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.

An Embarrassment of Corporate Riches

Things are rough all over. Unemployment is rising, inflation is up, foreclosures are rampant, poor countries are experiencing food riots. Today the front page of the Wall Street Journal pointed out that major agribusiness companies are facing a challenge of their own: soaring profits.

The likes of Cargill, Archer Daniels Midland and Monsanto have joined the Exxon Mobils of the world in experiencing windfall profits. Cargill, which is privately held but releases summary financial results, reported earlier this month that its net income for the quarter ending February 29 was up 86 percent over the same period last year. Monsanto beat that with an increase of more than 100 percent.

While the percentage increases are more than healthy, the absolute amounts involved—$1.1 billion in Monsanto’s latest quarter, for example—pale in comparison to the profits being raked in by the oil majors. Exxon is scheduled to announce its first quarter results tomorrow—May Day—and a gusher is expected. The company earned $11.7 billion in the fourth quarter of 2007 and more than $40 billion for the year as a whole. Only a few dozen U.S. companies have $40 billion in revenues.

The Journal also had an article today on how food and energy companies are escaping the kind of public opprobrium that followed the run-up of oil prices in the 1970s. It seems that, apart from the relatively small number of angry truckers who have been protesting fuel prices in Washington, DC, most Americans are willing to accept soaring commodity prices with little more than a grumble. According to the Journal, this is because food and energy represent a smaller share of consumer expenditures than three decades ago. But that will inevitably change as those costs continue to rise while wage and salary levels remain largely stagnant. A point may come when the energy and agribusiness giants are seen not as accidental beneficiaries but as crisis profiteers.

A Struggle Over the Rockefeller Legacy?

For a family whose economic power peaked a long time ago, the Rockefellers have been in the news a lot lately—in both good ways and bad. The negative press comes courtesy of author Steve Weinberg, whose well-received new bookTaking on the Trust: The Epic Battle of Ida Tarbell and John D. Rockefeller—looks at both the oil tycoon and the pioneering investigative journalist who exposed the unsavory aspects of his business practices.

The publicity given to Weinberg’s book reminds those who associate the Rockefeller name these days mainly with a respected foundation and a liberal U.S. Senator from West Virginia that it was long reviled because of Standard Oil’s ruthless conquest of its competitors. Long after Tarbell’s book on Standard Oil was published in 1904, the Rockefeller name was associated with the worst features of capitalism. Labor activists blamed a Rockefeller-controlled company for the infamous Ludlow Massacre of 1914, when wives and children of striking workers were killed by the Colorado state militia. In the late 1960s, the New Left condemned the Rockefeller-controlled Chase Manhattan bank for oppressing the people of Latin America.

Now it seems that the Rockefellers are trying to burnish their reputation. David Rockefeller, the 92-year-old former chairman of Chase Manhattan, just announced a gift of $100 million to his alma mater Harvard University (as if it needed the money). Neva Rockefeller Goodwin, daughter of David Rockefeller, submitted a shareholder resolution for next month’s annual meeting of Exxon Mobil (which descends from the Standard Oil Trust) calling on the company to establish a task force to examine the consequences of global warming.

And today, the Financial Times reports that members of the Rockefeller Family plan to press for corporate governance reforms at Exxon Mobil, including a requirement that the chairman of the board be independent of management. The Rockefellers, whose combined holdings in Exxon are not large enough to be disclosed by the company, are dubious agents for change at a corporation that in many ways carries on the harmful practices that made their family fabulously rich. Today’s Ida Tarbells are better suited for the job.

Federal Database of Contractor Misconduct Now One Step Closer

The effort to centralize information on federal contractors that have broken the law or violated regulations took an important step forward today when the House approved by voice vote H.R. 3033, the Contractor and Federal Spending Accountability Act. The issue now goes to the Senate, where Claire McCaskill (D-Mo.) today introduced a companion measure.

The bills would require the federal government to take over a function that until now has been unofficially handled by the Project On Government Oversight. POGO’s Federal Contract Misconduct Database has been an immensely valuable pilot effort covering the 50 companies doing the most business with Uncle Sam.

First on that list in terms of contract dollars is arms maker Lockheed Martin, for which POGO has found 42 instances of misconduct—resulting in $553 million in fines and settlement costs—since 1995. Number two contractor Boeing has 24 instances and $863 million in misconduct dollars, followed by Northrop Grumman with 23 instances and $450 million. While Lockheed leads in the number of misconduct instances (followed by General Electric and Exxon Mobil and Honeywell International before Boeing and Northrop), it ranks 9th in misconduct dollars. The winners in that category are Exxon and BP Amoco. POGO defines “misconduct” as cases in which contractors “violate laws or regulations or are the subject of misconduct allegations in their dealings with the government, individuals, or private entities.”

H.R. 3033 would mandate the creation of a public database that would reveal whether any recipient of a federal contract or grant had, within the past five years: been involved in any civil, criminal or administrative proceeding resulting in a finding of fault of $5,000 or more; had a federal contract or grant terminated because of default; or been suspended or debarred from doing business with the federal government. This would enable federal agencies to weed out bad actors before awarding future contracts.

If it passes, the contractor database would represent the second instance in recent years in which a disclosure initiative pioneered by a non-profit became an official federal program. The recently launched USA Spending database of federal contracts and grants, mandated by bipartisan legislation sponsored by Sen. Barack Obama (D-Ill.) and Sen. Tom Coburn (R-Okla.), was directly modeled on the FedSpending database that had been created by OMB Watch.

CEOs Who Never Pick Up the Tab

I was intrigued by a post that just appeared in Footnoted.org about some companies whose recent proxy statements disclose they are reimbursing top officers for the cost of having their cars washed. We have all heard about the expensive perks large corporations shower on their executives: country club memberships, use of corporate jets, personal financial advisors, etc.—all in addition to munificent salaries and bonuses. Yet are companies also taking care of mundane everyday expenses as well?

In theory, it shouldn’t be possible to learn these details, since even under the more rigorous disclosure rules imposed by the SEC in 2006, companies are not required to list perks worth less than $10,000. Nonetheless, I decided to follow Footnoted’s lead and search the database of recent proxy statement to look for other kinds of personal services being provided to executives. Here’s an assortment of what I found.

SLM Corp.—the student loan company also known as Sallie Mae—reports that it not only provided a townhouse for president C.E. Andrews but also paid for “real estate taxes, homeowner’s insurance, neighborhood association fees, repairs and improvements, utilities, lawn and housekeeping services, and pest control.”

Harris & Harris Group—a business development company focusing on nanotechnology—pays for both a health-club membership and a personal trainer for chief executive Charles E. Harris.

BioLase Technology—a producer of dental lasers—paid the laundry expenses of Keith Bateman while he was executive vice president of the company.

Military contractor Raytheon and numerous other companies pay for security systems at the homes of their top executives.

Home Depot pays for the home internet services used by their top executives and picks up the tab when they send funeral flowers.

Beermaker Anheuser-Busch has a company barber shop for top executives and provides free beer “for personal use and entertaining.”

The costs of these perks are trivial in comparison to the cash compensation the executives receive and are barely a blip in the overall finances of the companies. But they illustrate the regal manner in which the corporate elite are treated. How can a CEO who doesn’t have to pay many of his or her own personal expenses—including in some cases the cost of six pack—understand the situation of those who get nothing for free?

Taking the Sweat Out of University Logo Apparel

If you will excuse a bit of parental pride, I would like to report that my son Thomas, a sophomore at the University of North Carolina-Chapel Hill, has been involved in a protest aimed at getting UNC to participate in a program that protects the rights of workers who sew university logo apparel. On Friday, students held a demonstration on campus, while a smaller group is in the fifth day of a sit-in at the building containing the office of Chancellor James Moeser, the target of the pressure campaign. Carolina Blue clothing is among the most popular “brands” of university apparel.

The UNC actions are part of the latest wave of recent campus actions in support of the Designated Supplier Program (DSP), an initiative of the Worker Rights Consortium and United Students Against Sweatshops. Recent actions have taken place at schools such as Penn State University, the University of Montana, Appalachian State University and the University of Houston. While all the protests have been non-violent, more than 30 students were arrested last week at Penn State.

The DSP, launched in 2005, is an attempt to fight sweatshop conditions by getting universities to demand that licensee companies distributing their logo apparel make use of supplier factories that have been independently verified to pay a living wage and respect the right of workers to organize. Currently, more than 30 schools have signed on to DSP (including the entire University of California system), while officials at other institutions have resisted.

Apparel companies such as Nike, Champion (owned by Hanesbrands) and Russell Athletic (owned by Berkshire Hathaway) are among the big players in the $3 billion university logo market. Nike, the target of intensive protests during the 1990s over its use of sweatshop suppliers, has cleaned up its act, though the company itself has acknowledged that its suppliers do not always comply with its standards. Since monitoring its large number of plants—located in 36 countries—is impossible, the alternative is to direct business to a smaller group of factories known to treat their workers decently—hence, DSP. That way, students can ensure that the sweat in university apparel comes from wearers, not producers.

Note: The Worker Rights Consortium has an online database of factories around the world that produce university logo apparel.

Private Debt Collectors Can’t Reach IRS’s “Low-Hanging Fruit”

The Washington Post article this week on the poor performance of the private debt collectors working for the Internal Revenue Service is a classic story of wrong-headed federal outsourcing. The paper reported that the companies, set loose in 2006 to collect $1 billion owed to Uncle Sam by deadbeat taxpayers, “have rounded up only $49 million, little more than half of what it has cost the IRS to implement the program. The debt collectors have pocketed commissions of up to 24 percent.”

What makes the story more galling is that the contractors were handed the work on a silver platter. By the early 2000s, the IRS was being underfunded to the point that it had to ignore many scofflaws. Rather than allowing the agency to hire more employees, who typically bring in much more than they cost, the Bush Administration and the Republican-controlled Congress gave in to long-standing lobbying (and ample campaign contributions) by the private debt collection industry to get a piece of the action. The private collectors were to be given the “low-hanging fruit”—taxpayers who had not disputed their debt but were slow in paying. Nonetheless, there were widespread misgivings about giving private parties access to personal financial information and having them represent the government in an activity so prone to abuse.

The initial companies chosen by the IRS in 2006 to participate in the program included one firm that had a particularly questionable track record: Linebarger Goggan Blair & Sampson LLP, an Austin-Texas based law firm that became a leading figure in outsourced debt collection for government agencies around the country. The Houston Chronicle once wrote (10/13/2002) that the firm was frequently criticized for its “political rainmaking and hardball collection tactics.” In 2004 a former name partner in the firm was convicted in a bribery case involving payments to city councilmen in San Antonio to secure a debt collection contract. Around the same time, the Linebarger firm privately settled a lawsuit in which a competitor alleged it had engaged in bribery and bid rigging in various locations. A collection contract awarded to the firm by New Orleans was reported to have been the subject of an FBI investigation.

The IRS removed the Linebarger firm from its private debt collection program last year without explanation. That left two contractors: CBE Group of Waterloo, Iowa and Pioneer Credit Recovery of Arcade, New York. Both companies have been sued multiple times over aggressive tactics in their efforts on behalf of clients other than the IRS.

Pioneer is a unit of SLM Corporation, otherwise known as Sallie Mae, which started out as a government-sponsored enterprise but was subsequently privatized and started trading on the New York Stock Exchange. It was to have been taken private in a leveraged buyout last year but the deal collapsed. The company, which has been suffering heavy losses, is being investigated by New York Attorney General Andrew Cuomo.

Leave it to the Bush Administration: Not only does it contract out functions that by all rights should be done by public employees, it makes highly dubious choices in selecting the companies to carry out the work. So it should come as no surprise when we end up with the worst outcome, which in this case means abuse of taxpayers and poor financial results. Ah, the magic of private enterprise.

“Green” Corporations Among the Toxic 100

The appearance of a new version of the Political Economy Research Institute’s Toxic 100 is a useful reminder that, for all their feel-good green ads, large corporations are still defiling the environment in a major way. This year’s list of the biggest corporate air polluters is led by DuPont and includes household names such as Dow Chemical, Eastman Kodak, General Electric and Exxon Mobil among the top ten. The companies are ranked by their “toxic score,” which the Institute calculates by multiplying the amount of toxic air releases reported to the EPA by the relative toxicity of the chemicals involved and the size of the population at risk of exposure.

What’s new this year is the inclusion of foreign corporations with facilities in the United States. There are three such listings in the top ten portion of the Toxic 100: Nissan Motor, Bayer Group and ArcelorMittal.

It’s interesting to see that foreign companies can be no less hypocritical than their U.S. counterparts when it comes to saying one thing about the environment and doing another. Nissan USA brags on its website about its Green Program, which uses as its catch phrase “seeking a symbiosis of people, vehicles and nature.” Bayer just announced it “will partner with the United Nations Environment Programme’s Regional Office in North America to help sponsor the 36th annual World Environment Day celebration.”

Even more awkward is the appearance on the list of steel giant ArcelorMittal. Just last month, it was one of a handful of corporate sponsors of the green jobs conference put on in Pittsburgh by the Blue Green Alliance, led by the United Steelworkers and the Sierra Club. The conference program contained a full-page ad for the company saying: “At ArcelorMittal, Sustainability is one of the company’s core values.” Under the corporation’s name is the motto “Transforming tomorrow.” Perhaps ArcelorMittal should focus a bit more on transforming its air pollution problem today.

Their Information-Gathering and Ours

The activist world is abuzz over two new articles about corporate spying on environmental and labor groups.

James Ridgeway has published an exposé in Mother Jones on a private security company called Beckett Brown International (later S2i). According to documents obtained by Ridgeway, the firm, organized and managed by former Secret Service officers, spied on Greenpeace and other environmental groups in the late 1990s. Its activities are said to have included “pilfering documents from trash bins, attempting to plant undercover operatives within groups, casing offices, collecting phone records of activists, and penetrating confidential meetings.” Because the papers seen by Ridgeway are not complete, it cannot be said exactly which groups were spied on for whom. The firm’s clients are known to have included corporations such as Allied Waste, Halliburton, Monsanto and Wal-Mart.

The other article was written by Amy Bennett Williams for the Fort Myers (Florida) News-Press. It reports on an attempted infiltration of the Coalition of Immokalee Workers farmworker advocacy group by the owner of a private surveillance company. The Coalition suspects that the company may have been hired by Burger King, which is the current target of a campaign to raise pay for tomato pickers. The article notes that a person using an e-mail address traced to Burger King’s corporate headquarters made disparaging online comments about the Coalition.

Reports such as these are certainly a matter of concern, but it is important to distinguish between unlawful corporate espionage and legitimate information-gathering of the type that campaigners themselves do against companies all the time.

For example, in speaking about his article on Democracy Now this morning, Ridgeway mentioned that among the Beckett Brown documents he obtained was a background report on David Fenton, who runs the largest public-interest p.r. firm in the country. Ridgeway mentioned that the file included license plate numbers and property tax records.

As a corporate researcher (and licensed private investigator) for unions, environmental organizations and other activist groups, I find nothing scandalous about the presence of that kind of information, which is part of the public record (though there are often restrictions on who can access license plate numbers). The same goes for divorce, bankruptcy and other court records; criminal records and driving violations; tax liens; state corporate filings; campaign contributions; and voting records (indicating whether someone voted, not who they voted for). I’m also not scandalized by dumpster diving, assuming that it was done in a jurisdiction where it is not illegal (laws vary).

Let’s not be disingenuous. Campaigners use all legal means at our disposal to find possibly incriminating information about corporations and their executives. We should accept that they are doing the same about us.

The difference, of course, is that corporations and their agents sometimes cross the line. As the Ridgeway and Williams articles suggest, companies may use operatives who engage in burglary, infiltration, pretexting (misrepresenting oneself to obtain financial and telephone records) and other illegal or improper tactics. By all means, let’s condemn those practices, while being careful not to preclude those information-gathering techniques we need for our nobler purposes.

Will Tesco Brings Its Litigious Ways to the USA?

Say all you want about Wal-Mart—the giant retailer usually deals with its many adversaries in the court of public opinion rather than by filing lawsuits against them. The same can’t be said about Tesco, the British counterpart of Wal-Mart that has begun to enter the U.S. market.

In the past week, Tesco has brought two separate legal actions against its critics. First, it sued the Guardian newspaper and its editor Alan Rusbridger for “libel and malicious falsehood” in connection with a series of articles claiming that the company had used offshore partnerships as a way of avoiding up to £1 billion in taxes when selling UK properties. Tesco acknowledges that it may have saved £23-60 million in taxes but wants its day in court to argue that the £1 billion figure is erroneous. Playing hardball, Tesco says it is collecting communications from customers angry about the Guardian stories—and who say they are taking their business elsewhere—to justify a demand for “special damages.”

Now it’s been reported—by the Guardian—that Tesco has brought a libel suit against a former member of parliament in Thailand for criticizing the company’s expansion in that country. This follows a similar action against a Thai newspaper columnist.

Tesco may be tempted to bring similar suits in the U.S., given the negative coverage of its campaign to create a string of Fresh & Easy Neighborhood Markets. Some of the criticism is purely of a business nature. USA Today wrote recently that the stores, which it described as “about the size of a Trader Joe’s with lots of Whole Foods-type natural foods and prices that can seem Costco-esque,” don’t seem to be hitting the mark. The paper continued: “The unfamiliar combination—and a rather sterile store décor—seem to have left American shoppers confused about just what the chain is.” It’s apparently for this reason that Tesco recently decided to freeze its U.S. rollout, which began in Southern California, Las Vegas and Phoenix.

Like Wal-Mart, Tesco has started facing scrutiny—most notably in a report published last year by the Urban and Environmental Policy Institute of Occidental College—on supply-chain issues and its expected U.S. labor practices. If the rollout continues to falter, these issues may become moot. Otherwise, let’s hope the company spends more here on public relations and less on lawyers.