Author: Phil Mattera

By Phil Mattera, Dirt Diggers Digest

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.

By Phil Mattera, Dirt Diggers Digest

Goldman Sachs, which has long prided itself on being one of the
smartest operators on Wall Street, has apparently decided that the best
way to defend itself against federal fraud charges is to plead incompetence. The
firm is taking the position that it is not guilty of
misleading investors in a 2007 issue of mortgage securities because it
allegedly lost money — more than $90 million, it claims — on its own
stake in the deal.

In fact, Goldman would have us believe that it took a bath in the
overall mortgage security arena. This story line is a far cry from the
one put forth a couple of years ago, when the firm was being celebrated
for anticipating the collapse in the mortgage market and shielding
itself — though not its clients. In a November 2007 front-page article headlined “Goldman Sachs Rakes in
Profit in Credit Crisis,” the New York Times reported that the
firm “continued to package risky mortgages to sell to investors” while
it reduced its own holdings in such securities and bought “expensive
insurance as protection against further losses.” In 2007 Goldman posted a
profit of $11.6 billion (up from $9.5 billion the year before), and CEO
Lloyd Blankfein took home $70 million in compensation (not counting another $45 million in
value he realized upon the vesting of previously granted stock awards).
Some bath.

Goldman is not the only one rewriting financial history. Many of the
firm’s mainstream critics are talking as if it is unheard of for an
investment bank to act contrary to the interests of its clients, as
Goldman is accused of doing by failing to disclose that it allowed hedge
fund operator John Paulson to choose a set of particularly toxic
mortgage securities for Goldman to peddle while Paulson was betting
heavily that those securities would tank.

In fact, the history of Wall Street is filled with examples in which
investment houses sought to hoodwink investors. Rampant stock
manipulation, conflicts of interest and other fraudulent practices
exposed by the Pecora Commission prompted the regulatory reforms of the
1930s. Those reforms reduced but did not eliminate shady practices. The
1950s and early 1960s saw a series of scandals involving firms on the
American Stock Exchange that in 1964 inspired Congress to impose
stricter disclosure requirements for over-the-counter securities.

The corporate takeover frenzy of the 1980s brought with it a wave of
insider trading scandals. The culprits in these cases involved not only
independent speculators such as Ivan Boesky, but also executives at
prominent investment houses, above all Michael Milken of Drexel Burnham.
Also caught in the net was Robert Freeman, head of risk arbitrage at
Goldman, who in 1989 pleaded guilty to criminal charges. When players
such as Freeman and Milken traded on inside information, they were
profiting at the expense of other investors, including their own
clients, who were not privy to that information.

During the past decade, various major banks were accused of helping
crooked companies deceive investors. For example, in 2004 Citigroup agreed to pay $2.7 billion to settle such charges
brought in connection with WorldCom and later paid $1.7 billion to former Enron investors. In 2005
Goldman and three other banks paid $100 million to settle charges in connection
with WorldCom.

In other words, the allegation that Goldman was acting contrary to
the interest of its clients in the sale of synthetic collateralized debt
obligations was hardly unprecedented.

What’s not getting much attention during the current scandal is that
in late 2007 Goldman had found another way to profit by exploiting its
clients, though in this case the clients were not investors but
homeowners.

Goldman quietly purchased a company called Litton Loan Servicing, a
leading player in the business of servicing subprime (and frequently
predatory) home mortgages. “Servicing” in this case means collecting
payments from homeowners who frequently fall behind in payments and are
at risk of foreclosure. As I wrote
in 2008, Litton is “a type of collection agency dealing with those in
the most vulnerable and desperate financial circumstances.” At the end
of 2009, Litton was the fourth largest subprime servicer, with a
portfolio of some $52 billion (National Mortgage News
4/5/2010).

Litton has frequently been charged with engaging in abusive
practices, including the imposition of onerous late fees that allegedly
violate the Real Estate Settlement Procedures Act. It has also been
accused of being overly aggressive in pushing homeowners into
foreclosure when they can’t make their payments.

Many of these complaints have ended up in court. According to the Justia database,
Litton has been sued more than 300 times in federal court since the
beginning of 2007. That year a federal judge in California granted class-action status to a group of plaintiffs, but
the court later limited
the scope of the potential damages, resulting in a settlement in which
Litton agreed to pay out $500,000.

Meanwhile, individual lawsuits continue to be filed. Many of the more
recent ones involve disputes over loan modifications. Complaints in
this area persist even though Litton is participating in the Obama
Administration’s Home Affordable Modification Program and is thus
eligible for incentive payments through an extension of the Toxic Assets
Relief Program.

There seems to be no end to the ways that Goldman manages to make
money from toxic assets.  On Wall Street, as in Las Vegas, the house
always wins.

BONUS FEATURE: Federal regulation of business leaves
a lot to be desired, but it is worth knowing where to find information
on those enforcement activities that are occurring. The Dirt Diggers
Digest can help with our new Enforcement
page, which has links to online enforcement data from a wide range
of federal agencies. The page also includes links to inspection data,
product recall announcements and lists of companies debarred from doing
business with the federal government.

By Phil Mattera, Dirt Diggers Digest

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 29 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.

President Obama’s drill-baby-drill (but not quite everywhere) gambit
does not only link him to an environmentally backward policy. It also
will force his Administration to defend one of the most dysfunctional
federal programs in modern history: the Interior Department’s offshore
oil and gas leasing system.

Interior’s Minerals Management Service (MMS) is supposed to collect
royalties from companies drilling in offshore public waters. After new
activity was restricted in the wake of the devastating spill off the
coast of Santa Barbara, California in 1969, the oil industry sought to
make its leases more profitable by pressing for reductions in these
payments.

In the mid-1990s, when energy prices were low, Big Oil got Congress
to expand the “royalty relief” provisions that were already in the Outer
Continental Shelf Lands Act of 1953. Royalties were supposed to return
to higher rates when prices rebounded, but things got complicated.
First, it came to light that MMS had failed to write those
provisions into some 1,000 deepwater leases it signed in 1998 and 1999,
putting into question its ability to collect billions of dollars in back
royalties.

While this was being sorted out, one of the drilling companies —
Kerr-McGee (now part of Anadarko Petroleum) — filed suit challenging the
right of MMS to impose the higher royalties on any leases. The
company’s self-serving arguments found a sympathetic ear in federal
court. Last fall the Supreme Court declined to review an appellate ruling in favor of
the company, thus allowing Anadarko to avoid paying more than $350
million in back royalties. For the industry as a whole, the Court
blocked the Interior Department from trying to collect on a bill that
the Government Accountability Office once estimated
could run as high as $53 billion.

Then there’s the small matter of the wild parties and gifts that
industry representatives lavished on MMS employees in charge of the
agency’s royalty-in-kind program. In September 2008 Interior Department
Inspector General Earl Devaney (now in charge of the Recovery
Accountability and Transparency Board) issued three reports describing gross misconduct at MMS,
including cases in which agency employees were literally
in bed with the industry. Devaney concluded that the royalty program was mired in “a
culture of ethical failure.”

Not all MMS employees were bought off. Some agency auditors came
forward and charged that they had been pressured by their
superiors to terminate investigations of royalty underpayments.

Once the Obama Administration took office, Interior Secretary Ken
Salazar took steps to clean up MMS. Last September he announced plans to terminate the royalty-in-kind
program, whose staffers had been at the center of the sex and gifts
scandal.

For a while it was unclear whether Salazar would tighten up the
remaining royalty programs. In fact, he told the editorial board of the Houston
Chronicle last fall that in some cases he thought drilling
companies should pay even lower royalty rates. He changed his tune this
year, and the Administration is seeking modest increases in royalties and fees.

Yet the entire offshore leasing program still amounts to a giant
boondoggle. Thanks to the federal courts, artificially low royalty rates
are now effectively an entitlement for the drilling industry. Research conducted by the Interior Department
itself suggested that the incentives result in little additional oil
production. Not to mention the environmental risks.

And now, thanks to a dubious calculation that making concessions on
offshore drilling will help prospects for a climate bill, the Obama
Administration is bringing about a major expansion of a program that is
disastrous even if there are no spills. Profit, baby, profit.

(Photo of offshore oil drilling
platform from the National
Energy Technology Laboratory.)

By Phil Mattera, Dirt Diggers Digest

Critics of the $787 billion Recovery Act complain it is not doing
enough to revive the economy, but they rarely ask why the companies
that are receiving stimulus contracts and grants are not hiring more
people. Now one of those recipients is facing a growing controversy
over its employment practices in a case that helps explain why jobs
remain in short supply.

Appliance maker Whirlpool is under fire
from organized labor for its decision to shut down a 1,100-worker
refrigerator plant in Evansville, Indiana and shift the work to a
company factory in Mexico. The announcement
was actually made last August, but it did not get national attention
until recently, when union activists realized that Whirlpool had been given a $19.3 million grant
by the U.S. Department of Energy to develop “smart appliances.” The
funding was part of the Recovery Act’s $4.5 billion pot of money to
encourage the development of the smart transmission grid.

The grant was not directed to the Evansville plant, but unions are
nonetheless indignant that a company engaged in exporting jobs to a
foreign low-wage location is receiving federal aid. The company made
things worse for itself by warning
workers not to participate in a planned protest demonstration featuring
AFL-CIO President Richard Trumka. The union at the plant, IUE-CWA Local
808, has filed an unfair labor practice charge over the warning.

This situation shows the difficulty of using stimulus funds or other
incentives to generate employment at a time when so many large
corporations no longer have an interest in producing things in the
United States.

Consider Whirlpool. For decades its production activities were
almost entirely located in the USA. In the 1980s that began to change
as the company started to focus more on overseas markets. It bought
large shares in the Canadian company Inglis, Mexico’s Vitromatic and
then the European appliance business of the Dutch company Philips. In
1990 Forbes wrote that Whirlpool was “going global — with a vengeance.”

If Whirlpool’s foreign expansion was meant only to meet demand in
foreign markets, that would be one thing. But the company began a
process of reducing its manufacturing in the United States and other
developed countries while increasing it in foreign low-wage havens. One
of its favorite havens was Mexico. In the late 1980s the company closed
numerous U.S. plants and shifted production to Mexican maquiladora
plants. In 1996 the plant in Evansville lost about 265 jobs when some
refrigerator production was moved to Mexico. In 2003 Whirlpool shifted
some production from its facility in Fort Smith, Arkansas to a new
plant south of the border.

The latter move came a decade after a bitter dispute between the
company and the workers in Fort Smith represented by the Allied
Industrial Workers union. In 1989 Whirlpool unilaterally imposed
concessions on members of AIW’s Local 370, prompting the union to
launch a national boycott of the company. In 1991 the head of the local
confronted Whirlpool executives and directors at the company’s annual
meeting, calling on them to abandon their “narrow-minded, shortsighted,
union-busting behavior.” The dispute was not settled until 1993.

In 2006 the Evansville and Fort Smith plants lost a total of about
1,200 jobs to Mexico. Or, in the antiseptic terms of Whirlpool’s press release: “The company also is adjusting its workforce levels at several of its
North American manufacturing facilities to optimize production levels
and take advantage of its expanded manufacturing footprint.”

In other words, the current shutdown plan in Evansville is just the
latest in a series of “adjustments” by which Whirlpool is ridding
itself of decently paid U.S. workers and replacing them with much
cheaper labor abroad. The 1,100 losing their jobs are the remnant of a
Whirlpool workforce in Evansville that back in the early 1970s totaled nearly 10,000. Companywide, 26 of Whirlpool’s 37 production facilities are now located outside the United States.

It did not seem to occur to Whirlpool that there was anything
unseemly about accepting federal stimulus funds at a time when it was
closing a domestic plant. In fact, something similar happened seven
years ago. In 2003, during a period when the downsizing of the
Evansville plant was already under way, the company accepted a $1.3
million grant from the U.S. Department of Energy — via the Indiana
Department of Commerce — to help develop a new manufacturing process
for energy-efficient refrigerators produced in Evansville (source:
Associated Press, February 8, 2003 via Nexis).

Until the federal government is prepared to do something serious
about offshoring, it should at least refrain from giving financial
assistance to firms that engage in the practice, even if the aid is
going to a different part of the company — and even if it is for a
laudable purpose such as promoting energy efficiency. The federal
government now has a (non-public) contractor misconduct database
to help it avoid giving procurement awards to bad actors. Perhaps there
should also be a list of job-exporting companies which would be
ineligible for federal aid until they reaffirm their commitment to
domestic production.

By Phil Mattera, Dirt Diggers Digest

A war of words is raging over the impact of the Obama administration’s $787 billion stimulus program, which is now one year
old. Conservative members of Congress are mounting a relentless assault
on what they see as an abject failure, even as many of them unabashedly
promote and at least implicitly take credit for individual American
Recovery and Reinvestment Act (ARRA) projects in their home districts.

Meanwhile, the office of Vice President Joe Biden has issued a report
insisting that ARRA has created or saved 2 million jobs and has brought
many states back from the brink of fiscal disaster. The stimulus
effort, Biden insists, “is going well.”

The debate boils down to an age-old disagreement between those
opposed to allegedly wasteful social spending and those who believe
government has to reinforce the social safety net during a time of
economic distress.

Both sides are ignoring the fact that ARRA, to a significant degree,
is a rescue plan not just for unemployed workers and struggling state
governments, but also for parts of corporate America. This goes far
beyond the roughly $50 billion in business tax breaks that Republicans
last year insisted be part of the plan.

The Recovery Act represents a big step in the direction of what was
once called industrial policy. Billions of ARRA dollars are being used
by the federal government to encourage the development of new
industries in areas such as renewable energy and health information
technology that are seen as the foundation of future economic growth.
Billions more are being spent on traditional procurement contracts to
boost private-sector activity.

Here are some examples of larger injections of ARRA funds going directly to the corporate sector:

ADVANCED ENERGY MANUFACTURING TAX CREDITS

Hemlock Semiconductor, a joint venture of Dow Corning (itself a joint venture of Dow Chemical and Corning Inc.) and two Japanese companies: $141 million for the production in Michigan of polycrystalline silicon used in solar panels.

Wacker Polysilicon North America LLC, a subsidiary of the German chemical company Wacker Chemie: $128 million for a plant in Tennessee that will produce polysilicon for solar cells.

United Technologies Corporation, the big military contractor: $110 million for new equipment at its Pratt & Whitney plants to help produce more energy-efficient jet engines.

Alstom, the big French power and transportation equipment firm: $63 million for a Tennessee facility that will produce the world’s largest steam turbines for nuclear power plants.

GRANTS FOR DEVELOPMENT OF ADVANCED BATTERIES FOR ELECTRIC VEHICLES

Johnson Controls: $299 million for work on nickel-cobalt-metal battery cells

A123 Systems Inc.: $249 million for work on nano-iron phosphate cathode powder and electrode coatings.

General Motors: $105 million for production of high-volume battery packs for the GM Volt.

“CLEAN” COAL POWER INITIATIVE

American Electric Power Company: $334 million for the development of a chilled ammonia process to capture CO2 at a power plant in West Virginia.

Southern Company Services: $295 million for the retrofitting of a CO2 capture installation at a coal-fired power plant in Alabama.

BROADBAND EXPANSION

ION HoldCo LLC, a partnership led by Sovernet Communications: a $39 million grant to expand fiber-optic broadband in rural areas of upstate New York.

Biddeford Internet Corp. (dba GWI): a $25 million grant to extend a fiber-optic network to rural and disadvantaged parts of Maine.

ENERGY LOAN GUARANTEES

Solyndra Inc.: a $535 million
loan guarantee to support the construction of a commercial-scale
manufacturing facility for cylindrical solar photovoltaic panels.

PROCUREMENT CONTRACTS

Lockheed Martin: $165 million to work on the crew vehicle for NASA’s Project Orion.

Clark Construction Group: $152 million to design and build a new headquarters for the U.S. Coast Guard in Washington, DC.

General Motors: $104 million to supply light trucks, station wagons and alternative fuel vehicles to the General Services Administration.

GlaxoSmithKline: $62 million from the Department of Health and Human Services to do research on the H1N1 flu vaccine.

To this list can be added the thousands of contracts that states
have awarded to private companies to carry out ARRA-funded activities
such as highway repair, school construction and environmental
remediation.

It is surprising that there has been so little debate on the
relative merits of all these projects and programs — as well as on the
wisdom of providing direct subsidies to profit-making entities. Are
these grants, contracts, tax credits and loan guarantees a smart
investment in the future or nothing more than business boondoggles?

With a significant portion of the Recovery Act going to aid
corporations, we also have a right to ask why they are not creating
more jobs with the taxpayer funds they have received. It would also be
helpful to know — though the limitations of ARRA data collection make
this difficult — how good are the jobs that have been created (in terms
of wages and benefits) and whether those jobs are being equitably
distributed among different portions of the population.

If we are ever going to reach any meaningful conclusions about the
whole stimulus endeavor, we’ve got to go beyond tired debates about Big
Government versus the Free Market. Like the bailout of the banks and
the auto companies, ARRA is changing the relationship between the
public and private sectors. Now we need to know whether the new
arrangement is working and who is reaping the benefits.

By Phil Mattera, Dirt Diggers Digest

It would not surprise me if the people who do public relations for
Toyota are flipping through their old scrapbooks to cheer themselves up
amid the worst crisis in the company’s history.

They might be looking longingly at the 2003 Business Week cover story headlined: “Can Anything Stop Toyota: An Inside Look at How It’s Reinventing the Auto Industry.” Or the 2006 New York Times paean entitled “Toyota Shows Big Three How It’s Done.” Perhaps they are going back even further to the 1997 love letter from Fortune: “How Toyota Defies Gravity.”

These days Toyota is instead experiencing the unbearable heaviness
of being exposed as just another unscrupulous automaker that, whether
through incompetence or greed, puts many of its customers behind the
wheel of a deathtrap.

New revelations
that the company knew about the defective gas pedals for years before
taking action are all the more scandalous because Toyota had a
longstanding reputation not only for business prowess but also for
social responsibility.

The company, of course, fostered this image. Its website proclaims:
“Toyota has sought harmony between people, society, and the global
environment, as well as the sustainable development of society, through
manufacturing. Since its foundation, Toyota has continuously worked to
contribute to the sustainable development of society through provision
of innovative and high-quality products and services that lead the
times.”

All big corporations make similar declarations, but Toyota managed
to convince outside observers of its pure heart. Last year the
Ethisphere Institute included the automaker on its list of “the World’s Most Ethical Companies.” Toyota is ranked 14^th
on the “Global 100 Most Sustainable Corporations in the World.” And it
received the highest score among automakers in a 2006 CERES assessment of corporate governance changes adopted by large corporations to deal with climate change.

Toyota’s environmental reputation is not completely unblemished. In 2007 the company incurred the wrath
of green groups for its opposition to an effort to toughen fuel economy
standards in the United States (a stance it modified in response to the
pressure). In 2003 Toyota agreed
to pay $34 million to settle U.S. Environmental Protection Agency
charges that it violated the Clean Air Act by selling 2.2 million
vehicles with defective smog-control computers.

Overall, however, Toyota was regarded as a much more environmentally
enlightened company than Detroit’s Big Three. In fact, its successful
efforts to bring hybrids into the auto industry mainstream made it
something of a corporate hero in green circles. Michael Brune, who was
recently named the new executive director of the Sierra Club, brags that he and his wife have been driving a Prius since 2004.

Toyota’s more laudable stances on sustainability issues did not
prevent it from being completely retrograde when it came to respecting
the collective bargaining rights of its U.S. employees. It has
successfully kept unions out of its heavily-subsidized American plants
and has taken advantage of contingent workers to keep down costs in those operations.

Just as good environmental policies do not automatically lead to
good labor practices, the current safety scandal shows that a company
can be green and totally irresponsible at the same time.  Despite
Toyota’s claim about promoting “harmony between people, society, and
the global environment,” it appears the company put its business
interests ahead of the safety of its customers and others with whom
they share the road.

The automaker’s safety scandal is another indication that voluntary
corporate social responsibility policies go only so far. It is only
through rigorous government regulation, backed by aggressive
environmental and other public interest activism, that major
corporations can be kept honest.

By Phil Mattera, Dirt Diggers Digest

The one redeeming feature of the abominable Supreme Court ruling
on corporate electoral expenditures is the majority’s retention of the
rules on disclaimers and disclosure. While opening the floodgates to
unlimited business political spending, the Court at least recognizes
that the public has a right to know when a corporation is responsible
for a particular message and a right to information on a corporation’s
overall spending.

Writing for the majority, Justice Kennedy states: “The First
Amendment protects political speech; and disclosure permits citizens
and shareholders to react to the speech of corporate entities in a
proper way. This transparency enables the electorate to make informed
decisions and give proper weight to different speakers and messages.”

There’s no question that steps must be taken to mitigate the
Citizens United ruling, whether through changes in corporation law,
shareholder pressure, enhanced public financing of elections, or even a
Constitutional amendment.

Yet while these efforts progress, it is also worth taking advantage
of the Court’s affirmation of the principle of transparency and push
for even greater disclosure than what we have now. Groups such as the
Sunlight Foundation are already moving in this direction.

The effort could begin with pressing the Federal Election Commission
to tighten the existing reporting rules on what are known as “electioneering communications” and to enforce them more diligently.  But that’s not enough.

In the wake of Citizens United, we’ve got to demand more information
on the many ways corporations exercise undue influence not only on
elections but also on legislation, policymaking and public discourse in
general. Now that Big Business is a much bigger threat to popular
democracy, we have to subject corporations to intensive full-body scans
to find all their hidden weapons of persuasion. The following are some
of the areas to consider.

Lobbying. In his State of the Union Address,
President Obama said that lobbyists should be required to disclose
every contact with the executive branch or Congress. That’s fine, but
why stop there? Many corporations do their lobbying indirectly, through
trade associations which disclose little about their sources of
funding. How about rules that require those associations to disclose
the fees paid by each of their members and require publicly traded
companies to disclose exactly how much they pay to belong to each of
their various associations?

Front Groups. Corporations also indirectly seek to
influence legislation and public opinion by bankrolling purportedly
independent non-profit advocacy groups. Such front groups — such as those
taking money from fossil-fuel energy producers to deny the reality of
the climate crisis — do not have to publicly disclose their contributor
lists. Why not require publicly traded companies, at least, to reveal
all of their payments to such organizations?

Union-Busting. Encouragement of collective
bargaining is still, in theory, official federal policy. Yet many
companies violate the principle — and the rights of their workers — by
using corporate funds to undermine union organizing campaigns. The
existing rules on the disclosure of expenditures on anti-union “consultants” are too narrow and not vigorously enforced. That should
change.

These are only a few of the ways that undue political influence and
other forms of anti-social corporate behavior could be addressed
through better disclosure. Yet, as we’ve seen, transparency by itself
does not counteract corporate power unless something is done with the
information.

This came to mind in reading the last portion of the Citizens United
ruling. Not all five Justices in the majority went along with the idea
of maintaining the disclaimer and disclosure rules. Parting with
Kennedy, Roberts, Scalia and Alito, Justice Thomas argued not only that
corporate independent expenditures should be unrestricted, but also
that they should be allowed to take place under a veil of secrecy.

He bases his argument not on legal precedent, but rather on dubious
anecdotal evidence that some supporters of California’s
anti-gay-marriage Proposition 8 were subjected to threats of violence
after their names appeared on public donor lists. Thomas thus suggests
that corporations should be able to make their political expenditures
anonymously to avoid retaliation.

While I am in no way advocating violence, I think activists need to
use the information that becomes public as the result of expanded
disclosure to make corporations pay a price for any attempts to buy our
political system. If we can get them to worry about (non-violent)
retaliation to the point that they limit their expenditures, then we
will have gone a long way toward neutralizing the pernicious effects of
the Citizens United ruling.

By Phil Mattera, Dirt Diggers Digest

After the New Orleans region was struck by Hurricane Katrina in 2005, Wal-Mart scored a public relations coup
by delivering emergency supplies quickly while government agencies
stumbled. Ignoring the fact that the company’s vast distribution
network made the feat relatively easy, awestruck journalists hailed the giant retailer as a “savior” for many of the storm’s victims.

The Behemoth of Bentonville has apparently not been performing any
major logistics miracles for the people of Haiti in the wake of the
recent devastating earthquake. The company is working mainly through
the Red Cross, initially providing $500,000 in cash and food kits worth $100,000.

Although the company’s outlays have apparently increased a bit since its January 13 press release,
the amount is still in the neighborhood of $1 million. To put that
number in perspective, in 2008 Wal-Mart had profits of $22 billion,
which works out to some $2.5 million an hour — every day of the year.

It is hard to be impressed at a commitment of 30 minutes worth of
profits to help deal with a disaster of the magnitude facing Haiti. But
this is not just an abstract issue of generosity.

Over the years, Wal-Mart has earned huge sums from the impoverished nation. Haiti is one of the low-wage countries where garment contractors have
produced the goods that, despite Wal-Mart’s vaunted low prices, can be
profitability sold in its network of Supercenters. It’s been going on
for many years. A 1996 report
on Haiti by the National Labor Committee noted that Wal-Mart was a
major customer of sweatshops paying garment workers as little as 12
cents an hour.

In this time of dire need, Wal-Mart should feel pressure to make a
commitment to the Haitian people of a magnitude comparable to the
wealth it has extracted from the country over the years.

The question of the obligation of a company such as Wal-Mart to a
situation such as Haiti is particularly relevant in light of the
outrageous ruling by the Supreme Court in the Citizens United case.
Thanks to the High Court’s corporate shills, Wal-Mart executives are
probably already fantasizing about the unlimited slush funds they will
have to sway elections and pressure incumbents to do their bidding.

Now is a good time to launch a movement to push corporations to do
something with their money other than buying the political system. The
outpouring of support for Haiti could be the springboard for a campaign
that demands that Wal-Mart — and other major corporations that have
benefited from the country’s cheap labor — provide not a bit of charity
but rather a substantial amount in the form of reparations.

Perhaps the way to start is to call for disclosure of an estimate of
how much value Wal-Mart has extracted from the Haitian people. Rather
than letting the company brag about its pittance of a voluntary
contribution, it would be much more satisfying to see it have to
negotiate an amount that would make a real difference for the country.