MARCH 1994 - VOLUME 15 - NUMBER 3
B E H I N D T H E L I N E S
Amoco Calls it Quits
Under the international pressure, Amoco Corp. announced in
March 1994 that it will pull all of its operations out of Burma.
Amoco is at the center of a campaign led by Burmese exiles and ethical investors, who formulated shareholder resolutions asking the company to exit the country [see "Targeting Burma," Multinational Monitor, November 1993]. The coalition includes the Oil, Chemical and Atomic Workers union, the Sierra Club and the Interfaith Center on Corporate Responsibility.
According to John Seger, Amoco's resident manager in Yangon, Burma, the decision to divest was made "as a result of Amoco's assessment of the economic exploration potential of our contract areas in light of the current crude oil forecasts."
But Simon Billenness, of the socially responsible money management firm Franklin Research & Development, notes that "as recently as six months ago, Amoco's production company president William Lowrie described Burma as one of Amoco's most promising areas of exploration. Six months is an unusually brief turnaround to go from describing an area as most promising to declaring that exploration possibilities have been exhausted. It doesn't take a genius to realize that a rapid decision like that probably had a political component."
Shareholder resolutions were also drawn up for PepsiCo, Unocal and Texaco. PepsiCo and Texaco have appealed the resolutions to the Securities and Exchange Commission (SEC), which has ruled that the companies are not required to hear the resolutions. The shareholders are considering legal action against the SEC or Texaco over the matter.
The military junta that rules Burma, according to the human rights group Freedom House, is among the 12 most repressive regimes in the world. Since 1988, it has initiated a fire sale of the country's natural resources, particularly oil and timber, to multinationals. Seventy to 90 percent of the profits from oil development directly buoy the junta.
The departure of Amoco follows that of Levi Strauss & Co., which stated in May 1992 that "under current circumstances, it is not possible to do business in [Burma] without directly supporting the military government and its pervasive violations of human rights."
Billenness calls the Amoco pull-out "a morale booster for the pro-democracy movement that shows that shareholder pressure and boycotts are tactics which succeed."
Politics as Usual
In an effort to project an image of stability from a White House shaken by the Whitewater Affair, U.S. President Bill Clinton named Lloyd N. Cutler, a quintessential Washington corporate insider, as special counsel to the president in March 1994.
Citizen groups reacted with dismay to the hiring of 76-year-old Cutler, who has compiled a long record of serving powerful corporate interests. During the 1960s and 1970s, Cutler represented the Pharmaceutical Manufacturers Association. His early efforts included a successful attempt to weaken a bill that would have limited patent rights to three years rather than 17, limited price markups to 500 percent and required greater disclosure of drugs' side effects. From the 1950s through the 1970s, Cutler also included the auto industry in his client portfolio, lobbying to water down auto safety and pollution regulations. In 1972, representing Ford, Cutler helped quash the Department of Transportation's first efforts to have airbags installed in automobiles.
After a brief tenure as White House counsel to President Jimmy Carter in 1979, Cutler returned to his law firm, Wilmer, Cutler & Pickering, where he represented such figures as George P. Schultz, the former secretary of state who was involved in the Iran-Contra scandal.
As special counsel, Cutler's responsibilities will include selecting senior lawyers and steering the president through the Whitewater controversy.
Consumer advocate Ralph Nader says, "It is ironic that a president who promised to be a `New Democrat' is considering appointing someone who is really `corporate establishment,' which is what the president will get in Lloyd Cutler."
Twenty of 22 large defense corporations that arc lobbying Congress to, weaken the Federal False Claims Act have been involved in fraud, waste and abuse in government contracting practices, according to a February 1994 report by the Washington, D.C.-based Government Oversight Project.
The report surveys the 22 defense contractors who are signatories to a lobbying position paper titled "Reform of the Federal False Claims Act." The paper has been circulated widely on Capitol Hill as part of an intensive effort to weaken support for the False Claims Act.
The report found that the 20 companies paid the government over $500 million in penalties and settlements in reported cases from 1990 to the present.
General Electric leads the pack of government contractors in fraud; the report found 16 examples of GE's fraudulent activity, defective pricing, money laundering and federal Foreign Corrupt Practices Act violations. Since 1990, GE has been convicted twice for defrauding the government. Other contractors involved in multiple fraudulent activities include: Boeing, Grumman, Honeywell, Hughes Aircraft, Martin Marietta, McDonnell Douglas, Northrop and Rockwell International.
Congress strengthened the False Claims Act in 1986 when it passed amendments giving whistleblowers a monetary incentive for alerting the government to those who defraud the government. Since passage of these amendments, the federal government has recovered over $588 million under the Act.
Defense contractors argue that a voluntary disclosure program set up by the Defense Department and "self-policing" are sufficient alternatives to a strong False Claims Act. But the Project notes that since 1986 the Pentagon's voluntary disclosure program has recovered a total of $171 million, compared to the $588 million recovered under the False Claims Act.
- Aaron Freeman and Ben Lilliston