December 1990 - VOLUME 11 - NUMBER 12
C O R P O R A T E P R O F I L E S
The 10 Worst Corporations of 1990by Russell Mokhiber
Leaving on of the more rapacious decades in corporate history, one is left to wonder: What have multinational corporations learned? After surveying the ten worst companies of 1990, the answer is clear: not much.
With many governments of the world dependent on big business, corporations can be as nasty as they want to be. And they have been. From hooking kids on tobacco, to pushing untested and risky genetically engineered growth hormones, to intimidating employees who try to speak out against their company's misdeeds, the multinationals are as reckless, immoral and criminal as ever. Citizens concerned about this breakdown in law and order must become increasingly vigilant to protect themselves and their families from the marauding corporate cabal.
Toward this end, we present the Ten Worst Corporations of 1990. The companies presented here are large, multi-billion dollar enterprises headed by white, "well-educated" men. Even the most notorious offenders use slick multi-media advertising campaigns to whitewash their misdeeds.
But don't believe the hype. And don't believe you can't change things. Don't buy the products made by the worst corporations. Pick a high-profile local outlet of one of the ten, and picket it.
Be creative and have fun. But spread the word.
Also, keep your eyes out for corporate crime in your neck of the world. Nominations are now open for the Ten Worst of 1991.
On July 5,1990, a massive explosion at an ARCO Chemical Company refinery near the Houston Ship Channel killed 17 workers and injured five others. According to the Oil, Chemical and Atomic Workers Union (OCAW), the explosion was the result of upper echelon management "placing profits over safety."
The explosion occurred when a treatment tank containing 900,000 gallons of wastewater and chemicals exploded. Five of the dead workers were ARCO employees, 11 worked for Austin Industrial, a company contracted to clean the tanks, and one was an employee of another contractor, Waste Processing, Inc.
Federal officials said that ARCO had been cited for two minor violations in the past.
On January 3, 1991, ARCO agreed to pay $3.48 million in fines to OSHA, the largest dollar-amount settlement in OSHA's history. OSHA fined ARCO $10,000 for each of 347 "wilful" violations (committed with an intentional disregard of, or plain indifference to, the requirements of the Occupational Safety and Health Act) and $11,300 for "serious" violations (in which the company should have known of a substantial probability of an accident resulting in death or serious injury). In addition to paying the fines, ARCO agreed to revamp its safety program at the Channelview plant as well as at three of its other facilities.
Federal and state officials decided not to criminally prosecute ARCO for the seventeen deaths.
"There is a direct association between the lack of preventive maintenance, the substitution of contract labor for skilled, permanent union labor and this accident," said Tony Mazzocchi, secretary-treasurer of OCAW. "The contractors were probably working more than 16 hours straight when [the tank] exploded."
Mazzocchi believes that many other accidents have also occurred as a result of corporate use of contract labor. "The wages are cheaper, you don't pay any fringes, you run them in and out, you have total control over them; people have to do what they're told and they don't have any protection. But you give something up. Contract laborers often don't know what they are doing and are often recruited off the street. You give up a workforce that knows and understands a refinery."
Hundreds of workers have been killed over the past couple of years in the petrochemical industry and thousands more injured. Mazzocchi says that the only way to stem the bleeding is to create safety programs that give all employees, including contract workers, the right to know about hazards in the workplace and the right to act on that knowledge.
While its workers were being killed and injured, ARCO was ripping off the state of Alaska. In September 1990, ARCO settled a decade-old lawsuit by agreeing to pay $287 million in royalties from the production of oil from Alaska's North Slope. The state had charged that ARCO and British Petroleum had fraudulently manipulated oil prices to avoid paying taxes to the state. Alaska had sought punitive damages from ARCO in excess of $100 million.
But just weeks before a trial, wily ARCO lawyers convinced the state to drop the fraud charges and allow ARCO to settle the case without admitting wrongdoing. Richard Fineberg, a former oil and gas policy analyst for Alaska's state management and budget office, denounced the state for dismissing the fraud charges and not disclosing to the public the terms of the settlement. Fineberg is campaigning to overhaul Alaska's system of negotiating disputes with major oil companies, which he contends are kept secret in violation of the public interest.
Fineberg believes that the way in which Alaska settles its royalty disputes with ARCO and other oil companies will lead to repeat performances by the oil companies. "If we fail to demand public acknowledgement that the companies have engaged in royalty reporting and payment practices that are, at different times, inadequate, obstructionist, inaccurate and fraudulent, then by this action we guarantee with near certainty that we will face similar problems in the future," Fineberg said.
It is one thing to be a polluter. Many corporations are polluters. But it is another to seek to intimidate victims of corporate pollution-victims who are seeking to protect themselves from pollution and gain a measure of justice against the offending company. Ashland Oil is a polluting corporation with an intimidating edge.
In Catlettsburg, Kentucky, Ashland runs a giant refinery. Local residents charge that the Ashland operations, including a metals-recovery system, have dumped heavy metals, many of which are carcinogenic and remain unregulated, into the neighboring community. Local residents charge that the chemicals are highly corrosive, cause paint to peel off people's cars and houses and cause skin burns.
Ashland has been running the facility without obtaining the air pollutant permits required by the Kentucky Department of Environmental Protection (DEP). The agency knows that Ashland is polluting the region, but continues to allow the plant to operate. "Given Ashland Oil's history of constructing and operating air contaminant sources without permits," begins one 1988 DEP memo, "I recommend the most stringent penalties available to use in the hope that Ashland Oil will get the message this time."
A second December 1989 DEP memo writer asked a superior to commence legal action against the company "for numerous violations of the Air Quality regulations." The memo asserted that "these violations occurred starting in June 1987 . .. and continue to date. The documentation concerning these violations [is] quite voluminous.... Please take whatever measures allowed by law to impose any and all sanctions and remedies deemed appropriate."
A study sponsored by Vanderbilt University and conducted by a Stanford University medical student found unusually high cancer rates around the Ashland facility. "They just can't run the plant a week without having what they call a malfunction or an upset," according to attorney Rodney Jackson, who represents hundreds of local residents charging that the company has damaged property and health.
In July 1990, a local jury awarded $10.3 million to four residents. Instead of confessing guilt or exhibiting shame, Ashland went on the attack.
Attorneys for the residents charge that following the verdict, the company turned the Catlettsburg area into a "civil war zone" in a campaign to win the support of local businesses, town governments and politicians. Ashland mounted a traditional "good neighbor" public relations effort, including staged rallies, letter-writing campaigns and telephone trees to counter the public impact of the $10.3 million verdict. But at the same time, residents were also bombarded with various forms of harassment, including obscene phone calls, acts of vandalism and other forms of intimidation.
In August 1990, residents, this time on the other side of the Kentucky-West Virginia border, banded together and sued Ashland again. They charged the company with fraud, obstruction of justice and threatening plaintiffs and journalists. Attorneys for the residents called on a Kanawha County, West Virginia court to "supervise and regulate" the conduct of Ashland to prevent the company from "chilling the free litigation of these claims."
"The tactics which defendants are using have gone beyond the permissible bounds of free speech which is protected under the constitution, and such actions warrant court supervision," argued Arnold Levin, an attorney for the residents. "The recent escalation of intimidation tactics requires the intervention of this court to safeguard the rights of the plaintiffs."
Residents charge that Ashland is responsible for a series of acts of harassment against the four individuals awarded the $10.3 million verdict, and for surveillance and harassment campaigns targeting local environmentalists and other prominent supporters of legal action against Ashland.
On December 18, 1989, the West German multinational BASF, the world's second largest chemical corporation, with 130,000 employees and $25 billion a year in sales, settled a five-year labor dispute with Louisiana local 4-620 of the Oil, Chemical and Atomic Workers Union. In June 1984, as part of a worldwide effort to reduce its labor costs, BASF locked 370 union workers out of its Geismar, Louisiana facility and refused to let them work. For the ensuing five and a half years since that infamous date, the union conducted a corporate campaign that effectively portrayed BASF as a despicable corporation in an historically criminogenic industry.
In 1986, OCAW charged BASF with an "apparent coverup" of unsafe conditions that could lead to a Bhopal-like release of toxic materials from its Geismar facility in Ascension Parish, Louisiana. Releases of phosgene, toluene, disocyanate and other toxic chemicals had occurred at the plant, OCAW charged. And by locking out union employees, BASF was "running a complex chemical manufacturing operation with inadequately trained contract workers who are violating critical safety procedures on a regular basis."
Reports of occupational risks and BASF pollution around the world, coupled with a union-led boycott of BASF consumer products, fuelled the corporate campaign and forced the company to rehire the locked-out workers and negotiate a new contract with the union local.
But if what's happening in BASF plants in the Midwest is any indication, BASF has not learned much from its Louisiana experience.
On July 19, 1990, a BASF facility in Cincinnati was rocked by a fatal fire and explosion. The explosion killed two workers, injured 17 others and caused extensive damage to the neighboring community. On November 19, 1990, OSHA issued citations alleging 133 safety and health violations--including 104 wilful violations--against the company for its role in the blast. OSHA proposed fines totalling $1,061,000.
Joseph Kinney, director of the National Safe Workplace Institute, has identified a BASF plant in Detroit, Michigan as another dangerous site. "It's just a disaster waiting to happen," Kinney says. "There have been small problems at the plant and it's just a question of when the big problems will occur. Whistleblowers have talked to me about this plant. They say they think there is a really good chance for an explosion that could kill 300 people."
And while it is readily apparent that BASF doesn't give a damn about its workers or the environment, this year provided evidence that the company doesn't give a damn about its customers. In July 1990, BASF finally settled a claim brought by an Illinois woman who alleged that a chemical detergent manufactured in the 1960s caused her leukemia [see "Deadly Detergents," Multinational Monitor, July/August 1990]. The woman, 23-year-old Fawn Wright, charged that the chemicals in the detergent Loxene, which was used to wash diapers at the Booth Memorial Hospital in St. Louis where she was born, caused her to become gravely ill, required her to have a blood transfusion when she was five days old and caused her current illness, acute myelocytic leukemia. One active ingredient in Loxene: pentachlorophenol, a wood preservative and suspected human carcinogen. BASF removed Loxene from the marketplace in September 1967, less than six months after Wright's birth. Twenty-three years later BASF finally agreed to pay Wright $3.75 million to settle the case.
In August 1987, AFL-CIO President Lane Kirkland and Peter H. Coors, president of Adolph Coors Co., settled a ten-year-old labor dispute. Socially responsible beer drinkers started drinking Coors beer again and conveniently forgot that Coors was still controlled by an anti-environment, anti-women, anti-gay, anti-minority, pro-contra right-wing family.
Joseph Coors, the company's vice president, donated a $65,000 airplane to Lt. Oliver North's operation in support of the Nicaraguan contras. He supports the National Rifle Association with generous gifts. He also is a vocal opponent of the Equal Rights Amendment. In 1984, company chairman William Coors told an assembly of black businessmen that "one of the best things [the slave traders] did for you was drag your ancestors over here in chains." He then added that the descendants of "wetbacks" should be thankful that their ancestors swam the Rio Grande to get to America.
In November 1990, the company joined the ranks of corporate criminals when it pleaded guilty to two criminal misdemeanor counts in Colorado and agreed to pay a total of $650,000 in fines in connection with state charges of contaminating groundwater and failing to report the contamination to regulatory authorities.
The investigation stemmed from chemical releases at the Coors plant in Golden, Colorado. Coors pumps groundwater from dozens of wells beneath and near the plant for both brewing and drinking water. When the company first discovered the contamination in 1981, it stopped using wells located in the contaminated areas for brewing or drinking water. The company continued, however to pump from the wells, redirecting some of the water to the treatment plant and dumping the rest directly into nearby Clear Creek, federal officials reported.
Coors' advertising is dirty too, according to a coalition of public interest and environmental groups. In December 1990, the group awarded Coors an award for one of the year's "most misleading, unfair or irresponsible" advertising campaigns. A Coors advertisement, "The Search for Halloween Headquarters," constitutes "the cooptation of a holiday celebration for kids and its transformation into a drinking holiday, according to the Council on Alcohol and Drug Dependence, Inc.
The London-based multinational giant Rio Tinto Zinc operates 52 mines in 40 countries. In Canada, it has exposed its Denison Mine workers to radioactive exposures seven times higher than are considered safe. In Namibia, it houses its mine workers in appalling conditions in temporary camps and has run its operations in violation of United Nations resolutions on the country long occupied by South Africa. Around the world, from Northern Ireland to New Zealand, RTZ throws its weight around to get what it wants.
It sometimes resorts to violent threats against groups defending indigenous lands from mining operations. An RTZ board member once threatened to "squash Survival International like a fly" if the group didn't get off RTZ's case. [See "Rio Tinto Zinc: The British Mining Monster," Multinational Monitor, April 1990.]
Recently, Kennecott, the United States-based RTZ subsidiary, has been in a brawl with indigenous people in Wisconsin. According to a recent report by Al Gedicks, executive secretary of the Wisconsin Resources Protection Council, Kennecott wants to construct a small, open-pit copper mine near the city of Ladysmith. The mine would sit just 140 feet from the Flambeau River, one of the state's most pristine waterways and a prime walleye fishing area. The proposed mine is also within the territory retained by the Lake Superior Chippewa for fishing, hunting and gathering.
The proposed site of the mine is opposed by a coalition of Wisconsin's six Chippewa bands and grassroots environmental groups. They argue that Native Americans have the right to protect their preserved fishing habitats and that Wisconsin cannot grant a permit to the mine unless Kennecott can prove that its mining activities will not degrade the natural resources in the area.
In 1976, grassroots activists in Wisconsin defeated a similar Kennecott proposal, but now Kennecott has access to RTZ's global resources. Indigenous people fear that the proposed Kennecott facility will open the door for other mining companies to come in and pollute the area. Mining companies have a long history of polluting the nation's waters, and Kennecott is near the top of any list of polluters. Local groups allege that Kennecott's Bingham Canyon Mine in Utah is one of the United States' most polluted sites.
In 1982, James Klausner, then an Exxon lobbyist, told the Wisconsin Manufacturers and Commerce Association that Wisconsin could host up to 10 major metal mines by the year 2000.
Gedicks reports that multinationals have quietly leased over 400,000 acres of farm, forest and recreation land with the intent of mining uranium, copper and zinc. According to Gedicks, the Chippewa/environmentalist coalition wants to declare the area a toxic-free environmental zone that would be jointly managed by the state and the Chippewa.
In May 1990, the Chippewa took their case to the RTZ board of directors meeting in London. When Gaiashkibos, a Chippewa leader. asked board chairman Sir Alistair Frame whether RTZ would respect Chippewa rights in Wisconsin, Frame answered, "We will deal directly with the federal and state government. Next question." According to Gedicks' report, Gaiashkibos tried to ask a follow-up question, but Frame turned off his microphone. "What we observed today confirms our worst suspicions about the intentions of RTZ," Gaiashkibos said of the meeting. "We have been told firsthand that RTZ couldn't care less about our rights or concerns."
What is one to expect from a multinational corporation that tried to cloud debates on the environment in the 1970s with the motto "Without chemicals, life itself would be impossible"? Answer A corporation whose financial health in the 1990s is built on products of dubious value that pose serious or unknown risks to consumers and the environment the aspartame low calorie sweetener NutraSweet, the herbicide Lasso, the Copper-7 IUD and Bovine Growth Hormone (BGH), a genetically engineered bacteria, which, when injected into cows twice a month increases milk yields from 10 to 25 percent [See "Monsanto's Misdeeds," Multinational Monitor, July/August 1990].
BGH poses unknown risks to the economies of dairy-producing states and to consumers. In December 1990, Consumers Union, the publisher of Consumer Reports magazine, released a report concluding that the synthetic hormone has not been sufficiently studied to determine its impact on human and animal health. The Consumers Union report came on the heels of a lawsuit filed by the Foundation on Economic Trends, a public interest group, which charged Agriculture Secretary Clayton Yeutter and the Department of Agriculture's National Dairy Board with illegally helping Monsanto, Eli Lilly & Company, Upjohn Company and American Cyanamid promote the hormone.
BGH has been banned in Germany, three Scandinavian countries and in parts of Canada. British regulators recently rejected an application by Monsanto for commercialization of BGH in England. In April 1990, Wisconsin and Minnesota, two major dairy states, issued temporary bans on the commercial use of BGH. A number of supermarket chains, including Kroger and Safeway, announced in 1989 that they would not accept BGH dairy products because of consumer concerns.
Studies have predicted that BGH use will drive many small farmers out of business completely, severely affecting the economies of dairy regions. And public health expert Dr. Samuel Epstein of the University of Illinois argues that "cell- stimulating growth factors" such as BGH could induce premature growth and breast stimulation in infants and possibly promote breast cancer.
Wisconsin Secretary of State Doug LaFollette complained in August 1989 to the Food and Drug Administration that "a few chemical companies are willing to endanger the health of millions of Americans who take for granted the safe, wholesome quality of our milk."
Safety questions have also been raised about Monsanto's Nutrasweet. A study by a University of Illinois scientist indicated that using Nutrasweet appeared to heighten chances of behavioral disturbances an birth defects. Others argue that Nutrasweet has not been tested properly. But consumer group calls on the FDA to ban the sweetener as an "imminent hazard to public health" have fallen on deaf ears.
While Monsanto has stopped producing the infamous herbicide Agent Orange and the insecticide parathion, which may have been responsible for half of the world's pesticide poisonings and 80 percent of those in Central America, it still produces some highly toxic chemicals, including the herbicide butachlor, which can cause skin and eye irritation and decreased body weight, organ-weight changes, reduced brain size and lesions. It also still produces the world's bestselling herbicide, alachlor, marketed under the trade name Lasso, for use on corn and soybeans. Alachlor has caused lung, stomach, thyroid and nasal cancers in laboratory animals.
Last year, Mobil made our "Ten Worst" list because of the way it mistreated the environment [See "Ten Worst Corporations of 1989," Multinational Monitor, December 1989]. This year it makes the list because of the way it continues to mistreat the environment, but also because of the way it mistreats its employees.
In November 1990, a federal jury in Newark, New Jersey awarded $1 million in punitive damages and $375,000 in compensatory damages to Dr. Valcar Bowman, Jr., a former environmental affairs manager for Mobil Chemical Corporation. Bowman alleged in an unjust dismissal lawsuit that the company fired him for refusing to conceal environmental problems.
Bowman was manager of environmental affairs for Mobil Chemical from 1984 until he was fired on April 14, 1986. He alleges that he was pressured to change environmental audit reports so as "to keep upper level management from being fully knowledgeable of" the environmental problems at the facilities.
In the summer of 1985, Mobil's general counsel requested that Bowman and members of his staff go to a Mobil plant in Bakersfield, California and remove environmental records. According to Bowman, Mobil was concerned that law enforcement officials would raid the plant, looking for incriminating documents, as they had raided Mobil's Torrance, California facility earlier. Bowman refused to remove the Bakersfield records. "I not only refused to go to Bakersfield," Bowman said. "I told my staff members not to get involved in that kind of mess. And they all refused."
After that incident, things "went from worse to horrible," according to Bowman. "I was continuing to have pressure applied on me to make changes on the audit reports. I was complaining to every executive that I thought would listen, including the president of the company. But nobody wanted to hear it. They had other ideas [about] what my future was going to be and eventually terminated me based on a cost-containment sham." Bowman calls it a sham because Mobil Chemical Company had record profits in 1986, the year he was fired.
In October 1990, another former Mobil environmental affairs manager sued Mobil, charging that the company systematically covered up environmental and human health problems. Myron A. Mehlman, the former director of toxicology and manager of Mobil Oil's Environmental Health and Science Laboratories, claims Mobil incorrectly reported results of his toxicological testing of Mobil products to company officials and outside agencies. Mehlman held his position from 1978 until he was fired in 1989. He supervised about 100 employees in conducting tests and safety evaluations of Mobil's petrochemical products, including gasoline.
Mehlman alleges that in September and October 1989, he attended a conference in Japan with high-ranking Mobil officials and other industry, government and environmental representatives. During a presentation, Mehlman warned that the true benzene levels in gasoline and other Mobil products posed a serious hazard to the public health and environment and that they should be reduced and that Mobil products should be modified.
Immediately upon his return from the conference, Mehlman says he was placed on suspension and locked out of his office in Princeton, New Jersey. Mehlman says he was fired for his continuing objections to incorrect reports of his toxicological testing and for his disclosure of the public-health and environmental problems associated with Mobil products.
Mobil argues that Mehlman was fired for a conflict of interest in connection with his participation in the publication of books and journals. Mehlman counters that this is a pretext, and that Mobil was told of any potential conflicts of interest and had approved of the work in advance.
Mobil was unable, however, to cover up the largest gasoline spill in history. In July 1990 it agreed to clean up an underground lake of approximately 17 million gallons of petroleum products which had seeped under the streets of New York City since World War II. In an agreement with the state of New York, Mobil agreed to pump out the oil, most of which had leaked from Mobil's facility in Greenpoint, an industrial section of New York City. The lake contains about 6 million more gallons of oil than spilled in the largest single oil spill-last year's Exxon Valdez spill in Alaska. Mobil was fined $500,000.
Even when it tries to be environmentally friendly, Mobil fails. In June 1990, the company was sued by seven states for deceptive advertising. According to the lawsuit, Mobil claimed that its Hefty brand trash bags were "environmentally friendly" and "degradable," when in fact they were neither.
New York Attorney General Robert Abrams, calling Mobil's actions "green-collar fraud," said "degradable plastics" are "nothing but a snake-oil cure for our solid waste problems. It's a myth that degradable plastics quickly disappear or provide any benefits to the environment in a landfill, and Mobil knew it But that didn't stop Mobil from trying to mislead consumers into purchasing products that simply are not good for the environment.... Mobil's claims for its trash bags should be thrown into the landfill of rhetoric."
Criminal Enterprise Being a defense contractor is a dirty job. Your corporate goal is to build weapons of mass destruction and to make money at it. Putting that bit of reality aside, one defense contractor stands out as perhaps the most corrupt in history: Northrop. Earlier this year, the company pleaded guilty to 34 criminal counts of providing false statements to the U.S. government over a three- year period in connection with the Cruise missile and the Harrier jet. The company was fined $17 million.
But the settlement was a good deal for Northrop. As part of the settlement, federal officials agreed to drop 139 additional counts of making false statements and two counts of conspiracy. In addition, the government agreed to drop major investigations of charges that the company falsified test data on the MX missile and overcharged the Air Force on the B-2 Stealth bomber program.
After the settlement, Northrop argued that the problem was with individuals and not with the company. "The company pleaded guilty because under the law it accepted responsibility for the unauthorized and unacceptable acts of three or four of its employees--even though they had acted on their own and even though it had fired them nearly three years before when their behavior was discovered," a Northrop spokesman said.
But federal prosecutors shot back that the "employees" involved in the cheating included the general manager at a Northrop facility and the chief engineer. And, the prosecutors said, there were at least five test technicians and supervisors who falsified test results at the direction of the general manager and chief engineer.
Federal prosecutors chided Northrop for suggesting that it provided full disclosure of the cheating. They also pointed out that Northrop was convicted of cheating on testing of components for more than 110 missiles and jets.
Congressman John Dingell, D-MI, calls Northrop "a continuing criminal enterprise."
There is no shortage of evidence to buttress that assertion. In September 1990, Wolfgang Kuhn, an international arbitrator, ruled that in the mid-1980s Northrop paid $6.25 million to South Korean businessmen in an attempt to influence the South Korean government to purchase Northrop's F-20 fighter airplane. Kung concluded that the scheme was "not a situation where low-ranking officers colluded to defraud Northrop, but where Northrop acted, probably illegally, through its top management." A House subcommittee investigating the payoff called it a plan to "develop a slush fund to bribe various Korean officials to buy Northrop's F-20 fighter." No F-20 planes were ever sold to South Korea.
Currently, seven grand juries around the country are investigating allegations against Northrop of bribery, overcharging of the government and falsification of test records.
Criminality is not new to those who run Northrop. In 1974, Thomas V. Jones, who resigned earlier this year as chief executive officer of the company, pleaded guilty to creating a company slush fund in 1972 to reelect then-President Richard Nixon. Jones also falsified documents and lied to a grand jury. He was fined $200,000 for the illegal contribution.
A number of former Northrop employees are now suing the company under the federal False Claims Act, alleging that Northrop has been ripping off taxpayers for millions of dollars. Jean- Francois Truong, a former financial controller at Northrop, is suing Northrop over the B-2 bomber program, a program he has called "maliciously organized chaos, calculated to deceive." Truong alleges that Northrop managers repeatedly instructed him to falsify Air Force progress reports. Truong says that the chaos, confusion and waste that reigns at Northrop's B-2 program "is not due to new technology, or an expanding work force, as Northrop and the Air Force would have you believe." Instead, Truong believes the cause is Northrop's decision to "make the money first and some sort of product later."
Some industries are prone to wrongdoing, criminal and otherwise. The chemical, tobacco, pharmaceutical and auto industries come to mind. The telephone industry is not usually a regular in the criminogenic crowd. That's why NYNEX, the regional telephone company serving New York and the New England states, stands out.
In May 1990, a federal grand jury in Washington, D.C. indicted NYNEX on one count of criminal contempt for violating the consent decree that broke up the giant Bell operating system. The U.S. Justice Department began its investigation after Scott Rafferty, a lawyer hired for NYNEX's Telco subsidiary, questioned the legality of giving MCI Communications access to Telco computer facilities. Rafferty says he was fired for questioning the "regulatory exposure" of a number of NYNEX's business operations.
In October 1990, the Federal Communications Commission (FCC) reached an agreement with the company settling FCC charges brought in February that the company overcharged its unregulated affiliates by $35.5 million. The company was fined $1.4 million. The settlement decree, approved by a vote of 5-0, did not cite findings of wrongdoing. But Commissioner Andrew C. Barrett said in a separate opinion that he would have preferred to have had such a finding. Barrett said there was "sufficient evidence of wrongdoing to find that NYNEX violated the FCC's rules regarding transactions between telephone companies and their nonregulated affiliates."
Rafferty calls the FCC settlement with NYNEX a sellout.
The New York Public Service Commission apparently didn't think very highly of NYNEX's veracity or competence either. It reduced the company's $945 million rate request to $23 million.
Company executives were apparently paying more attention to the libidinous needs of fellow male executives than they were to the rights of the company's phone customers. From 1984 to 1988, NYNEX allegedly held "pervert conventions" in Florida, where employees and suppliers partied together. Awards were given at the convention: one NYNEX employee won the "Procurement Award" for three consecutive years for "arranging for women" to appear at the conventions; others included the "Most Valuable Pervert Award" and the "Moon Over Miami Award."
Rafferty charges that there were improper relationships with suppliers at the conventions that tainted business transactions. New York State officials allege that many suppliers who attended the conventions saw their business from NYNEX increase, but NYNEX denies this.
Instead of listening to Rafferty and other employees who sought an early exposure and resolution of incipient corruption within the company, NYNEX sought to silence the messengers. According to Rafferty, a number of other whistleblowers within the company faced this silencing treatment. Michael Burkhart was discharged by a NYNEX subsidiary after he questioned the use of illegal, one-of-a-kind contracts to give unlawful discounts to certain large corporate customers. Robert Zirkelbach was fired by a NYNEX subsidiary after he questioned markups as high as 1,004 percent that the NYNEX procurement subsidiary, MECO, was charging. Tobias Squitieri was fired after he complied with a New York state employment discrimination administration subpoena regarding the discharge of another employee.
Many of the fired employees have brought legal actions against NYNEX.
In 1989, a best-selling book, Barbarians at the Gates, documented the raucous takeover battle for RJR Nabisco, one of the world's largest consumer products companies, which markets such high-profile brands as Oreo and Chips Ahoy! cookies, Ritz and Triscuit crackers and Camel and Winston cigarettes. The battle ended with the company controlled by the New York investment banking firm of Kohlberg Kravis Roberts. In Barbarians at the Gates, the authors describe the unmitigated greed displayed by those seeking to sink their teeth into RJR's profits.
But RJR itself is a barbaric and unconscionable drug pusher, child-corrupter and killer, and its products should be boycotted. RJR is a major producer of cigarettes such as Camel, Winston, Doral, Magna, Vantage, More, Ritz and Chelsea. More than 1,000 people in the United States die every day from cigarette-induced disease. That's 40 funerals every hour--many of them due to RJR.
What makes RJR stand out this year from the tobacco industry's other leading killers--Phillip Morris, Brown & Williamson and Lorillard? First and foremost, children. With smokers dying every day from tobacco-induced disease, the industry needs to addict a new batch of young consumers to remain financially healthy. And RJR has been a leader in addicting children, according to Dr. Joe Tye, director of the grassroots organization STAT (Stop Teenage Addiction to Tobacco). "The company has been so brazen in its attempts to recruit children to become nicotine addicts," says Tye, "so outrageous in its efforts to deceive smokers into believing that they can continue to smoke without personal harm, that 'corporate evil' is the only term that properly describes their behavior."
Most outrageous is RJR's profligate use of its "Smooth Character" cartoon camel to push Camel cigarettes. Since the cartoon camel was introduced in 1987, the number of teenage smokers has increased by more than ten percent. "Talk to teachers and students in junior high and high schools," Tye says. "They'll tell you that Camels are replacing Marlboro as the cigarette of choice among teenagers."
There has been widespread commentary in the advertising industry press about the phallic symbolism in the cartoon camel's facial features. In November 1990, STAT sponsored a contest that asks entrants to complete the sentence, "That's not a Camel. That's a .................."
In 1989, RJR weighed in on women's rights with its beach rape ad. A four-page print ad, the pull-out offers tips on "how to impress someone at the beach." One suggestion is to "run into the water, grab someone and drag her back to shore, as if you've saved her from drowning. The more she kicks and screams, the better." After a storm of public protest, the company pulled the ad.
RJR has a long history of using cartoon characters, professional athletes and images of social and sexual activity to encourage young people to smoke. Earlier this year, the company launched a new brand, Dakota cigarettes, and targeted it at "virile female" high school dropouts. According to an internal memorandum, the marketing campaign focused on women whose favorite pastimes were cruising, partying and attending hot rod shows and tractor pulls with their boy friends.
The company also sought to market a high-tar Uptown cigarette to the black community, but community outrage, led by a Philadelphia doctor, Dr. Robert Robertson, caused RJR to withdraw the cigarette. Despite the hype about RJR's decision, the company has not stopped targeting blacks.
Uptown would have had the highest nicotine content of any RJR cigarette other than the unfiltered Camel, and Robertson believes the reason the company put so much nicotine in Uptown was because many blacks spend less money on cigarettes, and RJR wanted to get them addicted quickly.
In its effort to addict new smokers, RJR has targeted not only blacks, women and children in the United States, but is aggressively promoting smoking in developing countries. In Asia, the company uses "movie stars, rock music concerts, television advertising and promiscuous distribution of free cigarettes to lure unsuspecting children to become nicotine addicts," according to STAT.
The boycott campaign against RJR Nabisco products has been picking up steam recently. On October 10,1990, Ben & Jerry's Gourmet Ice Cream company joined the boycott and announced that it will no longer be using RJR's Oreo cookies in its ice cream.