The Multinational Monitor


C O R P O R A T E   P R O F I L E

Monsanto's Misdeeds

by A.V. Krebs

The corporation which conceived the slogan "Without chemicals, life itself would be impossible," has a new focus. Currently, the St. Louis-based Monsanto Company is aglow with the wonders of biotechnology. Now the company asserts that it "is developing a way to use Mother Nature to modify organisms to serve us better."

Started in 1901, Monsanto grew through most of this century as a commodity chemical manufacturer, selling chemicals to other companies, which used them to make other products such as detergents. By the beginning of the 1980s, however, Monsanto executives decided that contracting markets, rising prices for petroleum (a prime component of many chemicals) and competition from oil companies made Monsanto uncompetitive in the industry. 'Between 1980 and 1987," company Chairman and Chief Executive Officer Richard Mahoney states, "we sold or shut down $4 billion worth of businesses, ranging from basic oil and gas exploration operations with most of their derivative chemicals, to businesses involving other products like polystyrene plastics, where our market position was inadequate." The percentage of company assets tied up in commodity petrochemical businesses fell from 30 percent to approximately 2 percent.

The company's current principal industry segments are in crop chemicals, animal sciences, chemicals, capital equipment, NutraSweet and pharmaceuticals.

Monsanto does business all over the world and aspires to become a genuine "global company," according to Mahoney. "In time, if we do our job right, we estimate that Monsanto's total business will be split roughly 50-50 between the United States and international markets," " he says. The company's production facilities are already widely dispersed. In addition to its main offices and research laboratories in the St. Louis area, Monsanto has research and production facilities in 19 states. Abroad, it has facilities in Argentina, Australia, Brazil, Belgium, Canada, France, Japan, Mexico, Norway, Puerto Rico and the United Kingdom. It employs 42,000 people worldwide.

In reorienting its operations, Monsanto has thrown its resources into research and development, hoping to take the lead in the emerging biotechnology field. "Research and development isn't part of the strategy. Research and development is the strategy," Mahoney emphasizes.

Monsanto executives believe enormous potential exists to exploit the new tools of the biological sciences. "Two years from now every crop in the world will be easily manipulated," declares Robert T. Farley, who is in charge of the company's plant molecular biology group. "Ten years from now, in some plants we'll know every gene, every protein, every function. The door is wide open. There are no longer any technical restraints."

Monsanto's scientists are predicting the first of its genetically engineered plants will be on the market by 1994 or 1995. Already the company has developed a variety of crops � tomatoes, potatoes, alfalfa, tobacco and cucumbers � that are resistant to viral infections. In addition, they have altered cotton, tomatoes and potatoes with bacterial genes that produce proteins fatal to budworms, boil worms and other pests.

Monsanto's emphasis on biotechnology comes in the face of the imminent expiration of two of its most important patents � a lucrative herbicide sold under the ROUNDUP label and the aspartame low-calorie sweetener, NutraSweet. The company has already begun funneling over $1 billion of its corporate capital into biotechnology.

Topping Monsanto's research and marketing agenda is Bovine Growth Hormone (BGH), a genetically engineered bacteria, which, when injected into cows twice a month, purportedly increases milk yields from 10 to 25 percent (see "The Chemical Jungle," Multinational Monitor, May 1989). Also on the corporation's menu of new products is Simplesse, a blend of milk and egg-white protein used in the company's fat-free "Simple Pleasure" ice cream.

Sales of these two new products have been forecast at $100 million to $200 million yearly for BGH and $300 to $500 million for Simplesse.

Monsanto sees the sales of these two products supplementing and possibly eventually replacing ROUNDUP, which had sales of $1 billion in 1989, and aspartame, which, under the labels of NutraSweet and Equal, generated sales of $869 million last year. In 1989, these two products and the anti-hypertension drug Calan SR ac-counted for 20 percent of Monsanto's sales and approximately 40 percent of its profits, according to the Wall Street Journal. While Monsanto's 1989 sales rose only 4.7 percent to $6.68 billion, company profits nearly tripled, going up some 15 percent to $679 million.

The company's gamble on biotechnology is not without risks, however. Just as the chemical industry earned plaudits from financial analysts but harsh criticisms from environmentalists, so too is biotechnology being subjected to searing attacks by public interest advocates. But unlike the case of the chemical industry, social critics of biotechnology are emerging at the birth of the new industry, and may exert significant influence over its future.

Growing pains

The expanding movement to ban the use of BGH by spotlighting its dire economic and health effects on dairy farmers and consumers, for example, makes the product's future uncertain.

Uncertainty surrounding BGH, in fact, reflects the indeterminate state of the entire industry. "I've con-tended for some time," states Paul T. Leming of Morgan Stanley & Co.'s Equity Research Department, "that BST [BGH] is the litmus test of biotechnology products getting into the human food chain."

Public health experts such as Dr. Samuel Epstein, University of Illinois professor of environment and occupational medicine and one of the first critics of BGH-produced milk, have argued strenuously against the introduction of BGH. Epstein warns that "cell-stimulating growth factors" such as BGH could induce premature growth and breast stimulation in infants and possibly promote breast cancer.

Wisconsin Secretary of State Doug LaFollete, in an Au-gust 1989 letter to the FDA's Frank Young, complained that "a few chemical companies are willing to endanger the health of millions of Americans who take for granted the safe, wholesome quality of our milk supply."

Family farm advocates denouce BGH as well, claiming it is a threat to the family farm and a boon to corporate agribusiness. "Studies indicate synthetic BGH will favor bigger and bigger dairy operations," says John Hathaway, co-chair of the National Family Farm Coalition's dairy committee. "The most productive states � Wisconsin, California and New York � already have lost 30 percent of their dairy farms in the last decade. That hasn't brought more efficiency or lower milk prices to the industry, it's only brought more poverty to rural communities and more profits to processors."

Other critics of BGH, such as John Stauber, an associate of the Washington, D.C.-based Foundation on Economic Trends, note that once BGH is successfully introduced, it is bound to create additional markets for the large chemical companies. "Companies ... will clean up on this stuff if it gets approved" he charges. "If the cows get sick, they'll make more money selling antibiotics to the farmers. They just can't lose."

Some food companies and food outlets, such as Ben & Jerry's Ice Cream (urging their customers to "save family farms") and Kroger Co., have already refused to use or sell BGH milk in their products and stores.

Conscious of the growing controversy surrounding BGH, recently banned in Wisconsin and the subject of similar attempts in Vermont, Monsanto has taken aggressive public relations steps. It has enlisted the scientific community and the Food and Drug Administration to gain farmer and consumer confidence and had saturated officials of the American Medical Association with favor-able propaganda. One of the company's tactics, according to the Wall Street Journal, is to insist on using the more scientific � and sanitized � term Bovine Somatatropin or BST, rather than BGH.

Monsanto has also sought to legitimize its BGH efforts bycoopting university experts. The company has enlisted the research help of such land-grant universities as the University of Wisconsin and the University of Vermont in conducting BGH research. These university sponsorships bring more than just additional research. "In the majority of instances where industry interests are involved," charges Epstein, "the only information avaailable to Congress and decision-makers is either developed in-house or by contract with university research arms. This create: an inherent conflict of interest, and a conscious anc subconscious effect on those receiving the funds."

Not so sweet

Monsanto's $2.8 billion purchase of pharmaceutica manufacturer G.D. Searle in 1985 was an important par of its effort to diversify away from commodity chemicals According to Mahoney, the purchase brought Monsantc "both the pharmaceuticals operations we coveted and ar expanding stream of earnings from Nutrasweet sweet ener that could help to see us through the potentially lear years before corporate restructuring began to pay off."

Nutrasweet was in fact Searle's most attractive prod� uct. The world's "first branded ingredient," NutraSweet is sold principally to Coca-Cola and Pepsi. It is used in 161 soft drinks and in some 3000 other products.

By 1989, Nutrasweet had established Monsanto as the clear industry leader in the production of artificial sweetners with a 70 percent market share.

Health and consumer critics charge, however, that aspartame, currently consumed by over 100 million Americans each day in soft drinks and a variety of other products, may cause brain tumors, seizures, mood swings and headaches.

Noting that the FDA has received approximately 3,000 complaints from consumers since it appeared in 1981, Dr. Louis Elias, director of medical genetics at Emory University Medical School, argues that Nutrasweet was not properly tested. "They never asked the right questions about what it does to brain function in humans. They decided without data that you had to have enormous amounts of phenylalanine in your blood before it be-comes a problem. We don't know that's the case."

A 1987 study by a University of Illinois scientist indicated that using Nutrasweet appeared to heighten chances of behavioral disturbances and birth defects. Dr. Reuben Matalona, a pediatrician and geneticist, argues that his test results suggested that large amounts of Nutrasweet could affect small children and millions of people unaware of their body's inability to fully process phenylalanine. High concentrations of the chemical, he suggests, can cause reduced attention span and concentration and memory loss.

Elias and Matalon's concerns are shared by a broad segment of the scientific community. A 1987 General Accounting Office study conducted for Sen. Howard Metzenbaum, D-Ohio, noted that over half of 69 scientists polled voiced concerns about the Nutrasweet's safety.

Petition efforts by James Turner, an attorney with the Community Nutrition Institute, calling on the Food and Drug Administration to ban Nutrasweet as an "imminent hazard to the public health," have been rejected by the federal agency. Turner argues that medical records of a total of 140 Nutrasweet users show them to have suffered from epileptic seizures and eye damage after consuming products containing the artificial sweetener.

Another aspect of the artificial sweetener controversy that has escaped public attention is the monetary cost of the ingredient. For example, in 1987 the wholesale price of aspartame when adjusted to an equivalent amount of sweetening power as sugar was 35 percent higher than sugar and twice as much as high-fructose corn sweeteners, the most widely used sweetening agent.

A poisonous past

In shifting its corporate emphasis to biotechnology, Monsanto leaves behind a sordid record of producing unsafe pesticide and chemical pollutants.

  • Monsanto was a major producer of Agent Orange, an herbicide sprayed widely by U.S. troops during the Vietnam War. Agent Orange, which is made of the dioxin-contaminated chemicals 2,4,5-T and 2,4-D, wreaked havoc in the Vietnamese countryside and also poisoned many U.S. soldiers. In 1984, Vietnam veterans' claims against the producers of Agent Orange were settled for $180 million, an amount viewed by many veterans' groups and public health advocates as extremely small. Mon santo was ordered to pay 65 percent of the award.

  • Contradictory scientific evidence on the carcinogenicity of dioxin was a major reason the Agent Orange settlement was so low. But recent disclosures, stemming from a case unrelated to Agent Orange, have demonstrated that several important Monsanto studies disputing the health risks of dioxin were fraudulent. Lawyers for the 65 plaintiffs in the class-action suit, Frances E. Kemner, et. al. v. Monsanto, charged that Monsanto's spill of 2,4,5-T near Sturgeon, MO caused cancer in those exposed to the chemical.

    Although the court awarded the plaintiffs only $1 in actual damages, it awarded $16.25 million in punitive damages in response to the lawyers' accusations that studies prepared by Monsanto were fraudulent. The studies have long been used to discredit other studies showing exposure to dioxin to have significant health consequences.

    The studies compare the number of deaths for workers exposed to dioxin at a 1949 explosion of a West Virginia Monsanto plant with those not exposed. But the plaintiffs' lawyers claimed that the studies intentionallycounted exposed workers in the unexposed group and vice versa. They assert that, properly conducted, the studies would show mortality rates for exposed workers to be 65 percent higher than for unexposed employees. Jay Feldman, executive director of the National Coalition Against the Misuse of Pesticides, told Multinational Monitor that "the whole thing was fraudulent. Records were bad, testing procedures were flawed." " Dr. Cate Jenkins, an EPA chemist, wrote in a memo which helped uncover the fraud, "It is a commonly bandied adage that dioxins have not been demonstrated to have caused cancer in humans, despite documented exposures. Perhaps this may now be seen as yet another 'old industry tale' in light of the fraud allegedly committed by Monsanto in conducting its 'research.'"

    Monsanto has vigorously denied that its studies were conducted improperly and has appealed the punitive damages in the Kemner case.

  • In 1985, when the Pesticide Action Network (PAN) launched its "Dirty Dozen" campaign, it included the Monsanto-produced parathion in its list of 12 dangerous pesticides used worldwide. Parathion is an insecticide which may be reponsible for half of the world's pesticide poisonings and 80 percent of those in Central America, according to PAN. Parathion poisoning may cause convulsions or coma and paralysis. Monsanto phased out its parathion production in 1986, though it claims it did so only "because the market shifted [and parathion] was being replaced by other pesticides." Bruce Buckland, director of government and industry affairs at Monsanto, says, "Parathion is probably one of the safer ones."

  • The company still manufactures butachlor, an herbicide produced in Iowa and sold overseas, particularly in Asian and Pacific countries and in Latin America, under the trade names Machete and Lambast. Monsanto submitted butachlor for EPA registration in 1978. The EPA granted a temporary tolerance which expired in 1984; Monsanto has not submitted any data since then. EPA officer Robert Taylor has told Greenpeace that the EPA did not approve Monsanto's application for butachlor registration due to "environmental, residue, fish and wildlife and toxicological concerns." Butachlor can cause skin and eye irritation, as well as decreased body weights, organ weight changes, reduced brain size and lesions, according to Monsanto's safety data sheet for the chemical. Nevertheless, butachlor appears in the U.S. food supply; it is used in Argentina, Brazil, China, India, the Philippines, Taiwan, Thailand and Venezuela, which together produce 97.5 percent of U.S. rice imports, reports the U.S. Department of Agriculture Economic Research Service.

  • Monsanto also produces alachlor, which is marketed under the trade name Lasso and is the largest selling herbicide in the United States. In its 1988 annual report, Monsanto called Lasso one of "two miraculous new herbicides" (along with butachlor), perhaps a reference to the fact that approximately 84 million pounds of the product are used each year to treat approximately 30 percent of U.S. corn and soybeans. Presumably, the "miracle" is not that alachlor has been demonstrated to cause lung, stomach, thyroid and nasal cancers in lab animals, findings which have prompted the EPA to require the warning "alacholor has been determined to cause tumors in laboratory animals" on all Lasso containers.

    In 1984, the EPA considered an emergency ban of alachlor, according to internal agency documents obtained by Greenpeace. Lobbying by Monsanto succeeded in persuading officials to reject the emergency ban and instead place alachlor in a Special Review. The agency acknowledged that alachlor was a probable carcinogen and expressed concern that "large numbers of Americans maybe exposed" to alachlor through the consumption of treated crops, contaminated drinking water or from direct contact with treated crops, Greenpeace reports. But the federal statute governing pesticide use, the Federal Insecticide, Fungicide and Rodenticide Act, required the EPA to consider not only the health and environmental effects but the economic impact of a ban. In 1987, the EPA decided to allow sales of Lasso to continue, requiring only that it be applied by certified applicators.

  • One Monsanto product which was ultimately outlawed bythe EPA is carcinogenic polychlorinated biphenyls (PCBs), another chemical originally touted as a won-der by the company. Monsanto began commercial PCB production in 1929, becoming the first and only U.S. manufacturer. Although as early as 1936 studies demonstrated that PCBs had detrimental health effects, Monsanto continued production until 1977, one year after the EPA issued an order outlawing production of the chemical by 1979.

    Hailed for their great stability and flame resistance, PCBs made their way into products ranging from electrical transformers to bread wrappers and baby bottles. The EPA estimates that 1.4 billion pounds of PCBs have been produced since 1930 and that 91 percent of U.S. citizens have detectable amounts of PCBs in their tissues. Much of the Great Lakes, the world's largest single freshwater supply, is contaminated by PCBs, with scientists in Duluth, Minn. declaring that all trout and salmon over one foot long in Lake Michigan are unsafe for human consumption.

In whose service?

Monsanto was one of the most important players in the chemical revolution which has remade social arrangments in the United States and throughout the world since World War II. That revolution's legacy of poisonous pesticides, toxic dumps and air and water pollution will plague the world for the foreseeable future. The centralizing effect of pesticide-intensive agriculture is also a lasting inheritance.

The biotechnology revolution which Monsanto hopes to lead may offer some beneficial possibilities, but it also has the potential to repeat the destructive experiences of the chemical revolution. In agriculture, for example, "we have the potential to understand biological systems ... as never before, such as understanding the entire cycle of how pests attack crops and how crops respond," " says Jack Doyle, author of Altered Harvests and director of Friends of the Earth's Agriculture and Biotechnology Project. But new technical capabilities are not being used to develop an environmentally and socially sound sustainable agriculture. "The kind of biotechnology that Monsanto has embarked upon is silver-bullet technology that will pro-long the system of agriculture we have now," warns Doyle.

If biotechnology is to serve the public interest, then it will have to be developed and applied according to a model other than Monsanto's. Because when Monsanto says it "is developing a way to use Mother Nature to modify organisms to serve us better," the "us" really refers to Monsanto, not society. ^

Inheriting the I.U.D.

When Monsanto Acquired G.D. Searle for $2.8 billion in 1985, the pharmaceutical manufacturer was in the midst of the escalating lawsuits which would force its Copper-7 intra-uterine device (IUD) off the market within a year. Since Searle introduced the Copper-7 in 1974, more than 1,000 women have filed claims against the company in the United States, charging that Searle knew of the design flaws that caused pelvic inflammatory disease (PID)-induced sterility.

Copper-7 victims charge that Searle was aware of the IUD's serious health risks before marketing it, and that the company deliberately misled the FDA in the safety studies it submitted for the IUD's approval. They denounce Searle's public relations claims, which internal company documents reveal were viewed as misleading even by some within the company. A 1977 memo written by Searle's associate director of clinical research in obstetrics and gynecology, Dr. Francis B. O'Brien Jr., stated that claims of the Copper-7's safety and effectiveness are ''both misleading and a thinly disguised attempt to make claims which are not FDA approved."

Despite such warnings, Searle promoted the Copper-7 heavily. It eventually gained 90 percent of the U.S. IUD market, achieving particular popularityamong the very women to whom it posed the highest risk of infection. Because of the Copper-7's small size, a large portion of its sales were to women who have not borne children and almost always have smaller uteruses. These women are especially susceptible to PID, and much of Searle's advertising targeted them.

Although it has pulled the Copper-7 from the market, Searle has continued to fight the relatively small number of claims against it which have actually come to trial, vigorously denying any wrongdoing and disputing the safety hazards themselves.

Of the thousands of Copper-7 users who contracted PID, only a handful have won damages. The most notable case, in which a St. Paul, Minn. woman, Esther Kociemba, was awarded $8.8 million in punitive dam-ages, was settled out of court after Searle announced its intent to appeal the decision. Although neither side would characterize the settlement, Michael V. Ciresi, Kociemba's attorney, told Multinational Monitor, "if we could disclose the settlement, which we can't, there would probably be a lot more lawsuits."

Ciresi blamed the high costs of litigation for keeping many potential cases from court. It took lawyers in the Kociemba case more than four years and cost them $10 million in fees and expenses to sift through more than 600,000 internal Searle documents for evidence that the company knew of the IUD's dangerous flaws.

Searle portrays its decision to cease production of the Copper-7 as merely a business move, unrelated to the IUD's alleged health risks. Kay Bruno, the company's senior director of public affairs, says, "It's an economic matter. It was no longer an economically viable piece of the company's business. ... There was no request by any regulatory authority [for Searle] to bow out [of the IUD market]." Bruno cited "the lack of availability of product liability insurance combined with the costs of defending against unjustified law-suits" as the major reasons for Searle's decision.

Ciresi puts little stock in Searle's claims. He maintains that Searle is responsible to women who were misled by its advertising and injured by its product. He further charges that Monsanto shares its subsidiary's responsibility for PID cases that arise from continued use of the Copper-7 by women who have not been alerted to its danger. He says Monsanto "knew why they were taking them [the IUDs] off the market, and they lied about it." An untold number of women have suffered as a result. ^

� Nadav Savio

A.V. Krebs is Director of the Corporate Agribusiness Project and author of the forthcoming book, The Corporate Reapers: From Seedling to Supermarket.

Research assistance provided by Nadav Savio.

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