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Multinational Monitor's Corporate Rap Sheet

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The Ten Worst Corporations of 1994

by Russell Mokhiber

  1. DENNY'S : Blackout
  2. DOLE FOODS : Undermining Delaney
  3. GENERAL ELECTRIC : Term Limits, Anyone?
  4. GENERAL MOTORS : Reckless Homicide?
  5. MONSANTO : Crack for Cows
  6. NIKE : Hot Air
  7. PEPSI : Boycott
  8. PHILIP MORRIS : Death, Disease and Duplicity
  9. UNOCAL : Guilty
  10. UPJOHN : Pattern of Deceit

IN THEIR BOOK, The Bell Curve: Intelligence and Class Structure in American Life, Richard J. Herrnstein and Charles Murray argue that "as a group, criminals are below average in intelligence."

Actually, the opposite is true.

As a group, those criminals who inflict the most damage on society, are above average in official measures of "intelligence." They are the best and the brightest who run the world's multinational corporations. They come from the best communities, get the highest scores on standardized tests, go to the best schools, enter the biggest corporations, and get the highest pay.

Herrnstein and Murray got it wrong because they left white-collar and corporate criminals out of their analysis. This is a significant omission, since it is undisputed that white-collar and corporate criminals inflict far more damage on society than all street criminals combined.

White-collar fraud alone costs $200 billion a year, according to W. Steve Albrecht, a professor of accountancy at Brigham Young University and co-author of the book Fraud: Bringing Light to the Dark Side of Business. In contrast, the Federal Bureau of Investigation reports that for 1992, street robbery cost $565 million and burglary cost $3.8 billion.

Albrecht points out that criminal fraud occurred in 60 percent of all savings and loans seized by the federal government and that 30 percent of all business failures are caused by white-collar crime.

And this "intelligent crime" also is the more violent crime. The handful of the world's corporate criminologists who have studied this issue are in agreement that corporate crime and violence kills far more people than all street crime combined. For example, while the murder rate in the United States is about 24,000 a year, the National Institute of Occupational Safety and Health estimated recently that occupational diseases kill 50,000 Americans a year. In addition, 10,000 people in the United States die on the job every year. These deaths are only occasionally prosecuted as reckless homicides by local prosecutors.

Thousands die every year from asbestos-induced disease. The Dalkon Shield IUD injured thousands of women who used it. Ten years ago, 2,000 to 5,000 persons were killed and 200,000 were injured - 30,000 to 40,000 of them seriously - after a Union Carbide affiliate's factory in Bhopal, India released a deadly gas over the town.

In the United States, Attorney General Janet Reno has set violent crime as her number one priority. By "violent crime" she means violent street crime. She has rarely, if ever, condemned violent corporate and white-collar crime.

The defense bar agrees with Reno. You will not see the American Bar Association White-Collar Crime Committee, which is heavily dominated by white-collar crime defense lawyers, seek the passage of a resolution condemning violent corporate crime.

Of course, most corporate and white-collar violent crime goes unprosecuted. This happens for a wide range of reasons, including the exercise of corporate power in Washington, which works to decriminalize such violent behavior. The federal auto safety law, for example, carries no criminal sanctions, thanks to the auto lobby. For years, auto safety advocates have sought to add criminal sanctions to the law, and for years, the auto lobby has blocked its passage.

So, in honor of the "intelligence" of our corporate leaders, we present The Ten Worst Corporations of 1994.

Keep your eyes open for the really smart corporate moves of the new year. On January 1, nominations will open for the Ten Worst Corporations of 1995.

  1. DENNY'S: Blackout

    THE November 6, 1994 article by freelance journalist Howard Kohn in the New York Times Magazine documented in detail what people all across the United States knew in general: that Denny's was mistreating its black customers.

    The Denny's policy was known as "blackout," and it was meant to make African-American customers feel uncomfortable and excluded.

    Kohn documents how at a Denny's restaurant in San Jose, California, "young African-American customers stepped out of their cars into the illuminated parking lot only to find themselves in a race to the front doors. ... Denny's employees rushed to lock up, and the blacks were left to wonder at the baldfaced claim, `We're closed.' Only after they left were the doors reopened."

    "I couldn't believe it," Robert Norton, a white employee, said. "I said to the duty manager, `This is ludicrous. How can you be doing this?' But I was told this was how the game was played."

    Earlier this year, the Justice Department announced that what was happening at the San Jose Denny's was not an isolated incident. Denny's agreed to pay $46 million in damages and to launch a nationwide program to avert future discrimination. The Justice Department said that the settlement of two lawsuits, one in San Jose and one in Baltimore, Maryland, against the company contained "the most sweeping preventive measures and the largest monetary damages ever in a public accommodations case."

    The lawsuits alleged that Denny's failed to serve blacks, required blacks to pre-pay, and forced them to pay a cover charge. In one instance, African-American Secret Service officers who accompanied President Clinton were denied service at a Denny's in Annapolis, Maryland. This led a CBS-TV news anchor to report that "these agents put their lives on the line every day, but they can't get served at Denny's."

    John P. Relman of the Washington Lawyers' Committee for Civil Rights calls the settlement historic because "for the first time it puts a price tag on indignities that black Americans endure every day at restaurants and public places all across America."

    In the California case, 40 African-Americans alleged discrimination. In one case, Michael Maxwell, a police officer, his wife, Demetrece, and 13 other family members went to a Denny's Restaurant in San Diego, after watching Mrs. Maxwell's brother play in his last college football game for San Diego State University.

    The Maxwells and eight of their party were seated together and were told they had to pre-pay for their food. The other members of the Maxwell group including Mrs. Maxwell's father had not been required to pre-pay. When Mrs. Maxwell asked the manager why some of the group had to prepay while others did not, the manager replied that the waitress had made a mistake by not requiring them all to pre- pay. Members of the Maxwell party observed at least six white customers walk to the register and pay after they had consumed their meals.

    Kohn, who is writing a book, "We Had a Dream," about desegregation in the United States a generation after the civil rights movement, writes that the real problem at Denny's "was the theory held by employees that black customers were bad for business."

    "The problem of discrimination at Denny's did not come out of the blue - it had existed for years," Kohn concludes.

    Because of the lawsuits, Denny's has been forced to promise change. In addition to paying the damages, Denny's agreed to: retain an independent civil rights monitor, educate and train new employees in racial sensitivity, and feature African-Americans and members of other racial minority groups as customers and employees in advertising "to convey to the public that all potential customers, regardless of their race or color, are welcome at Denny's."

    [Contact: Ron Petty, CEO, Denny's, 203 East Main Street, Spartanburg, S.C. 29319-9722. Telephone (803) 597-8000]

    [Contact: Washington Lawyers Committee for Civil Rights and Urban Affairs, 1300 19th Street, N.W., Suite 500, Washington, D.C. 20036. Telephone: (202) 835-0031]

  2. DOLE FOODS: Undermining Delaney

    The Delaney Clause is a food safety law passed in 1958. It prohibits companies from adding cancer- causing chemicals to processed foods.

    Delaney is the only zero-carcinogen law currently on the books. But a group of major U.S. corporations, led by Dole Foods, is seeking to wipe out Delaney's no-cancer approach and replace it with a "negligible risk standard."

    Dole is a $3.4 billion global fruit and vegetable corporation with headquarters near Ventura, California. The majority of Dole's pineapple and banana plantations are in Central America.

    Dole, which did not return calls seeking comment for this article, has a proven record of contempt for its workers and consumers. Pesticides that were banned in the United States were used by Dole in Central America. One such pesticide, dibromochlorpropoane (DBCP), was banned in the United States in 1977, but sold overseas. A Dole subsidiary, Standard Fruit Co., used it on banana plantations in Costa Rica before and after it was banned in the United States. It was banned in the United States as being a suspected carcinogen. DBCP also causes sterility in men.

    Hundreds of workers in Costa Rica who allegedly were sterilized after being exposed to DBCP sued Dole and the manufacturers of the pesticide in state court in Texas. The case was settled in 1992 for $20 million. An additional 15,000 workers have similar claims currently pending in Texas courts, according to their attorney, Dallas-based Charles Seigel.

    At Standard Fruit Co.'s pineapple plantation in Honduras, Dole has allegedly used pesticides that were banned or heavily restricted in the United States. In 1992, a Honduran government commission confirmed problems at the pineapple plantation. The commission found workers with skin rashes, eye problems, headaches dizziness and nausea.

    So, it is little wonder that Dole has contempt for a U.S. law, the Delaney Clause, that prohibits cancer-causing pesticides in the food chain.

    In 1988, the Environmental Protection Agency adopted a policy that allowed pesticides in food if, in the EPA's opinion, the risks were "negligible." Instead of eliminating all additions of cancer- causing chemicals to processed foods, as required by Delaney, the EPA wanted to use a risk-assessment analysis to determine how much pesticides to allow in the food supply.

    But in July 1992, a federal appeals court ruled that the EPA was wrong. The court ruled that the presence of cancer-causing pesticides in processed foods constitutes a violation of the Delaney Clause. As a result of that decision, one of two things will happen in coming months: Congress will weaken or abolish the Delaney law, or the EPA will be forced to proceed with plans to ban about 50 cancer-causing pesticides [see "Delivering on Delaney," Multinational Monitor, September 1994].

    Dole wants Congress to cripple or wipe out the law.

    So, apparently, does the Clinton Administration. EPA Administrator Carol Browner argues that some pesticides pose little threat to human health, since they are consumed in small amounts, and should therefore be allowed for use in "negligible" quantities.

    The "negligible risk" policy adopted by the Clinton administration over-simplifies the hazards associated with pesticides. The model ignores the cumulative risk of multiple pesticides that may be used on a single food, the potential interactive effects of multiple pesticides being used, and the harmful effects on certain high-risk populations, including young children, the elderly and disabled. A July 1993 National Academy of Science study found that the amount of pesticide residues the government currently allows on fruits and vegetables may already pose an excessive risk to children.

    Citizen's Clearinghouse for Hazardous Waste, founded by the activist Lois Gibbs, has launched a campaign to save the Delaney law. Gibbs is urging all citizens to contact their local schools and ask them not to purchase Dole products, ask their local supermarkets not to sell Dole products, and call or write Dole to let them know how you feel.

    [Contact: David Murdock, CEO, Dole Foods, 31355 Oak Crest Drive, Westlake Village, CA 91361. Telephone: (818) 879-6600 Fax: (818) 879-6618. Or Toll Free: 800-232-8888]

    [For more information on Protect Our Children - Save Delaney Campaign, Contact: Citizens Clearinghouse for Hazardous Waste, P.O. Box 6806, Falls Church, VA 22040. Telephone: (703) 237- 2249]

  3. GENERAL ELECTRIC: Term Limits, Anyone?

    If corporations had to face the voters to maintain their right to exist, then GE would be high on any responsible citizen's list for termination. GE is the bad boy of big U.S. corporations and people in the United States and around the world deserve a break - if not today, then someday soon. (Who says, by the way, that corporations have the right to live in perpetuity? You and I live and die, but GE lives forever. Why?)

    The Multinational Monitor has been putting out the Ten Worst list since 1988, and GE made the cut in 1988, 1991, 1992 and this year, 1994. Why? Because GE is what corporate criminologists call a recidivist corporation - it keeps getting into trouble with the law.

    A report released this year by the Washington, D.C.-based Government Accountability Project found that 20 of the 22 largest defense corporations, including GE, that were lobbying Congress to weaken the Federal False Claims Act, have been involved in fraud, waste and abuse in government contracting.

    The False Claims Act is one of the country's toughest laws against corporate crime. The law gives whistleblowers a monetary incentive for alerting the government to those who defraud the government. Since the passage of the 1986 amendments to the law, the federal government has recovered over $588 million under the Act.

    Obviously, GE and the defense contractors - also known as "the fraud lobby" - don't like the law, because it exposes their wrongdoing. The report found that just since 1990, General Electric has been caught engaging in 16 instances of fraudulent activity, and has twice been convicted of criminal misdeeds.

    In June of this year, federal officials began investigating allegations that 7,000 military and commercial jet aircraft engines, including ones that power President Clinton's plane, may be defective. GE, the manufacturer of the engines, denies the allegations, saying the engines in question have flown for more than 200 million hours without an electrical problem such as the one in question. The Cleveland Plain Dealer first reported the investigation. A whistle-blowing GE employee filed a lawsuit against the company claiming that the engines "unnecessarily endanger the health and well-being of pilots, maintenance service personnel and passengers, including the very real likelihood of loss of life."

    GE has also been busy in recent years engaging in union busting in Mexico.

    In May 1993, Fernando Castro Hernandez, a worker at GE's small motor facility in Juarez, Mexico, was demoted after he refused to falsify company safety reports. The GE facility was not unionized, so Castro joined with fellow co-workers and began to organize. In November 1993, Castro and about 120 other pro-union workers were fired. GE told Castro that he was fired for distributing union fliers and for telling a U.S. reporter that GE used chemicals in its Mexican plant that had been banned in the United States.

    When President Clinton was touting the North American Free Trade Agreement (NAFTA) to the U.S. public last year, he promised that labor abuses such as those inflicted on Castro and his co-workers would be stopped by authority of a NAFTA side agreement. President Clinton was wrong. At a hearing about worker rights abuses by GE and Honeywell before the National Administrative Office (NAO), the agency established to enforce the side agreement, GE denied violating Mexican labor laws; the NAO said it did not have the authority to act. This is the only such hearing the NAO has held.

    [Contact: John F. Welch, Jr., Chair and CEO, GE, 3135 Easton Turnpike, Fairfield, CT 06431. Telephone (203) 373-2211]

    [Contact: Government Accountability Project, 810 1st Street, NE, Suite 630, Washington, D.C. 20002. Telephone (202) 408-0034]

    [Contact: United Electrical, Radio and Machine Workers of America, 2400 Oliver Building, 535 Smithfield Street, Pittsburgh, PA 15222. Telephone: (412) 471-8919]

  4. GENERAL MOTORS: Reckless Homicide?

    This has been a bad year for General Motors, and justifiably so.
    One of the world's largest multinational corporations, GM refuses to do the right thing - recall its dangerous C/K pickup trucks. Without a recall and repairs, the gas tanks of these GM trucks are susceptible to explosion when broadsided in a collision.

    Clarence Ditlow, the director of the Center for Auto Safety, and a major thorn in GM's side on safety issues, earlier this year called for a criminal homicide prosecution against the giant automaker for manufacturing and marketing pickup trucks that it knows "are rolling firebombs that would incinerate 20 times as many people in crashes as the infamous Ford Pinto." Ditlow estimates that more than 600 persons have been burned to death in GM pickup fire crashes and thousands more have been injured.

    In the first and last homicide prosecution of a major auto company, Ford Motor Company was indicted by an Indiana grand jury in September 1978. The indictment charged the company with reckless homicide in connection with the deaths of three teenaged girls who were burned to death after their Ford Pinto was rear-ended. A jury found Ford not guilty of those charges.

    GM spokesperson Ed Lechtzin says he thinks that Ditlow's call for a homicide prosecution was "absurd." When asked why he thought it was absurd, Lechtzin said, "When you think something is absurd, you don't have to explain it."

    Ditlow made his statement after Department of Transportation Secretary Federico Peņa announced in October that an initial decision had been made that a safety defect exists in the GM trucks with fuel tanks mounted outside the frame rails. "Of critical importance in this matter is the evidence that GM was aware, possibly as early as the mid-1970s, but certainly by the 1980s, that this design made these trucks more vulnerable and that fatalities from side-impact fires were occurring," Peņa said at the time. "However, GM chose not to alter the design for 15 years."

    Ditlow said that Secretary Peņa's decision "sets the stage for state prosecutors to bring homicide prosecutions." Peņa said, "The record clearly shows that there is an increased risk associated with GM C/K series pickups and leads me to conclude at this point that this risk is unreasonable. This case involves not only serious injuries, but a significant number of fatalities, in crashes that were otherwise survivable."

    There were 9 million GM C/K pickups manufactured with fuel tanks mounted outside the frame rails, dating back to the 1973 model year. In one of the most extensive investigations in the agency's history, the National Highway Traffic Safety Administration (NHTSA) reviewed over 100,000 pages of documents, conducted crash tests and completed statistical and other analyses related to the alleged defect.

    Ditlow said that Peņa "stood up for the American consumer to confront a $140 billion corporation that refuses to spend $100 per truck to fix the worst crash fire defect in history."

    "If General Motors continues to stonewall a recall, it will face billions of dollars in punitive damage awards in product liability lawsuits as these trucks continue to explode on the highways of America," Ditlow said. "We call on General Motors' board of directors to admit that it made a horrible mistake 20 years ago and to reject the bankrupt strategy of its lawyers since then to carry out a scorched- earth defense of the pickups."

    Just as this issue was going to press, Secretary Peņa buckled under enormous auto industry pressure and announced that he was closing down the government's investigation and cancelling three days of public hearings. Those public hearings would have put burn victims and families of burn victims into the national spotlight, thus guaranteeing harsh negative publicity for GM.

    As part of a settlement agreement, GM said it would pay $51 million to "support safety programs." But the settlement did not address the safety of the trucks in question. Ditlow calls the settlement a "blood money" agreement.

    "If Secretary Peņa won't stand up to GM, we will," Ditlow says.

    "We cannot let five million Americans ride at risk of fiery death. The secret deal Secretary Peņa cut with GM behind closed doors will let over 100 more people burn to death who could have been saved by a recall."

    Early last year, a Georgia jury hit GM with a $105 million punitive damage verdict in one such products liability case (Moseley v. General Motors). That award was overturned on technical grounds earlier this year. The case is scheduled to be retried next year in Atlanta.

    Joe McCray, a San Francisco-based trial lawyer who has handled 19 GM pickup truck injury and death cases, estimates that about 300 such cases have been brought against GM. Only a handful have gone to trial. McCray claims that as far back as 1978, GM's own studies showed that putting the gas tanks outside the framerails increased the risk of the tanks crushing on impact, spilling gasoline and resulting in fire.

    "Ford didn't make a particularly good truck, but at the same time they did secure the fuel tank between the frame rails," McCray says. "You could whack a Ford at 60 miles per hour, and there would be no fuel spillage. You could whack a GM pickup truck at 60 miles per hour, and fuel would be all over the place and there would be a very large fire."

    According to auto safety critic Byron Bloch, GM developed safety bladder type liners for fuel tanks made from tough-skin, flexible, puncture-resistant plastics to fit inside the sheet-metal fuel tanks as a snug liner. But GM refused to install such liners on most of its cars and trucks.

    Bloch says that GM internal memos from 1978 and 1979 describe the liner project. A 1979 GM memo asserts that "the only means of assuring fuel tank crash integrity is a fuel tank liner" and "a fuel tank liner would be required for significant improvement in crash performance."

    GM put the bladder liner in its Chevrolet Corvettes beginning in 1975 for added protection, Bloch says, and he urged GM to put the liners in the GM pickup trucks. Bloch estimates that the bladder fix for the 4.5 million GM C/K trucks currently on the road would cost about $200 per tank, or $900 million overall.

    GM's troubles with law enforcement officials around the country continued to mount this year. In April, GM was fined a record $1.945 million for safety violations at its Oklahoma City assembly plant following the 1991 death of a worker. GM had contested the case brought by the Occupational Safety and Health Administration (OSHA).

    OSHA began investigating GM on April 4, 1991, the day GM worker Don Smith died of fatal head injuries when he was struck by a conveyor lift that began moving while he was repairing it. An OSHA administrative law judge upheld 43 of 57 penalties initially charged by OSHA, resulting in the biggest fine OSHA has won in court to date.

    And last year, the California Department of Motor Vehicles charged GM and 34 northern California dealerships with fraudulently reselling 51 vehicles with serious mechanical problems without disclosing their history of defects to the purchasers. GM settled the "lemon-laundering" charges in April 1994 by agreeing to pay the California DMV $330,000.

    [Contact: John F. Smith, Jr., President and CEO, GM, 3044 West Grand Boulevard, Detroit, MI 48202-3091. Telephone (313) 556-2044]

    [Contact: Center for Auto Safety, 2001 S Street, N.W., Suite 410, Washington, D.C. 20009- 1160. Telephone: (202) 328-7700]

  5. MONSANTO: Crack for Cows

    Never, in the long history of technological innovation in American agriculture, ranging from the invention of the cotton gin in the late 19th century to the introduction of chemical pesticides 50 years ago, has the advent of a new farm technology stirred such a reaction."

    That was the staid New York Times describing the introduction onto the market of recombinant bovine growth hormone (rBGH), the first important product of genetic engineering to be used in food production. When regularly injected into cows, the hormone forces the animals to produce up to 25 percent more milk.

    Monsanto, the company that brought you Agent Orange, has invested over $500 million in rBGH, and it made sure earlier this year that the Food and Drug Administration (FDA) approved it over forceful objections from the scientific community.

    Monsanto and the FDA want you to think that rBGH is completely safe. The company claims in promotional material that "Milk is carefully tested throughout its passage from the farm to the store to guarantee that it is fresh, healthy and safe. ... [A] comprehensive government monitoring system assures milk safety."

    Don't believe the hype.

    Dr. Samuel Epstein, chairman of the Chicago-based Cancer Prevention Coalition, believes that the FDA and Monsanto ignored evidence linking milk from treated cows with increased risk of breast cancer.

    The General Accounting Office has warned of the potential hazards to human health by consuming products derived from rBGH-treated cows. The powerful antibiotics and other drugs used to fight increased disease in rBGH-injected cows may lead to harmful drug residues in the milk supply and dangerous resistance to antibiotics in bacteria that can infect the human population.

    In addition, the United States has too much milk already. The overproduction of milk caused by Monsanto's rBGH could force up to 30 percent of U.S. family dairy farmers out of business within three years, according to the Washington, D.C.-based Pure Food Campaign.

    And what about the cows? Recombinant BGH is like "crack" for cows. It revs up their systems and forces them to produce a lot more milk, but it also makes them sick. Even the FDA admits that cows injected with rBGH could suffer from increased udder infections (mastitis), severe reproductive problems, digestive disorders, foot and leg ailments, and persistent sores and lacerations.

    Because of these concerns, more than 90 percent of U.S. citizens say they want hormone-treated milk labeled. But the FDA has written restrictive rules to prevent farmers and retailers from informing consumers that a dairy product is free of rBGH. The FDA rules governing this issue were written by Michael Taylor, who, before joining the FDA, worked for a law firm in Washington, D.C. representing Monsanto.

    The Pure Food Campaign has called for a boycott of all Monsanto products. Ronnie Cummins, director of the campaign, says that Monsanto and other giant multinational corporations realize that consumers don't want biotech foods. "They have to force consumers to accept these products," Cummins says. "And the only way to force consumers to accept genetically engineered food is to refuse to label it."

    "rBGH poses serious health hazards for humans, it is bad for cows, it is going to put up to 30 percent of family dairy farmers out of business and it is a disaster for the environment," Cummins says. "It is also the gateway product for several hundred other genetically engineered foods that are waiting in the wings for FDA approval."

    The Pure Food Campaign has signed up thousands of people in the United States to work to fight biotech foods. The Campaign urges consumers to demand products that are rBGH-free from their supermarkets. Consumer pressure on local retailers has been intense in recent months. Supermarkets are taking out ads in local newspapers informing consumers that they carry milk from dairies that don't use rBGH.

    In response, Monsanto sent letters to 2,000 retailers in Illinois and Wisconsin reminding them to obey the FDA labeling rules and warning some that their advertising violates those guidelines. And the company sued an Iowa dairy cooperative and a Texas dairy products firm, alleging that their ads violated federal law.

    All this was too much for the National Farmers Union, which called for a national boycott of Monsanto products, including sweeteners NutraSweet and Equal and herbicides Roundup, Lasso, and Lariat.

    [Contact: Richard J. Mahoney, Chair and CEO, Monsanto, 800 North Lindbergh Boulevard, St. Louis, MO 63167. Telephone: (314) 694-1000]

    [The Pure Food Campaign advises consumers to check with major food producers such as Dannon, Kraft, McDonald's and Pizza Hut, to see if they are using Monsanto's biotechnology in their dairy products. If they are, or if they refuse to answer your question, boycott them too. To get involved in the campaign, contact: The Pure Food Campaign, 1130 17th Street, N.W., Suite 300, Washington, D.C. 20036. Telephone: (800) 253-0681 or (202) 775-1132]

  6. NIKE: Hot Air

    Nike is one of the world's best known companies because it has signed on some of the world's best known sports figures - Michael Jordan, Andre Agassi, Bo Jackson, Charles Barkley, and Pete Sampras - to advertise its shoes.

    But Nike has an ongoing, potentially devastating image problem that it must constantly work to suppress. As the Economist magazine put it succinctly in July 1991, "a pair of Nike sports shoes that sells for $150 in the United States is made by Indonesian women paid the equivalent of 58 cents a day."

    Nike itself makes very few shoes. The company buys its shoes mostly from Asian contractors. According to a September 1994 report by Tilburg, Netherlands-based IRENE (International Restructuring Education Network Europe), 99 percent of the 90 million shoes Nike sells every year are produced in Asia, by a contractor workforce of over 75,000.

    In the early 1990s, under critical scrutiny by a handful of investigative reporters, Nike introduced a Code of Conduct. In it, Nike says its business is based on "trust, teamwork, honesty and mutual respect - we expect all of our business partners to operate on the same principle."

    Nike also argues that the jobs Nike supports in the Asia-Pacific region are among the best paying and most desirable jobs in those economies. "The income of an Indonesian entry-level factory worker is five times that of a farmer," a Nike position paper claims. "In the Indonesian labor market, numbering 78 million people and suffering from 40 percent unemployment, having a job at all is considered a benefit." But according to labor activists who have investigated the company's practices in Asia, Nike has pursued a ruthless policy of cutting costs by finding ever-cheaper production sites.

    According to IRENE, after originally making shoes in Europe, North America and Japan, in the early 1980s, Nike shifted most of its production to South Korea and Taiwan, where wages of $1 an hour were as little as one-tenth of those in the United States. "Then about five years ago, as wages and union organizing in Korea and Taiwan both took off, Nike shifted almost half of its production to Indonesia, China and Thailand, often leaving widespread unemployment in its wake," according to Marikje Smit, author of a report on Nike published by the Amsterdam-based Centre for Research on Multinational Corporations.

    Sadisah, a Nike production worker, was fired in late 1992 for helping organize her fellow workers in West Java, Indonesia. Sadisah worked for a Korean contractor, PT Sun Hwa Dunia. "Our factory did not pay minimum wages, nor did it meet other regulations, such as a ban on wage deductions for meals, and two-day menstruation leave for women," Sadisah told a conference in Paris earlier this year. "The company ignored workers' rights, and only emphasized our responsibilities. Working conditions were also very demeaning. For instance, for toilet breaks, we had to wear a sign board saying "I'm going to the toilet."

    In October 1991, Sadisah was making the equivalent of 80 cents a day. She and her colleagues drew up several demands to put to the company. These include demands for minimum wages and for women's entitlement to menstrual leave. A peaceful demonstration was organized and the company eventually accepted most of the conditions. But Sadisah and some of her colleagues were suspended for leading the protests. Despite court rulings in her favor, the company has refused to re-employ her.

    Research by the Jakarta office of the AFL-CIO and other public interest groups found that Sadisah's employer was not the only Nike contractor which failed to meet Nike's code of conduct. The research found that four of the six factories studied did not pay the daily minimum wage, even though this wage only met two-thirds of workers' "basic physical needs," as defined by the Indonesian government.

    "When we started the research we, perhaps naively, thought that Nike would treat its workers better than local firms," says the AFL-CIO's Jeff Ballinger. "In fact, the arrival of Nike and other shoe industry transnational corporations made matters worse, by turning the minimum wage into the maximum available." Ballinger says that he found that at least three of the Nike contractors were using child labor, with one 14-year-old girl sewing shoes for 50 hours a week. Compulsory overtime, which is against Indonesian law, was common, as were other violations concerning working hours and holidays, maternity leave and health and safety.

    Nike claims that all of its contractors must sign its code, which it monitors internally, and that no code violations have arisen. But labor activists want independent monitors to check to see whether the Nike's code is being met.

    In 1994, Nike spent a reported $250 million on advertising. Ballinger estimates that just 1 percent of that budget would lift 10,000 Indonesian workers above the poverty line. Labor groups have launched a campaign with the slogan "Wearing Nike Shoes Oppresses Indonesian Women" to bring Nike's action into line with its code.

    We suggest boycotting Nike shoes.

    [Contact: Philip H. Knight, Chair and CEO, Nike, One Bowerman Drive, Beaverton, OR 97005. Telephone (503) 671-6453]

    [For more information on Nike, contact: Jeff Ballinger, Press for Change, P.O. Box 230, Bayonne, N.J. 07002. Telephone: (201) 436-7177]

  7. PEPSI: Boycott

    One day last year, Ann Leonard, of Greenpeace's International Waste Trade Project, was sifting through some U.S. Customs data. She noticed that Pepsi was exporting huge amounts of plastic waste out of California to India. She noticed that in 1993 alone, there were 23 shipments totaling nine million pounds of plastic waste. Leonard became curious. She found out that most of the waste was going to Madras, on the southeast coast of India.

    Leonard ended up in Madras this year, searching for the Pepsi bottles. She followed leads for weeks. One day, she came over a hill, and saw "an absolute mountain of used plastic soda bottles."

    "I couldn't figure out what was going on, because they were not all Pepsi bottles," Leonard says. As it turns out, the bottles were all from California's recycling program. Every one had a label that said "California Redemption Value." "Pepsi arranges for the shipment of the bottles and sends them to an affiliated company in India," Leonard says.

    As Leonard revealed in a Multinational Monitor article earlier this year [see Dumping Pepsi's Plastic," September 1994 ], Pepsi is involved in both producing and disposing of plastic waste in India. Under Pepsi's two-part scheme, plastic for single-use disposal bottles are manufactured in India and exported to the United States and Europe, while the toxic by-products of the plastic production process stay in India. Used plastic bottles are then returned from these countries to India.

    Pepsi officials in the United States acknowledge that the waste is exported to India, but claim it is all recycled. The company in India that receives the waste bottles, Futura Industries, admits that much of the waste is not recycled. But it will not say where the remaining, "nonrecyclable" wastes are disposed.

    And while Pepsi and Futura maintain that the plastic waste imports are legal, Leonard points out that the shipments may violate both Indian law and the terms of an international treaty. Last April, the Indian Commerce Minister banned the import of plastic wastes into the country. And the Basel Convention on Wastes, which regulates the waste trade and prohibits hazardous waste exports, does cover "waste collected from households."

    Pepsi's dumping of plastic waste in India has fueled the anti-Pepsi mood in the country. Protesting activists in Madras have taken to defacing Pepsi billboards. In New Delhi, thousands of activists have vowed to disrupt the sale of Pepsi in the city. Many want Pepsi to just leave India altogether. The campaign is part of a larger "Swadeshi" movement to boycott foreign goods in the country.

    Citizen activists in the United States have also called for a boycott of Pepsi because it does business with Burma's repressive junta. Pepsi's Chief Executive Officer Wayne Calloway defends his company's decision to stay in Burma, saying "I don't think corporate CEOs should make foreign policy decisions."

    Other corporations, including Liz Claiborne, Levi Strauss & Co. and Amoco, under pressure from human rights activists, have decided not to do business in Burma any longer.

    But Calloway has decided to keep Pepsi in Burma, and he has strongly criticized human rights activists. After hearing about the Pepsi boycott from one such activist, Calloway wrote back, accusing the activist of "dealing in coercion and strong-arm tactics." "It's no different than what years ago was practiced by Joe McCarthy and the like," Calloway wrote earlier this year. "In those days, `establishment organizations' felt fully justified in using intimidation on progressives and liberals ... feeling their noble purpose justified anything. They were wrong then, just as you are wrong now, in my opinion. Like a blacklist, a boycott is just another form of intimidation, and those despised tactics of the past are no different than what you are doing yourself. That we are a big, pretty successful company doesn't change the principle, at all."

    This is truly twisted reasoning. Pepsi is doing business in a country dominated by an ugly, repressive regime. It is Pepsi that is engaged in the wrongful practice, not consumers who boycott their high-sugar product.

    Boycott Pepsi. And let Calloway know about it.

    [Contact: Wayne Calloway, Chairman and CEO, PepsiCo, 700 Anderson Hill Road, Purchase, NY 10577. (914) 253-3700]

    [Contact: Greenpeace, 1436 U Street, NW, Washington, D.C. 20009. Telephone (202) 462- 1177]

  8. PHILIP MORRIS: Death, Disease and Duplicity

    Philip Morris is the seventh largest U.S. industrial corporation, with annual revenues of more than $50 billion. Its big money maker - cigarettes.

    Every year, three million people around the world die from tobacco-related diseases. In the United States, smoking is the leading preventable cause of death, killing over 400,000 people each year. In spite of the known dangers of tobacco use, the tobacco industry continues to spend billions of dollars each year promoting its deadly products around the world.

    Since 90 percent of smokers start before the age of 21 - 60 percent before the age of 14 - much of the tobacco industry's marketing and promotion is geared toward children and youth. Philip Morris's Marlboro Cowboy campaign is the classic example of youth marketing, playing on themes of risk-taking and independence. Because of the campaign, Marlboro is the number-one children's cigarette in the United States, the number-one selling cigarette around the world, and the number-one consumer product in the world.

    Tobacco advertising and promotion by Philip Morris and other companies is reversing public health progress in many countries, and expanding the tobacco epidemic, especially in parts of the world where women have traditionally not smoked.

    A recent study published in the Journal of the American Medical Association showed that smoking initiation rates among U.S. girls aged 11 to 17 rose rapidly from 1967 to 1973, after Philip Morris introduced Virginia Slims.

    The U.S. General Accounting Office reported that in the year after Korea was forced to lift import restrictions on cigarettes made by Philip Morris and other U.S.-based multinationals, the smoking rate among teenage girls rose by more than 300 percent. Similar trends are evident in other countries as well. "Until the arrival of the transnational tobacco companies and the beginning of aggressive advertising, the prevalence of smoking was decreasing," says Dr. Jiri Kozak, an adviser to the Czech Ministry of Health.

    Philip Morris and other tobacco companies consistently deny that they target youth with their slick advertising and promotion campaigns, claiming instead that they are only seeking to convince smokers of competing brands to switch. Youth smoking, they claim, is not in the tobacco industry's best interests.

    When the public gets outraged and acts to try to curb the tobacco industry's marketing excesses, Philip Morris brings its corporate hammer down hard on the public policy. Philip Morris has openly defied tobacco advertising bans in Russia and Hungary. "When you're moving, you get the feeling the whole country is covered with Marlboro signs," says an advertising representative in Hungary.

    The City of New York is currently debating whether to ban smoking in public places. In response, Philip Morris is threatening to move its headquarters out of the city if the ban is passed. And according to a report in the New York Times, the company is pressuring major arts institutions in New York, institutions that have benefited from the company's largesse in the past, to lobby city officials against the smoking ban.

    Philip Morris has set up front groups around the United States to execute its dirty work against public health initiatives. The company recently provided most of the start-up money for the National Smokers Alliance. The organization, the brainchild of the company and its public relations firm, Burson-Marsteller, is evoking images of a powerful "Big Brother" government to sign up members from the extensive mailing list Philip Morris has been compiling through its promotional activities.

    In California, Philip Morris bankrolled a campaign to put on the November ballot an initiative that would have crippled tough local anti-smoking ordinances in favor of a milder statewide rule. The Secretary of State in California found that the company engaged in a "systematic scheme of deception" to get enough signatures to get the initiative on the ballot. The company then spent more than $20 million in an unsuccessful effort to get the measure passed.

    Earlier this year, INFACT, the citizen action group in Boston, called for an international consumer boycott of Philip Morris. Since Philip Morris derives 56 percent of its overall revenues from food and beer, consumers around the world can boycott these products to pressure the company to stop inducing young children to smoke tobacco. "It's time for the public to take action and hold these companies directly accountable for their life-threatening activities," said INFACT's executive director, Elaine Lamy.

    Key brand names on the boycott list are: Kraft, Oscar Mayer, Maxwell House, Post, Jell-O, Kool-Aid, Marlboro, Kraft Food Services, General Foods, Miller, and Jacobs Suchard.

    [Contact: Michael A. Miles, Chair and CEO, Philip Morris Companies, 120 Park Avenue, New York, NY 10017. Telephone (212) 880-5000]

    [For more information on the boycott, contact: INFACT, 256 Hanover Street, Boston, MA 02113. Telephone: (617) 742-4583. FAX: (617) 367-0191]

  9. UNOCAL: Guilty

    At a time when more socially conscious corporations were running away from the repressive military government in Burma, Unocal was strengthening its ties. The reason: offshore gas.

    Unocal, in conjunction with Texaco, is planning to build a natural gas pipeline through some of Burma's most pristine tropical forests to Thailand.

    According to Rainforest Action Network, the proposed pipeline would have profound effects on one of the last remaining forest wilderness areas left in Burma. The junta is preparing the area for the pipeline, with forced labor and ethnic cleansing of the region's indigenous peoples - the Mons.

    Mon defiance of Burma's State Law and Order Restoration Council (SLORC) - the junta in power - has led to constant campaigns of ethnic cleansing directed at them. Villagers suspected of sympathizing with Mon resistance fighters are tortured, raped, and massacred by SLORC troops.

    The Mons, once Southeast Asia's great Buddhist civilization, are now an endangered, hunted people. Human rights groups say that the SLORC is making Mon villages disappear, and eradicating the inhabitants so there will be no risk of sabotage to the pipeline. Mons are being taken as slaves to work on infrastructure projects, building roads, extending the railway line and building new army bases for the SLORC battalions.

    Nobel Peace Prize winner Aung San Suu Kyi has called on all nations to boycott Burma.

    Rainforest Action Network is calling on Unocal to disinvest from the country.

    While Unocal is apparently getting away with its partnership with the murderous regime in Burma, it was forced to admit to criminal pollution in California. Unocal was found guilty earlier this year of three criminal pollution charges and was fined $1.5 million for leaking diluent, a petroleum thinner, into the ocean and groundwater at its Guadalupe oil field.

    Unocal was found guilty of discharging up to 8.5 million gallons of chemicals over a 40-year period. It ranks as California's largest oil spill and the fourth largest spill in U.S. history.

    Unocal took over the Guadalupe oil field in 1953. California investigators charged that illegal discharges have occurred at the field since 1978, and alleged that the company attempted to cover up the leaks. In 1990, the company admitted that petroleum thinner that was seeping from the sand at Guadalupe Beach came from the oil field. At various times, diluent has covered beaches in central California with an oil sheen.

    California authorities agreed to drop 33 misdemeanor charges, including six charges against employees of Unocal, when the company accepted full responsibility for the criminal conduct. The company still faces up to $170 million in civil fines.

    Residents of the California coast have complained for some time that the diluent was contaminating beaches and harming sea lions, seals and other marine animals. In 1990, the company built a retaining wall to prevent the oil from hitting the beach. But in January 1994, the diluent was still surfacing on the beach beyond the restraining wall.

    State officials have not been able to determine how much diluent has flowed into the ocean, but recovery wells on the beach have recovered more than 650,000 gallons since 1990. Unocal has said that most of the leaked petroleum has seeped into the ground below the oil field, and may have contaminated the ground water. Experts hired by the company have estimated that 4.6 million to 8.5 million gallons of diluent have leaked into the ground. State officials estimated that there have been 190 leaks of diluent at the oil field that went unreported.

    Unocal is also pushing ahead with plans to begin operating a sour-gas facility in Canada near Little Buffalo, Alberta. The facility, which would be used to remove excess sulfur from natural gas, is adjacent to and upwind from a village of Lubicon Cree. The facility will emit hazardous pollutants into the air.

    For years, the Lubicon lived a self-sufficient life on their land, hunting, gathering and trapping. In 1979, the government in Alberta allowed oil companies to explore on its territory. According to a report by the Rainforest Action Network, in four years, the companies drilled 400 oil wells within 15 miles of Little Buffalo. The drilling activity eventually destroyed the hunting and trapping areas and the Lubicon were forced onto welfare. The Lubicon believe that the oil industry, and Unocal's facility, represent "genocide, pure and simple." They want the facility decommissioned.

    Unocal did not return calls from Multinational Monitor.

    [Contact: Rainforest Action Network, 450 Sansome Street, Suite 700, San Francisco, CA 94111. Telephone: (415) 398-4404]

    [If you have a Union 76 or Unocal credit card, cut it up and send with a letter of protest about the company's Burma and other operations to: Roger Beach, CEO, Unocal Corporation, P.O. Box 7600, Los Angeles, CA 90051. Fax: (213) 977-7040]

  10. UPJOHN: Pattern of Deceit

    Halcion is Upjohn Company's best-selling sleeping pill.

    According to consumer advocates, the problem with Halcion is that long-term use induces memory loss, depression, anxiety and violent behavior in some patients. Because of these health concerns, Britain permanently banned the drug. And two years ago, Public Citizen called on the Food and Drug Administration (FDA) to ban the drug as well.

    But in 1992, the FDA concluded that Halcion was safe, but recommended stronger warnings about potential side effects.

    According to an FDA report obtained earlier this year by Public Citizen, Upjohn "engaged in an ongoing pattern of misconduct" to ensure that Halcion would remain on the market.

    The FDA report is based on information obtained during an FDA inspection of Upjohn from December 1991 through March 1992, which was abruptly halted before federal officials completed their investigation. FDA closed down its investigation even though the agency found that in a Halcion study at a prison in Jackson, Michigan, there were serious adverse reactions. Thirty percent of those reactions were not reported to the FDA in Upjohn's new drug application. "Responsible management was aware of serious side-effects," the FDA found.

    Upjohn was seeking approval of Halcion at the one milligram level "even though information shows that there was an awareness that the dose was too high and caused serious side-effects in significant numbers," an FDA memo dated April 4, 1994 found.

    In addition, the FDA memo said that Upjohn took no corrective action after reports from Belgium and the Netherlands showed numerous adverse reactions at the one milligram level.

    The FDA memo charged that it had uncovered Upjohn documents indicating that the company had chosen to disregard the drug's hazards in order to increase sales.

    FDA investigators found that data on side effects of Halcion were misrepresented to the Japanese and French governments, even though management was informed of the inaccuracies.

    Upjohn formed a "product support committee" to counter negative publicity about the drug and to silence critics.

    The FDA memo said that the committee attempted to discredit reports by Dr. Ian Oswald, a British doctor; sought to halt publication of a critical article in the New England Journal of Medicine; and provided misleading data to a Boston study group which subsequently sent a flawed letter to Lancet, the British medical journal.

    According to internal FDA documents, the FDA shut down its investigation of Upjohn just before investigators were to pick up crucial documents from the company.

    Public Citizen's Dr. Sidney Wolfe has called for a criminal prosecution of Upjohn. "For the past two decades, Upjohn has systematically misrepresented Halcion's serious behavioral and psychological adverse effects to the FDA, expert [review] panels ... and to the public," Wolfe says.

    Upjohn categorically denies Wolfe's allegations and says that the company "puts nothing ahead of patients' health."

    But Wolfe says that new evidence revealed during a recent trial in the United Kingdom, Upjohn Company v. Professor Ian Oswald and the BBC, "gives further substance to our fears that Upjohn engaged in a pattern of withholding information and misleading the agency concerning Halcion."

    Wolfe says that four examples from that case, "any one of which could be grounds for criminal prosecution, are taken from three different studies in which Upjohn either failed to submit data to the FDA or altered data that was submitted."

    "It is time for the FDA to criminally prosecute this firm and remove this dangerous drug from the market in the United States, as we petitioned the FDA to do in July 1992 and as has been done in other countries such as the United Kingdom," Wolfe says.

    Wolfe adds that the FDA should explain to the U.S. public "how a drug company can engage in an extensive pattern of withholding records and deceiving the FDA regarding a high-selling drug and yet avoid criminal sanctions."

    Upjohn was also accused of bribing retailers this year. The company, accused of paying pharmacists to push the company's diabetes medication, agreed to abandon the payment practice and pay seven states a total of $675,000 to settle the case.

    [Contact: Theodore Cooper, Chair and CEO, Upjohn, 7000 Portage Road, Kalamazoo, MI 49001. Telephone (616) 323-4000]

    [Contact: Public Citizen Health Research Group, 2000 P Street, N.W., 7th Floor, Washington, D.C. 20036. Telephone: (202) 833-3000] n


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