Corporate Accountability

Stealth Disclosure

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

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

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

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

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

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

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

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

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

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

Corporate Social Irresponsibility

The catastrophic Exxon Valdez oil spill of 1989 gave rise to the modern corporate social responsibility movement; the current spill in the Gulf of Mexico marks its collapse.

The past two decades have been an experiment in corporate behavior modification. An array of well-intentioned organizations such as CERES promoted the idea that large companies could be made to do the right thing by getting them to sign voluntary codes of conduct and adopt other seemingly enlightened policies on environmental and social issues.

At first there was resistance, but big business soon realized the advantages of projecting an ethical image: So much so that corporate social responsibility (known widely as CSR) is now used as a selling point by many firms. Chevron, for example, has an ad campaign with the tagline “Will You Join Us” that is apparently meant to convey the idea that the oil giant is in the vanguard of efforts to save the earth.

What also made CSR appealing to corporations was the recognition that it could serve as a buffer against aggressive regulation. While CSR proponents in the non-profit sector were usually not pursuing a deregulatory agenda, the image of companies’ agreeing to act virtuously conveyed the message that strong government intervention was unnecessary. CSR thus dovetails with the efforts of corporations and their allies to undermine formal oversight of business activities. This is what General Electric was up to when it ran its Ecoimagination ads while lobbying to weaken air pollution rules governing the locomotives it makes.

Recent events put into question the meaning of a commitment to CSR. The company at the center of the Gulf oil disaster, BP, has long promoted itself as being socially responsible. A decade ago it adopted a sunburst logo, acknowledged that global warming was a problem and claimed to be going “beyond petroleum” by investing (modestly) in renewable energy sources. What did all that social responsibility mean if the company could still, as the emerging evidence suggests, cut corners on safety in one of its riskiest activities—deepwater drilling? And how responsible is it for BP to join with rig owner Transocean and contractor Halliburton in pointing fingers at one another in an apparent attempt to diffuse liability?

BP is hardly unique in violating its self-professed “high standards.” This year has also seen the moral implosion of Toyota, another darling of the CSR world. It was only months after the Prius producer was chosen for Ethisphere’s list of “the world’s most ethical companies” that it came to light that Toyota had failed to notify regulators or the public about its defective gas pedals.

Goldman Sachs, widely despised these days for unscrupulous behavior during the financial meltdown, was a CSR pioneer in the investment banking world. In 2005 it was the first Wall Street firm to adopt a comprehensive environmental policy (after being pressured by groups such as Rainforest Action Network), and it established a think tank called the Center for Environmental Markets.

Even Massey Energy, which has remained defiant in the face of charges that a preoccupation with profit over safety led to the deaths of 29 coal miners in a recent explosion, publishes an annual CSR report.

When the members of a corporate rogues’ gallery such as this all profess to be practitioners of CSR, the concept loses much of its legitimacy. The best that can be said is that these companies may behave well in some respects while screwing up royally in others—the way that Wal-Mart is supposedly in the forefront of environmental reform while retaining its Neanderthal labor relations policies. Selective ethics, however, should be no more tolerable for corporations than it is for people.

Heaven forbid that we violate the free speech rights of CSR hypocrites, but there should be some mechanism—perhaps truth-in-image-advertising laws—to curb the ability of corporations to go on deceiving the public.

The People’s Regulator

Government regulation of business is looking pretty lame these days. After 29 workers were killed in an explosion at a Massey Energy mine in West Virginia, it came to light that the facility had accumulated more than 1,300 safety violations over the past five years but was not shut down by the Mine Safety and Health Administration – an agency labeled a “meek watchdog” in a recent New York Times headline.

It has also been revealed that Toyota managed to keep critical information about faulty gas pedals from federal regulators in an ultimately unsuccessful effort to avoid a massive recall of its vehicles. A pair of recent reports show that regulatory oversight of Citigroup was deficient both before and after the banking giant had to be bailed out by taxpayers. Again and again, it’s the same old story: aggressive corporations riding roughshod over feckless regulators.

Compare this to what recently happened when Consumer Reports issued a “don’t buy recommendation” for a Lexus sport-utility vehicle because its testing had shown a risk of rollovers. Within hours after the warning was issued, Toyota, the parent company of Lexus, announced that it would suspend sales of the GX 460. A company official stated: “We are taking the situation with the GX 460 very seriously and are determined to identify and correct the issue Consumer Reports identified.”

Toyota’s quick response was undoubtedly part of its effort to control the damage to its reputation from the sudden-acceleration controversy, but it also demonstrates the power of Consumer Reports. More than a magazine, it is a bulwark against shoddy manufacturing and dishonest practices that threaten the physical and financial well-being of the public. It is the people’s regulator.

The potency of Consumer Reports stems from its rock-solid integrity and its complete independence from the companies it is monitoring. While the magazine is often taken for granted these days, CR and its non-profit parent Consumers Union have not always been revered during their 70-plus years of existence.

The challenges Consumers Union (CU) faced in its early decades are documented in the work of Norman Silber, who wrote a dissertation on the subject in 1978 (available via the Dissertations & Theses database) which became the 1983 book Test and Protest.

CU was established in 1936 by a group of engineers, researchers, writers and editors who were unabashedly leftwing and saw their work as complementary to the growing labor movement. The organization’s mission was, Silber notes, threatening not only to manufacturers but also to the commercial media, which saw its independent product ratings as “an unfair and subversive attack upon legitimate advertising.” Many major magazines and newspapers refused to let CU advertise Consumer Reports in their pages.

CU was also an early target of the House Un-American Activities Committee, though the scrupulously non-partisan content of Consumer Reports saved the organization from serious persecution. During the anti-communist hysteria of the 1950s, Silber recounts, CU suspended its reporting on labor conditions in the industries whose products it rated. Its own staff remained unionized, though it switched from the leftist Book and Magazine Guild to the more mainstream Newspaper Guild.

CU did nothing to dilute its assessment of business practices. During the late 1950s it was especially critical of the tobacco industry for engaging in misleading advertising and for selling a dangerous product. CU also took on the dairy industry over the issue of milk contamination caused by radioactive fallout. And it began arguing for improved auto safety starting well before Ralph Nader appeared on the scene. In the 1970s CU successfully pressured federal regulators to improve standards for microwave ovens to address radiation leakage.

CU also did not flinch when the recipients of poor product ratings decided to take the organization to court. It fought companies such as Bose audio and Suzuki Motor up to the Supreme Court to protect its right to offer candid assessments.

This is not to say that CU is completely above reproach. Critics have charged over the years that the organization’s preoccupation with product testing comes at the expense of broader consumer advocacy (this is what Nader said when he quit CU’s board in 1975). And in 2007 the organization suffered a black eye when it botched its testing of infant car seats and had to issue an unprecedented apology. Nonetheless, its overall track record, up through its reprimand of Lexus, is pretty impressive.

A private organization without formal enforcement powers is no substitute for government regulatory agencies, but CU does have something to teach those agencies – above all, that a watchdog can be truly effective only when it is completely uninfluenced by the companies it is monitoring.

It also helps to be able to issue definitive pronouncements about corporate misbehavior. CU’s statement about the dangers of the GX 460 was not tentative and was not subject to time-consuming appeals.

Once official regulators show as much spunk as the likes of Consumers Union, corporations may finally start to clean up their act.

Corporate Overkill

There is so much corporate misbehavior taking place around us that it is possible to lose one’s sense of outrage. But every so often a company comes along that is so brazen in its misdeeds that it quickly restores our indignation.

Massey Energy is one of those companies. Evidence is piling up suggesting that corporate negligence and an obsession with productivity above all else were responsible for the horrendous explosion at the Upper Big Branch mine in West Virginia that killed at least 25 workers.

This is not the first time Massey has been accused of such behavior. In 2008 a Massey subsidiary had to pay a record $4.2 million to settle federal criminal and civil charges of willful violation of mandatory safety standards in connection with a 2006 mine fire that caused the deaths of two workers in West Virginia.

Lax safety standards are far from Massey’s only sin. The unsafe conditions are made possible in part by the fact that Massey has managed to deprive nearly all its miners of union representation. That includes the workers at Upper Big Branch, who were pressured by management to vote against the United Mine Workers of America (UMWA) during organizing drives in 1995 and 1997. As of the end of 2009, only 76 out of the company’s 5,851 employees were members of the UMWA.

Massey CEO Don Blankenship (photo) flaunts his anti-union animus. It’s how he made his corporate bones. Back in 1984 Blankenship, then the head of a Massey subsidiary, convinced top management to end its practice of adhering to the industry-wide collective bargaining agreements that the major coal operators negotiated with the UMWA. After the union called a strike, the company prolonged the dispute by employing harsh tactics. The walkout, marked by violence on both sides, lasted 15 months.

In the years that followed, Massey phased out its unionized operations, got rid of union members when it took over new mines and fought hard against UMWA organizing drives. Without union work rules, Massey has had an easier time cutting corners on safety.

Massey has shown a similar disregard for the well-being of the communities in which it operates. The company’s environmental record is abysmal. In 2000 a poorly designed waste dam at a Massey facility in Martin County, Kentucky collapsed, releasing some 250 million gallons of toxic sludge. The spill, larger than the infamous Buffalo Creek flood of 1972, contaminated 100 miles of rivers and streams and forced the governor to declare a 10-county state of emergency.

This and a series of smaller spills in 2001 caused such resentment that the UMWA and environmental groups—not normally the closest of allies—came together to denounce the company. In 2002 UMWA President Cecil Roberts was arrested at a demonstration protesting the spills.

In 2008 Massey had to pay a record $20 million civil penalty to resolve federal charges that its operations in West Virginia and Kentucky had violated the Clean Water Act more than 4,000 times.

And to top it off, Blankenship is a global warming denier.

Massey is one of those corporations that has apparently concluded that it is far more profitable to defy the law and pay the price. What it gains from flouting safety standards, labor protections and environmental safeguards far outweighs even those record penalties that have been imposed. At the same time, Massey’s track record is so bad that it seems to be impervious to additional public disgrace.

Faced with an outlaw company such as Massey, perhaps it is time for us to resurrect the idea of a corporate death penalty, otherwise known as charter revocation. If corporations are to have rights, they should also have responsibilities—and should face serious consequences when they violate those responsibilities in an egregious way.

Kowtowing to the Corporate Elite

Two national political figures recently made statements about the pay practices of the big banks that did so much to create the current economic crisis. Can you tell which one was made by Barack Obama and which came from the mouth of Sarah Palin at the recent Tea Party convention?

Comment A: “While people on main street look for jobs, people on Wall Street, they’re collecting billions and billions in your bailout bonuses. Among the top 17 companies that received your bailout money, 92 percent of the senior officers and directors, they still have their good jobs. And everyday Americans are wondering, where are the consequences for them helping to get us into this worst economic situation since the great depression? Where are the consequences?”

Comment B (responding to a question about the $9 million in compensation received by Lloyd Blankfein of Goldman Sachs and the $17 million received by Jamie Dimon of JPMorgan Chase): “I know both those guys. They are very savvy businessmen. And I, like most of the American people, don’t begrudge people success or wealth. That is part of the free-market system…$17 million is an extraordinary amount of money. Of course, there are some baseball players who are making more than that and don’t get to the World Series either, so I am shocked by that as well… I guess the main principle we want to promote is…that shareholders have a chance to actually scrutinize what CEOs are getting paid, and I think that serves as a restraint and helps align performance with pay.”

Sad to say, the lame second statement, which sounds like something composed by a not particularly imaginative flack for the financial industry, was made by President Obama in an interview with Bloomberg BusinessWeek. His comments caused such an initial uproar that the Administration’s Deputy Communications Director Jen Psaki felt compelled to put up a post on the White House blog to try to clear up any “confusion” about what the standard bearer of the Democratic Party was saying.

If Psaki’s aim was to repair Obama’s progressive bona fides, she actually made matters worse by reiterating her boss’s previous comments about the glories of the free market and the wonders of individual wealth.

What is going on here? At a time when the public is outraged at the behavior of Big Finance — and when even a dunce such as Palin realizes she must condemn Wall Street greed — Obama decides to soft-pedal his criticism. Rather than acknowledging the damage done by the likes of Blankfein, he treats the matter as an intellectual exercise of fine-tuning pay to match performance. Wall Street pay is well-aligned with performance. The problem is that what’s been performed – the bad loans and toxic assets in the period leading up to the crisis and the stingy lending and bailout abuses in its aftermath – is good for the banks but disastrous for the economy as a whole.

Much of the Obama interview is an embarrassing obeisance to corporate power. The President seems to be apologizing for giving even the slightest the impression that he is anti-business. “Everything we have done over the last year,” he said, “and everything we intend to do over the next several years, I think is going to put American business on a stronger footing.” Asked why he does not have a “major CEO” in his cabinet, Obama replies: “We want and need more input from the corporate community.”

And he gushes over CEOs he admires. He lauds Fred Smith of FedEx as “thoughtful” and says that “sitting down and talking to him was incredibly productive and helps inform how we shape policy.” Hopefully, that does not include labor policy, given FedEx’s resistance to unionization and its abuse of the independent contractor classification. According to BusinessWeek, Obama had a staffer send a follow-up e-mail with a list of his other favorite CEOs, including Ivan Seidenberg of Verizon, another foe of unions.

A generous interpretation of Obama’s BusinessWeek interview is that he is simply trying to counteract overheated right-wing rhetoric depicting him as some kind of socialist. Yet he doesn’t seem to feel the same discomfort about the fact that, as Obama admits in the interview: “On the left we are perceived as being in the pockets of Big Business.”

He seems to regard that image, based on his mostly timorous approach to matters such as healthcare and financial reform, as a political benefit. During normal times in laissez-faire America, that might be the case. Yet this is an era in which an endless series of scandals and misbehavior have left the legitimacy of big business in tatters. Kowtowing to the corporate elite is bad politics and bad policy.

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.

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.

Shell’s Troubled Relationship with the Truth

Oil giant Royal Dutch Shell is facing accusations that it manipulated a supposedly independent environmental audit of a huge Russian oil and gas project in which it is involved. Nick Mathiason of the British newspaper The Observer reports that he obtained dozens of internal e-mails showing that Shell officials in London sought to influence the conclusions of a review of Sakhalin II being conducted by AEA Technology. The audit was used by financial institutions in making funding decisions about the $22 billion project.

The Observer quotes Doug Norlen of the group Pacific Environment as saying: “Shell stage-managed the whole process. They set the agenda, scheduled meetings and even participated in the editing of sections. I believe this to be a stark and vivid example of manipulation.” The Shell website contains a page on which it touts the favorable findings of the AEA report.

Pacific Environment, a non-profit advocacy organization based in San Francisco, has done pioneering environmental work on the Russian Far East and Siberia, collaborating with Russian activists who formed Sakhalin Environment Watch. The groups have been highly critical of the offshore Sakhalin II project because it threatens the survival of the world’s most endangered species of whales—Western Pacific Grays (photo). The campaign has pressured Shell and its partners to adopt stronger environmental protections or abandon the project.

The campaign became more complicated in late 2006, when Shell was forced by Russia to sell half of its holdings in the project at a bargain-basement price to Gazprom, which is publicly traded but controlled by the Russian government. This gave Gazprom a majority stake of 55 percent, with Shell’s interest reduced to 27.5 percent. The holdings of the other partners, Mitsui and Mitsubishi, were also slashed.

In its diminished position, Shell was even more vulnerable to attacks in the Russian and foreign press in mid-2007 after it was revealed that David Greer, the deputy chief executive of Sakhalin II, had sent out a motivational memo to his staff containing unattributed passages taken from a speech made by U.S. General George S. Patton on the eve of D-Day in 1944. Amid the ensuing furor over plagiarism, Greer resigned.

Shell’s integrity problems are not limited to Sakhalin II. In January 2004 the company admitted that had overstated its proven petroleum reserves by 20 percent. It later came out that that top executives at the company knew of the situation two years before it was publicly disclosed. Shell ended up paying penalties of about $150 million to U.S. and British authorities for the misreporting.

In his Observer article, Mathiason notes that environmental campaigners are worried that Shell’s behavior with the Sakhalin II report could be repeated in audits involving other projects such as its oil drilling leases in Alaska’s Chukchi Sea. Given the company’s troubled relationship with the truth, that concern is quite legitimate.

Piercing the Corporate Veil of Secrecy

Congratulations to Wikileaks, Wal-Mart Watch and a handful of other web resources for being chosen by Portfolio magazine as the “top anti-corporate sites.” Specifically, the magazine is featuring sites that have done the most to distribute confidential—and often embarrassing—corporate documents or otherwise publicize material that companies want kept quiet. “From anonymous whistle-blowers who post secret documents online to fan sites that spill trade secrets,” Portfolio writer Kim Zetter says, “websites and their owners can be a major thorn in the side of corporations that find comfort behind a veil of secrecy.”

Wikileaks is focused on piercing that veil. The site was at the center of controversy a few months back when Swiss bank Julius Baer tried to get it taken offline after it posted documents that purportedly showed how the bank’s Cayman Islands branch helps wealthy clients hide assets and launder money. Much of the web community rallied to the defense of Wikileaks, and the censorship move was defeated.

Wal-Mart Watch, of course, is one of two national campaigns aimed at reforming the giant retailer. Aside from producing its own critiques of the retailer (including one to which I contributed), the group has used its site to publicize internal company documents leaked to it. Among these was a memo in which the company discussed controlling health care costs by methods such as making physical activity part of every job, apparently so that those in poorer shape would not apply.

The other sites singled out by Portfolio are:

* Mini-Microsoft, a anonymous blog written by a Microsoft employee who skewers management and highlights waste and inefficiency at the software behemoth.

* Brenda Priddy and Company, a automobile outfit that is not necessarily critical of carmakers but which manages to take clandestine photographs of their prototype vehicles and sell them to other websites and magazines for distribution well before the companies are ready to go public.

* Farmers Insurance Group Sucks, a site produced by a disgruntled customer who now publicizes lawsuits against the company, complaints to state insurance agencies, and unflattering insider testimonials.

* HomeOwners for Better Buildings, a site that exposes the shortcomings of the residential construction business, especially KB Homes. It is filled with homebuyer horror stories and has an “Implode-O-Meter” that tracks companies in the industry experiencing bankruptcy or other forms of distress.

* AppleInsider and MacRumor, which make it their business to report on new Apple products and features being developed by the secretive company.

Zetter has only scratched the surface, and she seems to realize it. She says to her readers: “If you have suggestions for other pesky sites that are a reliable source for inside information about a company or industry, please let us know. We’ll write about the best ones in a follow-up article.” So go ahead and let Zetter know about the wider world of the corporate-critical web.

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.)