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Multinational Monitor's Corporate Rap Sheet
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Shameless: 1995's 10 Worst Corporations
by Russell Mokhiber and Andrew Wheat
1. SHELL Executes A Business Plan
2. BHP Wants To Be Above The Law
3. ADM : Food Stamp King
4. CHIQUITA Top Banana
5. ENRON's Political Profit Pipeline
6. DOW CHEMICAL's Implant Liability
7. JOHNSON & JOHNSON Obstructs Justice
8. 3M : Skipping A Beat?
9. DUPONT's GOA Constrictor
10. WARNER-LAMBERT's Guilty Plea
The corporate crime lobby rioted in Washington, D.C. this year, putting the
torch to law-and-order restrictions on corporate America. Big corporations
with recidivist crime records marched arm-in-arm with accountants and
lawyers, swarming the marbled corridors of power, demanding protection for
corporate and white-collar criminals caught stealing from investors,
polluting the environment or injuring consumers.
When anyone dares challenge these corporate decriminalization and furlough
proposals, their shameless proponents lash out with moral indignation.
At a press conference earlier this year, Corporate lobby poster boy House
Speaker Newt Gingrich was asked why his "Contract with America" addressed
street crime, while ignoring the more damaging corporate crime and violence.
Gingrich said that probably 90 percent of the U.S. population is more
fearful of being "blown away walking into a Seven-Eleven" than of dying from
an occupational disease. "If I go around the country and say, 'vote for us
and there will be no more white-collar fraud,' the average voter would say,
'I don't think he gets it.'"
This public perception is shaped by corporate media and tabloid television
trash, which focus overwhelmingly on street crime. If these media devoted
proportional time to the corporate muggings and homicides that are carried
out through fraud, unsafe products, pollution and occupational accidents and
disease, public perceptions would shift to more accurately reflect reality.
The Federal Bureau of Investigation (FBI) reports that burglary and robbery
combined cost the United States approximately $4 billion a year. In
contrast, white-collar fraud, generally committed by intelligent people of
means, costs 50 times as much -- or $200 billion a year, according to W.
Steve Albrecht, a Brigham Young University accounting professor and
co-author of the book Fraud: Bringing Light to the Dark Side of Business.
The FBI reports approximately 24,000 street crime homicides a year. More
than twice that number -- 56,000 Americans -- die each year on the job or
from occupational diseases such as job-related cancers and brown and black
lung disease. This does not include the health costs to the general public
of corporate pollution.
In their relentless search for campaign funds, Gingrich and many of his
bi-partisan cronies overlook the need to deter crime by enforcing the law
against society's most powerful lawbreakers. Yet, respect for legal
authority is like a fish -- it rots from the head down. Why should street
criminals respect the law when members of Congress give the green light to
corporate America to plunder?
Gingrich says that the time has come to "reestablish shame as means of
enforcing proper behavior." To help balance Gingrich's targeting of shame on
the poor, Multinational Monitor presents the 10 worst corporations of 1995,
to "reestablish shame as a means of enforcing proper behavior" -- in the
boardroom.
1. SHELL EXECUTES A BUSINESS PLAN
Nigeria's military dictatorship hanged nine political dissidents,
including playwright and environmentalist Ken Saro-Wiwa, in November
1995.
The dictatorship was roundly condemned for the executions by human
rights groups and government leaders from around the world -- as was,
to a lesser extent, its business partner Royal Dutch Shell. Saro-Wiwa
led a campaign in Nigeria that accused Royal Dutch Shell of profiting
off 500,000 Ogoni people and polluting their homeland.
In Nigeria, which accounts for 14 percent of Shell's worldwide oil
production, Shell seems to have made its deal with the devil. As Steve
Kretzmann pointed out ["Nigeria's Drilling Fields," Multinational
Monitor, January/February 1995], "oil is the single most important
commodity in Nigeria, and Shell is the backbone of the oil market."
Multinationals that find themselves forming close partnerships with
unsavory regimes often explain failures to cut these profitable ties by
arguing that they are pursuing a "constructive engagement" policy that
benefits the downtrodden and sets a sterling example for the tyrants.
Such a case is difficult to make when a corporation's behavior has been
less than noble and when the downtrodden are determined to throw the
company out.
Shell's deteriorating pipeline infrastructure has spilled oil on Ogoni
land with such regularity that it is difficult to characterize the
spills as accidents. The company's Nigerian operations spilled an
estimated 1.6 million gallons in 27 incidents from 1982 to 1992. The
company says half of the spills in 1992 resulted from sabotage designed
to extort compensation from the company. Ogoni leaders say sabotage is
a factor in very few spills.
Eric Nickson, head of public affairs for Shell International in London,
has visited the company's operations in Nigeria. He acknowledges that
"there are [environmental] problems,"but says, "We're addressing
these."
Since a huge anti-Shell rally on Ogoni land in January 1993 that
congregated thousands of people, hundreds of Ogonis have been killed.
Saro-Wiwa was arrested four times between the 1993 rally and his
execution.
But in the brutal clash between the Nigeria's dictatorship and people,
Shell often comes off looking like an ally of the repressive state.
After soldiers opened fire on a peaceful demonstration against a
contractor laying Shell pipes on Ogoni farm land in April 1993 --
killing one person and wounding 10 -- the general manager of Shell's
Nigeria subsidiary wrote the Governor of Rivers State (himself a former
Shell employee) asking for more pipeline security.
A May 1994 Nigerian military memo noted, "Shell operations still
impossible unless ruthless military operations are undertaken for
smooth economic activities to commence."
Four days after this memo was written, four traditional Ogoni leaders
were murdered by a mob at a rally. Saro-Wiwa was in military custody at
the time, but nine months later he was charged with inciting the riot.
After Saro-Wiwa was executed in November 1995, calls intensified for
Shell to abandon a large liquefied natural-gas project in Nigeria. If
we pull out now, "the project will collapse. Maybe forever. So, let's
be clear who gets hurt if the project is canceled," Shell said in
full-page ads in leading Western papers. "A cancellation would
certainly hurt the thousands of Nigerians who will be working on the
project."
While using a constructive engagement argument to defend its economic
collaboration with Nigeria's dictatorship, Shell advanced a
disengagement policy toward political repression. "There are now
demands that Shell should intervene and use its perceived 'influence'
to have the [Saro-Wiwa] judgment overturned,"says a November 2, 1995
Shell release. "This would be dangerous and wrong. Ken Saro-Wiwa and
his co-defendants were accused of a criminal offense. A commercial
organization like Shell cannot and must never interfere with the legal
process of a sovereign state."
A subsequent Shell release urging Nigeria to grant clemency to the nine
men headed for the gallows came as too little too late.
Shell also made headlines in 1995 when it became the first oil company
to try to dispose of an obsolete off-shore oil platform by a burial at
sea. Shell wanted to sink the 460-foot Brent Spar platform west of
Scotland, but was disabused of plans to convert the Atlantic into a
corporate dump, thanks in large part to a campaign led by Greenpeace
[see "Sparring with Shell," Multinational Monitor, July/August 1995].
An analysis done by Norway-based consulting firm Det Norske Veritas
revealed in October 1995 that Greenpeace and Shell had both
misrepresented the Brent Spar's toxicity. A sampling error convinced
Greenpeace that the rig carried 5,500 tons of oil and oily wax when
there was, at most, 103 tons aboard. Shell estimated that there were
fewer than 20 grams of highly toxic polychlorinated biphenyls (PCBs)
aboard; the new estimate is eight kilograms.
2. BHP WANTS TO BE ABOVE THE LAW
A70-kilometer stretch of the Ok Tedi River in Papua New Guinea (PNG) is
"biologically dead." The weapon of its destruction is the daily dose of
more than 80,000 tons of toxic mining waste that Australian mining
giant BHP has been dumping in the river.
While the destruction of rivers by mining companies is all too
commonplace, what is unusual is the lengths to which BHP, which has
operational control over Ok Tedi Mining Ltd. (OTML), went to try to
immunize itself from resulting legal claims. For generations, the
families of villagers represented in the suit have relied on the river
system for food, water, transportation and recreation, a way of life
that they contend has been harmed by OTML.
The PNG government originally conditioned OTML's permits upon the
company building a dam to contain the crushed rock, cyanide and heavy
metal wastes that the mine was expected to discard at a rate of 80,000
tons a day over its 30-year life span.
After a landslide destroyed a tailings dam that OTML was building,
however, the mine decided to abandon this environmental safeguard.
Exercising the clout that comes with being the source of 30 percent of
PNG federal revenues, OTML got permission to operate without the dam.
By 1991, the Australian Conservation Foundation (ACF) concluded that
the Ok Tedi River system, upon which thousands of people depend, was
"biologically dead."
The Melbourne, Australia law firm of Slater & Gordon filed a lawsuit in
Australia in 1994 against OTML on behalf of land owners downstream from
the mine. The plaintiffs are seeking damages estimated at $1.5 billion
to $2.2 billion, half in compensation for environmental damage to the
river system and the other half in punitive damages to punish the
defendants for alleged deliberate destruction of property down river.
BHP lawyers responded in August 1995 by helping to draft legislation
for the PNG Parliament that would make it a criminal offense to sue
BHP. In September 1995, the Victoria State Supreme Court found BHP in
contempt of court for its part in drafting the legislation.
In early December 1995, the PNG Parliament approved legislation that
would block any future OTML liability and set up a $81,323,000
compensation fund for landowners harmed by OTML's operations. The
legislation would give plaintiffs six months to opt out of the
Australia suit and to seek a settlement under this fund. "The
compensation fund goes nowhere in terms of the damages," says Slater &
Gordon Solicitor John Tuck. This money would be doled out over 15 years
by the provincial government in PNG, "which doesn't exactly have a
great reputation in financial matters," Tuck says.
BHP acknowledges in a company statement that "fish numbers have
decreased" in the river waters "immediately below the Ok Tedi
junction." But the statement says that the fish "remain plentiful and
variety is undiminished" elsewhere in the river system.
"The government of Papua New Guinea enacts laws as to how the Ok Tedi
mine operates," says BHP spokesperson Stedman Ellis. "We have complied
with these laws. This has been recognized by the government of Papua
New Guinea."
3. ADM: FOOD STAMP KING
How does "America's supermarket to the world," which is fighting
allegations of large-scale international price-fixing by a former
executive, preserve its position as the biggest U.S. corporate welfare
recipient even as Congress is removing millions of citizens from social
welfare rolls?
What Decatur, Illinois-based ADM has that less fortunate welfare
recipients lack is the money and savvy to buy political and media
influence. There is no good policy reason to preserve the best-fed U.S.
welfare recipient's place at the public trough. This is the conclusion
of many welfare experts, including James Bovard, a fellow of the
libertarian Cato Institute in Washington, D.C. Bovard's 1995 report,
"Archer Daniels Midland: A Case Study in Corporate Welfare," found that
ADM leads the corporate welfare pack.
"ADM and its chairman, Dwayne Andreas, have lavishly fertilized both
political parties with millions of dollars in handouts and in return
have reaped billion-dollar windfalls from taxpayers and consumers,"
Bovard wrote. "Thanks to federal protection of the domestic sugar
industry, ethanol subsidies, subsidized grain exports, and various
other programs, ADM has cost the American economy billions of dollars
since 1980 and higher prices and higher taxes over that same period."
The Cato report also found that: every $1 of profits ADM earns on
ethanol sales costs taxpayers $30; every $1 of profits ADM earns on
corn sweetener costs consumers $10; the grain-export subsidies that
line ADM's pockets in the name of alleviating Third World hunger have
devastated the economies of recipient nations; and taken together, the
agricultural welfare programs championed by ADM have cost the U.S.
economy at least $40 billion over the past 15 years.
Andreas and ADM do not defend themselves on free-market terms. "There
isn't one grain of anything in the world that is sold in a free
market," Andreas recently told Mother Jones magazine. "Not one! The
only place you see a free market is in the speeches of politicians.
People who are not from the Midwest do not understand that this is a
socialist country." ADM did not return calls from Multinational
Monitor.
In a celebrated whistle-blower case this year, former ADM executive
Mark Whitacre alleged that, having helped itself to a huge slab of the
corporate welfare pie, ADM got greedy and participated in a global
conspiracy involving corporate espionage, technology theft and price
fixing. ADM fired Whitacre in August 1995, accusing him of "the theft
of at least $2.5 million from the company," allegations Whitacre
denies.
Whitacre, a Ph.D. in nutritional biochemistry, joined ADM in 1989 to
run a biochemical division producing lysine, an amino acid supplement
for animal feed. After ADM made a large investment in the product,
lysine prices plummeted. Whitacre alleges that ADM responded by getting
the world's leading lysine makers to fix higher prices.
ADM denies the charges.
4. CHIQUITA'S TOP BANANA
Carl Lindner and his companies are a Political Action Committee (PAC)
piggy bank. The Cincinnati, Ohio billionaire is Chief Executive Officer
(CEO) of Chiquita Brands International and CEO of American Financial
Corp. (AFC), Chiquita's parent corporation.
In 1994, AFC, its subsidiaries and their executives made $580,000 in
so-called "soft money" political contributions, including $275,000 to
the Democrats, $250,000 to the Republicans, and $55,000 to the GOP
Action Committee (GOPAC) that was then run by current Speaker Newt
Gingrich, R-Georgia [see "Gingrich's GOPAC Patrons Take Out A Contract
on America," Multinational Monitor, March 1995].
U.S. law imposes limits on the amount of "hard money" that can be
contributed directly to the campaigns of individual candidates. But
there is no limit on the flow of "soft money" to general party coffers
or to political foundations such as GOPAC.
Around the time of AFC-affiliated soft-money contributions, Chiquita
received major market assistance from leaders of both parties.
In the late 1980s, Chiquita gambled that, with the unification of
Europe's market, the European Union (EU) would terminate banana
preferences for former European colonies, says Chris Parlin, counsel at
Washington, D.C.-based Winthrop, Stimson, Putnam & Roberts, which
represented the Caribbean Banana Exporters Association until recently.
Chiquita phased out its Caribbean production on this mistaken
assumption, says Parlin.
As major banana exporters and signatories of the General Agreement on
Tariffs and Trade (GATT), Costa Rica and Colombia successfully
challenged the EU quota as discriminatory under GATT. But during
Uruguay Round GATT tariff negotiations in December 1993, Colombia and
Costa Rica agreed to drop this dispute. Through a "framework
agreement,"the EU placated the complaining countries by giving them
control of licenses that provide preferential access to part of the EU
banana market. This pacified the trade war with everyone but Chiquita.
Chiquita pushed the United States to file a dispute against Lom
preferences under GATT's new offspring, the World Trade Organization
(WTO). But the U.S. case is weaker than the earlier one because the WTO
has some limited recognition that developing countries are entitled to
certain preferences. More importantly, WTO dispute procedures require a
country with a grievance to have a significant commercial interest in
the matter. "There is no appreciable banana production in the United
States, and relatively few U.S. jobs depend on bananas," says a March
1995 letter to U.S. Trade Representative Mickey Kantor from Belize's
Prime Minister Manuel Esquivel on behalf of the Caribbean Common
Market. In contrast, "The loss of our traditional European banana
markets would be catastrophic" for Caribbean nations, Esquivel wrote.
Going beyond the WTO, Chiquita's political friends brandished
unilateral U.S. trade weapons and tried to torpedo the EU framework
agreement with Colombia and Costa Rica. In August 1994, 12 senators,
including Majority Leader Robert Dole, R-Kansas, petitioned Kantor to
investigate EU banana policies. Two months later, U.S. trade officials
announced an investigation under Section 301 of the Trade Act of 1974.
Kantor issued a preliminary decision that EU banana quotas were
discriminatory in January 1995 and began compiling a "retaliation list"
of European imports for possible sanctions.
But Kantor has not moved fast enough for some recipients of Chiquita
cash. In October 1995, the Journal of Commerce reported that Senator
Dole told Senate Finance Committee Republicans that legislation to open
up the EU banana market was his "top priority" for the sweeping budget
reconciliation bill. Despite Dole's efforts, the banana legislation --
which strips Colombia and Costa Rica of U.S. trade preferences unless
they scuttle the EU framework agreement -- was deleted from the budget
bill.
Why did a U.S. presidential candidate try to make bananas the "top
priority" of a huge bill with controversial Medicaid cuts? One
Dole-banana link is a $100,000 Lindner gift to Dole's now-defunct
Better America Foundation.
Another explanation emanates from Dole's office. "Senator Dole has
taken this position because it is right for America," says a December 5
statement from his office. "To suggest any other reason is totally
absurd." Chiquita did not return Multinational Monitor calls.
Like Shell and Dow Chemical, Chiquita's 10-Worst case is bolstered by
its defendant status in lawsuits related to production and use of the
pesticide DBCP, which has been linked to widespread sterilization of
banana workers.
Between 1965 and 1990, DBCP was produced by Shell, Dow and Occidental
Chemical and widely applied by Chiquita, Standard Fruit and Dole Foods.
These companies have been named in DBCP class action suits on behalf of
more than 10,000 banana workers in 11 developing countries.
The banana worker suits allege that as early as 1961, research by Dow
and the University of California indicated that DBCP is highly toxic
and that its vapors alone can do damage to sperm cells, livers and
kidneys.
"This pesticide was used by virtually every banana worker in the world
for a period of 10 to 15 years,"says Austin, Texas-based lawyer Scott
Hendler, who represents about 3,500 DBCP plaintiffs. Dallas lawyer
Charles Siegel represents approximately 7,000 more workers.
In 1977, the United States banned domestic use of this highly toxic
pesticide -- though not domestic production for export. As a result,
foreign workers continued to inject the pesticide in the ground with a
special tank. In unscrewing it to refill it, they were exposed to
splashes and fumes.
The defendants "may dispute that these guys have been injured, but they
do not dispute that these chemicals can cause these kinds of
[sterilization] injuries,"Hendler says.
5. ENRON'S POLITICAL PROFIT PIPELINE
In early 1995, the world's biggest natural gas company began clearing
ground 100 miles south of Bombay, India for a $2.8 billion, gas-fired
power plant -- the largest single foreign investment in India.
Villagers claimed that the power plant was overpriced and that its
effluent would destroy their fisheries and coconut and mango trees. One
villager opposing Enron put it succinctly, "Why not remove them before
they remove us?"
As Pratap Chatterjee reported ["Enron Deal Blows a Fuse," Multinational
Monitor, July/August 1995], hundreds of villagers stormed the site that
was being prepared for Enron's 2,015-megawatt plant in May 1995,
injuring numerous construction workers and three foreign advisers.
After winning Maharashtra state elections, the conservative
nationalistic Bharatiya Janata Party canceled the deal, sending shock
waves through Western businesses with investments in India.
Maharashtra officials said they acted to prevent the Houston,
Texas-based company from making huge profits off "the backs of India's
poor." New Delhi's Hindustan Times editorialized in June 1995, "It is
time the West realized that India is not a banana republic which has to
dance to the tune of multinationals."
Enron officials are not so sure. Hoping to convert the cancellation
into a temporary setback, the company launched an all-out campaign to
get the deal back on track. In late November 1995, the campaign was
showing signs of success, although progress was taking a toll on the
handsome rate of return that Enron landed in the first deal. In India,
Enron is now being scrutinized by the public, which is demanding
contracts reflecting market rates. But it's a big world.
In November 1995, the company announced that it has signed a $700
million deal to build a gas pipeline from Mozambique to South Africa.
The pipeline will service Mozambique's Pande gas field, which will
produce an estimated two trillion cubic feet of gas.
The deal, in which Enron beat out South Africa's state petroleum
company Sasol, sparked controversy in Africa following reports that the
Clinton administration, including the U.S. Agency for International
Development, the U.S. Embassy and even National Security adviser
Anthony Lake, lobbied Mozambique on behalf of Enron.
"There were outright threats to withhold development funds if we didn't
sign, and sign soon," John Kachamila, Mozambique's natural resources
minister, told the Houston Chronicle. Enron spokesperson Diane
Bazelides declined to comment on the these allegations, but said that
the U.S. government had been "helpful as it always is with American
companies." Spokesperson Carol Hensley declined to respond to a
hypothetical question about whether or not Enron would approve of U.S.
government threats to cut off aid to a developing nation if the country
did not sign an Enron deal.
Enron has been repeatedly criticized for relying on political clout
rather than low bids to win contracts. Political heavyweights that
Enron has engaged on its behalf include former U.S. Secretary of State
James Baker, former U.S. Commerce Secretary Robert Mosbacher and
retired General Thomas Kelly, U.S. chief of operations in the 1990 Gulf
War. Enron's Board includes former Commodities Futures Trading
Commission Chair Wendy Gramm (wife of presidential hopeful Senator Phil
Gramm, R-Texas), former U.S. Deputy Treasury Secretary Charles Walker
and John Wakeham, leader of the House of Lords and former U.K. Energy
Secretary.
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To round out the ENRON story, we include the following from
THE WAR & PEACE DIGEST, April/May 1996, Vol.4, No.1, p.6.
--ratitor
HOW TRANSNATIONALS BUY GOVERNMENTS (AND RULE THE WORLD)
Secret deal by Enron defeats citizens of India
Enron, the Houston-based multinational engineering giant, has
finally triumphed over a year-long, citizen-lead effort to
halt a $2.8 billion gas-fired power plant a hundred miles
south of Bombay in India. Local citizens have demonstrated
violently against the project saying it was overpriced and
would destroy fisheries and coconut and mango trees. They
complained that the company would be "making profits off the
backs of India's poor." New Delhi's Hindustan Times
complained, "It is time the West realized India is not a
banana republic which has to dance to the tune of the
multinationals."
Rashmi Mayur, a leading urban environmentalist and head of
the Bombay-based Global Futures Network, had led the
opposition to the Enron plant on grounds that it would be
disastrous for the economy and ecology of the area, with an
inappropriately expensive, massive, centralized and foreign
controlled enterprise. But early in 1996 the Indian
government officially approved Enron's request to build the
plant. "Even an alliance of new political parties, pledged to
halt the project, ended up being bought by Enron after a
secret meeting with the corporation's senior executives,"
Mayur said bluntly.
He pointed to the case as a grim demonstration that the
transnational corporations have become the "real power of the
Earth; the de-facto governments, operating outside the rule
of law." He said the transnationals were now so rich they
could buy up any government, including the United States
government. "The governments have become merely the
chauffeurs for the transnationals." he claimed. The
transnationals, operating outside any authority, had created
what he described as "the new global anarchy of the
international marketplace."
The United Nations, he said, has proved ineffective in
dealing with the challenge of the transnationals. "The UN is
only a.club; a forum. It can not enforce a judgment against
the actions of the transnationals. Like governments, they can
even walk out of the World Court if they wish."
Environmental Non Governmental Organizations (NGOs) were also
powerless to obstruct the juggernaut of the transnationals.
"It was the same with the French nuclear testing or the
illegal Japanese and Norwegian whaling ." Mayur said. "The
NGO's could do nothing to stop them."
The biggest transnationals, he pointed out, were the
international arms manufacturers feeding the world's arms
bazaars. "That is why the Pentagon is more powerful than any
political party. Its annual $260-billion budget represents
one third of all military spending on the planet. And in some
third world nations, the military budgets are rising by more
than 10% a year."
Mayur is not optimistic that the media, as it presently
exists, can -- or will -- do anything about the transnational
anarchy. "The major media are all controlled by multinational
corporations." However, Mayur sees some encouragement in the
new global communications technology like Internet. He also
points to the global grass roots protest against France
during the recent nuclear tests. "The whole Earth must now
become the grassroots," he said. "Then, and only then, can we
hope for an end to the madness of the nation states and the
transnationals who control them, and look ahead to the coming
unity of humanity."
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6. DOW CHEMICAL'S IMPLANT LIABILITY
John E. Swanson thought Dow Corning Corp. was at the head of the class
in corporate ethics -- until his wife, Colleen, decided that her
silicone breast implants, which were marketed without disclosure of
significant health risks, were the cause of her persistent illness.
Although thousands of women have complained of a variety of implant
problems, including auto-immune disease, hardening of the skin, joint
swelling and chronic fatigue, the Swanson case is different because
John Swanson was a Dow Corning ethics officer who helped design an
ethics program that was hailed as a corporate model. Now, Swanson, who
worked at Dow Corning for 27 years, says that Dow Corning's handling of
the implants controversy was unethical.
The Swanson story is told in the 1995 book Informed Consent: A Story of
Personal Tragedy and Corporate Betrayal -- Inside the Silicone Breast
Implant Crisis by John Byrne. Dow Corning denounces the book as skewed,
saying John Swanson's involvement in it "precludes the possibility of a
fair, accurate and objective evaluation of the controversy." The
company also says that Swanson solicited money in exchange for a pledge
not to write an expos, a charge Swanson denies.
According to Informed Consent, Swanson received a memo in December 1990
that alleged that two company officials were trying to destroy internal
reports showing much higher implant complication rates than had been
acknowledged. The author of the memo, company Medical Director Dr.
Charles Dillon, alleged that a senior Dow Corning attorney asked a
company scientist to destroy all copies of a memo on her research,
which found that 30 percent of women with implants experience problems.
Dillon asked the company's business conduct committee, on which Swanson
served, to investigate "a violation of corporate, professional and
commonly accepted business ethics."
Dow Corning was the leading maker of breast implants and silicone gel.
Having already spent $1 billion defending itself from implant claims,
and with more than 8,000 lawsuits pending against the company, Dow
Corning declared bankruptcy in May 1995 to try to escape liability. Dow
Chemical is a 50 percent owner of Dow Corning.
Many legal experts considered Dow Chemical untouchable in these
lawsuits because it never manufactured breast implants. But in October
1995, a Nevada jury hit Dow Chemical with a $10 million punitive damage
judgment in an implant case. The jury also awarded $4.1 million in
compensatory damages to Charlotte Mahlum, who claimed that her implants
caused severe neurological illnesses.
Mahlum's lawyer, Fred Ellis, a partner in the Boston law firm of
Gilman, McLaughlin & Hanrahan, says that evidence showed that, "Dow
Chemical knew early on about the dangers of liquid silicone and
concealed them from the public."
Dow Chemical has asked the court to set aside the verdict on the
grounds that the evidence did not support the jury's decision. "The
jury was inflamed by plaintiffs' counsels' prejudices, distortions and
exploitation of their emotions," said Dow Chemical General Counsel John
Scriven following the verdict. "We understand that Charlotte Mahlum and
women like her are unwell, but the facts argue against laying the blame
at the door of Dow Chemical," Scriven said. "We never were in the
silicone business. And based on the overwhelming strength of the
scientific and medical evidence, we know silicone breast implants don't
cause disease of any type."
Ellis charges, however, that the two main epidemiological studies Dow
Chemical relied on, the Harvard Nursing Study and a study by the Mayo
Clinic, "do not look at the atypical diseases that these women have."
Ellis also argued that the studies were tainted by conflicts of
interest. "The Mayo study discloses on the front page that it was
funded by the Plastic Surgery Educational Foundation (PSEF)," Ellis
says. Two of the authors of the Harvard Nurses Study "had either agreed
to act as a consultant expert for the defendant manufacturers, or were
actually on the payroll of the manufacturers while they were conducting
the study," Ellis says. During the study, Dow Corning contributed
million of dollars to Brigham and Women's Hospital, the institution
conducting the study.
Terri Hornbach-Torres, a Brigham spokesperson, says the hospital
received $7 million from Dow Corning and that the hospital is
investigating two doctors involved in the study. "The inquiry is
looking at the potential conflict of interest on the part of the
doctors and at their roles as experts for private attorneys
representing silicone breast implant manufacturers and as researchers
involved in research supported by Dow Corning," Hornbach-Torres says.
Silicone breast implants are not the only product linked to Dow
Chemical that can be hazardous to your health. In September 1995,
Greenpeace reported that chlorine-based Dow Chemical products --
including pesticides, solvents and PVC plastics -- constitute the
world's single largest source of dioxins.
Dioxins have been linked to a range of health problems, including
cancers, endometriosis, declining fertility, immune system suppression
and birth defects.
Joe Stearns, Dow's director of environmental affairs for chemicals
dismissed as "totally inaccurate" the claim that Dow is the world's
leading producer of dioxins. "The Environmental Protection Agency, in
their dioxin reassessment indicated that municipal and hospital waste
is the largest [dioxin] source," he says.
7. JOHNSON & JOHNSON OBSTRUCTS JUSTICE
Prosecuting corporate crimes is a time-consuming process that relies
heavily on corporate paper trails. Too often, corporate wrongdoers
attempt to hide evidence of one crime by committing another --
destroying evidence.
Image-conscious Johnson & Johnson Company (J&J), maker of
age-of-innocence products such as J&J baby powder and shampoo, lost its
innocence in January 1995, when a company subsidiary pled guilty to
destroying documents.
Ortho Pharmaceutical Corp., a wholly-owned J&J subsidiary, was fined $5
million and ordered to pay $2.5 million in restitution after pleading
guilty to one count of conspiracy to obstruct justice, one count of
obstruction of justice and eight counts of corruptly persuading
employees to destroy documents.
Ortho employees started destroying documents on the heels of a Food and
Drug Administration (FDA), Department of Justice and grand jury
investigation into a 1985 to 1988 public relations campaign promoting
the use of Ortho's Retin-A to treat sun-wrinkled or "photoaged" skin.
The FDA approved Retin-A in 1971 as an acne treatment but never
approved it to treat "photoaging." Thousands of documents showing how
Ortho coordinated the Retin-A campaign work of outside public relations
firms were destroyed.
"The destruction of documents by a major corporation to thwart a
federal investigation is outrageous misconduct that simply will not be
tolerated," says Frank Hunger, head of the Justice Department's civil
division.
"The company does not believe it violated FDA regulations or guidelines
relating to promotional activities," a J&J statement says. But J&J
Chair and CEO Ralph Larsen says, "The document destruction was
absolutely wrong," adding, it "must never happen again."
In an unrelated incident in October 1995, J&J Consumer Products
division settled Federal Trade Commission charges that it had made
false advertising claims that exaggerated the failure rate of condoms.
The ads promoted the company's spermicidal jelly, K-Y PLUS Nonoxynol-9.
"There was no intent to imply condoms are defective,"a company
statement says.
Asked if the Retin-A and condom incidents suggest a wider company
problem with product misrepresentation, Vice President for External
Communications F. Robert Kniffin says J&J has 160 companies worldwide
advertising all kinds of health-care products. "So, to reach a
conclusion that I there is some trend or pattern is an impossible
stretch,"Kniffin says.
8. 3M: SKIPPING A BEAT?
Earlier this year, 3M claimed a place in the annals of corporate
violence.
In Deadly Medicine: Why Tens of Thousands of Heart Patients Died in
America's Worst Drug Disaster, author Thomas J. Moore argues that
popular heart drugs produced by 3M and other pharmaceutical companies
resulted in the deaths of an estimated 50,000 patients. Tambocor had
the biggest share of the market for this class of drugs.
Deadly Medicine documents how St. Paul, Minnesota-based 3M, anxious to
expand a small foothold in the lucrative pharmaceutical business,
introduced its first major new drug, Tambocor, in 1985. Within two
years, pharmacists were filling thousands of Tambocor prescriptions a
month to treat irregular heartbeats.
In 1989, National Institutes of Health (NIH) clinical trials indicated
that the drug, far from saving heart patients, finished them off,
writes Moore, a senior fellow at George Washington University's Center
for Health Policy Research.
Deadly Medicine argues that the drug industry persuaded thousands of
doctors to prescribe expensive drugs based on the unproved theory that
suppressing mild premature heartbeats would prevent lethal cardiac
arrests. The book also charges that 3M, outside medical experts and
some Food and Drug Administration (FDA) officials knew Tambocor could
kill patients.
Moore says the FDA knowingly allowed expert advisers who had tested the
drugs for the pharmaceutical industry to judge the merits of the same
drugs for the FDA. Two of the FDA's eight outside judges of Tambocor's
safety had worked on the drug for the industry, Moore says.
3M successfully waged a high-pressure campaign to persuade the FDA to
relax safety restrictions on the Tambocor label, despite growing
evidence about the dangers of antiarrhythmic drugs, Moore says.
Asked why these drugs have not spawned a slew of product liability
suits, Moore says it would be difficult to sort out in court which
heart patient died of a heart condition and which died as a result of a
prescription for that condition.
This same class of drugs is still prescribed widely. Moore cites a
physician survey released in March 1995 at the American College of
Cardiology in New Orleans that shows that physicians are ignoring FDA
warnings and the results of a National Heart, Lung and Blood Institute
study. The survey suggests that 30 percent of general practitioners
prescribe this family of drugs for patients with a mild heart rhythm
disturbance called non-sustained ventricular tachycardia.
Marcia Arko, a 3M spokesperson, told Multinational Monitor that no
"knowledgeable" 3M representative was available to discuss Moore's
findings. A prepared company statement says the allegations "have no
scientific merit whatsoever -- they're just plain wrong."
"Tambocor is a highly effective medicine that dramatically improves the
lives of thousands of people," the statement says. "Tambocor has been
thoroughly studied and tested since the mid-1970s by hundreds of
leading heart specialists and 3M scientists. It is approved for use in
more than 50 countries, some for over a decade."
9. DUPONT'S GOA CONSTRICTOR
What did DuPont see in Goa, India? As Gary Cohen and Satinath Sarangi
reported earlier this year ["DuPont: Spinning Its Wheels in India,"
Multinational Monitor, March 1995], DuPont hooked up with the Indian
company Thapar in 1985 to build a $217 million factory to make nylon
6,6 -- a tire ingredient -- in Goa's jungle highlands.
This venture, which was designed to supply Asia's booming tire market,
set out on the wrong foot where community relations were concerned. The
investors had the state Economic Development Corporation take over the
factory site from a cooperative and then lease it to Thapar-DuPont Ltd.
(TDL) in exchange for a state stake in the enterprise.
To address industrial chemical concerns that have been heightened in
India since Union Carbide's Bhopal disaster, TDL made squeaky-clean
claims. A full page ad in a Goa newspaper, for example, proclaimed, "We
will not handle, use, sell, transport, or dispose of a product unless
we can do it in an environmentally sound manner." What the ads did not
say was that DuPont's contract with TDL exempts the U.S.-based parent
company from liability for environmental claims or a Bhopal-style
industrial accident.
Local activists organized the Anti-Nylon 6,6 Citizen's Committee to
take another look at the plant. Activists with the environmentalist Goa
Foundation intercepted an electronic message from DuPont to Goan
project manager Sam Singh that acknowledged that the company had not
taken appropriate measures to ensure four critical types of pollution
control for the plant: groundwater protection, waste water treatment,
solid waste recycling and air pollution control.
Indian activists also acquired information from their U.S. counterparts
about the hazardous chemicals that TDL was planning to use at the Goa
facility and about DuPont's toxic track record in the United States.
After taking a hard look at DuPont, Goans decided that they did not
want the company as a neighbor. They first stormed the construction
site in October 1994. Despite police repression, protests continued
into January 1995, when a bus load of U.S. DuPont officials were met by
protesters, who refused to allow the bus onto the factory site. Police
responded to this confrontation by opening fire, killing 25 year-old
Nilesh Naik. Naik's funeral was held at the factory site. Before his
funeral pyre was lit, someone blew up the factory's electricity
generator.
Finally getting the message, TDL began negotiating to reopen the
factory elsewhere. In June 1995, TDL signed a memorandum of
understanding with the state of Tamil Nadu to relocate the factory near
Madras. Plant director S.N. Krishnan told the Indian paper Frontline
that the new plant would "ensure that 95 percent of the effluents will
be recycled for use by the plant," compared to 70 percent at the other
plant.
Opposition in Tamil Nadu is focusing on environmental concerns as well
as the incentives the state offered the company, including: 150 acres
of land, electricity at one-third the usual industrial rate, a
commitment of one million gallons of water a day and other subsidies
and tax concessions.
In both Tamil Nadu and Goa, opponents of the nylon plant latched onto
DuPont's miserable environmental health and safety record, which
continues to worsen.
In April 1995, the U.S. Occupational Safety and Health Administration
(OSHA) fined DuPont's oil subsidiary, Conoco Inc., $1.6 million after
an investigation of an October 1994 explosion at its Westlake,
Louisiana refinery that killed one worker and hospitalized another.
OSHA alleged that the company failed to: provide required employee
safety training; perform required equipment tests and inspections; and
correct equipment deficiencies. "Although we disagree with the citation
and findings, it is best to put this behind us and move forward,"
Refinery Manager Jim Leigh said in a prepared statement. "We want to
learn from this tragic event I so that events of this type never happen
again."
DuPont is currently facing litigation in connection with company
fungicides that have been alleged to have damaged crops and caused
babies to be born blind.
A case involving a U.S. family that claims that spraying of the DuPont
fungicide Benlate near their home caused their son to be born without
eyes is expected to begin in April 1996. In October 1995, U.S. lawyers
announced that they would bring suit in federal court in Florida on
behalf of families in Scotland who have made similar allegations
involving DuPont fungicides Benomyl and Carbendazim.
DuPont did not respond to Multinational Monitor requests for comment.
DuPont got into trouble this year over a 1993 Benlate case that the
company had settled with growers who alleged that the product killed
their ornamental plants. In August 1995, a U.S. federal district judge
found that DuPont had withheld relevant soil test data from the
plaintiffs.
The judge fined DuPont $115 million. In doing so he said, "Put in
layperson's terms, DuPont cheated. And it cheated consciously,
deliberately and with purpose." A DuPont statement said, "Neither
DuPont, its attorney nor anyone affiliated with DuPont has engaged in
improper conduct."
10. WARNER-LAMBERT'S GUILTY PLEA
Fortune 500 Warner-Lambert Company pled guilty in November 1995 to a
felony count and was sentenced to pay a $10 million criminal fine for
fraudulently failing to notify the federal government about persistent
problems that it had with certain drugs maintaining stable dosages.
Warner-Lambert pled guilty in U.S. District Court in Baltimore,
Maryland to a felony under the Food, Drug, and Cosmetic Act. Federal
officials charged that the company fraudulently failed to report drug
stability failures of the prescription drug Dilantin to the Food and
Drug Administration (FDA).
Diantin is a widely used anti-epileptic medication. The government
alleged that similar violations occurred with the prescription drugs
Parsidol, an anti-Parkinsonism drug, and Euthroid and Proloid, both
thyroid medications.
A grand jury in Baltimore indicted Warner-Lambert's former
vice-president for quality assurance, Allan Doane, on charges of
conspiracy, for having shipped adulterated Dilantin and obstructing FDA
proceedings. If convicted on all charges, Doane faces a maximum
sentence of 19 years imprisonment and a $1.25 million fine.
Federal officials alleged that prior to 1991, Warner-Lambert had
trouble meeting FDA-approved dissolution specifications for Dilantin.
By October 1991, stability test failures had occurred on two different
dosages of Dilantin and company employees met to discuss the test
failures. They determined that the FDA should be notified, but that
decision was reversed by Warner-Lambert executives.
During several discussions with FDA about these other drugs,
Warner-Lambert officials concealed the Dilantin failures. The FDA did
not learn of the Dilantin stability failures until the middle of 1992,
when FDA inspectors uncovered them during inspections of manufacturing
facilities.
As a result of the FDA investigation, in 1993 Warner-Lambert agreed to
a court-ordered injunction regulating the company's testing and
reporting practices. Under terms of the injunction, Warner-Lambert
continues to manufacture Dilantin. The company has discontinued
production of Parsidol, Euthroid and Proloid.
Warner-Lambert spokesperson Jennifer Mann said "no consumer was
injured" by the crime and the guilty plea represents Warner Lambert's
first criminal conviction.
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