Mining Industry

Brazil Extracts Billions from Mining Giants

When multinational mining companies are implicated in disasters in the Global South they often get away with paying minimal amounts in compensation to the communities or workers involved. Brazil recently broke that pattern by negotiating a settlement worth over US$30 billion.

That amount will be paid out by mining giants BHP and Vale in connection with the 2015 Mariana disaster in which a tailings dam at the iron ore mine operated by their joint venture Samarco collapsed and unleashed a torrent of waste that killed 19 people and contaminated 400 miles of the Doce River.

Under the agreement, BHP and Vale, which have already been compelled to pay out about US$8 billion, will provide another US$23 billion over the next 20 years to affected communities and public authorities. The amounts cover water clean-up costs, health programs infrastructure repairs and improvements, and a flood response fund. Also included are funds for education, the needs of women, fishing, food security, and income support for vulnerable populations. The companies are, in effect, being compelled to finance a parallel social welfare system.

BHP and Vale both have histories of harmful impacts that extend well beyond the Mariana disaster. BHP, headquartered in Australia, took its current form as a result of the 2001 merger of the company previously known as Broken Hill Proprietary and Billiton, originally a Dutch company. It has been at the center of environmental controversies concerning its operations in countries such as Chile, Guatemala, India, and the United States. For example, in 2022 it was fined the equivalent of US$8 million by environmental authorities in Chile for damage caused by excessive water extraction in the Salar de Atacama salt flat.

Vale, headquartered in Brazil, was implicated in another even worse mining disaster in its home country. Three years after the Mariana incident, a tailings dam near Brumadinho in the state of Minas Gerais collapsed, releasing a mudflow that engulfed houses, farms and roads and killed more than 250 people, most of whom were company employees. The toxic deluge also destroyed 300 acres of native forest and polluted 200 miles of the Paraopeba River.

In 2021 Vale agreed to pay US$7 billion in compensation to the state government. It probably got off easy, given that evidence emerged suggesting that Vale executives had been warned about safety risks with the dam. In the wake of those revelations, Brazilian authorities brought homicide charges against the chief executive of the company, Fabio Schvartsman. Those charges were dismissed earlier this year, but relatives of the victims are seeking to have them reinstated.

Apart from the environmental penalties, Vale got in trouble with the U.S. Securities and Exchange Commission for making false and misleading statements to investors about the safety of its dams. In 2023 the company had to pay US$55 million to settle the matter.

The substantial penalties being paid in Brazil by BHP and Vale will provide needed relief to the affected communities, yet it is unclear whether the amounts are enough to get corporations with annual revenues in the $40-50 billion range to fundamentally change their ways.

Toxic Corporate Culture

Most large companies like to brag about their corporate culture, seeing it as a key factor in their success. Yet when an independent assessment is done, the results may tell a very different story.

The latest example of this is taking place at the Anglo-Australian mining giant Rio Tinto Group, which has operations in more than 30 countries. A report commissioned by the company from an outside expert paints a dismal picture of workplace culture in its mines and other facilities around the world.

Elizabeth Broderick, Australia’s former sex discrimination commissioner, conducted an investigation that included a survey completed by more than 10,000 employees as well as more than 100 group listening sessions, 85 confidential individual interviews, and 138 written submissions.

Based on all this, Broderick found that Rio Tinto’s workplace culture is marked by widespread bullying, sexual harassment and racism. She found that the harmful behavior was not limited to the male-dominated manual workforce. Managers, including those at senior levels, often tolerated the behavior or even demonstrated it themselves.

Among the most disturbing findings was that 21 female employees reported experiencing actual or attempted rape or sexual assault during the past five years.

High percentages of the employees had not reported the various forms of mistreatment, believing either that their concerns would not be taken seriously or that they might face repercussions for filing a complaint. Broderick writes: “Employees believe that there is little accountability, particularly for senior leaders and so called ‘high performers’, who are perceived to avoid significant consequences for harmful behaviour.”

In a company press release about the report, CEO Jakob Stausholm stated: “I feel shame and enormous regret to have learned the extent to which bullying, sexual harassment and racism are happening at Rio Tinto.” The implication was that the revelations came as a surprise, thus making management somewhat less culpable.

Yet Stausholm and other senior executives must have been well aware of the problems for some time. The Broderick report was commissioned in response to previous revelations, such as those that emerged from a West Australia parliamentary inquiry last year.

Moreover, Rio Tinto does not exactly have an unblemished track record when it comes to the treatment of employees or the communities in which it operates. Mining industry critic Danny Kennedy once called the company—a frequent target of criticism over its policies relating to the environment, labor relations, and human rights—“a poster child for corporate malfeasance.”

In the area of human rights, Rio Tinto’s sins include having operated a uranium mine in Namibia, in violation of United Nations decrees, during a period in which apartheid-era South Africa still occupied the country. It has also been accused of abuses at mines in Indonesia and Papua New Guinea. A lawsuit was filed against Rio Tinto in the United States under the Alien Tort Claims Act, alleging that the company colluded with local authorities in Papua New Guinea to violently suppress protests. It was ultimately dismissed.

In 2020 Rio Tinto’s then-CEO Jean-Sebastian Jacques was pushed out after shareholders demanded he face more serious consequences in the wake of a decision to destroy ancient rock shelters in Australia’s Juukan Gorge that were sacred to two Aboriginal groups.

The question now surrounding Rio Tinto is whether it will see the Broderick report as more than a public relations problem to overcome and make meaningful changes throughout its operations, including the policies adopted by those at the top.

Fronting for Rogue Corporations

Only days before the world gathers in Glasgow to discuss the climate crisis, Greenpeace has leaked a trove of documents suggesting that some countries are coming to that gathering with sinister motives. According to the environmental group, several leading coal, oil, beef and animal feed-producing nations are trying to water down the International Panel on Climate Change’s findings to protect their domestic industries.

Among the countries said to be involved are Saudi Arabia, Australia and Brazil. It seems clear these efforts reflect not only the inclinations of their political leaders but also the interests of major corporations headquartered in those nations.

Saudi Arabia is, of course, the home to the Saudi Aramco—one of the world’s largest oil and gas producers and thus one of the biggest contributors to greenhouse gas emissions. Australia is the home to mining companies such as BHP Group, the world’s largest producer of coal. Brazil is the headquarters of meat-producing giant JBS.

Along with their outsized role in CO2 emissions, these companies damage the environment in other ways and have run afoul of regulatory requirements. Take the case of Saudi Aramco. As documented in Violation Tracker, its U.S. subsidiary Motiva Enterprises has racked up more than $170 million in penalties over the past two decades for violations of the Clean Air Act and other environmental laws. In addition to cases brought by the EPA, Motiva has been the target of lawsuits and enforcement actions by attorneys general and environmental regulatory agencies in states such as Texas and Louisiana.

In its U.S. operations, BHP has been cited for violations both by the EPA and by the Bureau of Safety and Environmental Enforcement, the federal agency that oversees offshore oil and gas drilling. It has also paid fines to environmental agencies in Louisiana and Arkansas.

JBS, which has taken over several major beef and poultry producers in the United States, has been cited 59 times for environmental violations, paying a total of $5.6 million in penalties. Earlier this year, its Pilgrim’s Pride poultry subsidiary pleaded guilty and was been sentenced to pay approximately $107 million in criminal fines for its participation in a conspiracy to fix prices and rig bids for broiler chicken products.

JBS will also show up in Violation Tracker UK, which will be launched next week. Its Moy Park Limited subsidiary has been fined over £1.2 million since 2010, most of which came from workplace safety violations but also included £82,000 in nine environmental cases.

These examples suggest that the behind-the-scenes efforts of Saudi Arabia, Australia and Brazil are not just a matter of differences in climate policy. By resisting stronger controls on greenhouse gas emissions, these countries are serving the interests of corporations that repeatedly violate environmental regulations and other laws that serve the public good.

Note: Violation Tracker UK will go public on October 26. It will contain information on more than 60,000 cases brought by over 40 UK regulators such as the Environment Agency and the Health and Safety Executive. The database aggregates cases linked to more than 650 parent corporations based in the UK and over 30 other countries.

The Corporate Crook Conquest of the Executive Branch

It appears that the Trump Administration will not rest until every last federal regulatory agency is under the control of a corporate surrogate. The reverse revolving door is swinging wildly as business foxes swarm into the rulemaking henhouses.

Among the latest predators is Alex Azar II, who was just nominated by Trump to head the Department of Health and Human Services, a position Tom Price had to vacate amid the uproar over his excessive use of chartered jets for routine government travel. Until earlier this year Azar was the president of the U.S. division of pharmaceutical giant Eli Lilly.

Azar apparently shares Price’s abhorrence of the Affordable Care Act, but he also brings the perspective of a top executive for a drug company with a particularly sordid track record. For the past 40 years Lilly has been embroiled in a series of scandals involving unsafe products and the marketing of drugs for unapproved uses. Among the many cases were some that involved criminal charges.

In 1985 Lilly pleaded guilty to charges that it failed to notify federal regulators about deaths and illnesses linked to Oraflex. The company’s former chief medical officer entered a plea of no contest to similar individual charges. A Justice Department report put the number of deaths the company had covered up at 28.

In 2009 the U.S. Justice Department announced that Lilly had agreed to pay a $515 million criminal fine as part of the resolution of allegations relating to the illegal marketing of its schizophrenia drug Zyprexa.

The company has also faced bribery allegations. In December 2012 the U.S. Securities and Exchange Commission announced that Lilly would pay a total of $29.4 million to resolve charges that some of its subsidiaries violated the Foreign Corrupt Practices Act by making improper payments to win business in Russia, Brazil, China and Poland.

Violation Tracker’s tally on Eli Lilly amounts to $1.49 billion in penalties since 2000.

Meanwhile, the Senate has confirmed (along party lines) the Trump Administration’s nomination of coal mining executive David Zatezalo to head the Mine Safety and Health Administration. For seven years Zatezalo served as chairman of Rhino Resource Partners, where he clashed with MSHA over the company’s safety problems. The agency issued two rare “pattern of violation” warnings against the company. Violation Tracker contains 160 cases involving Rhino with total penalties of more than $2 million.

And given the headlong rush by Congressional Republicans to pass their tax legislation, it should be noticed that the Trump Administration’s interim head of the Internal Revenue Service (following the resignation of John Koskinen, who had been named by Obama) is David Kautter, who spent most of his career at the accounting firm Ernst & Young, which now prefers to be called EY.

Kautter was in charge of the tax compliance department at Ernst, which to a great extent meant helping clients dodge their fiscal obligations. In 2013 the firm had to pay $123 million to settle federal criminal charges of wrongful conduct in connection with illegitimate tax shelters (it was offered a non-prosecution agreement).

The phrase regulatory capture used to refer to tendency of agencies to gradually become more sympathetic to the needs of the industries they were supposed to oversee. Under Trump that process has been accelerated, with regulatory posts being given to individuals who are already corporate insiders or shills for the worst the business world has to offer. More than regulatory capture, it is the corporate crook conquest of the executive branch.

The Corporate War on Coal Miners Continues

The signing ceremony for Donald Trump’s executive order nullifying the climate initiatives of the Obama Administration was staged so that about two dozen miners looked on adoringly as the president claimed to be ending the so-called war on coal. Trump then repeated his promise that the regulatory rollbacks would “put our miners back to work.”

Just about every analysis concludes this is a hollow promise. Trump’s action will have little impact on the long-term decline of coal industry jobs. Even industry figures such as Robert Murray, CEO of Murray Energy, are warning: “He can’t bring them back.”

And even if there is a modest improvement, it won’t include the kind of well-paying jobs that used to characterize coal mining. According to the latest annual report on coal from the U.S. Energy Information Administration, unionized underground mining jobs are now outnumbered three to one by non-union surface mining jobs. The executive order’s lifting of the freeze on federal coal leasing, which is concentrated in Western surface mines, will increase the gap.

This did not happen by accident. The coal industry has been seeking for years to weaken the United Mine Workers by shifting work to non-union operations or by spinning off UMW-represented mines as weak stand-alone companies. The industry’s biggest producer, Peabody Energy, did this in 2007 when it shed Patriot Coal, which subsequently declared bankruptcy and was given court approval to slash wages, pensions and healthcare benefits of its workers and retirees. Today Peabody has only one operation left with a UMW presence. Anti-union animus was pronounced at various companies — especially Pittston and Massey Energy — that merged into what is now called Alpha Natural Resources.

One consequence of de-unionization is that coal managers can more easily cut corners on safety. This was seen at Peabody more than three decades ago. In 1982 the company pleaded no contest and paid a penalty of $130,000 to settle federal charges that it falsified dust-sampling reports submitted to the Mine Safety & Health Administration (MSHA) as part of the monitoring of conditions that can cause black lung disease. In 1991, after a year-long investigation by MSHA, Peabody once again stood accused of tampering with coal-dust test results. It pleaded guilty to criminal charges and was fined $500,000, the largest penalty that had ever been assessed for a non-fatal violation of federal mine safety regulations.

In 2006 a dozen miners died in a methane gas explosion at the Sago Mine in West Virginia operation, which had been cited by MSHA for “combustible conditions” and “a high degree of negligence.” During 2005 the mine (then run by International Coal Group, which later merged into Arch Coal) had received more than 200 violations, nearly half of which were serious and substantial.

Allegations of poor safety practices at a non-union mine surrounded an even worse disaster — the death of 29 miners at Massey Energy’s Upper Big Branch operation in West Virginia in 2010. The mine had been cited more than 50 times by MSHA in the month before the explosion and had racked up 1,342 violations over the previous five years. In 2011 Alpha Natural Resources, which bought Massey after the accident, had to pay $209 million to settle federal criminal charges.

If Trump really wanted to do something to help coal miners, he would beef up MSHA’s enforcement capacity and embrace labor law reforms that would help the UMW regain lost ground. Instead, he is proposing a 21 percent cut in the budget of the Labor Department, of which MSHA is a part, and staying silent on the anti-worker practices of the coal companies he is so eager to assist.

Corporate Criminals and Public Office

Donald Trump’s candidacy is based to a great extent on the notion that a successful businessman would make an effective President. Democrats have shot holes in Trump’s claims of success, but they have not done enough to attack the underlying claim that private sector talents are applicable to the public realm.

The conflation of business and government acumen is all the more dangerous at a time when the norm in the corporate world is increasingly corrupt. The observation by Bernie Sanders during the primaries that “the business model of Wall Street is fraud” applies well beyond the realm of investment banking. Have those calling for government to operate more like business been paying attention to Wells Fargo, Volkswagen and EpiPen-producer Mylan?

It used to be that the main threat was that unscrupulous corporations would use investments in the political and legislative process to bend policymaking to favor their interests. Trump has shown that a corporate miscreant can use a pseudo-populist platform to try to take office directly.

Trump is not unique in this regard. Take the case of West Virginia, where a controversial billionaire coal operator is leading the polls in the state’s gubernatorial race. Jim Justice brags that he is a “career businessman” not a career politician, yet that career includes racking up some $5 million in fines imposed by the Mine Safety and Health Administration, according to Violation Tracker. To make matters worse, NPR and Mine Safety News reported in 2014 that Justice resisted paying these fines. An NPR update says that $2.6 million in MSHA fines and delinquency penalties remain unpaid even as the Justice mining operations continue to get hit with more safety violations.

On top of this, NPR estimates that the Justice companies face more than $10 million in federal, state and county liens for unpaid corporate income, property and minerals taxes. About one-third of the total is owed to poor West Virginia counties. Like Donald Trump, Justice has failed to follow through on charitable commitments yet has managed to pump several million dollars into his campaign.

Did I mention that Justice is the Democratic candidate? He is not, however, supporting Hillary Clinton though he is tight with conservative Democrat Sen. Joe Manchin. Justice’s Republican opponent is state senate president Bill Cole, whose super PAC received a $100,000 contribution from a super PAC funded by the Koch brothers. This was after Cole spoke at the Koch’s private conservative donors conference in Palm Springs last February, reportedly using his remarks to emphasize his commitment to getting a “right to work” law passed in West Virginia. While in the legislature Cole has also been cozy with the American Legislative Exchange Council and has pushed the crackpot supply-side economic prescriptions of Arthur Laffer. Cole is also an enthusiastic supporter of Trump.

It is difficult to know which is worse: a candidate in the pocket of unscrupulous corporate special interests or one who is himself one of those corporate miscreants. It is troubling to think that our elections increasingly come down to such an untenable choice.

A Struggling Arch Coal Deserves Little Sympathy

archcoal Arch Coal recently became the latest and largest coal producer to seek protection in Chapter 11. The company has also lost its listing on the New York Stock Exchange. Arch vows to go on operating but faces a very uncertain future.

It’s difficult to summon much sympathy for Arch or its struggling competitors. While its workers deserve a just transition to new livelihoods, Arch deserves to fade away. The main reason, of course, is the coal industry’s outsize contribution to the climate crisis, but a look at Arch’s track record shows a string of other major negative impacts.

Pollution. Arch’s first big environmental controversy occurred in 1996, when a massive mine waste spill at the operations of its Lone Mountain subsidiary in Virginia contaminated 30 miles of rivers and streams, killing thousands of fish. The company was hit with a $1.4 million state fine, one of the largest in Virginia’s history.

Arch also became a bigger target for environmental activists when it escalated its involvement in mountaintop-removal mining in Appalachia. It took advantage of the Bush Administration’s support for the controversial practice and resisted when the Obama Administration moved to tighten the rules. In 2010 an Arch subsidiary sued the Environmental Protection Agency over the planned revocation of a permit for a large mountaintop project in West Virginia that the agency decided would do irreversible damage to the environment. The EPA stood its ground, and when the revocation for the Spruce No.1 Mine was formally announced, Arch said it was “shocked and dismayed” and charged that the decision “will have a chilling effect on future U.S. investment.” Arch took the case all the way to the Supreme Court and was rebuffed at every stage.

In 2011 the EPA and the Justice department announced that Arch would pay $4 million to settle alleged violations of the Clean Water Act in Kentucky, Virginia and West Virginia. As part of the settlement, Arch was required to take steps to prevent an estimated two million pounds of pollution from entering waterways, including the implementation of a system to reduce selenium discharges. That same year, Arch paid $2 million to settle a lawsuit brought environmental groups over the selenium issue in West Virginia.

In 2015 Arch had to pay another $2 million to the federal government to settle similar alleged violations by 14 subsidiaries connected to its International Coal Group operations in five states.

Federal Leasing. Arch is one of a handful of companies taking advantage of a non-competitive program that allows coal operators to lease federal land at below-market rates. A 2012 report by the Institute for Energy Economics and Financial Analysis estimated that over 30 years the Treasury lost $28.9 billion in revenue from the failure to obtain fair market value for the coal extracted from the Powder River Basin of Wyoming and Montana, the country’s largest coal-producing region. A report released by the U.S. Government Accountability Office in 2014 also found a pattern of undervaluing coal leases, as did a 2015 report by Headwater Economics estimating that two reform options would have generated additional revenue ranging from $850 million to $5.5 billion for the 2008-2012 period.

In 2014 the Western Organization of Resource Councils and Friends of the Earth filed a lawsuit asking that the Interior Department’s Bureau of Land Management be required to prepare a comprehensive environmental impact review of the federal leasing program. The last time such an assessment was done was in 1979. Arch’s Chapter 11 filing came just days before the Obama Administration announced the suspension of new federal coal leases.

Mine Safety. A 2003 inspection of Arch Coal’s Black Thunder mine in Wyoming by the federal Mine Safety and Health Administration resulted in more than 50 violations. Two miners had been killed at the massive operation in the previous 12 months. In 2015 MSHA issued an imminent danger order at Black Thunder.

There have been other fatalities at Arch operations, including one at a Kentucky mine in 2013 that MSHA found had occurred after the company knew of a significant danger but failed to take proper precautions.

The most serious accident associated with Arch was the 2006 disaster at the Sago Mine run by a subsidiary of International Coal Group, which became part of Arch in 2011. Twelve miners died in a methane gas explosion at the West Virginia operation, which had been cited by MSHA for “combustible conditions” and “a high degree of negligence.” During 2005 the mine had received more than 200 violations, nearly half of which were serious and substantial. Investigations of the accident by the state and the company suggested that lightning had set off the explosion, whereas a United Mine Workers report concluded that sparks generated by falling rocks inside the mine were the cause.

According to the Violation Tracker database, Arch’s current operations have been fined a total of more than $6.4 million by MSHA since the beginning of 2010.

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Note: This post is drawn from my new Corporate Rap Sheet on Arch Coal, which can be found here.

Big Coal’s War on Its Workers

helmets_wide-b8e68ac63c226846ea9705fcf6fc13535c1b2b2e-s800-c85 Fossil-fuel apologists have accused the Obama Administration of waging a war on coal in its effort to cut power plant greenhouse gas emissions. Yet the main source of the industry’s distress is the energy market, and the real war is the one coal companies have for years carried out against the health and safety of its workforce.

There’s no doubt that Big Coal is in trouble. One of the industry’s largest players, Alpha Natural Resources, recently filed for Chapter 11 bankruptcy protection, following the path taken by competitors such as James River Coal, Walter Energy and Patriot Coal. Financial weakness prompted the delisting of Alpha and Walter Energy from the New York Stock Exchange. Industry leader Peabody Energy has seen its share price tumble even before the current market tumult. It is now trading at around $2 a share, compared to $70 in 2011.

Given the outsize role played by coal in the climate crisis, it is difficult to work up much sympathy for the industry in its time of trouble. While it is tempting to simply let the dirty industry shrink towards disappearance, there needs to be a just transition for those who have risked their lives extracting the fossilized carbon from the ground.

The magnitude of that risk has been made clear to me recently in the preparatory work I’ve been doing for the Violation Tracker database my colleagues and I at Good Jobs First will release this fall. The initial version will cover penalties imposed by agencies such as the Environmental Protection Agency, the Occupational Safety & Health Administration and, most relevant to the current discussion, the Mine Safety & Health Administration.

Based on preliminary results, it now appears that coal mining companies will turn out to be among the corporations with the largest aggregate federal environmental, health and safety penalties during the past five years. The largest mining offender is Alpha Natural Resources, whose penalty tally will top $100 million.

That reflects the fact that Alpha is now home to two of the most controversial firms in U.S. mining history: Pittston Coal and Massey Energy. Pittston had a long record of environmental and safety violations before its operations were used in the creation of Alpha in 2002, but even more notorious was Massey, which was responsible, among other things, for the 2010 Upper Big Branch mining disaster in West Virginia that took the lives of 29 workers, the most fatalities in a U.S. coal accident in 40 years. In the wake of that disaster, which an independent report attributed to management failures, Alpha agreed to purchase Massey. We thus attribute Massey’s violations to it.

At least 20 other coal mining companies will show up in Violation Tracker with $1 million or more in total penalties. The largest amounts, in excess of $30 million each, will be linked to Murray Energy, whose head Robert Murray has vowed his firm will be the “last man standing” in the coal industry, and Patriot Coal.

Patriot, a spinoff from Peabody Energy, is a prime example of the vindictiveness of the coal industry toward miners. Its Chapter 11 filing earlier this year was its second in three years. In both cases the company has tried to use the bankruptcy court as a way to undermine its contractual commitments to United Mine Workers members and retirees, especially with regard to pension and health plan contributions. Its current move against worker benefits comes as the company, which is trying to sell off its assets, is awarding more than $6 million in executive bonuses.

A repeated health and safety violator and a raider of worker benefits. It’s hard to imagine anyone will be sad to see Patriot disappear.

Getting Even Tougher on Corporate Crime

blankenship West Virginia’s coal country is not very fond of the Environmental Protection Agency these days, but another part of the federal government — the Justice Department — is viewed more sympathetically.

The reason is that Don Blankenship, the most reviled man in the state, is being prosecuted. A federal grand jury recently handed up an indictment with four criminal counts against Blankenship (photo), the former CEO of Massey Energy, for conspiring with other managers to violate safety laws on a massive scale, thereby creating the conditions that led to the 2010 Upper Big Branch disaster, in which 29 miners were killed.

It is a rarity for criminal charges to reach the CEO level, and if any chief executive deserves such special treatment, Blankenship is the one. The indictment paints a picture of a manager who was utterly contemptuous of federal safety regulations and thus of the safety and well being of his employees. He is said to have called the use of workers for safety compliance “ridiculous” and “crazy.”

What’s really crazy is that Blankenship is not facing even more serious charges. He could theoretically spend as much as 31 years in prison, but if convicted he would likely serve much less time. The indictment makes a compelling case for the conspiracy charges, but they also detail activity that could easily be construed as homicide or at least negligent homicide. In fact, back in 2010 there were calls for Blankenship to be charged with murder.

Blankenship is emblematic of a type of business misconduct that brings about serious harm or even death to workers, consumers or the general public. This kind of brazen corporate behavior originated in the 19th Century and persisted in the 20th, especially in industries such as tobacco and asbestos. A new investigation by the Center for Public Integrity documents steps by the petroleum industry beginning in the late 1940s to suppress evidence linking benzene, an ingredient in gasoline, to leukemia.

It was not long ago that business apologists were claiming that such egregious cases of corporate irresponsibility were a thing of the past. We were made to believe that Big Business had cleaned up its act and was now taking the lead in promoting ethical and sustainable practices.

That notion took a beating in 2010, which saw not only the Upper Big Branch explosion but also the Deepwater Horizon disaster in the Gulf of Mexico brought about by the negligence of BP, Transocean and Halliburton.

This year corporate wrong-doing is once again in full bloom. At the center of it has been General Motors, the company whose dangerous Corvair compact gave rise to the modern public interest movement. Fifty years later, the new, post-bankruptcy GM is again facing charges of endangering lives through foolish cost-cutting measures.

GM, however, is not alone this time. We’re seeing negligent behavior by other automakers, including the Japanese, and now a scandal is growing over the practices of airbag supplier Takata, which is alleged to have covered up evidence that its products were rupturing and spewing metal debris at drivers. Now the company is resisting calls in the U.S. for a nationwide recall.

For a long time, the discussion on business misconduct has focused on the need to bring criminal charges against top executives. That’s a worthy goal, but we need to give more attention to the nature of the charges. A CEO who has knowingly placed human lives in danger should be prosecuted as toughly as street criminals who do the same. Potential penalties along the lines of life imprisonment may be the only thing that can deter the Don Blankenships of the world.

Paying for Protection from Protests

grasberg_mine_11 Responding to pressure from groups such as the International Corporate Accountability Roundtable, the Obama Administration has just announced that the United States will finally adopt a national action plan on combating global corruption, especially when it involves questionable foreign payments by transnational corporations that serve to undermine human rights. The White House statement notes that “the extractives industry is especially susceptible to corruption.”

True that. In fact, U.S.-based mining giant Freeport-McMoRan is an egregious case of a company that is reported to have made extensive payments to officials in the Indonesian military and national police who have responded harshly to popular protests over the environmental, labor and human rights practices of the company, which operates one of the world’s largest gold and copper mines at the Grasberg site (photo) in West Papua. There have been reports over the years that the U.S. Justice Department and the Securities and Exchange Commission were investigating the company for violations of the Foreign Corrupt Practices Act, but no charges ever emerged.

Here is some background on the story: Freeport moved into Indonesia in 1967, only two years after Suharto’s military coup in which hundreds of thousands of opponents were killed. The company developed close ties with the regime and was able to structure its operations in a way that was unusually profitable. Benefits promised to local indigenous people never fully materialized, and the mining operation caused extensive downstream pollution in three rivers.

Until the mid-1990s these issues were not widely reported, but then Freeport’s practices started to attract more attention. In April 1995 the Australian Council for Overseas Aid issued a report describing the oppressive conditions faced by the Amungme people living near the mine. It also described a series of protests against Freeport that were met with a harsh response from the Indonesian military. A follow-up press release by the Council accused the army of killing unarmed civilians. An article in The Nation in the summer of 1995 provided additional details, including an allegation that Freeport was helping to pay the costs of the military force.

In November 1995, despite reported lobbying efforts on the part of Freeport director Henry Kissinger, the Clinton Administration took the unprecedented step of cancelling the company’s $100 million in insurance coverage through the Overseas Private Investment Corporation because of the damage its mining operation was doing to the tropical rain forest and rivers (the human rights issue was not mentioned).

The company responded with an aggressive public relations campaign in which it attacked its critics both in Indonesia and abroad. Freeport also negotiated a restoration of its OPIC insurance in exchange for a promise to create a trust fund to finance environmental initiatives at the Grasberg site. Within a few months, however, Freeport decided to give up its OPIC coverage and proceeded to increase its output, which meant higher levels of tailings and pollution.

The criticism of Freeport continued. It faced protests by students and faculty members at Loyola University in New Orleans (where the company’s headquarters were located at the time) who called attention both to the situation in Indonesia and to hazardous waste dumping into the Mississippi River by Freeport’s local phosphate processing plant. Another hotbed of protest was the University of Texas, the alma mater of Freeport’s chairman and CEO James (Jim Bob) Moffett and the recipient of substantial grants from the company and from Moffett personally, who had a building named after him in return.

After its ally Suharto resigned amid corruption charges in 1998, Freeport had to take a less combative position. The company brought in Gabrielle McDonald, the first African-American woman to serve as a U.S. District Court judge, as its special counsel on human rights and vowed to share more of the wealth from Grasberg with the people of West Papua. But little actually changed.

Freeport found itself at the center of a new controversy over worker safety. In October 2003 eight employees were killed in a massive landslide at Grasberg that an initial government investigation concluded was probably the result of management negligence. A few weeks later, the government reversed itself, attributing the landslide to a “natural occurrence” and allowing the company to resume normal operations.

In 2005 Global Witness published a report that elaborated on the accusations that Freeport was making direct payments to members of the Indonesian military, especially a general named Mahidin Simbolon. In an investigative report published on December 27, 2005, the New York Times said it had obtained evidence that Freeport had made payments totaling $20 million to members of the Indonesian military in the period from 1998 to 2004. (A 2011 estimate by Indonesia Corruption Watch put company payments to the national police at $79 million over the previous decade.)

Reports such as these raised concerns among some of Freeport’s institutional investors. The New York City Comptroller, who oversees the city’s public pension funds, charged that the company might have violated the Foreign Corrupt Practices Act.

Back in Indonesia, protests escalated. In 2006 the military responded to anti-Freeport student demonstrations by instituting what amounted to martial law in the city of Jayapura. Around the same time, the Indonesian government released the results of an investigation by independent experts concluding that the company was dumping nearly 700,000 tons of waste into waterways every day. In 2006 the Norwegian Ministry of Finance cited Freeport’s environmental record in Indonesia as the reason for excluding the company from its investment portfolio.

In 2007 workers at the Grasberg mine staged sit-down strikes to demand changes in management practices along with improved wages and benefits. More strikes occurred in 2011. Two years later, more than two dozen workers were killed in a tunnel collapse at Grasberg. Indonesia’s National Commission on Human Rights charged that the company could have prevented the conditions that caused the accident.

Freeport’s questionable labor, environmental and human rights practices continue, yet aside from that OPIC cancellation two decades ago it has faced little in the way of penalties. It remains to be seen whether the new Obama Administration policy changes this sorry state of affairs.

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Note: This piece draws from my new Corporate Rap Sheet on Freeport-McMoRan, which can be found here.