Multinational Monitor

MAR 1999
VOL 20 No. 3


Unsafe In Any Seed: U.S.Obstructionism Defeats Adoption of An International Biotechnology Safety Agreement
by Kristin Dawkins

The Nuclear Boys Return to Ukraine: The European Scheme to "Compensate" for the Chernobyl Shutdown
by Tony Wesolowski

Corporate Soldiers: The U.S. Government Privatizes the Use of Force
by Daniel Burton-Rose and Wayne Madsen

Domesticating Markets: A Social Justice Perspective on the Debate Over a New Global Financial Architecture
by Walden Bello


Toxic Deception
an interview with Dan Fagin


Behind the Lines

Corporate Schoolyard Bullies

The Front
Election Rigging in Japan - Greenlining, Whitewashing? - Exxon: Mean and Stupid

The Lawrence Summers Memorial Award

Names In the News


The Front

Election Rigging in Japan

TOKYO -- On a cloudy afternoon during election week in February on the front steps of a town hall in the Tokyo district (which includes Tokyo proper and other cities) arrived buses full of employees from a large company. Upon exiting the bus, they walked straight into the town hall in a city home to many factories and offices of large Japanese multinational corporations, many of them household names.

The group of corporate employees that had arrived were not registering to vote, nor were they there to hear campaign speeches. Five days before the election, they were casting their ballots for city council for a company candidate, an employee whose campaign was funded by the company to represent the corporate interests in the local government.

The employees had received special permission from the town government to submit an absentee ballot, granting the company the ability to organize a bus campaign to artificially increase the voter turnout by shuttling voters to the town hall.

Every large corporation in the city directly funded candidates in the local elections, backing four of the 40 candidates for 30 seats. All of the company candidates won office, with virtually the entire corporate group among the top five.

The corporations did more to assure their victory than simply bus voters to the town hall. Many of the voters were coerced by their employers to vote for company candidates.

"Voters at the company were forced by the management to vote for the company candidate," says one local employee, "and those that resisted were harassed to vote along corporate party lines."

Workers report that company managers intimidate recalcitrant employees to vote for the corporate candidates, and severely punish those who refuse to follow company dictates.

This kind of corporate election-rigging has had a major impact on local elections and government policy. Corporate members on the city council form a corporate group to promote and protect the rights of corporations. Since they are not affiliated with any party, they run as independents and claim their position is to represent the company at city hall. One corporate campaigner ran on the platform of lowering corporate taxes and expanding the parking space available for employees.

As in many countries, local governments in Japan depend on corporate property taxes to pay for hospitals, health care for the elderly and handicapped, education, housing for the poor and other social services. The local tax base is becoming increasingly important, as the national government has been cutting back funding for local districts amidst the recent financial crunch.

Local political activists are outraged with the corporate undermining of their democracy.

"Forcing the city to buy company products is one reason why they rig elections," says a member of a Tokyo district city council. "Those contracts are supposed to be open for anyone to bid, but through favors they are able to force the city to buy their products."

A professor of law and social activist in Tokyo says, "the corporate city council members work to promote their self interest by working to reduce property tax and relax environmental regulations. The long term impact is to undermine our democracy."

In one city council assembly, the corporate group has sided with conservatives who favor closing a progressive community center.

"Corporate councilmen in the assembly are there simply to gain favors from the city," says a professor who helped found the center.

"They represent a very large political force and are working to undermine progressive movements that work to improve the welfare of citizens. Now they want to close down a community center that I founded 20 years ago which provides education for children and the elderly. In return, they receive favors to pollute our environment and to construct one more building the city does not need."

But most citizens are unaware of how the big corporations rig elections, and are generally disconnected from politics. Corporate council members support policies to keep the public apathetic.

Among these policies: strict limits on government support for distribution of campaign literature (adopted in the early 1970s "in reaction to fears of effective campaign organization of the Communist Party," says the law professor); bans on door-to-door canvassing by candidates; rules reducing the amount of written information that each candidate can distribute; and an extremely liberal absentee voter policy.

"Every year they pass laws to restrict our political freedoms," the law professor says. "Information is limited to announcements on vans that drive around town noisily broadcasting the candidates' positions, narrowing information to little but annoying sound bites." Corporate candidates are known among the citizens as little more than independents who have "kind hearts" and an interest in "building a new city."

The base for opposition to the corporate candidates is weak, thanks to a conservative labor movement.

More than a decade ago, Sohyo was an important progressive union federation. With the support of the Socialist Party, it organized public sector employees and helped drive up wages and benefits for workers throughout Japan. With the privatization of large corporations like NTT and Japan Railway in 1987, the progressive Sohyo federation was broken and forced to merge with the Domei, the conservative private sector federation.

Greenlining, Whitewashing?

Visit the Greenlining Institute"s web page <> and read about one of California"s premier public policy groups representing poor and minority consumers.

Its self-described purpose is "to promote low-income and minority economic development and increase minority community participation in policymaking."

In California, the Greenlining Institute is considered a major public interest group that fights insurance company and bank redlining.

But nowhere on the group"s web page -- and nowhere in the hundreds of newspaper articles written about the group over the years -- is there any indication that a big chunk of the group"s funding comes from those same giant corporations the Greenlining Institute was set up to counter.

Over 80 percent of the Institute"s $1.1 million budget in 1997 came from major corporations, according to the group"s most recent financial disclosure statement filed with the Attorney General of California.

In 1997, Union Bank gave $235,000. Southern California Edison gave $114,494, Merrill Lynch $88,489. And on down the list.

The group"s executive director, John Gamboa, says that for 1998, the group"s corporate funding was down to about 65 percent of the total budget because the group has taken in more money recently for intervening in regulatory agency proceedings.

Gamboa openly questions whether the money is affecting his group"s policy decisions.

"The companies fund us hoping that the money that they give us is going to temper our advocacy against them," Gamboa says. "I don"t know if it does or not. When you have a relationship with people, sometimes it does happen. I like to think that it doesn"t. If you did a good analysis, almost every single entity that has funded us, we have opposed them in some legal arena."

"We take it from both sides," Gamboa admits. "The companies say that we are creating extortion, that we are shaking them down. Other people say we are being bought off."

And Gamboa says the Institute has lost four big funders recently because of the group"s activities.

"In the last two years, State Farm has refused to support us because we opposed their acquisition of a thrift," he says. "Sumitomo Bank used to give us money every year, but they stopped because we turned them into the Labor Department for its minority hiring practices and its lending policies. San Diego Gas & Electric won"t give us money right now because we opposed their merger with Southern California Gas. Bank of America cut us off because we opposed their merger with NationsBank."

But consumer advocates in California say that on many big bread and butter issues that affect the masses of California consumers, the Institute has pulled its punches and sided with its industry funders.

In 1998, the Institute sided with the utility industry in its successful campaign to defeat Proposition 9, an initiative that would have rolled back a taxpayer-funded bailout of the utility companies for bad nuclear investments, among others.

Gamboa doesn"t hesitate to play the race card when addressing the Prop 9 issue. "We took the side with over 3,000 community and low-income groups and opposed mostly white, liberal so-called consumer groups on it," he says.

He says that Prop 9 would have undermined carefully worked out affirmative action gains secured by the Institute and other minority groups during a two-year negotiation over the deregulation law. Prop 9 was defeated last year after the industry flooded the television airwaves with anti-9 ads.

But in a letter to Gamboa in October 1998 during the heat of the Prop 9 debate, Harvey Rosenfield, the key proponent of the initiative, questioned Gamboa"s motives.

"There is no choice to be made between rate savings under Prop 9 and affirmative action, unless you are referring to some private quid pro quo that you have arranged with the utilities in which Pacific Gas & Electric has threatened it will terminate its affirmative action plans unless Prop 9 is defeated," Rosenfield wrote. And Rosenfield asks whether the Institute"s opposition to Prop 9 is based on "ratepayer money [the utility companies] have given you... such that you are unwilling to bite the hand that feeds you -- even as that hand crushes the state"s ratepayers?"

Rosenfield wrote that the Institute"s stance on Prop 9 "is the latest in a series of deplorable betrayals by you... always accompanied by race-baiting letters in which you insist that white consumer advocates don"t know how to protect the poor."

Gamboa now says that he "knew that everyone was going to say, 'yeah, you are just on the side of the utilities on this because they have given you money in the past.""

"That is a legitimate thing to think, but you have to look at how long we fought [the utility industry] to get protection for our community on this," he says.

Asked whether the utility industry would have stopped giving money to the Institute if it had endorsed Prop 9, Gamboa says, "Even if we lost it, it wouldn"t have made a difference to us," he said. "We have varied amounts from different sources. We"ve turned down more money than that."

How much and when?

"When we first started the organization six years ago or so, Pacific Bell was planning on spinning off AirTouch, which was its cell phone division, its most lucrative division," Gamboa said. "Pacific Bell offered us a chance to do their minority marketing. They told us, 'You have all the contacts in the minority community, we would like to hire you to do our marketing in exchange for the Institute"s agreeing not to oppose the spin off of AirTouch." We said, 'If AirTouch is spun off, this is going to leave Pac Bell in such a weak financial condition that it will be ripe for a takeover." We lost. And they spun it off."

So, how much was the marketing contract worth?

"Anywhere between six and sixteen million dollars -- their full ethnic marketing," Gamboa says. "We would have been a contractor. It would have been like them hiring an advertising firm. We didn"t even pursue it."

"We probably could be bought and they probably could have bought us," Gamboa says.

If there had been enough dollars?

"Almost everybody in the world is for sale," he says. "I"m not saying we are pure. No one has ever reached our price. And I wouldn"t even start to negotiate on it. That was a time when we were really hurting for funds, when we first started in 1993."

You are being facetious when you say you probably could be bought?

"I am trying to be honest with you," Gamboa says. "Almost everybody has his price. No one has reached mine yet. I don"t want anybody to entertain it because I don"t want to be tempted. When Pac Bell offered us that, I was tempted because the amounts were so great."

-- Russell Mokhiber

Exxon: Mean and Stupid

On March 23, 1989, the Exxon Valdez, one of Exxon's largest oil tankers, under the command of a captain who had been drinking and who abandoned the bridge, struck a reef and spilled 11 million gallons of crude oil into the Prince William Sound in Alaska.

In September 1994, an Alaska jury found Exxon liable for punitive damages for its conduct in causing the oil spill and assessed $5 billion against the company. The lawsuit was brought by commercial fishers, Alaska natives and others directly harmed by the spill.

In the nearly five years since its jury verdict, Exxon has not paid any of the punitive damages. Instead, it has chosen to use an appeals process to delay and possibly defeat any payment.

And to help create a favorable climate for its efforts to defeat the massive punitives award, Exxon has lobbied against the concept of punitive damages in general.

In 1998, Exxon funded Harvard Law Professor W. Kip Viscusi to look into the issue of punitive damages. Viscusi obliged, and wrote an article, "The Social Costs of Punitive Damages Against Corporations in Environmental and Safety Torts," for the Georgetown Law Journal advocating the abolition of punitive damages.

In a footnote to the article, Viscusi discloses that the research for the article was funded in part by "a grant from the Exxon Corporation."

But Viscusi will not say how much Exxon paid him.

Asked how much money he received from Exxon, Viscusi's first reply is, "I don't even know."

"I have several projects," Viscusi says. "This is one paper I did, but I'm working on several other things."

Asked how much he received in total from Exxon, Viscusi replies, "I don't remember that either."

Asked whether he received more than one check from Exxon, Viscusi responds: "Yes, but it was for different projects that overlap the time period."

Asked whether he can give a ballpark figure of how much money he took from Exxon, Viscusi says "no," arguing that the information is not public information.

Viscusi says that he received money from Exxon just in 1998.

Finally, when pressed again as to why he won't reveal the amount of money he took from Exxon for the research on punitive damages, Viscusi responds bluntly -- "It's none of your business."

Georgetown Professor David Luban applauds Viscusi for at least disclosing the fact of Exxon's funding in an age when other academics do not. "When one learns that an interested party has funded work, there should be a higher threshold of critical examination," Luban adds.

This is not a hypothetical issue for Luban, a professor of law and philosophy. He wrote a rebuttal to Viscusi's article in the same issue of the Georgetown Law Journal.

In "A Flawed Case Against Punitive Damages," Luban dissects Viscusi's argument, finding "13 critical errors that if I'm right, undermine Viscusi's argument at every stage."

In a nutshell, Viscusi argues that punitive damages don't create social benefits, and they do impose social costs on businesses, and thus should be eliminated.

To show that punitive damages create no social benefits, Viscusi argues that accident rates in environmental and other cases are not statistically significantly different in the four states that don't have punitive damages (Michigan, Nebraska, New Hampshire, and Washington) than the 46 states that do.

Luban says that he disagrees that the lack of difference between the four no-punitive-damages states and the other 46 shows that punitive damages are ineffective.

"Even if a business is in one of those four states, they won't look only to those states' tort regimes," Luban says. "They will look at any state that they might be sued in. After all, there are relatively few businesses that are strongly local in the sense that they operate locally, all of their customers are local, and their safety procedures and equipment are local."

And Luban argues that punitive damages are not there simply to deter all forms of unsafe conduct. Punitive damages are meant to be awarded only when the defendant's conduct has been egregious. Justice Richard Neely of West Virginia has put forward a useful formulation in TXO v. Alliance Resources in 1992: punitive damages exist to punish defendants whose conduct is either "really mean" or "really stupid." And as a result, they are not awarded very often.

Viscusi argues that punitive damage judgments are "out of control." But Luban says that on average, about 3 percent of plaintiffs' jury victories end with punitive damages being awarded against the defendants.

Asked how two scholars looking at the same data come to such radically different conclusions, Luban says, "Observers of the punitive damages scene focus on different aspects. Those of us who don't think punitive damages are out of control tend to look at the low overall incidence of punitive damages and the relatively low median of punitive damages -- about $50,000. What critics look at is the relatively high mean -- the average -- which is $735,000."

A high mean and a low median suggests a whole population of relatively low punitive damages with a few, very high punitive awards that bring the average up, Luban says.

Exxon was one of the very high cases. The jury found that its actions in the Valdez disaster were "really mean" and "really stupid."

-- Russell Mokhiber


The March 1999 Lawrence Summers Memorial Award goes to Gwain Cornish, senior vice president and chemist at Royal Group Technologies in the UK. Countering charges about the hazards of burning polyvinyl chloride (PVC), he told the Wall Street Journal: "Even mashed potatoes give off more toxins than PVC." ("Just One Word: Plastics," by Eileen Daspin, Wall Street Journal, January 22, 1999.)

Compared even to the technical and antiseptic language of the U.S. Environmental Protection Agency's draft dioxin reassessment -- "Dioxin-like compounds can be generated and released to the environment from various combustion processes when chlorine donor compounds [like PVC] are present." -- Cornish's comment is extraordinary. (Thanks to Charlie Cray of Greenpeace for this Summers nomination.)

In a 1991 internal memorandum, then-World Bank economist and current Deputy Secretary of Treasury Lawrence Summers argued for the transfer of waste and dirty industries from industrialized to developing countries. "Just between you and me, shouldn't the World Bank be encouraging more migration of the dirty industries to the LDCs (lesser developed countries)?" Summers wrote. "I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that. ... I've always thought that underpopulated countries in Africa are vastly under polluted; their air quality is vastly inefficiently low [sic] compared to Los Angeles or Mexico City." Summers later said the memo was meant to be ironic.


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