lesher to step down in 1997. The person chosen to succeed him was Thomas J. Donohue Jr., a hardliner described as “militant” and a “junkyard dog.” Among other things, Donohue had, in his role as head of the American Trucking Association, tried to get Congress to ban the use of corporate campaign pressure tactics by unions.

No one could accuse Donohue (photo) of straying from business laissez-faire ideology. As the Wall Street Journal pointed out in 2001, he was also quite willing to use the clout of the Chamber to advance the narrow interests of individual large corporations. Donohue dramatically expanded the organization’s membership and thus its budget, allowing the Chamber to spend unprecedented sums on lobbying.

But now it seems that Donohue and the Chamber have been a bit too orthodox. More and more large corporations are accepting that global warming has to be addressed and that the Waxman-Markey bill passed by the House and the companion legislation now before the Senate would not have the disastrous consequences for business that the Chamber has predicted.

The Chamber, however, increasingly seems to be captive to the coal industry, its railroad partners and other corporate fossil-fuel dead-enders. Environmental groups such as the Natural Resources Defense Council are accusing Donohue of having a personal conflict of interest because of his long tenure as an outside director of one of those railroads, Union Pacific.

While the actual resignations from the Chamber are few so far, the number will probably rise. Other members such as General Electric are making it clear the Chamber does not speak for them on climate issues and are facing mounting pressure to make a complete break.

It is refreshing to see dissension in the corporate ranks on the climate debate. If we can continue to drive a wedge between business pragmatists and Neanderthals on this and other issues, we may see some real progress in the federal legislative arena.

Shades of Green

Michael Moore may be on all the talk shows these days touting his new film on the evils of capitalism, but elsewhere in the mainstream media the celebration of big business continues apace. Especially when it comes to the environment, we are meant to believe that large corporations are at the forefront of enlightened thinking.

This is the implicit message of the cover of the new issue of Newsweek, which is filled with leaves to promote its feature on “The Greenest Big Companies in America: An Exclusive Ranking.” The list itself, however, has more validity than the usual exercises of this sort, which tend to take much of corporate greenwash at face value.

The Newsweek rankings are based on what appear to be solid data from KLD Research & Analytics, producer of the reputable (but expensive) SOCRATES social investing database, along with Trucost and CorporateRegister.com. Each company in the S&P 500 is rated on its environmental impact, its environmental policies, and its reputation among corporate social responsibility professionals, academics and other environmental experts. The ratings even take in account a company’s “regulatory infractions, lawsuits and community impacts.”

Not surprisingly, those at the top of the list are high-tech companies—such as Hewlett-Packard (ranked No. 1), Dell (2), Intel (4), IBM (5) and Cisco Systems (12)—which have never had quite the same pollution problems as old-line industries and which in many cases have made themselves “cleaner” by outsourcing their production activities to overseas producers. Dell, in particular, is on its way to becoming a hollow company by selling off its plants.

More interesting is that supposed sustainability pioneer Wal-Mart comes in at No. 59, behind old-line industrial companies such as United Technologies and Owens Corning. Whole Foods Market, purveyor of over-priced organic groceries, is a bit lower at 67. Oil giant Chevron, which urges the public to “join us” in its supposed commitment to energy efficiency, is ranked 371, not much better than long-time global warming denier ExxonMobil (395).

Since the Newsweek list covers the entirety of the S&P 500, we can also look at what is probably the most significant group: those at the very bottom. The harm that these companies—especially utilities such as American Electric Power and Southern Company with lots of fossil-fuel-fired power plants—do to the environment far outweighs any good done by those at the top of the list. Also among the laggards are agribusiness giants Monsanto (No. 485), Archer Daniels Midland (486), Bunge (493) and ConAgra Foods (497).

But special mention must be given to the absolute worst company of all: mining giant Peabody Energy. On a scale of 0 to 100, Peabody is awarded all of 1 point, presumably reflecting its single-minded dedication to climate-destroying coal and its support for groups fighting the climate bill now in Congress.

Newsweek deserves credit for undertaking a serious evaluation of corporate environmental performance. The web version even has a nice sidebar on green fakery. But the magazine could have easily turned the list upside down and headlined its feature “The Biggest Environmental Culprits of Corporate America.”