The Multinational Monitor

JUNE 1989 - VOLUME 10 - NUMBER 6

N A M E S   I N   T H E   N E W S

Goodyear's Bribes

Officials of the Goodyear International Corp., the Akron, Ohio-based tire manufacturer, pleaded guilty last month to charges that the company violated the Foreign Corrupt Practices Act by participating in an international bribery scam. At federal court proceedings in Washing-ton, D.C., attorneys for Goodyear admitted that the company paid nearly $1 million in bribes to Iraqi middle-men in exchange for $19 million in tire business from the Iraqi government. The transactions occurred between 1979 and 1983.

Court documents show that Goodyear officials went to great lengths to disguise the Iraqi bribes as legitimate business expenses. They created a fictitious account with a Greek marketing firm and paid its president $30,000 to ensure his cooperation. Through this account, Goodyear was able to launder approximately $400,000. The officials also drew up fake invoices for payments on advertising space in Middle Eastern newspapers to account for the remaining $550,000 paid out in bribes.

Despite all of the planning and the efforts to cover up the trail of bribery � factors which normally mitigate in favor of stiff sentences�Goodyear was sentenced to pay a meager $250,000 fine for its crime. That amount pales beside the company's profits on the ill-gotten $19 million in tire sales. In addition, thecorp orate official identified as the mastermind of the bribery plan David Janasik, Goodyear's Regional Export Manager for the Middle East, will pay an even smaller, $10,000 fine, serving a two-year term of probation.

Insult to Injury

Native Americans, along with the Department of the Interior, are losing millions of dollars a year to oil companies that undermeasure or undervalue oil and gas flowing from native and public lands. That was the conclusion reached last month by a Senate panel which led a six-month federal investigation into a variety of abuses against native Americans and federal programs for them. Among their other activities, investigators surveyed oil company operations for eight randomly selected Indian oil leases. Testing indicated that at six of the eight sites, the native proprietors were being "victimized by significant theft."

Leading the list of violators, according to a Senate source, was Koch Industries, Inc. of Kansas. Although "there were a number of small independents which appeared to be engaged in this," the source said, "Koch was a truly exceptional case. Over 50 statements collected by investigators, including interviews with Koch employees, show that Koch was stealing not just occasion-ally but as a matter of policy," he added. "And it's a significant amount. This is a company whose annual profits from crude are around $30 million, and whose theft is in the $7 million to $10 million range. It is a big chunk of their profit margin."

Documents collected during the investigation indicate that Koch, which is a leading purchaser of oil from Indian lands, ended 1986 with 803,874 more barrels than it paid for; 1987 with 671,144 more barrels than it paid for; and 1988 with 474,281 extra barrels. The total value of this extra oil is estimated to exceed $30 million.

A Koch employee told the Senate panel that the company term for the practice was "volume enhancement"

Charles Koch, the company's chief executive, called the Senate charges "absolute nonsense." He explained that if the company happened to receive more oil from native lands than it paid for, it is because "oil measurement is a mysterious art and the people doing the measuring are not rocket scientists."

Drug Cover-Up

The pharmaceutical industry is a large and influential force in Puerto Rico, where some 38 pharmaceutical companies employ more than 18,000 people. Recent revelations about the relationship between the industry and the office of the United States Attorney in Puerto Rico indicate that influence may extend will beyond the boundaries of the law.

It seems that pharmaceutical companies on the island have difficulty keeping track of narcotics and other con-trolled medicines. Over the last four years, they've been hit with approximately two dozen complaints by the U.S. Attorneys office with accompanying fines totalling over $3 million for violations of the federal Controlled Sub-stances Act. Some 20 more such cases are currently under investigation. In a highly unusual practice, however, which may well contravene Justice Department policy, the U.S. Attorney has made special agreements with the industry to hush up the violations.

The practice reportedly works this way: the U.S. Attorney files a complaint, accepts a quick financial settlement and then moves to dismiss the case so that there is no public record of any wrongdoing. Also part of the deals is a promise from the U.S. Attorney not to issue news releases or otherwise publicize the cases.

"When my attorneys negotiate with the defendant attorneys, part of the informal agreement is that we don't go out and issue all kinds of press releases and make a big fuss about it," Daniel Lopez Romo, the current U.S. Attorney in Puerto Rico, recently admitted. "We want to avoid hurting these people and getting them out of business. The adverse publicity would cost them millions of dollars and hurt industrial potential on the island."

In fact, the deterrent effect of adverse publicity is supposed to be much-prized by prosecutors in cases of corporate misconduct, which tend to be complicated and expensive to investigate and prosecute. A Justice Department manual for U.S. Attorneys appears to prohibit settlements which involve promises not to seek publicity or issue press releases.

The San Juan Star reported that among the companies involved in such deals to date are Alcon, E.R. Squibb, Rorer Caribbean, Bristol Meyers, and Searle Caribbean, a unit of the Monsanto subsidiary, G.D. Searle.

� Garth Bray

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