Phil Mattera

Unions Developing A Global Reach of Their Own

Newspapers in both Britain and the United States have reported in recent days that two major labor organizations are preparing to announce the creation of the first trans-Atlantic union. The merger will bring together the United Steelworkers, the leading U.S. union in manufacturing and heavy industry, and Unite, the mega British union formed by the joining of Amicus and the Transport & General Workers Union last year.

The step does not come as a surprise, since the unions created a strategic alliance in 2005 and announced their intention to wed about a year ago. But the formal marriage of the organizations will, nonetheless, represent a milestone in labor history. For decades, large corporations have been operating across national borders and in recent years have increasingly formed international mergers and joint ventures. Unions have expanded their international solidarity efforts but have largely remained tied to single countries. The Steelworkers-Unite initiative will be a major step toward the globalization of labor organizing. In its report, Britain’s Telegraph said the combined entity could be named the United Global Workers’ Union, which sounds like something out of science fiction.

The current scope of the 850,000-member Steelworkers is illustrated by the fact that a global search of 10-K filings with the SEC reveals that more than 100 publicly traded companies report having North American workers represented by the union. These include industrial giants such as Dow Chemical, Alcoa, International Paper and Goodyear Tire & Rubber that all do a substantial amount of overseas business. Dow Chemical, for example, derives 66 percent of its revenue from outside the United States. Unite is also a highly diversified union that represents workers at the UK operations of global companies such as Airbus, BP, British Airways, Michelin, Shell and Unilever. Steelworkers President Leo Gerard told the Wall Street Journal that among the organizing targets of the combined union could be India’s Tata Steel Ltd., part of the Tata Group conglomerate.

It will be interesting to see how labor relations change once one union, at least, can start to match giant employers in its global reach.

Firm Headed by Major Republican Contributors Accused of Supplying Substandard Plane Parts

The Project On Government Oversight (POGO) and CBS News just revealed that Pentagon investigators have accused a California company of supplying substandard components for military and civilian aircraft for nearly a decade, charging that the firm committed fraud and bribery and exhibited “brazen disregard for the safety of soldiers and civilians as well as for the sanctity of laws, rules and regulations.” The company is privately held Airtech International Inc., which also goes by the name of Airtech Advanced Materials Group.

POGO and CBS obtained a September 2006 memo in which the allegations were made by a special agent of the U.S. Army’s Criminal Investigation Unit, who argued that Airtech should be debarred from doing business with the federal government. The investigator charged that Airtech, which makes light-weight composite materials, “knowingly supplied nonconforming products to DOD [Department of Defense] prime contractors.”

Airtech has not been debarred or formally charged in the matter. A company spokesperson told CBS “we are aware of no current ongoing investigation,” but CBS reports that a document dated earlier this month indicates that an “active investigation” is still being conducted by the Army. CBS also says the House Transportation Committee is looking into the matter.

One fact not mentioned by either POGO or CBS is that the two top executives of Airtech—CEO William Dahlgren and his son Jeffrey Dahlgren, who serves as President—have together made a total of $308,700 in federal campaign contributions since the early 1990s—all of it to the Republican Party or Republican candidates, according to the Open Secrets database. Among those candidates: John McCain, who received $1,000 from William Dahlgren in February 2007, and George W. Bush, who got $2,000 from William Dahlgren in May 2000. Most of the Dahlgren money—more than $250,000—went to the Republican National Committee.

Apart from seeking contracts, the Dahlgrens may also have been investing in politics to gain influence in regulatory matters. According to the inspections database of the Occupational Safety & Health Administration, Airtech was cited for a serious violation in September 2006. OSHA proposed a fine of $5,060 (which is on the high side for the agency) but later settled with the company for $2,700.

Another model corporate citizen supporting the Republicans.

The Democratic Convention: Brought to You By Your Friends in Corporate America

Barack Obama and Hillary Clinton may be bashing big business (up to a point), but a number of major corporations are positioning themselves to win favors from a possible Democratic administration next year by signing up as sponsors of the party’s convention. Last week, Kevin Vaughan of the Rocky Mountain News reported that the August gathering in Denver has already lined up 56 corporate supporters.

Vaughan notes that these companies appear to be motivated by something other than civic responsibility: “Almost all of them have the same thing in common: They either have business with the federal government or they lobby on pending issues.”

Massie Ritsch of the Center for Responsive Politics told Vaughan: “Corporations aren’t allowed to contribute directly to political parties or candidates’ campaigns, but they can subsidize the gatherings that show off a party’s candidate to American voters and get the candidate officially nominated…Money from these corporate donors helps the party, it helps the candidate, and to call it anything other than a campaign contribution is to make a distinction without a difference.” Also on the list of sponsors is the Service Employees International Union.

The Center’s Capital Eye blog later reported that companies on the sponsorship list are also associated with actual campaign contributions—through their political action committees and individual giving by employees and their families. In this way, the Center says, 38 of the sponsoring companies have provided about $971,000 to Sen. Clinton and 48 have provided about $1.3 million to Sen. Obama.

Vaughan does a good job of cataloging the issues on which the corporate sponsors would likely seek help from the Democrats if they control the White House as well as Congress. For example, AT&T’s concern about liability in connection with its involvement in national security wiretapping; Merck’s opposition to low-cost drug importation; and Visa’s worries about new restrictions on credit card companies.

Other sponsors include leading weapons producer Lockheed Martin, the giant for-profit medical insurer UnitedHealth Group, and utility firm Southern Co., one of the largest producers of greenhouse gas emissions. Another of the sponsors, Molson Coors, may be a significant liability for the Democrats even during the convention. Jonathan Coors, nephew of company vice chairman Pete Coors, is leading an effort to put an anti-union right-to-work initiative on the ballot in Colorado.

Isn’t it wonderful that the Democrats display such diversity among those helping to make its historic convention possible.

Letting More Sunshine In

I’m writing this from beautiful Bigfork, Montana, where I’ve had the pleasure of attending a gathering of government transparency experts and activists convened by the National Institute on Money in State Politics. The message here is a mixed one. Speakers such as Charles Davis, head of the National Freedom of Information Coalition, told harrowing tales of how state governments try to block access to public records. Yet we are also being treated to reports on new advances in disclosure and new online tools to access the data. I’ll focus here on the latter.

Ed Bender, executive director of the Institute and our host, demonstrated new features recently added to the Institute’s already remarkable Follow the Money website as well as features that will soon be introduced. These include:

Committee Analysis Tool (or CAT). Using continuously updated legislative rosters compiled by Project Vote Smart, a user of Follow the Money can now quickly see all the contributions going to members of a given committee.
Lobbyist Link. This feature, which is currently in beta form and is expected to launch in the next month or two, allows users to see the extent to which a large company or other institution is trying to influence policymaking throughout the country. For example, by searching Verizon, one will be able to see data on the giant phone company’s lobbying efforts in every state and the campaign contributions associated with those efforts. The Institute invites Digest readers to preview the tool, but recognize that work is still being done on matters such as variations in company names. Send comments to the Institute using the link on the beta page.

Sheila Krumholz and Susan Alger of the Center for Responsive Politics provided a tour of their recently redesigned Open Secrets site, the leading source for data on federal campaign contributions and related issues such as lobbying, financial disclosure by public officials and the revolving door between the public and private sectors. The redesign makes it possible for registered users to display a personalized set of data on particular candidates or donors every time the site is opened. This was described as just the first in a series of planned personalization tools. The Center is also considering adding data on earmarks and federal contracts to the site.

Greg Elin of the Sunlight Foundation, whose new site Fortune 535 I wrote about recently, wowed even this sophisticated crowd with his description of a prototype tool called Influence Explorer, which will allow one to dump a body of text, such as a newspaper article, into a database that will automatically extract key names and assemble data on those individuals. The initial application is limited to members of Congress (the data thus include items such as campaign contributions), but it could be extended to other groups of people or institutions.

Among the other speakers were Cindi Canary of the Illinois Campaign for Political Reform, who told about the origins of Open Book, a site that combines data from campaign contributions and procurement contracts in Illinois (which I covered last year), and Mike Smith, chief technology officer of the Washington Public Disclosure Commission, who described plans for upgrading the state’s already excellent site on campaign finance, lobbying and financial disclosure.

Hearing these presentations and others was both exciting to me as a researcher looking for new tools and inspiring evidence that proponents of transparency are making major inroads against the forces of darkness.

Wal-Mart and the Chinese Earthquake: Cheap Help for A Cheap-Labor Country

Wal-Mart Stores has put out a press release patting itself on the back for promising the equivalent of about $430,000 for disaster relief and reconstruction for the area of China hit by a massive earthquake this week. The gesture was laudable but the amount was less than impressive.

After all, the giant retailer would be nowhere today without the countless Chinese workers who toil in sweatshops so that American consumers can be offered the cheap goods that are at the core of the company’s business model. Last year those largely Chinese-made goods brought Wal-Mart profits of $12.7 billion, or about $1.4 million every hour of every day. The $430,000 contribution thus represents less than 20 minutes of profit.

Wal-Mart also profits from Chinese consumers. The company operates more than 200 stores in China (through joint ventures and minority-owned subsidiaries), several of which have been shut down because of the tremblor. Wal-Mart was so eager to operate stores in China that it agreed to let its employees there be represented by unions (though of the government-dominated variety).

Wal-Mart has a history of using relatively inexpensive amounts of disaster relief to boost its reputation. After Hurricane Katrina hit the U.S. Gulf Coast in 2005, Wal-Mart maneuvered to get maximum exposure for its prompt delivery of relief supplies. A fairly routine operation for a company possessing the most advanced logistics infrastructure was seen as nearly miraculous, given the ineptitude of federal and state public officials.

The company made an initial faux pas (quickly reversed) in announcing that employees at its stores shut down by the storm would be paid for only three days. It also started out offering a measly $2 million in relief but soon overcame its parsimonious instincts and upped the figure by $15 million, thereby winning wide praise. The wave of favorable coverage went on for several months, thanks at least in part to the efforts of its army of p.r. operatives from Edelman and a conservative blogger who was paid to tout Wal-Mart’s hurricane work in the blogosphere.

Wal-Mart may have to part with more than $430,000 to get a similar public relations bonanza from China’s suffering.

Living Large on Capitol Hill

After being in office for a while, many lawmakers cannot wait to go through the revolving door to the private sector so they can earn a lot more than the salary of $169,300 currently paid to members of Congress. However, a new tool created by the Sunlight Foundation suggests that some senators and representatives do quite well in building up their nest egg while still on the public payroll.

The Fortune 535 is a website that approximates changes over time in the net worth of members of Congress. First among these accumulators of wealth is Rep. Darrell Issa (R-Calif.), who is estimated to have grown richer by some $210 million since 2000. Two others are said to have boosted their net worth by more than $100 million: Rep. Jane Harman (D-Calif.) and Sen. John Kerry (D-Mass.).

Although the Fortune 535 is based on the personal financial disclosure forms filed by members of Congress and made available on the web by the Open Secrets website of the Center for Responsive Politics, its net worth numbers are not quite ironclad. That’s because legislators are allowed to report their assets and liabilities in exceedingly broad ranges. Fortune 535 combines the midpoints of the ranges for each asset and liability and compares the overall result for the earliest available disclosure form to the legislator’s most recent filing. The site does not attempt to explain the changes in the estimated net worth figures. By necessity, it is not the most rigorous data source, but it serves both to illustrate the flaws in the current financial disclosure system and to suggest that many members of Congress are not sharing the financial distress being experienced by their constituents.

Another new data source on Congress appears at first to contain more precise data. Legistorm has introduced the Foreign Gifts Database, which contains information on both tangible items and travel/lodging given by foreign governments to senators, representatives and their staff over the past decade. The database can be searched by recipient, country or description of the gift. Former Speaker Dennis Hastert, for example, reported receiving a ceremonial dagger from the government of Morocco worth $10,000. Hastert filed his reports on the dagger and other gifts only upon leaving office rather than within the specified 60 days after receiving the items.

Legistorm, which also provides databases of Congressional member and staff salaries and trips, also raises questions about the completeness of the reporting: Hastert’s filings are the only ones made by a member of the House in the past five years.

Social Responsibility for Sale

A feature article by two academics in today’s Wall Street Journal provides further evidence that the concept of corporate ethics is an oxymoron—or at least is a far cry from human ethics. The piece, by Remi Trudel and June Cotte of the University of Western Ontario’s Ivey School of Business, is headlined: “Does Being Ethical Pay?”

The authors don’t seem to think there is anything odd about discussing behavioral norms exclusively in terms of the material payoff. They unself-consciously refer to corporate social responsibility as a “big business” and thus don’t have any problem analyzing it in the same terms used for any investment.

Trudel and Cotte start out asking the question: “How Much are Ethics Worth?” What this means in practical terms is: how much extra can companies charge for products that are advertised as having been produced in an ethical manner. They ignore the question of how much more such goods actually cost to produce and consider only how much consumers are willing to pay. Based on experiments with a random group of adults, they found that people are willing to pay significantly more for the ethical goods, which suggests that consumers are a lot more ethical than companies.

Amazingly, the authors then address the question: “How Ethical Do You Need to Be?” Here they found that consumers would, for example, pay a differential for a shirt advertised as 25 percent organic but not much more for one said to have a higher organic content. The lesson Trudel and Cotte seem to draw from this is that companies should make some effort to give their products an ethical patina but need not go too far, since there will not be a proportional return for the additional effort.

The analysis of Trudel and Cotte is at the same time appalling and refreshing. It cuts through the social responsibility hype that permeates so much large-company marketing these days and shows that corporations will do the right thing only if it somehow enhances their bottom line. Lenin famously said that capitalists would sell the rope with which they would be hanged. Today’s corporate executives are happy to sell us the appearance of social responsibility—and, if we are lucky, the real thing.

Will the Justice Department Prosecute Company Linked to Mine Deaths?

Too many members of Congress behave as if they were corporate lobbyists who just happen to be on the public payroll. One outstanding exception to that tendency is Rep. George Miller (D-Calif.), who has been a consistent champion of the not-so-monied interests, especially workers. Yesterday, Miller, who serves as chairman of the House Committee on Education and Labor, announced that he has asked the Justice Department to initiate a criminal investigation of the general manager of the Crandall Canyon Mine near Huntington, Utah, where nine miners were killed in two accidents last August. (The official federal fatality reports are here and here.)

Miller based his request on the results of an investigation conducted by his committee, which found evidence that the mine manager, Laine W. Adair, had concealed the full story of a previous collapse of the mine involving the same technique—retreat mining—that was linked to last summer’s deaths. Had the Mine Safety and Health Administration been given a complete account of the earlier accident, Miller argued, the mine might have been barred from continuing to use the technique.

In Miller’s referral letter to the Attorney General, he notes that Adair has vowed to invoke the Fifth Amendment protection against self-incrimination if he is forced to testify before the committee, as have other officials of the mine’s corporate owner, Murray Energy, including CEO Robert Murray, who has “argued” that an earthquake caused the collapse at his mine.

It remains to be seen how the Justice Department responds to Miller’s request, which just happened to be announced the same week that the national hiatus on the death penalty came to an end with the execution of a convicted murderer in Georgia. When will this country exhibit the same blood lust for punishing corporate killers as it has for individual ones?

Postcard from the Good Jobs First conference

If you are a researcher or campaigner concerned about economic development accountability, the place to be this week is the national conference of Good Jobs First outside Baltimore. Gathered here are activists who are seeking to remake the relationship between the public and the private sectors.

Some of the most impressive presentations came this morning in a plenary session put together by the Partnership for Working Families (PWF). Madeline Janis, head of the Los Angeles Alliance for a New Economy, and Phaedra Ellis-Lamkins, who runs the South Bay AFL-CIO and Working Partnerships USA, described remarkable changes that have taken place in parts of California. Union-sponsored non-profit organizations, working with community allies, are turning the tables on developers who used to have the red carpet rolled out for them. Now the right to build large subsidized projects is being made contingent on providing benefits to the community ranging from apprenticeship programs and living-wage jobs to affordable housing, more green space and air pollution abatement. Janis and Ellis-Lamkins seemed to be describing a parallel universe in which the common good takes precedence over monied interests.

Their themes were echoed later in a presentation by Cecilia Estolano, chief executive of the Los Angeles Community Redevelopment Agency, a remarkable public official who is converting the agency from what she said was a “cookie jar” for developers into a promoter of projects that bring about broad improvements in living standards.

The good news comes not only from California. For example, Deborah Scott of Georgia Stand Up recounted how her group cajoled local officials in Atlanta to provide for community participation in major development projects taking place adjacent to an old rail line ringing the city.

I was unable to attend the PWF workshops (one of five tracks) because I was giving presentations of my own — in my capacity as research director of Good Jobs First — in workshops on advanced research techniques relating to subsidies and corporate taxes. Joining me in the latter were Matt Gardner of the Institute on Taxation and Economic Policy, who told us how to unearth the real tax rates of major corporations (which are often well below what the company claims), and Michael Mazerov of the Center on Budget and Policy Priorities, who described his proposal to compel corporations to disclose abbreviated versions of their state tax returns.

This is only a sample of the provocative ideas swirling around this conference. Wish you could be here.

(This item is being crossposted on Clawback.org.)

Rebuffed by Supreme Court, NAM Complies with Disclosure Law—for Now

It’s rare these days for powerful business interests to be rebuffed by the U.S. Supreme Court, but that’s what happened when Chief Justice John Roberts denied an emergency request from the National Association of Manufacturers (NAM) last week having to do with disclosure. NAM has been waging a court battle against a new law (Section 207 of P.L. 110-81) that requires trade associations to list member companies that are extensively involved in developing the organization’s lobbying strategies or that contribute at least $5,000 toward those efforts. NAM believes its members should be able to lobby confidentially.

NAM was seeking a stay on enforcement of a portion of the Honest Leadership and Open Government Act that took effect on April 21. The DC Court of Appeals turned down the request, so NAM went to the Supreme Court, which also said no.

This week, NAM submitted an amended lobbying disclosure filing to the Clerk of the House and the Secretary of the Senate. Beginning on page 54 of the 71-page document, NAM responded to a question about additional affiliated organizations by including a link to a page on its website.

That page contains the names of 63 large corporations and two trade associations (American Petroleum Institute and the Edison Electric Institute) whose lobbying involvement, NAM decided, now has to be made public. Not surprisingly, the companies include giant industrials in sectors such as energy, pharmaceuticals, chemicals, heavy equipment, food processing and aerospace. In other words, companies that have a lot of interests that need to be fostered in Washington.

Here’s the complete list: Albemarle Corporation, American Electric Power, American Petroleum Institute, AREVA Group, AT&T, Bayer Corporation, BD, Boston Scientific Corporation, BP Corporation North America, Bristol-Myers Squibb Company, Campbell Soup Company, Caterpillar Inc., Chevron Corporation, CN, CONSOL Energy, Corning Incorporated, Deloitte & Touche LLP, Delphi Corporation, Dominion Resources Services, Dow Corning Corporation, Eastman Chemical Company, Edison Electric Institute, Entergy Corporation, Exxon Mobil Corporation, FirstEnergy Corp., FMC Technologies, General Electric, Goodrich Corporation, Illinois Tool Works, Ingersoll-Rand, JELD-WEN, Inc., Johnson Controls, Koch Industries, Loews Corporation, Marathon Oil, Mead Westvaco, Merck & Company, Northrop Grumman, Occidental Petroleum, Owens-Illinois, PPG Industries, PPL Corporation, Rockwell Automation, Rohm and Haas, SABIC Americas, Inc., Sanofi-Aventis, Shell Oil, Smurfit-Stone Container, Sony Electronics, Temple-Inland, Terra Industries, Textron, The Clorox Company, The Hershey Company, The Timken Company, Unilever United States, Union Pacific, United States Steel, USEC, Verizon, Volvo Group North America, W L Gore & Associates, W. R. Grace & Co., Weyerhaeuser Company, and Xerox Corporation.

It is no great surprise that companies such as these are deeply involved in trying to shape federal policies, but what’s important here is the principle: lobbying is not a process that companies can engage in surreptitiously by funneling their spending through business associations. NAM President John Engler (former Republican Governor of Michigan) warned that the new disclosure requirement might prompt companies “to curtail their memberships or restrict their involvement in trade associations.” That might sound like a problem to Engler, but less corporate involvement in manipulating public policy is music to my ears.