The Multinational Monitor

March 1992

Corporate Tentacles

Table of Contents

Behind the Lines


GM’s Crash

The Front


A Formula for Disaster

By Ellen Sokol

The Commercialized Classroom

By Holley Knaus


The Tyranny of the Bottom Line

An Interview with Ralph Estes


Fronting for Business

By Mark Megalli and Andy Friedman


The Plant Closing Epidemic

By Robert Weissman

Corporate Profile

The Westinghouse Web

By Jim Donahue

Names In the News

Book Notes

Imperialism in Ireland



To the editor:

I am a conscientious objector at the Marine Corps brig. I admire and appreciate your publication.

My parole evaluation is going for the next couple of months and I’m humbly asking for letters to be sent in support of my parole to my parole coordinator.

I’m currently gathering addresses of fellow Gulf War vets who also have psychological pain, stories and photos from the war. We plan to get these things out in the public eye, where they belong.

My own story includes becoming against needless killings in U.S. war after I got back from Panama with my Marine unit in 1989.

I was told that my beliefs were "too political" for conscientious objector status in 1990.

I got orders to Saudi Arabia "during time of war" in February 1991.

I went to Saudi Arabia, but refused to have a weapon or contribute, except with my radio skills, for Medivac purposes only.

I was denied the use of chemical protective gear, and was forced on to the Kuwait border.

I was then charged with "failure to do utmost to engage the enemy."

I plan to take part in anti-recruitment videos with the War Resisters’ League of New York City, and plan to do all I can to support peace and human rights (when I’m able to get out of the brig).

All the letters supporting my parole that can be sent would greatly be appreciated. They should be sent to:

Parole Coordinator

Marine Corps Base Brig

Camp Le Jeune, NC 28542

Paul Cook

Camp Le Jeune, NC

Behind the Lines

Brownsville Birth Defects

BABIES ARE BEING BORN WITHOUT BRAINS and with other serious birth defects in Brownsville, Texas at an extraordinarily high rate, and city residents suspect a link to air and water pollution associated with the maquiladora factories located in Matamoros, Mexico , directly across the Rio Grande from Brownsville. Seventeen babies conceived in Brownsville between January 1989 and January 1991 were born without brains. Thirty babies conceived during 1991 were born with neural tube defects - either without brains or with spina bifida. The Centers for Disease Control (CDC) and the Texas Department of Health are conducting an investigation into why neural tube defects in Brownsville are occurring at a rate six times the normal U.S. incidence.

"Everyone has been suspecting that it’s due to solvents and pesticides and lower nutrition levels," says Domingo Gonzales of the Southwest Network for Environmental and Economic Justice.

Many U.S. companies have opened maquila plants in Mexico to take advantage of cheaper labor and weakly enforced environmental regulations. The quality of health care and the standard of living in border towns in both Mexico and the United States are notoriously low. Brownsville ranks in the bottom three cities in the United States in per capita income, wages and housing value.

The CDC and Texas Health Department study is expected to be completed in April.

Made By Slaves

CHINESE IMMIGRANTS WORKED under slave labor conditions in garment factories in Saipan, a U.S. territory in the Pacific, according to a lawsuit filed by the U.S. Labor Department against the owners of the factory. According to the Labor Department, the workers, most of whom were young women, were recruited from China to work in several factories owned by the Tan family. Once in Saipan, they were forced to surrender their passports, housed in fenced and guarded barracks and required to work seven-day weeks. Goods produced in the Tan factories were shipped to the United States and sold under major U.S. brand names, including the Levi’s Dockers brand.

The Labor Department lawsuit, however, only concerns back wages owed to the workers, who were being paid $1.63 to $1.75 an hour with no overtime in 1990, though the minimum wage in Saipan is $2.15 an hour. That year, in response to Labor Department pressure, the Tan family wrote checks to workers for back wages. However, the Department now charges that the workers were forced to return the checks soon after receiving them.

U.S. garment manufacturers are attracted to Saipan and the other Mariana Islands which became U.S. possessions during World War II because of the low wage levels, and the fact that goods produced on the islands can carry the "Made in U.S.A." tag. Goods shipped to the United States from the Marianas are also exempt from import duties.

Keir Jorgensen of the Amalgamated Clothing and Textile Workers Union says, "It is clear that these apparel companies have found a little platform in the middle of the Pacific Ocean from which they can take advantage of this anomaly of the Mariana Islands." Garment manufactures, says Jorgensen, are using "low-wage, substandard working conditions to produce goods with the ‘Made in the U.S.A.’ label."

Greasing the Regs

MAJOR WESTERN OIL AND GAS CORPORATIONS are funding and participating in a program that may draft the very petroleum laws that will govern their activities in the Russian Republic.

Energy companies including Exxon , Conoco , Amoco and Marathon have each donated an average of $100,000 to the Russian Petroleum Legislation Project, which is being administered by the University of Houston Law Center. Model legislation drafted by the project will be presented to Russia’s Committee on Industry and Energy in March, and then submitted to the country’s Parliament for debate and adoption. The project and the energy companies’ role in it were first revealed in January by the weekly Legal Times.

Corporations contributing to the project are permitted to place representatives alongside academics and lawyers on the legislation-writing teams and to review the draft laws. Several of the private lawyers involved in the project also have strong ties to the energy industry. George Hardy III, the director of the drafting committee, for example, is a partner in a Louisiana law firm that represents Exxon, Pennzoil , Phillips Petroleum and other oil companies.

Critics question the ethics of corporations’ involvement in the drafting of laws that will later regulate them. The situation "raises some serious questions of objectivity," says Chris Wold, assistant director of Central and Eastern European programs at the Washington, D.C.-based Center for International Environmental Law. Wold says that oil and gas companies have "a huge stake in the laws that are ultimately adopted" because there "is so much money involved" in exploiting the Russian Republic’s oil and natural gas deposits. Wold says that the project should "bring others into the discussion," particularly representatives of public interest and environmental organizations.

- Holley Knaus

Editorial: GM ’s Crash

ON FEBRUARY 24, 1992, General Motors announced plans to close 11 manufacturing and assembly plants, throwing more than 16,000 people out of work. GM has now announced plans to close two-thirds of the 21 plants it says it will shut down in the next few years.

GM is shameless. By announcing in December that it was going to close plants without specifying which ones, the company encouraged workers and communities to compete against each other in an effort to offer the company the lowest wages, the most flexible work rules and the lowest tax rates.

All this, in a sense, is to be expected. GM has long shown callous disregard for the effect of its decisions on the communities where it does business.

More disappointing, but perhaps no more surprising, is the failure of the United Auto Workers (UAW), which represents the workers who will be laid off, to take any meaningful steps to counteract GM’s actions.

GM’s most blatant "whipsawing" (pitting factories against each other) involved assembly plants in Ypsilanti, Michigan and Arlington, Texas which produce the Chevrolet Caprice and other models. GM announced in December that it would close one of the plants, sparking a high-profile campaign on the part of Arlington workers and Texas politicians to save the Arlington facility, and a quieter effort in Michigan.

The city of Arlington, the county of Tarrant and the state of Texas together presented General Motors with tax abatements and other incentives worth $30 million. A bipartisan group of Texas politicians, including both of the state’s senators, Democrat Lloyd Bentsen and Republican Phil Gramm, and governor Ann Richards, met with GM Chair Robert Stempel. And, probably of most importance to General Motors, workers at the Arlington plant agreed to accept special shift arrangements that will allow General Motors to operate the plant around-the-clock.

One of the most insidious aspects of whipsawing is that the incentives extracted from individual plants and communities usually do not influence corporate decisions to locate or close factories, since those decisions are normally based on internal business concerns which involve sums far greater than the incentives offered.

The case of Arlington and Ypsilanti, however, may be an exception. Most analysts had expected GM to close the Arlington plant, because transportation costs between it and supplier plants in the Midwest are higher than those for the Ypsilanti facility. But Arlington workers’ agreement to 24-hour production and close cooperation with the company may have been the deciding factors for General Motors. The Arlington work rule changes are particularly outrageous because they will allow the Arlington plant to run at levels above what has traditionally been viewed as capacity at the same time the Ypsilanti facility is shut down.

GM values the Arlington workers’ concessions not only for their intrinsic value, but because it hopes they will become pattern-setters. After the February 24 announcement, the Wall Street Journal wrote: "GM’s decision to save the Arlington factory sent a stern message to the leaders of the United Auto Workers union: GM will save plants when UAW locals agree to scrap long-established work rules to help GM cut costs, and shut plants that don’t." Stempel said that GM intends to go from "plant to plant" and ask for work rule changes and reductions in the number of job classifications, adding that local unions’ responses would influence which plants stay open and which close.

The UAW’s answer to GM was too little and too late. On February 25, UAW Vice President Steve Yokich, director of the union’s General Motors Department, said "GM Chairman Robert Stempel and the corporation are playing with fire if they encourage plant competition over work rules." He said the international union would not approve changes at the Arlington plant.

An effective union response to the current round of plant closings, however, would have required action before the shutdowns were announced. The union should have taken steps to prevent locals from competing against each other, and it should have tried to save jobs by putting forward demands for a shorter work-week and a ban on overtime.

Jerry Tucker, leader of the dissident New Directions Movement within the UAW, argues convincingly that the union was in no position to take these steps - or to resist whipsawing now - because of its performance over the last decade. The union stopped fighting for job security - with the 1990 contract widely understood as paving the way for mass layoffs - and, in the guise of helping U.S. automakers improve their "competitiveness," became an accomplice to whipsawing. It is a "very tough trick," Tucker says, for "people who have been in bed with management all this time" to suddenly stand up to corporate bullying.

If Tucker is right, many workers and communities will soon be confronting the troubles Ypsilanti faces - or the significant, though less dramatic, ones in store for Arlington. For there is no doubt that GM will continue to ruthlessly exploit its current predicament to take advantage of workers and communities that do not have the protection of a strong union.

The Front

Stone Axes Honduras

DESPITE SIGNIFICANT deforestation over the last 10 years, Honduras still has the largest standing pine forests in Central America. Now Stone Container , the Chicago-based world leader in paper bag and cardboard box production, appears to be on the verge of decimating what remains.

Stone is in the process of finalizing a contract with the Honduran government to "lease" the remaining virgin pine forests in Honduras for the next 40 years. The company plans to harvest the pine for pulpwood, which will be used in the production of items such as paper bags and packaging containers. The contract awaits the approval of the Honduran Congress.

Under the terms of the contract, which was recently leaked in Honduras, Stone would be granted virtually unrestricted rights to harvest between 1 and 2.5 million acres of pine forests throughout the country. The contract requires Stone to pay the government a "fair market price" for the trees it harvests, but does not denote what the price will be.

Many different segments of Honduran society, including foresters, environmentalists, business people and Miskito Indian groups, have united to oppose the deal. Jose "Pepe" Herrera, director of the Fundacion Cuero y Salado, a Honduran environmental group, summarizes the sentiment in the country, saying, "Never in history have the Honduran people united so strongly in opposition to anything. We’ve been used and abused by everyone. ... This time everybody has gotten together and said, ‘Enough! We don’t want this.’"

Critics say the project will cause land erosion, sedimentation of rivers and lakes and loss of diverse flora and fauna. Although Stone admits it has done no environmental impact assessment for the region, the company claims its "best management practices" will minimize any negative effects.

A contract with only loopholes

A careful review of the contract drafted by Stone’s lawyers shows the extraordinary nature of the agreement. Stone will be allowed virtual impunity in harvesting the 900,000 acres (approximately 1,500 square miles) of pine forest in the La Mosquitia region of eastern Honduras, an area made famous by the movie "The Mosquito Coast." La Mosquitia’s grassy plains, thick pine forests, tropical jungle, rivers and lagoons make up Honduras’ last "green frontier."

Environmentalists believe the contract will allow Stone to cut trees of any size and age. The contract permits cutting of "all standing, fallen, growing or later grown pine trees having a diameter at breast height of at least twelve (12) centimeters and less than thirty (30) centimeters; also any larger pine trees to the extent such trees are unsuitable for use as sawtimber because of the quality of the trees or the unavailability of a market for ordinary use as sawtimber."

Although the Honduran government will pay Stone to manage the forest, the contract contains no reforestation requirements, only a provision mandating that the harvesting of pine forests results in long-term "sustained yield."

Another loophole in the contract allows Stone to expand beyond the area it says it plans to harvest, through an allowance based on meeting a minimum pulpwood volume. No figure is mentioned in the contract, but the Honduran press has reported that Stone is guaranteed a yield of 500,000 metric tons of wood chips annually.

Many of the restrictions written into the contract apply only to the areas of natural pine that Stone cuts for the first time. In deforested areas where Stone replants pine or other fast-growing trees, the contract states that "the trees will be utilized by Stone for its own benefit at no cost to Stone." Stone will thus benefit from any replanting it chooses to do, and will most likely establish plantations of the fast-growing gmelina arborea, a species not natural to Honduras, as the company has previously done in Costa Rica.

What Honduras gets and what it gives

The Honduran government’s incentive in ceding control of its natural resources to a foreign-based multinational corporation is simple. With the country struggling with a foreign debt burden of more than $3 billion, the government is eager for any means to attract foreign capital.

Stone claims the project will be a boon for the Honduran economy. Gerald Freeman, senior vice president and general manager of Stone’s forest products division, predicts that "several thousand people will earn a living from the project and it will generate millions of dollars for local economies each year."

But when the costs that the government will incur meeting the requirements of the contract are figured in, any profit for Honduras is questionable. And of course Freeman’s estimate ignores the long-term environmental costs to Honduras.

The contract stipulates, for instance, that "the Government will cooperate with Stone in providing, maintaining and improving roads and bridges for access to specifically assigned forest areas. In case such work is to be performed by Stone, the Government will provide or obtain the necessary and appropriate rights of way." The government is also obligated to "assure that Stone is provided, at reasonable prices, electric power, transportation and communications services, as necessary or appropriate for the efficient management of Stone’s business in Honduras."

Meeting Stone’s energy, communications and transportation requirements will require enormous new investments by the government. Even the largest city in La Mosquitia, Puerto Lempira, has no running water in most houses and offices, has no phone system and only provides electricity from 6 to 9 at night. There is no road to Puerto Lempira, only a river. Thus the Honduran government may be required to build a road through the jungle to ease the company’s access to central La Mosquitia. Neither the cost nor the impact of these actions are discussed in the contract or mentioned by the principals supporting the project.

Neither the government nor Stone have discussed the long-term costs of depleting the natural resources of Honduras. As Pam Wellner of the San Francisco-based Rainforest Action Network points out, "Anytime you cut an old-growth forest for pulp, you’re liquidating long-term resources - such as watershed, wildlife, firewood, tourism - for short-term profits."

Stone Container: pulping the earth

Stone’s motivations in acquiring rights to cut and manage Honduran land are multifaceted. Stone has demonstrated an aggressive strategy for global production and distribution of its products. With supplies of pulpwood diminishing in the United States, Stone, the Honduran contract notes, has a "continuing interest in developing new sources of wood fiber, both for use in our mills and for sale on the international market." Stone also recognizes the enormous potential for profit from developing a pulpwood industry in Central America. Stone has been working in Costa Rica for several years, developing plantations of fast-growing exotic species for pulpwood. And, like Honduras, Stone is strapped with its own debt problem. Through a series of junk-bond leveraged acquisitions, Stone has built up a $3 billion debt. The huge profits it would potentially realize in Honduras will help pay off these debts.

Paul S. Howell, Stone’s general manager for International Market Development, recently explained his view of the deal to the Honduran press, saying, "Right now, the pine trees are not worth anything" to the people of La Mosquitia who live in the forests and jungles. He added, "We want to change that. We really want to make a difference here."

The inhabitants of La Mosquitia and others throughout Honduras fear, however, that they will end up paying "the difference." Their protests have shaken the resolve of the ruling National Party, forcing a delay in the Honduran Congress’s vote to ratify the Stone agreement, which was originally scheduled for the week of February 3.

In response to this delay, Stone has launched a publicity campaign in Honduras to try to win support for its plans. A "supplementary agreement" designed to answer protesters’ concerns is currently under discussion, with the agreement and the original contract likely to go before the Honduran Congress in the next several weeks.

-Dara O'Rourke

Food that Glows

IN A MOVE that may eventually make much of the U.S. food supply unsafe to eat, Vindicator, Inc. of Mulberry, Florida began operations in January 1992 as the first food irradiation facility in the United States. Vindicator has exposed one 1,100 pound batch of fresh packaged strawberries to radiation, and plans to begin irradiating other fruit, along with poultry, within the next few months.

Proponents are promoting food irradiation as a means of extending the shelf life of food and killing insects and bacteria. The process exposes food to gamma radiation from either of two radioactive isotopes: cobalt-60 (used at the Vindicator plant) or cesium-137. The radiation penetrates the food and kills some harmful organisms. The food itself does not become radioactive. The process has been endorsed by the UN World Health Organization and the UN Food and Agriculture Organization.

Critics of food irradiation are concerned, however, that the process reduces the nutritional value of food and may produce chemical changes in irradiated food that could have toxic effects. They say that the Food and Drug Administration (FDA) has relied on inadequate testing to support its approval of irradiation of fresh fruits, vegetables, grains, nuts, teas, spices, pork and poultry. They also express concerns about the environmental effects of the process, and with possible hazards faced by workers in irradiation facilities.

Harley Everett, executive vice president of Vindicator, says that the purpose of food irradiation is to "save lives" by preventing cases of food poisoning, such as salmonella in chicken. Everett says claims that irradiated food is unwholesome or unsafe to eat are "baseless" and that "thousands of studies repudiate [the claims] totally."

The FDA, however, relied on only five studies in making its 1986 decision to allow food to be irradiated.

Some medical experts, in fact, contend not only that the agency has relied on an inadequate amount of testing, but that the five tests accepted by the FDA for review do not support the safety of food irradiation. Dr. Donald Louria, chairman of the preventive medicine department at the New Jersey Medical School, reported in the September 1990 issue of The Bulletin of the Atomic Scientists that a department review of the studies found that two of them were "methodologically flawed. ... One of the two also suggested that irradiated food could have adverse effects on older animals. In a third FDA-cited study, animals fed a diet of irradiated food experienced weight loss and miscarriage, almost certainly due to irradiation-induced vitamin E dietary deficiency." Louria concludes that these "three studies do not document the safety of food irradiation and why the FDA relied on them is mystifying." The other two tests investigated effects of diets consisting of food irradiated at doses below the current approved level of 100,000 rads (poultry can be exposed to 300,000 rads).

Dr. Samuel Epstein, a professor of occupational and environmental medicine at the University of Illinois, says that food irradiation "has never been tested in accordance with standard toxicological procedures."

Many consumer groups and medical experts say the studies that have been conducted strongly suggest food irradiation makes food unsafe to eat. Studies show that irradiation produces unique products in food which may cause mutations, leading some critics to suggest that irradiated food may prove carcinogenic. According to Food & Water Inc., a New Jersey-based consumer organization which coordinates educational projects on food safety and environmental issues, tests have indicated that irradiation kills off bacteria that ordinarily signal spoilage of foods (through bad taste or smell), which may allow other dangerous bacteria to grow undetected. Tests have also shown that irradiation stimulates carcinogenic aflatoxin-producing molds, according to Food & Water. Epstein says that tests in which irradiated food has been fed to lab animals, and in one case to children from India, have found reproductive effects in rats and monkeys, and chromosomal damage, especially polyploidy, in rats, monkeys and the children.

Irradiation reduces the nutritional value of food as well. Epstein says loss of nutritional value is of particular concern since food irradiation is being promoted as a means of extending the shelf life of food shipped to undernourished people in the Third World.

Consumers who wish to avoid purchasing irradiated food may have difficulty doing so. The FDA requires that radiation-exposed food be labelled with a written warning and a "radura" - a symbol of a stylized flower that may be confusing, since it closely resembles the symbol for the Environmental Protection Agency. However, no label of any kind is required for foods prepared in restaurants or institutions, or for prepared or packaged foods that contain irradiated ingredients (for example, a loaf of bread made with irradiated wheat would not have to be labelled).

Critics of food irradiation are also concerned about environmental hazards associated with the process. Michael Colby, director of Food & Water, says that increased transport and handling of highly radioactive materials and wastes on highways will threaten numerous communities with contamination in the event of an accident. Other risks include increased worker exposure to radioactive materials and the potential for the contamination of irradiation facilities’ immediate environment and nearby groundwater supplies.

There have been numerous reported cases of accidents and violations of worker and environmental safety at existing irradiation facilities (used primarily for sterilizing medical equipment). In 1974, whistleblowers at the Isomedix company in New Jersey reported that radioactive water had been flushed down toilets and had contaminated the pipes leading to sewers. In 1986, the Nuclear Regulatory Commission (NRC) revoked the license of a Radiation Technology Inc. plant, also in New Jersey, for repeated environmental and worker-safety violations. In June 1988, Radiation Sterilizers in Decatur, Georgia reported a leak of cesium-137 that had been provided by the Department of Energy to sterilize medical supplies and consumer products. The leak contaminated 25,000 gallons of pond water, as well as workers’ clothes and cars. It also resulted in the contamination of some irradiated products such as milk cartons and saline eye solution. Federal and state officials say that all contaminated products were recovered before reaching the marketplace.

Colby says the nuclear industry is promoting food irradiation to improve its image and prospects for survival. He calls food irradiation "a blatant attempt to put a smiley face on the nuclear industry." Food irradiation would guarantee a future market for reactors producing isotopes such as cobalt-60. Vindicator purchases the radioactive material from the recently privatized Canadian company Nordion (formerly the state-run Atomic Energy of Canada Ltd.). According to a book on food irradiation written by Tony Webb and Tim Lang of the London Food Commission, Nordion has been aggressively marketing cobalt for the process, particularly in developing countries such as Thailand and Malaysia. Many critics also suggest that one reason irradiation is being promoted is to serve as a commercial outlet for waste, such as cesium-137, from nuclear weapons production. Colby says, however, that the use of cesium in food irradiation has been "on hold" in the United States since the accident at the Georgia plant.

Most powerfully, perhaps, critics of food irradiation challenge the need for the process at all. Colby says it is "outrageous ... to take on such health and environmental risks" for "a frivolous and unnecessary technology." Incidents of salmonella poisoning signal a need to clean up the poultry industry, not to expose chicken to radiation, he says. Epstein says exposing consumers, workers and the environment to the risks of irradiation is "reckless Russian roulette."

- Holley Knaus


A Formula for disaster

by Ellen Sokol

PENANG, MALAYSIA - In 1984, when Nestle signed an agreement pledging to abide by the World Health Organization (WHO)/UNICEF International Code of Marketing Breast-milk Substitutes, consumer leaders agreed to suspend the 7-year boycott against the Swiss food giant. The boycott leaders felt a genuine sense of accomplishment following an almost decade-long fight. Unfortunately, the battle over infant formula promotion continues today, nearly eight years later.

The importance of a healthy decision

The stakes in the ongoing battle are high, because infant formula companies’ marketing efforts strongly influence women’s decision to breastfeed newborns or to use breastmilk substitutes, and that decision has tremendously important implications for the health of infants.

There is nothing that equals breastfeeding in providing proper nourishment for infants. Breastmilk has the advantage of containing antibodies that help protect the baby against many common childhood illnesses. It is sterile, always at the right temperature, inexpensive and nearly every mother has more than enough for her baby. There is also an important relationship between breastfeeding and child spacing.

Babies who are not breastfed are fed with some type of substitute, usually by bottle. For bottle feeding to be safe, there must be clean water, fuel and facilities to boil the water and sterilize the equipment, adequate income to be able to afford the milk powder and a level of literacy that allows for the mixing and sterilizing instructions to be carefully followed.

In the developing world, the risk of death for infants who do not breastfeed is 10 to 15 times greater in the first 3 to 4 months of life than for babies who are fed only breastmilk. Despite the important role that breastfeeding plays in preventing malnutrition and infection in infants and young children, the prevalence and duration of breastfeeding have declined in many parts of the world.

As far back as 1974, public interest groups advocating for better infant health and the World Health Assembly, the official governing body of WHO, identified aggressive and often inappropriate marketing of breastmilk substitutes as a significant factor contributing to the alarming decline in breastfeeding rates and an associated increase in young infants’ morbidity rates worldwide.

In October 1979, UNICEF and WHO organized a Meeting on Infant and Young Child Feeding that was attended by 150 representatives of governments, public-interest organizations, the infant food industry and experts in related disciplines. The main outcome of this meeting was the recommendation that "there should be an international code of marketing of infant formula and other related products used as breast-milk substitutes." Two years later, the World Health Assembly approved the final version of the International Code.

Marketing malnutrition

Industry claims notwithstanding, manufacturers and marketers of infant formula, foods and feeding bottles routinely break the International Code. "Breaking the Rules 1991," a report issued by the International Baby Food Action Network (IBFAN) in October 1991, describes in detail hundreds of violations by more than 80 companies. Dr. Idrian Resnick, executive director of IBFAN’s U.S.-based group, says the "formula companies’ claim that they comply with the Code is proved false by this report. The formula industry, led by Nestle and American Home Products, must make fundamental changes in its marketing schemes to be in genuine compliance with the Code." According to an IBFAN survey, the worst offenders are: Nestle; Wyeth , a subsidiary of American Home Products (AHP); two German companies, Milupa and Hipp and Meiji , a Japanese corporation.

Not all of the news is bad. "Breaking the Rules 1991" also indicates that WHO and UNICEF’s adoption of the International Code and the boycott of Nestle has led to the decline of some unethical marketing practices. At least in developing countries, it is rare to find baby pictures or inadequate instructions and warnings on infant formula labels. And advertisements rarely reach the general public.

Yet some of the Japanese companies refuse to follow the pack even on these basics. In Karachi, Pakistan , giant billboards loom over streets and television stations broadcast advertisements beckoning consumers to buy Meiji’s infant formulas. Maternity wards all over Asia are decorated with posters of beautiful "Snow Brand" babies.

And many of the positive policy changes health activists have wrung from the baby food companies are offset by the industry’s marketing and promotion of new infant food products. Almost every infant formula company now markets a product generically referred to as "follow-up" formula. Depending on the brand, follow-up formulas are aimed at babies from the ages of anywhere between three months and three years. The companies apparently hope to escape the prohibitions of the International Code by calling the product something other than infant formula and marketing it for slightly older babies.

Health advocates have criticized follow-up formulas, with the World Health Assembly declaring in 1986 that "the practice being introduced in some countries of providing infants with specially formulated milks (so-called ‘follow-up’ milks) is not necessary." Yet in North America and Europe, Nestle and its subsidiary Carnation advertise follow-up milks in parenting magazines. Most of the infant formula companies advertise them heavily in professional journals all over the world.

As pernicious as corporate attempts to skirt the International Code with follow-up formulas are advertising campaigns for follow-up formula which indirectly - but undeniably - promote infant formula. Nestle, for example, markets infant formula under various brand names such as Nan-1 and Lactogen-1. It markets a corresponding follow-up formula, such as Nan-2 and Lactogen-2, for each infant formula. Since Nan-1 and Nan-2 have the same label design in slightly different shades of blue, any promotion of Nan-2 serves to promote Nan-1 as well. In one private hospital in Northeast Thailand , piles of leaflets advertising three different brands of Nestle infant and follow-up formulas are available for the taking. And in Abidjan, Ivory Coast , several hospitals display wall posters advertising Wyeth’s "SMA 2eme age" (a follow-up milk recommended for babies from the fifth month) which picture a logo that matches the logo on SMA infant formula.

A similar problem has cropped up in the marketing of formulas for special needs. The companies have developed a myriad of new products such as formulas for low-birth- weight infants, those they claim are hypoallergenic and those for babies with lactose intolerance. These products, like the follow-up formulas, are often no more than sales boosters for infant formula.

This was never better demonstrated than in the Philippines , which enacted legislation to control the marketing of certain infant food products in 1986. Soon after the Philippine law was implemented, Nestle and Wyeth-Suaco, the Philippine subsidiary of AHP’s Wyeth, approached members of the Philippine government with a request to exempt their low- birth-weight formulas from the provisions of the law. This product would not be commercially available, but would be donated for those babies who often could not thrive on breastmilk alone, the companies asserted. They brought neonatologists along with them to back up the scientific basis of their request.

Shortly thereafter, the real reason for the companies’ intense lobbying was discovered. Wyeth-Suaco’s marketing director had sent letters to all retailers of Wyeth products announcing the availability of a new special low-birth-weight formula. The letter explained to retailers that the new formula would only be available as a free service to hospital nurseries and that it would boost their sales of standard infant formula because "mothers will surely buy S-26 Standard right after a short stay on LBW, hence, more S-26 sales!"

The price of free formula

Probably the most recurrent violation of the International Code is the industry practice of donating carton upon carton of infant formula to hospitals.

Hospitals receiving free supplies start babies on formula - at no cost to the hospital or to the mother - but when the mother leaves the hospital, she must buy the expensive formula. According to economist Richard Jolly of UNICEF, many "hospitals think, at least for the first day or so, ‘let’s give the mother a rest and have a bottle or two bottles before moving to breastfeeding.’ There’s lots of evidence to show that even a bottle or two in those first days reduces the likelihood of a mother breastfeeding for a sufficient period by as much as one-third."

Through its survey, IBFAN discovered that although the practice was condemned by the World Health Assembly in 1986, companies still donate enough formula to many hospitals to enable nearly every baby to be bottle-fed. Health activists resumed the Nestle boycott because of the corporation’s refusal to stop donating formula, and American Home Products’ donations have sparked a new boycott of that company in certain countries.

By Nestle’s own estimates, it gives free supplies of formula to hospitals in 45 developing countries. Wyeth admits to donations of formula in 25 nations. The extent of the donations is illustrated by IBFAN activists’ discovery, during a January 1991 visit to a Panama City hospital, that Nestle had recently donated 600 cans of Carnation Goodstart while the U.S. company Mead-Johnson had been donating 260 cans of Enfalac each month. (One can is enough to feed a newborn for a full week.) Only 200 babies are born at the hospital each month.

Until very recently, Nestle defended its policy of donating free supplies to hospitals, even intimating that it would be unethical for the company to discontinue the practice. Francois Perroud, Nestle vice president for press relations, told the BBC in 1988 that "infant formula in developing countries is now less than 1 percent of our consolidated sales. It would be very easy simply to drop this matter, be rid of the controversy. Why don’t we do it? Because we believe we fulfill a need."

But the evidence indicates that companies do not make these donations for charitable reasons. Not one company donates supplies in Bangladesh or Burkina Faso, two of the poorest countries in the world. In contrast, in Canada , the biggest U.S. manufacturers bid up to C$500,000 for the "privilege" of supplying Canada’s largest maternity hospital with free formula. At Sumpaprasit hospital in Thailand, one nurse stated recently that "there are now eight different companies that ask to donate formula to our hospital. We had to set up a policy of monthly rotations because we do not want to favor any particular company." Such eagerness strongly suggests that companies give away formula because it is a successful marketing technique.

The companies even donate formula to hospitals in countries that prohibit the practice. In Malaysia, where government hospitals are not permitted to accept free supplies, one health worker reports that a number of companies, Nestle and Wyeth in particular, make use of a tender system which enables them to sell formula to hospitals at prices as ridiculously low as US$.04 per kilo. In the Philippines, where national legislation specifically prohibits donations of infant formula supplies, the companies conveniently neglect to collect payment on invoices for delivered quantities of infant formula.

Nestle still stalling

Nestle’s approach to free supplies has frustrated the groups advocating an end to the practice. As part of the agreement ending the first Nestle boycott in 1984, Nestle promised to abide by the final verdicts of UNICEF and WHO on the matter. In 1986, the World Health Assembly finally acted by resolving that maternity wards and hospitals should obtain small amounts of required infant formula "though normal procurement channels and not through free or subsidized supplies."

Instead of fulfilling its commitment and changing its policies to abide by the WHA resolution, Nestle employed its lawyers to find ways to circumvent it. When health activists applied additional pressure, Nestle announced that it was studying the problem in a few selected countries to determine the effect of ending free supplies. But even after announcing that its study in Mexico "indicate[d] that in some cases, supplies donated may be used in ways that discourage breastfeeding," Nestle agreed only to "work with international health advocates, health ministers and other manufacturers to develop normal procurement channels for infant formula for the limited number of infants who must use it."

These stalling tactics have served Nestle well. Although it first promised to abide by the International Code in 1984, Nestle has never stopped supplying free formula to hospitals. Now that hospitals have become dependent on these donations, Nestle and other members of the International Infant Food Manufacturers (IFM) contend that they cannot stop these donations until they are directed to by individual governments. An official August 1991 statement from Nestle said the company "agrees that the controversy over this issue would certainly be resolved if such supplies were bought by governments through normal procurement channels, and that manufacturers were not obliged, as they are presently, to supply infant formula in this way."

In June 1991, it appeared that the IFM companies had finally agreed to stop providing free supplies. When a letter from Peter Borasio, president of the IFM to James Grant, executive director of UNICEF, was made public, however, it turned out the IFM promised nothing more than "to work with WHO and UNICEF in a country by country process aimed at the development by governments of regulatory or other official measures as appropriate." Appearing to work with WHO and UNICEF enables the companies to polish their tarnished images while continuing to hook potential customers on free supplies.

Nasty Nestle

Nestle has a history of trying not only to improve its image but to discredit the IBFAN movement and the boycott campaigns in particular. In 1988, Nestle published and widely circulated a critique of the boycott. In the document, Nestle quoted the few phrases from a generally positive internal WHO working paper that were critical of IBFAN’s working methods. Following a complaint about public use of internal WHO documents, Nestle was forced to apologize to WHO, but in July 1989, another IFM member used phrases from the same document in a letter to a British politician.

In 1989, a plan to "neutralize critics" of Nestle, devised by the public relations firm Ogilvy and Mather, was leaked to the public. Nestle claims it rejected the plan, called "Proactive Neutralization: Nestle Recommendation Regarding the Infant Formula Boycott." Among the plan’s proposals were "interest group assessment and monitoring" and "initiat[ing] an early warning system through which Nestle gains awareness of actions being planned, and is equipped to take appropriate proactive or reactive steps" [see Nestle Undercover," Multinational Monitor, May 1989 ].

In July 1991, Nestle publicly criticized the Baby Milk Action Coalition (BMAC), the IBFAN group principally organizing boycott efforts in Europe. Caught off guard by a motion before the General Synod of the Church of England to endorse the boycott, Nestle sent a letter from P.H. Blackburn, the company’s chair and managing director, to every member of the Synod. Blackburn wrote, "I feel you should know that the promoters of this motion rely on information provided by the ‘Baby Milk Action Coalition.’ This information is demonstrably biased and inaccurate and totally misrepresents the facts which are vitally important in considering how to contribute to improved maternal and child health."

Despite this appeal, the General Synod’s motion was overwhelmingly adopted. Nestle responded by writing to 14,000 Church of England clergy members, asking that the vote be rescinded on the grounds that the corporation had not been given an opportunity to present its side of the story. Both the Bishop of Leicester, Tom Butler, and the Synod Secretary-General, Philip Mawer, defended the vote, stating that they were well informed of Nestle’s position before the vote was taken.

Promoting a breastfeeding culture

Infant formula industry critics have not limited themselves to opposing the practices of the baby food manufacturers. They are also pursuing positive initiatives to promote breastfeeding, and have successfully prodded UNICEF and WHO to join their efforts. In 1990, UNICEF sponsored a meeting in Florence, Italy of high-level government policymakers on "Breastfeeding in the 1990s: A Global Initiative." The officials adopted the Innocenti Declaration, which sets goals and policies for what James Grant, the executive director of UNICEF, has called a "massive shift" to a "breastfeeding culture."

At a follow-up to that meeting, UNICEF convened a special meeting of representatives of private voluntary organizations to discuss implementing the goals set in Florence. The organizations decided to form the World Alliance for Breastfeeding Action (WABA). According to Anwar Fazal, a former president of the International Organization of Consumers Unions and a founder of WABA, "the new global alliance, with the support of UNICEF, is set to become a formidable force in the transformation to a breastfeeding culture. The lives of some one million infants a year depend on it."

In August 1991, WABA helped UNICEF and WHO launch the Baby Friendly Hospital Initiative, which encourages hospitals around the world to support women in their desire to breastfeed. Hospitals that implement certain policies, practices and routines that enhance the initiation of breastfeeding in their maternity wards will be designated as "baby friendly." The campaign is needed, according to a UNICEF pamphlet, because "the majority of hospitals in industrialized, as well as developing countries, are not supportive enough of breastfeeding."

The focus on the infant formula industry has not been lost, however. Another major component of the breastfeeding initiative is UNICEF and WHO’s call for manufacturers "to end free and low cost supplies by the end of 1992." The companies have promised to cooperate, but their promises look as hollow as they have been since 1984.


The Commercialized Classroom

by Holley Knaus

STUDENTS IN U.S. SCHOOLS are being fed "McEducation," says Kathleen Tyner of the San Francisco-based Strategies for Media Literacy. Peggy Charren, president of the advocacy group Action for Children’s Television agrees: "Kids are getting pitched walking down hallways, kids are getting pitched eating lunch, kids are getting pitched sitting in the classroom."

Underfunded schools, desperate for resources, are increasingly receptive to corporate-sponsored educational materials and programs, and are ever more accepting of the associated commercialism and product promotion. "We are paying for educational deficits by selling kids to advertisers," says Charren.

Madison Avenue goes to school

"Kids spend money," says Tyner, and "schools are an untapped market segment."

Advertisers are reaching young people in schools through a variety of methods. Corporations now advertise to over three million students through GymBoards, a program of the New York-based American Passage Media Corporation . GymBoards places billboards in high school locker rooms with panels hawking products such as Neet hair remover and Tampax tampons alongside panels on health or social issues. Some students receive product samples in "GymBags." Sampling Corporation of America, of Glenview, Illinois, has distributed Halloween safety kits containing product samples and coupons to elementary students for over 10 years. Pizza Hut’s "Book It" program, which rewards young students with free pan pizzas for reaching reading goals set by teachers, may also lure parents into the restaurants as paying customers.

Not all corporate marketing aimed at students is this blatant or recognizable, however. Some of it "is cloaked as something else," says Jill Savitt of the Washington, D.C.-based Center for the Study of Commercialism. Lifetime Learning Systems (LLS), a Fairfield, Connecticut-based marketing service, specializes in creating, producing and distributing corporate-sponsored "educational programs" that promote the sponsor’s products or general views. Since its founding 14 years ago, claims company Vice President and Editor-in-Chief Dr. Dominic Kinley, LLS's materials have reached over 2 million teachers.

Some LLS programs amount to little more than product promotion and samples packaged as educational materials. For General Mills, LLS created a "Grow-Up!" teaching kit on fruit and nutrition that was distributed to preschoolers. Each kit contained certificates and growth charts for the students, booklets for their parents - and up to 96 product samples of the company’s Fruit Roll-Ups. According to an LLS promotional brochure, over one million samples were distributed in the classroom. Lederle Laboratories, producers of Centrum Jr. multivitamins, hired Lifetime to create a teaching kit which introduced fourth, fifth and sixth graders - at least those "in middle and upper income areas nationwide" - to the importance of vitamins and minerals.

Savitt and other critics say that materials designed to sell children products or ideas gain credibility when they are presented by a teacher in a classroom setting. Savitt says "one of those most dangerous" aspects of corporate-funded curricula is that "some kids will feel that information is completely correct, unbiased and valid because it is given to them in the classroom."

Perhaps most disturbing are programs designed not simply to sell products to students and their parents, but to influence attitudes and ideas about issues such as energy or the environment. The LLS brochure describes a program created for the Hartford, Connecticut-based Northeast Utilities with the objective of "re-educat[ing] consumers to the realities of the energy crisis and increas[ing] public support for nuclear power development." The materials, distributed in elementary, junior high and high schools in the utility’s service area, included filmstrips, a teaching kit, informational booklets and a board game on energy issues. According to the brochure, "Northeast Utilities surveyed participants in this last program to measure attitudinal change and found opinions shifting an average of 20 percent in favor of the utility’s position."

Savitt points out that large corporations and utilities do not have much competition in selling their version of the truth to kids. "Other voices," those representing environmental or consumer concerns, for example, "don’t have the money to produce materials to counter corporate" education programs that may be based on misinformation, or at least biased or one-sided information. And Charren says that many teachers, untrained themselves in identifying corporate promotion techniques, "don’t recognize propaganda when they see it."

Kinley defends the integrity of LLS’s materials. Former teachers, educators and publishers of textbooks prepare and review the company’s programs, he says, and the company has received "consistently positive responses" from teachers who have used LLS materials. Kinley also contends that critics are "raising alarms about something that has been going on in the United States for generations."

Savitt, however, says that students have never been as bombarded with corporate images and logos in the classroom as they are now. Marketing to students has become "a cottage industry [that has] spread like wildfire," she says.

Auctioning off the school day

Savitt says that getting advertising into the schools is considered "a coup" by marketers. "Advertising is so ubiquitous in our culture," she says. "It’s everywhere." And since "no one expects schools to be commercial," corporations that manage to "sneak in" advertising (disguised as curriculum or educational programs or contests) find that students greet their messages with less skepticism than usual.

Though he concedes that "marketing motives are involved," Kinley maintains corporations do not fund LLS programs "purely out of marketing interests." He says that companies see educational programs as a way "to do good for kids" and that both LLS and its clients are "very attentive as to where the line is drawn" and "very cautious" in deciding what is appropriate for the classroom. Furthermore, Kinley asserts, corporations do not necessarily influence what is taught. Materials are sent to teachers, he says, "who are free to use them or not use them" and "can shape them to their own purposes."

That is a claim of dubious validity. The U.S. education system is so poorly funded that teachers are desperate for resources and materials. Alex Molnar, a professor of education at the University of Wisconsin in Milwaukee, says that inadequate funding makes teachers "much more vulnerable to all manner of marketing" and willing to accept "any free material, no matter how tangential to [the] curriculum or how blatant in terms of its marketing motives." Savitt says that corporations and advertisers "are taking advantage of a bad situation and co-opting schools." Educators are forced into "chopping up part of the school day [and] selling it off for auction."

Not only does schoolhouse commercialism provide corporations a captive audience to whom they can pitch their products and viewpoints, say critics, but it fundamentally interferes with the learning and development process. "Learning works best when kids feel good about themselves; advertising works best when they don’t," Charren says. She says that educators must recognize the pervasiveness of the messages young people are receiving from corporations about the importance of consuming certain products. Charren insists that schools cannot teach students the importance of self-worth if they are also teaching them the importance of having the right pair of Nikes. Commercialism in schools "is wrecking education in America," she says.

One of the most blatant and better-known of the classroom hucksters is Whittle Communications, the producer of Channel One, a television news program beamed daily via satellite to 6.6 million teenagers in classrooms in over 9,000 high schools. In exchange for receiving free satellite dishes, video equipment and televisions from Whittle, schools agree to air the 12-minute program, two minutes of which consist of commercials.

In January 1991, the National Parents and Teachers Association (PTA) approved a set of principles to guide state and local education agencies in their relationships with corporations. The principles, based on the recognition that "compulsory education confers on educators an obligation to protect the welfare of their students and the integrity of the learning environment," blasted schools’ acceptance of Channel One: "Selling or providing access to a captive audience in the classroom for commercial purposes is exploitation and a violation of the public trust."

Charren says, "A television set in the classroom is a teacher. ... What we are doing is letting the teachers do the commercials." She is particularly concerned that "the Whittle idea works best where there isn’t any money" - that is, in low-income communities most likely to accept free equipment. This means that Whittle is pushing products in communities where "kids are in no position to waste money."

Even the content of the advertisements concerns Charren, who points to a commercial for Skittles candy currently being run on the channel. The ad pokes fun at clothes worn by foreign students and notes with amusement and astonishment that in some countries, students "go to school on Saturdays." Charren is outraged that Whittle runs the ad which she says reinforces a "peculiar kind of jingoistic Americanism."

Charren is also deeply concerned that if Whittle’s latest plans - to set up a system of 200 private for-profit schools by 1996 - come into play, classrooms will exist "just to give the kids a place to sit" while they watch Whittle television. This could be the "beginning of the downfall of education in America," Charren says.

Behind the beneficent corporation

Corporations have entered the schools with other, less intrusive programs. Many large corporations have sponsored large-scale education initiatives ranging from "adopt-a- school" mentoring programs to financing scholarships to opening their own "academies" in which staff members tutor students. Other corporations donate equipment such as televisions and computers (many of these donations are tied to receipt or label collection programs: the more labels from a particular product or receipts from a particular store a school manages to collect, the more corporate giveaways they "earn").

Corporations like Pepsico , IBM , Apple and American Express have earned reputations as good corporate citizens for their involvement in education. But educators assert that these reputations are often undeserved. They note that many of these same companies seek exemptions from property taxes - which fund public schools - that far surpass the value of their highly publicized donations.

Educators voice other complaints about direct corporate support of schools, as well. Pointing out that corporations tend to enter the schools with an air of saving or salvaging the U.S. education system and U.S. students, Molnar says, "Ideologically, it is important for business that public institutions be blamed for the failure of the American economy." Accusations that U.S. schools are producing unqualified graduates "takes the focus off American business and industry for its failure to provide jobs for American workers." Educators are also worried that corporate involvement supplants public schools’ mission of preparing students for participation in civic life with that of preparing students for life as workers in the free-market enterprise system.

Fighting commercialism

Opponents of the commercialization of schools agree that schools need much more money if educators are to resist relying on corporate-sponsored materials and programs.

Molnar says that "the simple and most direct way to reestablish the proper balance" between schools and corporations is to adequately "fund public schools through a steeply progressive income tax." He says a "progressive source of public funds for the public schools" divided equitably would do away with the need for "adopt-a-school" programs since "no school would be an orphan."

But Charren insists that school boards and local PTAs, as well as individual educators and parents, also have to take on some of the responsibility for keeping commercialism out of the schools. "The villains are the school systems, the school boards [as much as Whittle]. They have the power to say no," she says. "Schools have to reorganize their priorities about what it is schools should be doing - educating kids." The purpose and responsibility of the public education system is to tell kids from a variety of economic groups that what is important is "who you are and what you know, not what you have and what you can get."

"Schools should be a sanctuary for kids," says Savitt. "They are constantly bombarded with ads outside of school. Those six hours should be commercial-free."


The Tyranny of the bottom line

An interview with Ralpj Estes

Ralph Estes is a professor of accounting at American University. He is one of a handful of accounting industry renegades who have made the case for corporate social accounting to prevent corporate crime. He is the author of Corporate Social Accounting and Accounting and Society, and is currently working on a new book, tentatively entitled Tyranny of the Bottom Line.

Multinational Monitor: What is your critique of accounting as it is practiced today?

Ralph Estes: In brief, the problem with accounting is that it is a biased scorekeeper. It does not account for the multiple objectives of a corporation. It accounts for only one of those objectives. It leaves out all the rest, and this pushes corporate mangers to perform against one major goal, when in fact the typical corporation exists to achieve several goals.

MM: It accounts for return to shareholders. What are the objectives it doesn’t account for?

Estes: Each corporation will have an identified set of objectives. For some, it will be a small set, for others it will be fairly large. General Electric , for example, identifies about ten - one of which will be profitability to shareholders. The other ones might include: being a good employer, providing good products and services at a fair price, being a good citizen. [Yet] there is no accounting for any of these.

And there is no accounting above all for the major purpose for which the corporation exists. A corporation is not chartered by society to provide a return to stockholders. We allow that. But the reason we give corporations valuable charters is because we expect corporations to serve the public purpose, to do something good for society.

We have been diverted from our original understanding of the purpose of the corporation - I call it the perversion of the corporate purpose.

MM: How did the emphasis come to be on return to shareholders, when corporations have these other constituencies?

Estes: Like other major changes which occur over a long period of time in society, this perversion of corporate purpose occurred gradually, subtly and in a not very exciting fashion. When corporations were first chartered by Queen Elizabeth and her successors and then subsequently by the American colonies that became states, a public purpose was always stated in the charter and understood as the reason the corporation was granted special benefits. Along the way, investors invested, and they wanted an accounting for the investment.

As years went by, accountants kept on providing performance reports to the investors, but the state was not asking for a report on how well the corporation was producing for its public purpose. The employees were not asking for a report on how the corporation was performing with respect to employees. Consumers were not demanding an accounting from the corporation on how well it was performing for them. So we had a vacuum and the only thing filling that vacuum was the accounting report to stockholders - not to the other stakeholders.

Over the course of almost 300 years, we gradually turned from an understanding that the corporation is chartered to serve the public interest and the public purpose toward a belief that it exists to serve stockholders or the bottom line.

MM: Was it the failure of these other constituencies to demand a fair accounting, or was it instead the domination of shareholders in the process and their demand for an exclusive accounting?

Estes: I see no evidence in my research to indicate that shareholders had such a clear-cut goal. They just wanted an accounting for what they were putting into the company - a perfectly reasonable desire, since the shareholders, more than the other stakeholders, were often far removed from the geographical area of the operations on the corporation. By and large, the other stakeholders could observe what the corporation was doing.

MM: How would the new accounting system work?

Estes: A new accounting would be fairly simple in conception but not overly simple in initial execution. But then the accounting we have now is incredibly complex and very unsatisfactory, even in terms of its biased mission.

It would look pretty much like the accounting income statement we have now, with one column that shows the revenues - that’s the good; the costs or expenses - that’s the bad; and the net - the bottom line. It would include about four or five more columns, for employees, consumers, local communities and society at large. Each of these columns would show the goods that occur for these stakeholders, the bads and their bottom lines.

What will happen is that corporate managers, who now make the decisions in contemplation of how they will look on that one-dimensional bottom line, will have to think how these decisions will play out in the several columns. Being held accountable for the cost to the other stakeholders will affect their decisions.

Take the coal companies. Some 500 coal companies were cited by the Labor Department in early 1991 for doctoring their dust samples. They were condemning their workers to black lung disease, to painful illness and ultimately death, in order to save a few dollars on plant safety and dust filtering devices.

If the managers who made the decisions to falsify these dust samples had known that their annual report was not going to show simply revenues and expenses to stockholders, but was also going to show the benefits to workers in salaries and wages, experience and pensions and the costs to workers, including projected future costs of black lung disease resulting from their actions in tampering with these dust samples, then it is almost certain that their decisions would have been different.

MM: Isn’t social accounting of that nature more complex than the current accounting system which involves just dollars and cents? How do you put a price on black lung disease, for example?

Estes: I’ve done it in court testimony dozens of times. It happens every day in the courts of every community of this country, as expert witnesses come in to assess the loss to workers and to the deceased in wrongful death and personal injury cases. So it’s not nearly as difficult for people who are qualified and who have studied the area as it might appear to those who haven’t.

But we do not need to go to dollars at the outset. Dollars will come. What we need is simply information. What we need is a reporting of the layoff record of a company in all jurisdictions over several years so that workers can make informed employment decisions. What we need is detailed reporting of statistics on hiring, placement and promotion of women and minorities, so that women and minorities contemplating moving from one firm to another can see what their chances are. What we need is a reporting of the pollution emissions, the toxic substances stored, the hazardous waste created in the community.

All of this information is more or less required to be collected by the corporation and much of it is required to be reported to various federal agencies, but it is often not accessible to the people who need to know it. And when it is, it is accessible at great effort and cost, often only through Freedom of Information inquiries.

MM: So this is a step-by-step process - first disclosure, and then later requirements to factor the other costs into corporate decisions?

Estes: You won’t have to require them to factor them in. If it is in a publicly available annual report, where the public can hold the corporation accountable for what it has done, then the marketplace will do the regulating and the decisions will be different.

It is not hard to get from here to there. The first step is a very easy one. A corporation that wants to be accountable to its stakeholders, that wants to fairly account to its other stakeholders in addition to its stockholders, need start only by taking the information it presently must collect and must file with various federal agencies and put that out in a form that is accessible to all. Right now, workers are not allowed access to corporations’ EEOC [Equal Employment Opportunity Commission] filings, for example, so that the people who are most affected by whether a corporation is discriminating cannot judge for themselves whether they are going into an environment that is discriminatory.

MM: It is not a secret that Du Pont produces chemicals that destroy the ozone layer. It’s been reported in all the major media outlets. So what effect does it have if Du Pont reports what everyone knows?

Estes: It’s kind of a phenomena of "What’s today’s news?" The coal companies, for example, were very much in the news in early 1991 and again in late 1991, when new indictments were released. [But] we may never hear any more about the coal companies.

What I’m talking about is every year, at corporate report time, the information comes out and anytime an individual, a worker, a city council member or a member of Congress wants to find out what the corporation is doing in these important areas, he or she can simply go to the corporate report. Right now, when a worker wants to find out what the employment environment with respect to discrimination is at Du Pont, they don’t know where to go and they sure don’t have the means to go back and research newspapers for the last several years to see if there has been any story reported on it.

Imagine this: the corporate reports for all the corporations in Philadelphia, for example, are released by March 31. These are filed with the Corporate Accountability Commission in Washington, but they are also filed with the clerk’s office in cities in which the corporation does business, and with labor district offices and in the corporation’s headquarters. The news media jumps on this just like they do the stockholders’ report today. And on the nightly business report, we have a detailed comparison of the pollution of all of the large corporations located in Philadelphia, a comparison of what they are doing now and how they have changed over the last year. The media seeks interviews with the CEOs and the environmental protection officers of these corporations to explain [their performance].

Do you think that these people will be ignoring pollution in the next year? They would be making different decisions. The same would be true for safety issues and product liability issues - it would be a different and a more responsible corporate America. And in fact, it would be one that corporate managers would much rather work in, because it would free them to be as good as they want to be, instead of being bound now to the tyranny of the bottom line.

MM: If a member of Congress approached you and asked you to draft legislation to put into effect this new accounting, what would you propose?

Estes: We would rename the Securities and Exchange Commission the Corporate Accountability Commission. And we would require all companies meeting certain size requirements to file an annual corporate report. Initially this corporate report would contain the information presently included in the 10-K and the information presently being filed with other regulatory agencies - information that the corporation now gathers and information the corporation now reports. So, there would be no additional cost to the corporation.

Then, the Corporate Accountability Commission would hold hearings and conduct research to determine the information needs of the several stakeholder groups, including stockholders, who are not well served by the present system. It would undertake to identify the major information needs of workers - [information relating to] safety issues, toxic substance issues, layoff issues. It would undertake to identify the major information needs of consumers, of communities. And from all this, and over time, the Corporate Accountability Commission would establish more relevant reporting requirements.

Several years down the road, we would have a fairly comprehensive corporate report available to all stakeholders.

MM: You argue that in corporate America, we are not dealing with evil people but with a system that leads to evil results. But corporate executives realize this. They could act to move in a different direction, but they don’t.

Estes: Some try to. And there are examples of companies trying to swim upstream against the tide, but that inexorable pressure of the bottom line keeps drawing them back, and as soon as the one CEO leaves, or as soon as times get a little bit hard, back they come to the same kind of behavior they were engaging in in the past. Yes, there are some very commendable efforts of corporations to serve the needs and the interests of the whole set of stakeholders, but they are fighting a pressure that almost nobody can stand up against for any long period of time.

The standards of that system say this: If you are faced with a question of closing a plant in Dodge City, Kansas that will put 5,000 people out of work and devastate a community, devastate a school system, devastate a police department, devastate the social fabric of that community, in order to move that plant to Juarez, Mexico to earn a .5 percent higher return on investment for the stockholders and a few pennies more in earnings per share, the system now says, "Hey, you’ve got to do it." You can feel sorry for Dodge City, but you’ve got to do it. And managers don’t like to do that, but they do it.


Fronting for Business

by Mark Megalli and Andy Friedman

AN OCTOBER 18, 1991 ARTICLE in the New York Times titled "Court Lets ‘Baby Bells’ Branch Out," quotes the Alliance for Public Technology and identifies the group as "a Washington-based association representing educators, the disabled, the elderly, and other groups that favor quickly expanding the availability of information services." In fact, APT is a corporate front group, set up by the Bell companies to push government to allow the regional phone companies access to a multi-billion dollar information services market. Genuine consumer groups oppose allowing the regional Bells access to this market, fearing market concentration in communications.

A September 1, 1991 front page New York Times article titled "Experts Question Staggering Costs of Toxic Cleanups," reports that "environmental experts" are questioning whether the U.S. government’s program to clean up hazardous waste dumps is worth the estimated $300 to $700 billion cost. The environmental experts referred to in the article say it isn’t. But who exactly are these environmental experts? One is Tom Grumbly, who the Times reporter identified as an "environmentalist who is president of Clean Sites, a non-profit organization in Virginia that advises communities on hazardous waste cleanups."

Actually, Grumbly, as he himself pointed out in a September 11, 1991 letter to the Times, does not represent an environmentalist constituency. Clean Sites is a corporate front group, concerned about the costs to its sponsors of toxic cleanups.

Every day, groups with deceptive names, groups that represent major U.S. corporate powers, seek to dupe journalists and citizens into believing that the reports they produce and the positions they advocate are something other than the usual corporate propaganda.

The reason is simple: it is easier to believe disinformation when the disinformation is coming from an apparently uninterested party.

The rise of corporate front groups in the United States is a recent phenomenon, a direct response to the burgeoning consumer, citizen and environmental movements. Before these movements took hold in the late 1960s, major corporations delivered their messages through their lobbyists in Washington. The names of these traditional corporate lobbies told the stories - The National Coal Association, Chamber of Commerce, American Petroleum Institute.

But as public-interest groups began to win widespread public support, it became clear that new mechanisms were needed to deliver the corporate message.

If Burger King were to report that a Whopper is nutritious, consumers would probably roll their eyes in disbelief. If Anheuser-Busch were to report that a beer a day could lead to a happier life, consumers might see this as another attempt to sell beer. And if the Nutrasweet Company were to insist that aspartame has no harmful side effects, consumers might be skeptical.

But when the American Council on Science and Health and its panel of 200 "expert" scientists report that Whoppers are not so bad, consumers might actually listen. When the Health Education Foundation, headed by Dr. Morris Chafetz, reports on "The Good of Alcohol," beer drinkers might be less inclined to cut down on drinking. And when the "Calorie Control Council" reports that aspartame is not really dangerous, weight-conscious consumers might continue dumping the artificial sweetener in their coffee every morning without concern.

Increasingly, big business is creating front groups to influence legislators, the media and consumers. These corporate front groups advertise, hold conferences, publish newsletters and reports, write editorials and appear on talk shows in an effort to sway public opinion toward industry views.

How to be a front

An average person reading about Citizens for Sensible Control of Acid Rain would probably take the name at face value, assuming the group is mostly comprised of citizens wishing to curb acid rain. In fact, the group’s membership list includes no individual citizens.

Often, the use of a scientific-sounding name is the most effective tool for peddling an industry position on an issue. This method is employed by many of the chemical and nuclear power companies. Examples include the Council for Agricultural Science and Technology, the American Council on Science and Health and the Information Council on the Environment. Contrary to their names, these groups often disregard compelling scientific evidence, arguing, for example, that pesticides are not harmful, saccharin is not carcinogenic or that global warming is a myth.

Another tactic is to use a name which suggests concern for the public interest. Organizations which utilize this tactic want the public to believe they are environmentally sensitive or are consumer advocates, when in fact they are primarily concerned about their sponsors’ profits. For example, the National Wetlands Coalition, which uses the logo of a duck flying blissfully over a swamp, is working to make it easier for landowners to transform wetlands into shopping malls or oil drilling sites. And Consumer Alert fights adamantly against government regulations concerning product safety.

In several instances, front groups use buzzwords in their names which are immediate tip-offs to questionable motivations. Words like "sensible," "responsible," and "sound" indicate probable corporate backing. These reserved terms tend to downplay the severity of environmental dangers such as acid rain and ozone depletion by implying that admitting to and confronting these crises would not be sensible, responsible or sound.

Finally, there are the groups that simply have innocuous-sounding names which give no indication of the groups’ ties to business. These groups have names which may even reveal their true agenda. However, because the name does not indicate corporate sponsorship, the real motivation behind the agenda is not made clear. For example, although the American Tort Reform Association is pushing for the reform of state tort law to benefit the association’s business and corporate members, its name does not include the words "industry," "business," "corporation" or "company."

Front groups’ funding, control and membership are usually exclusively corporate, although groups often purport to have high grassroots involvement in one of these areas to give an air of authenticity.

Some organizations, established and entirely funded by corporations in one industry, are pure industry fronts. The Council for Solid Waste Solutions, for example, is nothing more than an amalgamation of plastics industry corporations. It was conceived and created, and is funded and controlled by, plastics manufacturers wishing to improve their public image.

Many public relations front groups simply operate out of the offices of a public relations firm, with employees of the firm often acting as directors. This is also true of many of the lobbying front groups, given their transient nature. Other groups work out of the law offices of the firms that act as their counsel. And still others are located in the same offices as one of their larger corporate or trade association supporters. The Alliance to Keep Americans Working, an anti-labor coalition of 90 business organizations, for example, lists the same phone number and address as that of the U.S. Chamber of Commerce.

People for the West!, on the other hand, is funded and controlled by mining companies, but has a significant roster of individual members. Miners and loggers certainly have a vested interest in securing their jobs, so it is no wonder that they join this organization, which has a pro-mining and pro-timber agenda. However, because People for the West! is heavily funded and controlled by large mining and timber companies, it qualifies as an industry front, despite its grassroots membership.

Tobacco and alcohol corporations, like the mining and timber companies, also tend to set up "grassroots" organizations - in this case, to fight for lower excise taxes and pro-smoking and drinking legislation. These groups - such as Smokers’ Rights, People United For Friendly Smoking and Beer Drinkers of America - are heavily funded by industry, and the members are used as pawns by corporations lobbying for pro-industry legislation. In an attempt to create the appearance of widespread popular support for industry positions, these front groups ask their members to sign pre-written letters and send them to their Congressional representatives.

The life of a front

Front groups tend to focus their activities on lobbying, public relations or a combination of both. Obviously, the groups which focus on lobbying tend to be more transient. The Coalition for Vehicle Choice was created by auto makers to lobby against the federal legislation which would increase the current corporate average fuel economy (CAFE) standards from 27.5 to 40 miles per gallon. When Congress votes on the bill, the Coalition will most likely dismantle.

Historically, other groups have come and gone. The Clean Capital Cities Committee was formed in 1987 to fight a proposed mandatory bottle deposit law in Washington, D.C. The group, which was created by beverage companies, bottlers and grocery stores, dismantled when it succeeded in defeating the bill. And the Clean Air Working Group, which fought to weaken the Clean Air Act of 1990, dispersed upon the bill’s passage. The group was the creation of several coal companies and spent millions of dollars in its attempt to thwart clean air legislation.

Most other front groups which do not focus solely on legislation have been created as public relations arms for industries. These groups serve corporations which have an inherent need to better their public image in order to remain profitable - cigarette manufacturers, alcohol distributors, producers of ozone-depleting chemicals, producers of hazardous waste, oil drillers and others.

Front groups are not limited to one particular industry or issue. They are used by tobacco corporations and nuclear power companies alike; by mining interests and asbestos manufacturers; by the National Association of Manufacturers and the Arctic Slope Regional Corporation.

Key areas in which front groups operate include:

o Environmental pollution. Corporations have established groups designed to counteract the furor over ozone depletion, wetlands preservation, solid waste and especially energy-related issues, such as global warming and acid rain.

o Public health. Front groups exist to argue for the safety of pesticides, food irradiation, junk food, tobacco and alcohol.

o Worker rights and safety. Clashes between labor and business are as old as capitalism, but corporations now rely on front groups to challenge the police authority of the Occupational Safety and Health Administration and to decrease labor union negotiating power.

Not all powerful industries have found it necessary to utilize such groups, however. Notably, the gun and defense industries appear able to successfully promote their agendas without using front groups.

Though gun manufacturers seem likely candidates to set up fronts to defeat legislation such as the recently passed Brady bill, which imposes a five-day waiting period for the purchase of firearms, the National Rifle Association itself performed most of the lobbying in opposition to such legislation. Smaller groups, such as the Citizens Committee for the Right to Keep and Bear Arms, have also battled such legislation, but they do not seem to be funded by gun manufacturers.

The defense industry, which has also avoided the use of front groups, has enjoyed a political climate which has posed little threat to its profits.

For those industries that perceive themselves as under attack from citizens’ organizations, however, front groups are an ever-more popular tool. They promise to proliferate unless citizens groups can successfully unmask them.


Corporate Front Groups

Alliance to Keep Americans Working

Alliance for Responsible CFC Policy

American Council on Science and Health

American Smokers Alliance

American Tort Reform Association

BACCHUS of the U.S., Inc.

Beer Drinkers of America

Calorie Control Council

Citizens Against Government Waste

Citizens for Sensible Control of Acid Rain

Citizens for a Sound Economy

Coalition for American Energy Security

Coalition for Vehicle Choice

Colorado River Resources Coalition

Consumer Alert

Consumers for World Trade

Council for Agricultural Science and Technology

Council for Solid Waste Solutions


Health Education Foundation

Information Council on the Environment

Keep America Beautiful, Inc.

Living Lakes, Inc.

National Institute for Chemical Studies

National Legal Center for the Public Interest

National Right to Work Committee and Legal Defense Foundation

National Safety Council

National Wetlands Council

Pacific Legal Foundation

People for the West!

Product Opinion Laboratory

Project New Start

Restaurants for a Sensible Voluntary Policy

Safe Buildings Alliance

United States Council for Energy Awareness

Workplace Health and Safety Council


Front Group Case Study:

American Council on Science and Health

IN 1989, the Natural Resources Defense Council (NRDC) published the results of a two- year study of the plant growth enhancer Alar. The group found that this chemical, when sprayed on apples used in juice and applesauce, posed a serious cancer risk for children, who tend to consume a higher proportion of these foods than do adults. The question of what to do about the findings held a prominent spot in the public eye throughout the early months of 1989. Occasionally, headlines such as, "Hysteria Obscures Issue of Toxins, Carcinogens," "Doctor Says Alar Fear Needless," and "Consumer Health Advocate Fights ‘Ban Everything’ Trend," would appear in the nation’s largest publications. The author of, or spokesperson quoted in, these articles would usually be Dr. Elizabeth Whelan, PhD. Whelan is executive director of the American Council on Science and Health (ACSH), a self-proclaimed "public education group directed and advised by over 200 prominent scientists, physicians and policy experts."

When publications listed these credentials, or stated even less about the doctor and her group, it was easy for a reader to take the point of view expressed at face value. Readers were left unsure how dangerous Alar really was. But when following a March 14 Wall Street Journal article by Dr. Whelan, entitled "Apple Dangers Are Just So Much Applesauce," the editor added, "Mrs. Whelan heads [ACSH], a New York group that gets about 10 percent of its funding from pesticide producers such as Uniroyal Chemical Co., the maker of Alar," readers might have begun to wonder.

A closer look at the entire list of ACSH’s major contributors reveals that the group is funded almost entirely by corporations within the food, drug and chemical industries, including Dow Chemical U.S.A., Kraft Foundation, The Nutrasweet Company, PepsiCo Foundation, Inc., General Mills, Inc., the Anheuser-Busch Foundation, Archer Daniels Midland Co., Burger King Corporation and The National Starch and Chemical Foundation. ACSH promotes corporate interests by promoting the idea that almost no food, drug or chemical is harmful if consumed in moderation. Low doses of asbestos, caffeine, Agent Orange and PCBs are all harmless, it claims. According to Dr. Whelan, there is "no such thing as ‘junk food’ and ... there is insufficient evidence of a relationship between diet and any disease." Furthermore, "cancer, except that from smoking, is overrated as a threat and ... the chemical industry is taking a bum rap for its publicly perceived role in raising cancer rates." Almost every one of these claims is dependent on the group’s contention that animal studies do not provide a fair gauge of health risks posed to humans.

ACSH’s work clearly benefits its corporate patrons. As Mike Jacobson, executive director of the Washington, D.C.-based public interest organization, Center for Science in the Public Interest (CSPI), puts it, "Industry invests in this pretend consumer group, and the investment pays off nicely when there’s a controversy." He notes that "most reporters, wire-service people and local TV reporters don’t have any idea who the group is."

In the face of constant criticism concerning her group’s biases, Whelan justifies her findings by referring to her panel of 200 "scientists and other experts," 20 to 100 of whom review every position paper ACSH publishes. But Peter Harnik, in a report on ACSH for CSPI, says the list of experts is "designed to look impressive to the casual observer... [but] a close look at it reveals a pro-industry bias to warm the heart of a junk food salesman." According to Harnik, the scientists are mostly consultants, paid representatives or employees of corporations in the food, drug and chemical industries. And in 1989, a member of the "scientific panel" wrote to Dr. Whelan: "I am concerned that the Council is bending too far in favor of protecting industry without a balancing concern for the safety of the consumer. ... I think it is now time that I remove my name from the list."

- M.M. & A.F.


Front Group Case Study:

Coalition for Vehicle Choice

WORSENING PROBLEMS with global warming, acid rain, smog and and oil spills have made energy conservation ever more important. Hoping to address this situation, Senator Richard Bryan, D-Nevada, has proposed a bill that would raise Corporate Average Fuel Economy (CAFE) standards by 20 percent by 1995 and 40 percent by 2001. The automobile industry opposes the Bryan bill and led a successful campaign against it in 1990, which culminated in the bill’s defeat. However, with fears concerning U.S. dependence on foreign oil intensified by the Persian Gulf War, the bill was reintroduced in 1991. And the auto industry has gathered its forces together again.

In the 1990 campaign, industry defeated the bill by claiming that it would do little to combat air pollution or save gas, and that it infringed upon U.S. citizens’ right to drive large cars. In 1991, the industry chose a new tack. Hidden behind the "Coalition for Vehicle Choice" (CVC), U.S. auto makers and suppliers now claim that increasing CAFE standards would compromise safety.

The Coalition was founded by Motor Vehicle Manufacturers of America (MVMA) of the United States, the National Automobile Dealers Association and the Association of International Automobile Manufactures (AIAM), with initial funding coming from MVMA and AIAM. The Coalition’s spokesperson, Ron Defore, who is also vice-president of the public relations firm E. Bruce Harrison Co., has said that CVC has "never tried to hide" the sources of its support. However, the Big Three auto makers, which provided the primary funding, are only listed as members of the Coalition through the MVMA. Furthermore, CVC ads claim that the group is supported by "over 200 automotive, and other business, consumer, farm, and safety organizations." Actually, its membership includes exactly one consumer organization - the pro-industry, corporate-funded Consumer Alert, two safety organizations which are also auto industry fronts (the American Coalition for Traffic Safety and the Detroit-based Traffic Safety Now) and less than 100 individual consumers.

CVC is headed by former National Highway and Traffic Safety Administration (NHTSA) Administrator Diane Steed, who has long opposed strict auto safety regulations. According to the consumer groups Public Citizen and the Center for Auto Safety, in her six years as administrator, Steed "compiled a dismal record trying to revoke existing safety standards and failing to act on others." Since leaving NHTSA, she has made about $150,000 a year as a consultant testifying in product liability cases, and now earns an additional $144,000 per year as CVC head.

Coalition for Vehicle Choice ads claim that increased CAFE standards "will leave [automakers] little choice but to build smaller, lighter cars - at the expense of safety." The ads feature a small car being crushed by a larger one in a crash test, and end with the line: "Fuel economy is important, but safety is vital."

These sentiments are moving, but irrelevant. A Center for Auto Safety report titled "The Safe Road to Fuel Economy" shows that "for a given population of cars there is no relationship between CAFE and current levels of safety." The report points out that of the 13.8 miles per gallon gain in CAFE achieved between 1974 and 1991, only 1.4 percent resulted from an actual down-sizing of automobiles. The large majority came from technological improvements. The Center for Auto Safety concludes that cars can attain a CAFE level of 40-45 miles per gallon, while simultaneously reducing the vehicle fatality rate.

- M.M. & A.F.


The Plant Closing Epidemic

by Robert Weissman

IN OPPOSING LEGISLATION that would require employers to notify their employees before they shut down factories or made mass layoffs, then-President Ronald Reagan criticized the proposal as a set of "arbitrary rules laid down by politicians and enforced by Washington bureaucrats" that would constitute an unfair burden on business. He called the legislation "a ticking time bomb in the back seat of a medium-sized or larger company that is stripping down and overhauling so it can keep on track with foreign racers."

Despite Reagan’s opposition, national concern about an epidemic of plant closings led to the passage of the Worker Adjustment and Retraining (WARN) Act in August 1988. After the bill passed the House of Representatives and Senate by overwhelming margins, Reagan reluctantly let it become law.

The Act requires that businesses employing more than 100 workers give employees 60 days notice of layoffs, if they lay off more than 50 workers at a given site. It exempts companies from the notification requirement if a plant closure is due to a sudden business downturn or if notification would adversely affect a company’s ability to procure credit needed to maintain operations.

Three years after the WARN Act’s passage, none of the fears expressed by Reagan or the bill’s other opponents have materialized. What has become apparent, however, is how little protection the WARN Act actually affords workers. Plant closings in the United States have continued unabated, and companies have used loopholes in the Act to avoid compliance.

The second annual "Plant Closing Dirty Dozen," issued in February 1992 by the Federation on Industrial Retention and Renewal (FIRR), a national job retention coalition, clearly illustrates the shortcomings of the WARN Act. It demonstrates a distressing pattern of corporate irresponsibility in closing businesses. "This year’s ‘Plant Closing Dirty Dozen’ shows graphically that many corporations continue to treat workers with callous indifference when they abandon a plant," says Howard Metzenbaum, D-Ohio, the original author of the WARN Act.

No warning signs

The Plant Closing Dirty Dozen makes clear that many companies are manipulating the circumstances of plant shutdowns to avoid complying with the WARN Act. Metzenbaum says, "I am especially disturbed by companies that try to manipulate the numerical triggers in the WARN Act - or rely inappropriately on the Act’s narrow exceptions - in order to avoid giving notice."

Companies that fail to provide 60 days notice can be forced to pay workers up to 60 days back pay, and can be fined up to $500 a day for each day they fall short of the 60- day notification period, up to a total of $30,000. Enforcement of the WARN Act, however, falls to the laid off workers themselves. While this frees them from relying on government agencies, it requires laid off workers - frequently non-union and unorganized - to hire a lawyer and sue for back pay.

Three of the dirty dozen shutdowns in particular illustrate techniques corporations are using to avoid compliance with the WARN Act, the difficulties workers face in using the Act and the hardships failure to comply imposes on workers:

o On January 25, 1991, Durham Hosiery , a division of the Danville, Virginia-based Durham Knitting Co., told approximately 1,200 workers in four plants in Eastern Tennessee and one in Northern Georgia that their plants were closing. Durham Hosiery gave workers between zero and 34 days notice, according to Bill Tomko, director of the Tennessee Industrial Renewal Network (TIRN).

Workers at the five plants were non-unionized and, says Tomko, while many knew about the WARN Act, they thought it was automatic. "They did not know about the loopholes," he says, and "they did not know that they needed to go to court to enforce it."

TIRN helped organize the laid off workers, who have now filed a class action suit seeking back wages and benefits for every day they were not properly notified.

When Durham Hosiery announced the plant closings, it told the workers that the closures came in response to market conditions, and that it had provided workers with as much notice as possible. This claim, if found valid in court, will enable the company to avoid giving back pay to the laid off workers, since the WARN Act exempts businesses who are forced to make mass layoffs as a result of "unforeseen business conditions."

The workers, however, assert that Durham Knitting did not come upon hard times as a result of a sudden change in market conditions. Tomko says that documents from Durham Knitting’s creditors show that the company was in dire straits nine months before it announced the shutdowns, having accumulated a debt of $20 million. He adds that supplies to the company were intermittent for nine months to a year before the shutdowns and that workers heard rumors that the company was experiencing financial hardship long before they received their layoff notices.

Dana Rust, a lawyer representing Durham Hosiery, acknowledges that the company had experienced numerous financial difficulties in the period preceding the shutdown announcement, but says it was "not clear [the company] would not be able to resolve them." He says Durham Knitting was "considering many different options at the time," and was hoping for new financing or to find a buyer for the division. Once it was apparent that Durham Knitting would be closed, he states, the company notified its workers immediately.

Jim Lefever, attorney for the laid off workers, says he hopes Durham Hosiery will agree to settle the workers’ suit. He says his goal is "to get some dollars flowing to the people" who were laid off as quickly as possible and to avoid a time-consuming trial and subsequent appeals. In deference to the company’s financial weakness, he proposed to Durham Hosiery that it pay the workers a portion of what they are owed every month.

Durham Hosiery has rejected Lefever’s offer, however. Rust says the settlement offer requested more compensation than the workers are entitled to receive even if the WARN Act is found to apply to the Durham Knitting closings.

o On April 11, 1991, Emery Worldwide Delivery , the former Purolator Currier and now a division of Consolidated Freightways, gave dozens of its Pittsburgh workers letters instructing them to attend a mandatory meeting two days later. At the April 13 meeting, Emery told the workers that they were being laid off. According to Bill Tomko, one of the laid off workers and formerly a driver with the company, the company gave workers 20 minutes to disperse and leave the premises. Workers received no severance pay.

The layoffs in Pittsburgh were part of a nationwide layoff of more than 1,000 Emery Worldwide workers.

Laid off workers in Pittsburgh, with Tomko taking the lead, contacted Emery employees nationwide, and discovered a pattern. In the year prior to the layoffs, Emery had gradually downsized the terminals that it eventually closed. When it announced the April 13 layoffs, fewer than 50 workers were still at each terminal, enabling Emery to claim that the layoffs were not subject to the WARN Act requirements.

In Pittsburgh, laid off workers are claiming that Emery had treated the two terminals it closed as a single operating unit. Paul Girdany, a lawyer representing the laid off workers, says the two terminals were "operationally integrated and run as one functioning unit." Since 55 workers total were laid off at the two terminals, the Pittsburgh workers are claiming they should be accorded the WARN Act’s protections. In August 1991, they sued for 60 days back pay and attorneys’ fees.

Girdany says Emery’s action was "a blatant violation of the WARN Act." The layoffs were simply a "corporate money saving gesture," he says, not necessitated by a business downturn. The laid off workers’ jobs, according to Girdany, have now been taken over by subcontractors.

Girdany says that Emery has "basically denied everything" in response to the workers’ WARN Act complaint and has made it clear that it plans to fight tooth and nail. "There is no excuse for this," Girdany says. The laid off workers "made the company what it is" and were "sacrificed."

Emery did not respond to repeated requests for comment on the layoffs and the WARN Act suit.

o Workers at the Arthur Winer Corporation , a Gary, Indiana producer of men’s clothing, never even received a termination notice when they lost their jobs. In April 1990, according to Lynn Feekin, director of the Calumet Project for Industrial Jobs, a community- and labor-based coalition working on job retention in Northwest Indiana, Winer told its 240 workers that the company was having a "sew-out." The plant would be temporarily shut, the company said, while it unloaded its inventory and searched for a new owner or worked out some other kind of arrangement to reopen. In the meantime, a Pennsylvania-based company, Ascher Pants, was to produce the Winer line in order to keep it alive.

The Winer workers "were left with their lives up in the air while they waited for something to be put together" so that the plant could be reopened, says Feekin. Within a few months, however, Ascher Pants had bought Winer’s customer list and its label. The Winer plant never reopened, and it has now deteriorated significantly, probably beyond repair.

The workers - 232 of whom are women and most of whom are East European with poor English skills - filed a WARN Act suit in February 1992.

Many of the workers are still without jobs, according to Feekin. Their treatment was a disgrace, she says. "Some of them put 24 years in there and they got zip - not even the courtesy of a note saying the plant was being closed."

Winer could not be reached for comment.

A warning is not enough

As serious as the enforcement problems and loopholes in the WARN Act are, the biggest problem with the plant-closing legislation is what it does not even try to do. The WARN Act guarantees workers a minimal safety net, but ultimately it does nothing to protect workers’ jobs from the vagaries of corporate greed or mismanagement.

There are plenty of reasons for plant shutdowns. The debt-driven leveraged buyouts, mergers and acquisitions of the last decade have forced many companies to pare operations, often closing or cutting back once-viable operations. FIRR’s Plant Closing Dirty Dozen includes five finance-related shutdowns. The lure of cheap foreign labor is another major factor contributing to plant closings in the United States. Two of the Dirty Dozen involve plants closing or workers being laid off so that production can be shifted to low-wage operations in Mexico . Some plants also close to take advantage of a variety of tax incentives, such as Internal Revenue Service Code 936, which grants a 100 percent tax credit on all Puerto Rican profits of U.S. subsidiaries. Three of the Dirty Dozen fall in this category.

Yet advocates for displaced workers believe the WARN Act has had some positive impact, despite its pitfalls. The primary effect, says Jim Benn, the executive director of FIRR, has been psychological. To at least some degree, he says, workers now know that they have rights if their plant closes.

The passage of the law itself was important, he adds, since it establishes that there is some "corporate responsibility to [address] the social impact of deindustrialization." He hopes that the WARN Act will serve as a wedge, which, as plant closings continue and U.S. workers’ suffering intensifies, will open the way for more far-reaching legislation in the future.

The first step in addressing the plant closing epidemic, Benn says, will be to enact into law many of the provisions contained in the original draft of the WARN Act. These include mandating longer notice to displaced workers, lower trigger mechanisms (meaning the Act would apply to workers at smaller facilities) and a requirement that companies planning to shut factories at least discuss alternatives to closure with the affected communities.

Ultimately, Benn says, protecting communities and workers will require the institutionalization of a process that weighs "the needs of corporations versus the social needs of communities." Profit maximization should not be the only criterion for deciding whether a plant should stay open, he insists. In instances where a facility can operate profitably - though perhaps not at the most profitable level - the needs of communities should take precedence. And where a corporation does decide to abandon a facility, he says, alternatives to closure - such as transfer to different management or employee or community ownership - should be considered.

The key to stemming the plant closing epidemic, says Benn, will be "restrict[ing] the rights of capital." Unfortunately, in the present U.S. political climate, the prospects for such restrictions are not bright, and it is likely that many more workers and communities will be forced to deal with the pain of plant shutdowns before meaningful steps are taken to treat the problem.

Corporate Profile

The Westinghouse Web

by Jim Donahue

"BIG PLAYERS can dominate the market," Westinghouse Chair and Chief Executive Officer Paul Lego told the Senate Judiciary Committee at a January 1992 hearing, as he and other U.S. CEOs lobbied Congress to enact stronger antitrust laws. The comments were extremely ironic, since Lego heads a diversified corporation that commanded $12.8 billion in sales in 1991 and employs 116,000 people worldwide.

Lego and his colleagues were not seeking stronger laws to prevent abuses stemming from the size of their own corporations, however. Rather, they were lobbying for greater restrictions on foreign competitors encroaching on their corporate oligarchy in the United States.

But Westinghouse’s own record serves as an excellent example of why antitrust laws should be strongly enforced - and why stronger laws are needed - for both foreign and domestically based corporations operating in the United States. There is no question that Westinghouse has engaged in illegal oligopolistic practices, as Westinghouse Canada’s 1977 conviction of conspiring with General Electric Canada and GTE Sylvania Canada to prevent competition in the light bulb business demonstrates. Westinghouse was fined $150,000 for the illegal activity.

Westinghouse’s size is not merely a technical or academic matter. Because of its powerful market position, Westinghouse is insulated from competition in many of the industry segments in which it operates. In many cases consumers - whether individuals, other businesses or governments - cannot easily turn to an alternative supplier. This has enabled the company to bilk consumers and taxpayers and pollute the environment with some degree of impunity. In the nuclear equipment industry alone, Westinghouse has been the defendant in scores of suits charging the company with manufacturing defective reactors, breaching uranium supply contracts or violating antitrust laws.

Westinghouse’s sprawl

George Westinghouse, the inventor of the train air brake and technology that allows for long distance electrical transmission, founded the company in 1886. In 1920, the company set up one of the first radio broadcasting stations, KDKA.

Today, Westinghouse is a massive conglomerate, active in seven business segments: radio and television broadcasting; electronics products; financial services; transport temperature control equipment and other industrial operations; office furniture manufacturing; power systems; and environmental cleanup services.

Much of Westinghouse’s business is in industries that tend to have few competitors. Its Thermo King unit accounts for nearly 75 percent of the truck refrigeration market in the United States, for example. In the nuclear field, in 1991, Westinghouse exclusively supplied reactor coolant pumps, nuclear fuel and other products and services to 51 of the 111 operating nuclear reactors in the United States, five of the seven reactors in Belgium, six of the nine reactors in South Korea and six of the nine reactors in Spain.

The corporation also manages and operates six U.S. government-owned nuclear facilities involved in uranium production, fuel reprocessing and/or nuclear waste disposal. The U.S. government awarded $3.49 billion in non-military contracts to Westinghouse in 1990, making the company the largest civilian government contractor. Over 90 percent of those contracts were awarded by the Department of Energy (DOE) for nuclear operations. In the same year, Westinghouse received $2.2 billion in military contracts, making it the twelfth largest defense contractor.

Westinghouse operates 77 manufacturing plants in 20 states and Puerto Rico . It also operates in Canada , Brazil , Australia , Germany , France , Italy , Ireland , Switzerland and Barbados . In 1990, foreign subsidiaries accounted for 12 percent of the corporation’s consolidated sales and operating revenues, and exports accounted for an additional 9 percent.

Westinghouse is currently involved in modernizing Russia’s air traffic control system as well as Poland and the Czech and Slovak Republic’s fossil-fuel power plants. In January 1992, Westinghouse won a $10 million contract with the government of Bulgaria to design and start up the first low-level radioactive waste processing plant in Eastern Europe. The waste will be processed at the Kozloduy nuclear power plant north of Sofia.

Westinghouse even owns a financial institution, Westinghouse Credit Corp., which lost $1.48 billion in the fourth quarter of 1991, due primarily to sour real estate loans. The company’s current troubles contrast starkly to its performance in the 1980s, when Westinghouse handed out loans like candy. Between 1981 and 1990, Westinghouse Credit’s assets increased from $2 billion to $10 billion and the unit’s earnings were a major contributor to the corporation’s overall profits. Its real estate portfolio increased from $300 million to $2 billion. By the end of 1991, however, two thirds of its real estate loan portfolio of $4.5 billion was classified as non-performing, which means borrowers have stopped paying interest on loans.

The unit is currently selling more than $700 million worth of assets to cover its losses, a measure that will adversely affect workers, many of whom are likely to be laid off by the assets’ new owners.

Hurting workers, the Westinghouse way

During his testimony before the Senate Judiciary Committee, Lego maintained that foreign competition is "hurting workers." He neglected to mention Westinghouse’s own dismal record in dealing with its employees.

Westinghouse has one of the most contemptuous labor records in the United States. A recent study by Essential Information found that from 1977 through 1990, the federal Occupational Safety and Health Administration (OSHA) cited Westinghouse for 1,338 violations of worker safety regulations, making it the second largest violator among the 50 largest corporations in the 1990 Fortune 500. During the 1980s, Westinghouse treated workers’ lives like commodities, selling more than 70 businesses and acquiring over 50.

Westinghouse employees have emerged as some of the harshest critics of the company’s endemic corruption, which is fostered by its large size. Whistleblowing workers have drawn attention not only to the company’s deplorable worker safety record, but to its history of contaminating and polluting the environment, endangering communities and overcharging the U.S. government.

Westinghouse takes its worker-critics seriously, especially because its oligopolistic position renders it somewhat impervious to pressures that might heel other corporations. The company has become notorious for harassing workers who complain about safety problems.

Westinghouse has made its contempt for worker privacy, safety and health most clear while operating the DOE’s Hanford Nuclear Reservation in Washington:

o Last August, the DOE’s Inspector General reported that the company’s Hanford plant illegally possessed equipment used for wiretapping and eavesdropping. Though the DOE failed to obtain direct evidence that Westinghouse spied on workers, the equipment did give Westinghouse the ability to eavesdrop on 200 telephone calls at once and to hear conversations through walls. The corporation denied using the equipment, claiming it was acquired by a previous contractor.

o An investigation by the Department of Labor determined that Westinghouse supervisors harassed Hanford engineer Inez Austin in 1991 for revealing a safety problem. Austin refused a Westinghouse order to transfer highly radioactive nuclear waste from one underground storage tank to another after determining that chemicals and radioactive materials might mix during the transfer and touch off an explosion. Westinghouse subsequently threatened to fire Austin and ordered that she see a psychiatrist for not following orders. The corporation eventually settled Austin’s complaint by providing her with one month’s back pay and removing critical remarks about her from its files.

o Westinghouse and Hanford’s previous contractor, Rockwell International, harassed another employee, Ed Bricker, after he publicly disclosed safety flaws that were later confirmed by the Department of Labor. The department found that Westinghouse violated federal regulations by harassing Bricker and ordered it to compensate him in lost wages and expenses and to remove critical remarks in his employment file.

o Hanford quality assurance specialists James Simpkin and Casey Ruud were harassed by Westinghouse for disclosing safety flaws. Simpkin was reprimanded in a letter for testifying before Congress on the plant’s miserable safety record. The letter was withdrawn, however, when he threatened to send it to a Congressional committee. As for Ruud, the Labor Department ordered Westinghouse to re-hire him after he was laid off for disclosing safety problems. Westinghouse paid an undisclosed, reportedly large, sum to settle lawsuits filed by the two men.

o Westinghouse allegedly harassed Gary Lekvold, a security specialist at Hanford, after he disclosed that Westinghouse falsified safety documents. Westinghouse ordered Lekvold to see a psychologist and to refrain from meeting with DOE officials without the presence of supervisors. He filed a $33.5 million suit against Westinghouse on January 25, 1991 in U.S. District Court in Spokane, alleging the company illegally suspended him, violated his speech and due-process rights, inflicted emotional distress, wrongfully interfered in his work and defamed him. The case is still pending.

In January 1992, Westinghouse released an internal survey that showed 20 percent of its Hanford employees feel intimidated or reluctant to discuss safety and other issues with their supervisors. Nevertheless, Westinghouse Hanford spokesperson Craig Kuhlman says, "Everyone is encouraged to come forth with their [safety] concerns." He adds that "in some cases," whistleblower concerns "have been very well taken." He insists that Westinghouse "does not condone any harassment" of workers.

Manufacturing a "radioactive mess"

Westinghouse took over the problem-plagued Hanford Nuclear plant from Rockwell International in 1987, when it was shut down for safety problems. Prior to 1987, the plant’s nine nuclear reactors produced plutonium for nuclear weapons, but not without disastrous consequences. From 1944 to 1989, 444 billion gallons of radioactive water and liquid waste were accidently spilled or deliberately dumped into the soil at the Hanford site, prompting Rep. Les AuCoin, D-Oregon, to declare the plant "a nuclear accident in slow motion."

Radioactive contaminants at the site include cesium, strontium, tritium, iodine, technetium, uranium and plutonium, and chemical contaminants include nitrates, sodium, phosphates, sulfates, ammonia, fluoride and carbon tetrachloride. Some of the waste migrating toward drinking water supplies exceeds concentration levels considered safe by the federal government.

Gerald Pollet, an attorney with Heart of America Northwest, a 16,000-member Hanford watchdog organization, says, "Serious environmental crimes at Hanford are going uninvestigated and unpunished." The group is currently suing Westinghouse and the DOE for violating the Clean Water Act, failing to report contamination of the Columbia River and failing to meet cleanup deadlines. The group also alleges that illegal pollution is continuing under a secret agreement between state and federal governments. Westinghouse would not comment on the suit.

In 1991, the DOE decided to permanently terminate nuclear production at the Hanford Nuclear Reservation. Now, Hanford is nothing more than a massive toxic waste dump requiring long term de-contamination that will take several generations. Rep. AuCoin recently commented on the "irony" that "the people [who] have brought us the arms race in order to protect us have left a radioactive mess in the form of waste in these reservations that now threatens us."

The DOE justified its permanent closure of Hanford’s reactors partly on the grounds that the Westinghouse-operated Savannah River Nuclear Site in Aiken, South Carolina could provide nuclear supplies. The 40-year-old South Carolina plant, which was designed to produce tritium for nuclear weapons, is as unsafe and environmentally destructive as Hanford, however. The plant’s five reactors have been closed since spring 1988 because of numerous environmental and workplace-safety flaws, and the government has spent more than $2 billion in an effort to revive one of them.

Like Hanford, Savannah River is more of a toxic waste dump than a nuclear processing facility. The plant has more than 300 waste sites and radioactive tritium is leaking from on-site storage tanks into groundwater. The DOE asserts that none of the tritium is leaking into drinking water supplies, but the leaks will pose a permanent human health threat for generations to come. In addition, the DOE acknowledges that an average of 50,000 curies of radioactive material is routinely released per year at the site, an amount that exceeds the national average for nuclear plants. Nevertheless, the DOE and Westinghouse, which took over the plant in April 1989, are pushing to re-start Savannah River’s aging K reactor.

In 1990 alone, the site had more than 400 operating problems, including equipment malfunctions, worker accidents and procedural violations. The number of problems exceeded that of any other DOE facility that year. In April 1991, the DOE found hundreds of environmental and worker-safety problems at the plant, and in May, the Augusta Chronicle of Augusta, Georgia quoted anonymous plant workers who said Westinghouse attempted to meet deadlines by forcing them to work in conditions that required possible exposure to radiation. Even the nuclear industry’s technical support group, the Institute of Nuclear Power Operations (INPO), issued a report critical of the plant. INPO found numerous violations of worker-safety regulations, including allowing workers to enter contaminated areas without protective clothing.

Westinghouse attempted to re-start the plant’s K reactor in December 1991, but it failed miserably, with potentially dangerous consequences to human health. During the attempted start-up, over 150 gallons of water containing 6,000 curies of radioactive tritium spilled into the Savannah River. Parts of the river showed radioactivity levels exceeding federal safety limits by two to 10 times. The public water system in Beaufort and Jasper counties, South Carolina was temporarily closed and businesses in nearby Port Wentworth, Georgia were shut down for several days. The embarrassing episode forced Westinghouse and the DOE to further delay the re-start of a reactor that opponents say should be permanently closed.

Less than a month before the spill, the DOE had issued a report critical of the plant’s ability to deter radioactive water spills. Even if the reactor is put back on line, because of safety concerns, the plant will not be able to operate beyond 30 percent of its capacity.

Daryl Kimball, associate director for policy at Physicians for Social Responsibility, says there is absolutely no reason for Savannah River to reopen. "The cost and the health risk [of reopening the site] far outweigh any benefit for producing new tritium," he says, "especially because the United States is going to be recovering large volumes of tritium from the warheads that have recently been retired."

Rick Ford, spokesperson for DOE, counters, "We will not disarm by following the tritium decay curve," referring to tritium’s 10-year half-life. "Even if we don’t need new tritium for 10 years or perhaps even 15 years, there will be a need to have the capability to produce it should we need to," he says.

Deception and fraud

Labor and environmental problems are only part of the criminal story of Westinghouse. In March 1991, the DOE’s Inspector General found that Westinghouse and Bechtel Corp., a subcontractor, attempted to conceal millions of dollars in cost overruns at Savannah by using the government’s $400 million construction account to buy equipment and services that should have been purchased with a separate account. The alleged fraud occurred with the approval of DOE field personnel and sparked a criminal investigation of top Westinghouse executives. The investigation was dropped after the president of Westinghouse Savannah and a DOE official were reassigned to other duties. "It was a loose way of accounting for funds," says the DOE’s Ford, who maintains that nothing illegal was done. Ford contends that the "historical practice" of concealing taxpayer funds was in fact "just a loose control over the budget process."

This was not the only time Westinghouse had been charged with fraud. The U.S. General Accounting Office (GAO) reported last May that four defense contracts awarded to the Marine Division of Westinghouse between 1985 and 1987 were fraudulently overpriced by about $9 million due to the company’s artificial inflation of subcontracting costs. The GAO claimed that instead of paying the prices established in its original pricing proposal to the government, Westinghouse paid subcontractors a lower fee, keeping the leftover government funds as profit. In one instance, the government agreed to spend $68 a unit for a missile part. After seeking new bids, Westinghouse bought the part from a subcontractor for $6.57 a unit, or $377,426 less than the proposed order price, the GAO concluded.

In 1985, Westinghouse employees were found guilty of defrauding the Pentagon of $200,000. The employees were convicted of deliberately charging the Pentagon for electrical equipment that was never delivered to the company; they received two-to-three- year prison terms.

While Westinghouse has repeatedly stolen from governments, it has also engaged in a pattern of currying favor with government officials by means of bribes and questionable gratuities. In 1988, for example, a Pentagon investigation found that Westinghouse, along with other defense contractors, paid more than $10,000 between 1981 and 1986 for at least 30 golf outings attended by members of Congress and Pentagon personnel. The contractors gave away prizes and cheated during golf games to ensure that members of Congress and their aides would win. The Defense Criminal Investigative Service of the Pentagon concluded that Air Force personnel accepted illegal gratuities from Westinghouse and four other corporations. Although the case was referred to a U.S. attorney, no action was taken.

The Philippine government has leveled even more serious charges against Westinghouse. It alleges in a lawsuit that Westinghouse bribed former Philippine President Ferdinand Marcos in order to win a contract to build a nuclear power plant. After the Philippine government refused Westinghouse’s offer to settle the case, a U.S. District Court judge denied Westinghouse’s request for dismissal of the suit and scheduled a trial for March. Although Westinghouse eventually built the plant, safety problems and defects have prevented it from ever going on line [see "Buying Manila," Multinational Monitor, December 1991].

Bribing government officials is not a new practice at Westinghouse. In October 1978, Westinghouse pleaded guilty to illegally providing $322,000 to an Egyptian government official before the company won a $30 million contract to build a fossil-fuel power plant in Cairo. According to Ron Hunt, a Westinghouse spokesperson, the illegal payments, made in 1974 and 1975, were discovered by an internal company investigation. U.S. District Judge Barrington Parker fined Westinghouse $300,000 for bribing Ahmed Sultan Ismail, the Egyptian minister of electricity who later became deputy prime minister. A fine of $10,000 was imposed for each of 30 counts of falsely declaring to the Export- Import Bank and the Agency for International Development that no illegal payments were made.

Ironically, Westinghouse attempted to void a 1986 contract between a competitor and the State of Oklahoma by declaring the contract was awarded with the help of illegal gratuities to state officials. Westinghouse bid on the $27 million contract, which involved a turbine generator for the Grand River Dam in Oklahoma, but lost out when the job was awarded to Asea Brown Boveri (ABB) of Switzerland. During a lawsuit over the questionable gratuities offered by ABB, however, it was determined that Westinghouse supplied similar gratuities - a free plane trip to the World Series and choice ball park tickets - to state-appointed dam officials during the contract bidding process. The Oklahoma Supreme Court ruled that ABB’s gratuities violated the law, but it refused to void the contract for the benefit of Westinghouse.

Westinghouse has profited from lax antitrust laws and lethargic law enforcement, but society has paid an enormous price through reduced competition, wasted government funds, damaged environmental well-being and worsened health of workers. Lego could have most strongly made the case for stringent application of anti-trust laws - against U.S. or foreign companies - during his January Congressional testimony by reviewing Westinghouse’s own miserable record. It illustrates quite clearly the importance of curbing concentrated corporate power.

Names in the News

Whipping Whistleblowers

A WHISTLEBLOWER at a government nuclear laboratory in Tennessee was unfairly ordered to sit all day in a room of toxic waste and radioactive chemicals to do useless work, the Labor Department determined in January.

The Labor Department found that Martin Marietta Energy Systems, contracted by the Department of Energy to operate the Oak Ridge National Laboratory (ORNL), violated the Clean Air Act, the Safe Drinking Water Act, the Toxic Substances Control Act and two other federal laws. Marietta says it will appeal the decision to the Secretary of Labor.

The whistleblower, Charles Varnadore, a technician at ONRL since 1974, has publicized lax health and safety conditions at the facility, once appearing on a CBS evening news segment about elevated cancer rates among Oak Ridge personnel. The CBS report followed the release of a study conducted by a North Carolina epidemiologist which found excess cancers among ORNL personnel over the last 40 years.

After he appeared on CBS, Marietta transferred Varnadore to a room containing radioactive waste. The room was filled with drums of toxic waste, and Varnadore was instructed to test, identify and weigh 717 unidentifiable chemicals. He was stationed in that room for over six months. A health physicist found the area to be unsafe, and, in September 1991, Varnadore was moved to another waste storage room, which contained mercury, radioactive materials and asbestos. Marietta moved Varnadore out of the second room after his lawyers complained in November.

"It’s one of the most horrid forms of repression and retaliation that I’ve have ever seen," says Edward A. Slavin Jr. of the Government Accountability Project (GAP), a Washington, D.C.-based group that works to protect whistle blowers.

Kilovolt Cancer

IN ONE OF THE FIRST LAWSUITS in the United States to seek damages for victims of exposure to electromagnetic radiation (EMR), Melissa Bullock, a 19-year-old woman living on Meadow Street in Guilford, Connecticut, has sued two Connecticut utility companies, alleging that electromagnetic radiation from an electric substation and area power lines caused her brain tumor.

In the suit, filed in January 1992, Melissa Bullock and her mother, Suzanne Bullock, seek to hold Northeast Utilities and Connecticut Light and Power liable for compensatory and punitive damages for Melissa’s condition, Suzanne’s emotional distress and the lost value of their home. The lawsuit also seeks injunctive relief to cease the emission of dangerous levels of EMR and disclose important information about the risks of EMR to the public.

The dangers of EMR on Meadow Street have been chronicled by the investigative reporter Paul Brodeur, who documented a cluster of diseases, including Bullock’s, on the street and charged that the injuries were caused by EMR.

Scientific studies have linked exposure to power line fields - which emit high levels of EMR - with nervous system cancer, including brain tumors.

For 10 years, Melissa Bullock slept directly underneath the power line from the substation that supplied the Bullock home. She was diagnosed in January 1989 as having a grade three astrocytoma, an advanced malignant tumor of the brain.

"The tragedy of Melissa’s cancer is the result of decades of neglect by the power companies," says Michael Koskoff, of Trial Lawyers for Public Justice, the Washington, D.C.-based legal organization that is handling Bullock’s case. "Melissa deserves compensation, and the public is entitled to know the risks of electromagnetic radiation."

No Time for the Crime

A NEW YORK Onondaga County Court Judge has stirred controversy by imposing a $60,000 fine on a construction company owner who pleaded guilty to negligent homicide. New York law stipulates that criminally negligent homicide can carry a penalty of up to four years in a state prison.

The defendant in the case, James Polvino, owner of Polvino Construction Co. in Rochester, NY, hired Carl Witherel to illegally dispose of several drums of toxic waste from a company warehouse in Rochester. Witherel was found dead alongside the drums on March 6, 1991, after dumping the hazardous chemicals. Defense lawyers believe that Witherel may have accidentally mixed the chemicals together, with the resulting fumes causing his death.

Polvino was facing the more serious charge of second-degree manslaughter, which could have sent him to state prison for up to 15 years. Instead he will be sentenced on March 3, 1992 to a conditional discharge, under which he will agree to pay $29,000 to the Department of Environmental Conservation to cover the cleanup cost and $30,000, the amount it took to investigate the case, to the Attorney General’s office. There will be no jail time or probation.

County Court Judge William Burke defends the sentence, claiming that the death was an unintentional chance occurrence. "The man’s death was unfortunate, but it really wasn’t taken into consideration [in the sentence]," he says.

- Ben Lilliston

Book Review

Imperialism in Ireland

Guests of the Nation:

The People of Ireland versus the Multinationals

By Robert Allen and Tara Jones

London: Earthscan Publications

310 pp.

Reviewed by Holley Knaus

BETWEEN 1960 AND 1982, multinational corporations invested more than £3.25 billion in Ireland, with U.S. companies alone investing £1.25 billion. In 1981, U.S. corporations’ investment in Ireland equaled 42 percent of their entire investment in Southeast Asia and the Pacific. Over one third of the manufacturing workforce in Ireland works for foreign multinationals.

"The reasons why these companies come to Ireland is straightforward," write Robert Allen and Tara Jones in Guests of the Nation: The People of Ireland versus the Multinationals. "Aside from the lack of safety and environmental regulations, multinationals choose Ireland as a manufacturing base because of [its] high productivity, labor flexibility, low labor costs, low or non-existent taxation, political stability and a highly attractive package of government-funded incentives."

Guests of the Nation is a series of case studies of grassroots, primarily rural, movements against multinational power in Irish communities. Allen and Jones focus on resistance to the chemical and pharmaceutical industries but note that electronics corporations - "a traditional industry for export processing zones in peripheral countries" - have moved into the country as well.

Allen and Jones argue, in fact, that Ireland in many ways resembles other "peripheral countries" in Southeast Asia and the Pacific which are used by multinationals as export platforms. "It is a peripheral, dependent country, with the majority of one province still a British colony under military occupation. It shows the normal pattern associated with dependent development, including a massive public debt, an economy dominated by foreign capital and a local state and political establishment that has colluded in the country’s dependent development. ... In some ways Ireland functioned almost as a model for export-oriented, dependent development, just as in earlier days it was the first British colony, the first country to be subjected to the new wave of European expansion."

Ireland set up the world’s first export processing zone, the Shannon Free Airport industrial zone, in 1958, the year the country opened itself up to foreign capital through its Programme for Economic Expansion. Since then, national and local authorities, and the semi-autonomous Industrial Development Authority (IDA), have worked to attract and protect foreign investment and development.

Organized labor has had a more complicated relationship with multinationals in Ireland. While there has been some opposition to multinational control of what labor considers national resources, particularly in relation to the mining industry, most of the major unions have, for the most part, welcomed foreign investment for the jobs it brings to Irish communities.

The multinationals, however, have not given much back to these communities or to the country in general. Over 80 percent of multinational profits from Ireland are repatriated. And most goods manufactured by multinationals in Ireland are consumed outside the country. In 1985, for example, more than 90 percent of all goods produced by U.S. multinationals in Ireland were exported, according to the Organization for Economic Cooperation and Development (OECD), with Japanese corporations maintaining a similarly high rate.

What the corporations have brought to Ireland are huge increases in air and water pollution, oil spills and oil tanker explosions, toxic dumping and ecologically harmful mining practices. Concern in Ireland is now growing about the effects of these practices on the health of individuals and on the long-term economic health of traditional farming and fishing communities.

Until recently, the people of Ireland had little experience in combatting the environmental degradation of their communities. Most of the struggles that Allen and Jones examine developed as responses to specific local threats and were led by previously unpoliticized men and women. And, as the authors point out, "the type of toxic development the communities were opposing was in fact state policy." Rural communities could expect little help from a government that was "pro-development, pro-industry, pro- science and technology and pro-foreign direct investment."

Allen and Jones report that the IDA promotes Ireland as a country that "missed out" on the Industrial Revolution and therefore still has plenty of "greenfield sites" ripe for exploitation by chemical manufacturers. Multinationals are attracted to the country’s lax environmental regulation and enforcement standards. Effective water pollution legislation was only introduced in 1977, and effective air pollution legislation in 1987. (Prior to the introduction of this legislation, environmental regulation was in the hands of local authorities, who had little expertise in identifying hazards and few resources to insure that polluting companies were penalized.) Workers exposed to toxic hazards still have limited legal recourse and there is little control over the transport of chemicals.

Guests of the Nation focuses primarily on the fierce and bitter debate among various members of Irish communities sparked and encouraged by multinationals’ activities. Trade unionists and local council members are pitted against farmers, fishing communities and others concerned with environmental degradation. Multinationals play on community divisions by threatening to pull out if they meet with resistance; and the IDA exacerbates tensions by warning that new industry will not locate in communities that have expressed opposition to multinational development.

But grassroots movements against multinationals have won significant victories, even in the face of corporations which refuse to give them information, overpowered and therefore hostile labor organizations, a pro-development left and local and state governments that disenfranchise them from the planning process. Local groups have posed significant opposition to mining interests in the west of Ireland, to the Swiss pharmaceutical multinational Sandoz, which hoped to locate a factory on Cork Harbour, and to the Electricity Supply Board, which attempted to dump asbestos waste at the Laois County Council dump. The Environmental Health Protection Group in Limerick defeated an attempt to locate the National Toxic Waste Incinerator in its city. A highly organized coalition of groups in Cork launched a major media campaign against Merrell Dow (a Dow subsidiary) and the IDA which eventually prevented the chemical company from opening a factory in Killeagh.

Guests of the Nation documents how multinational intrusions have politicized several rural Irish communities. Allen and Jones concentrate on tactics used to fight specific corporate actions and proposals and to counter state indifference or hostility. The final chapter of the book, which discusses more generally the political and economic factors which contribute to the near stranglehold multinationals maintain over Ireland, would probably serve better as an introduction to provide an analytical framework for the book’s case studies.

The case studies themselves, however, do provide encouraging accounts of the effectiveness of grassroots organizing and of the willingness of communities to stand up to powerful and threatening institutions when their well-being is endangered. Allen and Jones write, "What these movements have shown is that, when a local community unites to oppose a proposed toxic development, only through coercion and violence can that development be forced on them. These groups are responding to what appears as a form of internal colonization. Thus their opposition provides examples of local community power, not revolutionary, to be sure, but not to be sneezed at in a time when all power seems to have migrated to the center."



International Baby Food

Action Network

P.O. Box 19

10700 Penang


Action for Corporate


1313 5th Street, Suite 302E

Minneapolis, MN 55414

World Alliance for

Breastfeeding Action

P.O. Box 1200

10850 Penang


Center for Study

of Commercialism

1875 Connecticut Avenue, NW, Suite 300

Washington, DC 20009

Action for Children’s Television

20 University Road

Cambridge, MA 02138

Strategies for Media Literacy

1095 Market Street

San Francisco, CA 94103

Whittle Communications

375 Park Avenue

New York, NY 10152

Federation for Industrial

Retention and Renewal

3411 West Diversity Avenue, #10

Chicago, IL 60647


Westinghouse Building,

Gateway Center

Pittsburgh, PA 15222

Task Force on

Multinational Resource


P.O. Box 95316

Seattle, WA 98145

Stone Container

150 North Michigan Avenue

Chicago, IL 60601

Food & Water

225 Lafayette Street

New York, NY 10012

Books, Reports & Periodicals

The Politics of Breastfeeding

By Gabrielle Palmer

London: Pandora, 1988

Breaking the Rules 1991


P.O. Box 1045

10830 Penang


Beyond the Breast-Bottle Controversy

By Penny Van Esterik

New Brunswick, NJ:

Rutgers University Press, 1992

Food Irradiation:

The Myth and the Reality

By Tony Webb and Tim Lang

London: Thorsons Publishers, 1990

Culture Inc.: The Corporate Takeover of Public Expression

By Herbert Schiller

New York: Oxford

University Press, 1989

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