JULY/AUGUST 1998 · VOLUME 19· NUMBER 7&8

GE Rips Off the Bankrupt
The Federal Trade Commission in August finalized a settlement agreement with General Electric Capital Corporation and its wholly-owned subsidiary, Montgomery Ward Credit Corporation, that would ensure that GE Capital makes full refunds totaling at least $60 million to consumers who faced illegal collection.

According to the FTC, GE Capital regularly sought out consumers who filed for bankruptcy protection to persuade them to "reaffirm" credit account debts and falsely represented that these "reaffirmation agreements" would be filed with the bankruptcy courts, as required by law.

In fact, federal officials alleged that in many cases GE Capital did not file the agreements or the bankruptcy courts did not approve the agreements.

The reaffirmation agreements were, therefore, not legally binding on consumers. Nevertheless, the FTC alleges, GE Capital unfairly collected many of these debts.

"The U.S. Bankruptcy Code gives consumers a fresh start," says Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection. "GE Capital induced consumers to pay debts they did not legally owe."

Reaffirmation agreements are not illegal, according to the FTC. However, the U.S. Bankruptcy Code requires that such agreements be filed with the bankruptcy courts, and in the case of debtors not represented by legal counsel, reaffirmation agreements must be approved by the court. If not filed or approved, the agreements are unenforceable, and the underlying debts are legally discharged in bankruptcy.

IBM-Russia Nuclear Deal
A unit of IBM pled guilty in August to a 17-count criminal information charging violations that the company unlawfully exported computers to a Russian nuclear lab.

The company, IBM East Europe/Asia Ltd., was sentenced to pay $8.5 million, the maximum fine authorized by law.

IBM East Europe/Asia Ltd., the Russian subsidiary of IBM, admitted that it sold and exported computers to Arzamas-16, the Russian nuclear lab, "having reason to believe that the computers would be used directly or indirectly in research on or development, design, manufacture, construction, testing or maintenance of nuclear explosive devices" in violation of federal export control laws.

The Department of Commerce's Bureau of Export Administration (BXA) imposed a maximum civil penalty of $171,000 for the violations. BXA also denied the company export privileges for a two-year period, but suspended the denial during a two-year probation period.

The company agreed that during the two-year period it will not engage in transactions involving any nuclear or military end-users and will not use certain license exceptions to export any high performance computers.

Alleged Harassment at Ford
Six women who work at Ford Motor Company's assembly and stamping facilities in Chicago sued the company in August, alleging that it condoned and perpetuated "sexually harassing work environments."

In the lawsuit, filed in federal district court in Chicago, the women describe a workplace permeated with offensive references to women, including pornographic posters, calendars and sexually explicit graffiti.

They also allege that they were subjected to factory walls and lockers plastered with explicit posters and "pin-up calendars," pornographic magazines strewn about in public areas, drawings of nude women and their genitalia on factory and bathroom walls, and sexual graffiti.

The women allege that they were subjected to a daily barrage of hooting, cat calls, propositions and sexist insults, as well as leers, licking of the lips and whistles directed their way from male co-workers and supervisors.

New women employees were referred to as "fresh meat," women were routinely called "c--ts" and comments were made that women were "only good for two things -- cooking in the kitchen and laying in the bed."

Supervisors responded to women's complaints of the sexual harassment on the assembly line with, "That's why I don't let my wife work here."

"This behavior is reprehensible," says Daniel L. Berger, a lawyer for the women. "We have decisions by the courts unequivocally banning sexual harassment in the workplace."

"Ford ought to have known better," Berger says.

The complaint also alleges that despite an federal Equal Employment Opportunity Commission finding January, 1996, which found that women have been subjected to a sexually harassing work environment fostered by nonmanagement and management employees, and despite repeated media coverage by radio and television, Ford did virtually nothing to remedy the work environment at the plants.

The women claim that at least two of the limited number of employee meetings designed to educate employees on sexual harassment issues degenerated to the point where male employees were laughing and mocking the problem of sexual harassment.

None of the men were reprimanded about their behavior at the meetings. The complaint alleges that women who complained about the sexual harassment were subject to retaliation.

-- Russell Mokhiber