Multinational Monitor

JUN 1999
VOL 20 No. 6


The Carbon Kingpins: The Changing Face of the Greenhouse Gas Industries
by the Natural Resources Defense Council, the Union of Concerned Scientists
the U.S. Public Interest Research Group

Falling for AES's Plan? Uganda Debates Damming the Nile
by Stephen Linaweaver

Corporate Goliaths: Sizing Up Corporations and Governments
by Charles Gray

The More Things Change ... The World Bank, Cameroon and the Politics of "Governance"
by Korinna Horta


The Corporation and Democracy
an interview with
Peter Kellman


Behind the Lines

The Case for a Do-Nothing Congress

The Front
FDA's Blank Check for Biotech - Bank Privacy Sold Out - Sen. Shelby: Radical Leftist? - High Tech Goes to DC

Book Review
Democracy is Power

Names In the News


The Front

FDA's Blank Check for Biotech

The Food and Drug Administration (FDA) declared genetically engineered foods to be safe in the face of serious disagreement from its own experts.

Internal reports and memos obtained by lawyers suing the FDA over the approval of the biotech foods reveal the FDA's own scientists warned that foods produced through recombinant DNA technology entail different risks than do their conventionally produced counterparts.

But these scientists were consistently disregarded by the bureaucrats who approved the agency's current policy of treating bioengineered foods the same as natural foods.

"There is a profound difference between the types of unexpected effects from traditional breeding and genetic engineering which is just glanced over in this document," warned Dr. Louis Priybl of the FDA's Microbiology Group in criticizing a 1992 FDA draft policy paper on the issue.

Dr. Linda Kayl, an FDA compliance officer, complained that the FDA was "trying to fit a square peg into a round hole" by concluding that "there is no difference between foods modified by genetic engineering and foods modified by traditional breeding practices."

"The processes of genetic engineering and traditional breeding are different, and according to the technical experts in the agency, they lead to different risks," Kayl said.

Kayl and other FDA scientists recommended that genetically engineered foods undergo special testing.

For example, the FDA's Division of Food Chemistry and Technology warned that "undesirable effects such as the appearance of new, not previously identified toxicants ... may escape breeders' attention unless genetically engineered plants are evaluated specifically for these changes. Such evaluations should be performed on a case-by-case basis -- every transformant should be evaluated before it enters the marketplace."

The Alliance for Bio-Integrity, the lead plaintiff in the lawsuit against the FDA, is seeking to force the FDA to mandate safety testing and labeling of all genetically engineered foods.

"Not only was the FDA aware of uncertainties within its own ranks, it also knew there was considerable disagreement about the safety of genetically engineered foods in the scientific community at large," the Alliance's Steven Druker told a conference on biotech foods in Washington, D.C. in June.

"Even though the FDA knew that genetically engineered foods are not even uniformly recognized as safe by its own scientists -- let alone by a consensus within the scientific community -- it declared them to be generally recognized as safe," Druker said. "And although agency experts advised that genetically engineered foods should be subjected to special testing, including feeding studies to screen for unexpected toxins, the bureaucrats in charge of the policy proclaimed that these foods require no testing at all and left decisions about testing to the discretion of the industry."

Druker argues that, in approving biotech foods, the FDA violated the Food, Drug and Cosmetic Act and that genetically engineered foods are illegally on the U.S. market as a result. He wants these foods recalled and subjected to rigorous safety testing.

"The American people deserve better than they have received from the FDA when it comes to bioengineered foods," says Druker.

"They have a right not to be subjected to foods that are potentially harmful, and the FDA has a duty to uphold this right," he says. "It is high time that the agency reinstates reason and responsibility."

-- Russell Mokhiber

Bank Privacy Sold Out

U.S. Bank allegedly released customers' private banking information to a telemarketing company in exchange for a fee of $4 million plus commissions, Minnesota Attorney General Mike Hatch alleged in a lawsuit filed in June against the bank.

Hatch alleges that U.S. Bank, a unit of U.S. Bancorp, violated the federal Fair Credit Reporting Act and engaged in consumer fraud and deceptive advertising by providing the telemarketing vendor with such private information as Social Security numbers, account balances, transactions and credit limits.

"People are appropriately careful about protecting their Social Security number, checking and credit card information," says Hatch. "When a bank hands out this information to the highest bidder, it has to answer to its customers and to the attorney general."

Hatch alleged that U.S. Bank provided Member Works Inc. with its customers' name, address, telephone numbers of the primary and secondary customer, gender, marital status, homeownership status, occupation, checking account number, credit card number, Social Security number, birth date, account open date, average account balance, account frequency information, credit limit, credit insurance status, year to date finance charges, automated transactions authorized, credit card type and brand, number of credit cards, cash advance amount, behavior score, bankruptcy score, date of last payment, amount of last payment, date of last statement and statement balance.

Since November 1996, U.S. Bank has received over $4 million plus commissions -- commissions equal to 22 percent of each sale Member Works made -- from the provision of its customers' private information to Member Works.

Member Works used the U.S. Bank customer data to sell memberships in a health program that allowed members to get discounts on dental and health care visits.

Hatch also alleges that in addition to providing confidential customer information, U.S. Bank approved telemarketing scripts that contained deceptive information.

For example, if a customer asked a telemarketer if U.S. Bank had given the customer's credit card or checking account number to the telemarketer, the script instructed the telemarketer to answer "No, I personally do not have your account number."

Hatch alleges that U.S. Bank violated federal law and banking rules by allowing the telemarketing company to automatically withdraw payments from a checking account without written authorization from the consumer.

Federal and state regulatory agencies require banks to publish privacy policies telling consumers how their personal information will be used, who has access to the information and if the bank intends to give its personal information to non-affiliated third parties.

U.S. Bank has a privacy policy printed in its U.S. Bank Customer Agreement that says, "We share your concerns about the privacy of your personal information and strive to maintain its confidentiality."

Nothing in the bank's agreement reveals that personal, confidential information is being sold to companies that are not affiliated with U.S. Bank.

Hatch says that none of U.S. Bank's consumer brochures disclose to customers that their names and account information could be sold to a third party.

Hatch is asking that the court prohibit the bank's exchange of customers' personal information and order the bank to pay civil penalties to consumers. Hatch is also calling upon Congress to enact legislation to protect consumers' rights to financial privacy.

In June, U.S. Comptroller of the Currency John Hawke condemned such practices as "seamy," unfair and deceptive.

-- Russell Mokhiber

Senator Shelby: Radical Leftist?

Alabama Senator Richard Shelby could safely be described as a pro-business Republican.

But if nothing else, Shelby believes in constituent service, and one of his constituents is Jim Metrock, another pro-business Alabaman who tends to vote Republican.

As CEO of Metrock Wire and Steel, a family business, and founder of the Business Council of Alabama, the state's largest business association, Jim Metrock had dealings with Senator Shelby. A couple of years ago, Metrock decided to get out of the steel business and do some community service.

Metrock was concerned with commercial television's assault on children.

After Pat Ellis, a fellow Alabaman, told Metrock about Channel One, he began to research the problem. Metrock was surprised by what he learned -- a marketing company was exposing eight million children across the country to ads for junk food among other items.

Channel One Network, now owned by Primedia, Inc., is the company that loans televisions to public schools, in exchange for the schools agreeing to give Channel One access to schoolchildren for 12 minutes every day. The marketers use this opportunity to present the children with a 10 minute "news" program, generally aired during home room, and two minutes of commercials pushing such products as Pepsi, Mountain Dew, Snickers, M&M's, Twix, Bubble Yum bubble gum, Extra bubble gum and Fruit Loops, among other consumer items.

The advertisers pay a hefty price for the ads, a reported $200,000 for a 30-second spot.

Metrock asked his 18-year-old son if he had ever heard of Channel One. Yes, the son said, I've been watching it for three years.

Flabbergasted, Metrock launched his campaign. Early last year, Metrock and Ellis traveled to Washington, D.C. to meet with Senator Shelby's staff about the problem. In April 1998, Senator Shelby issued a news release expressing his concerns about Channel One and calling for Congressional hearings.

Channel One was not pleased. Executives pulled out their check books and began writing $120,000 worth of checks to lobbyists in an effort to derail the hearings.

First, they put on retainer an inside-the-beltway power law firm -- Preston, Gates. Then they brought on Ralph Reed, the former executive director of the Christian Coalition turned corporate lobbyist. And then they hired a lobbyist in Alabama to keep an eye on things.

As a result, the hearing was repeatedly delayed. Until this spring, when the hearing was set in stone for May 20, 1999.

Then, all of a sudden, radio spots started airing in Alabama attacking Senator Shelby, implying that he was part of a left-wing plot to put the kibosh on the pro-Christian values of Channel One.

Here is the text of one of the ads that ran:

"Tragedies like Littleton, Colorado show how vital it is to teach our children the values of faith and family. One bright spot is Channel One. Channel One reaches eight million students every school day, 250,000 here in Alabama, with a television program that tells children to turn their backs on drugs, reject violence and abstain from sex before marriage. And it's working. The Partnership for a Drug-Free America found that children are more aware of the risks of using marijuana because they are watching Channel One. But some on the radical left want Congress to ban such programming. Call Senator Shelby ... and tell him to stand up for Channel One's right to teach our kids to say 'no' to drugs and 'no' to sex before marriage."

The ad was sponsored by an unknown group called the Coalition to Protect Our Children. The group has a Montgomery, Alabama post office box. But it has no listed phone number. And Metrock says he knows of no organization in Alabama that endorses Channel One.

Channel One's lobbyist in Alabama is a man named Martin Christie. Metrock spoke with Christie on May 17 and Christie told him that he knew nothing about the campaign against Senator Shelby.

"I asked Ralph Reed if he knew anything about this advertising campaign in Alabama," Metrock says. "He didn't say he didn't. He said that he just wasn't keeping up with that."

He asked a Channel One executive if the company had anything to do with the ad, and the executive said no.

In any event, the campaign to derail the hearing failed. It was held on May 20. Ralph Nader and Phyllis Schlafly spoke against Channel One, while a Channel One executive and a priest from a religious school in Washington, D.C. spoke in favor of Channel One.

The hearing gained little press attention, but it has reinvigorated Metrock's determination to defeat commercialism in the schools. He wants to start with Channel One in home rooms -- which he calls "a two-by-four to the head" -- and then proceed on to Coke and Pepsi in the hallways.

-- Russell Mokhiber

High Tech Goes to DC

The high-tech sector had its Washington, D.C. coming-of-age-party in June.

The newly minted millionaires of Silicon Valley are on track to be major political players. Increasingly, they are abandoning the view that they could ignore government to rapidly deploying their economic power to attain political power and influence on Capitol Hill.

The first venue for the Silicon soiree was a "High Tech Summit" organized by the Congressional Joint Economic Committee. A series of high-tech executives paraded before the Senators and Representatives to offer hosannas for emerging new computer technologies, to plead for particular legislative preferences and to encourage the government to maintain its "light hand" in intervening in the high-tech sector.

Senator Connie Mack, R-Florida, offered a warm embrace, suggesting that "We are now faced with the challenge of De-inventing Government -- to get it out of the way before it stifles the Innovation Economy that has made America the world's preeminent economic leader."

Microsoft's Bill Gates addressed a deferential panel of Members of Congress on the second day of the High Tech Summit, propagating his views on technology and society.

The tech executives stayed in town after testifying to lobby Members of Congress. Congressional staff reported that the executives have learned a lot in recent years, and now understand how to relate to elected officials.

And Members of Congress promised to attend to the high-tech executives' legislative wish list. "We will continue to explore legislative options for the issues of concern that were discussed this week -- encryption, R&D, education and immigration, to name a few," said Mack.

"We have come to understand in a way that we really had not understood before just how powerful, important and all encompassing the information revolution is," said Senator Bob Bennett, R-Utah, chair of the new Senate High-Tech Task Force. "I expect we will now move forward with high-tech legislation to address some of the proposals that have been made at the Summit."

The proof of the Members' commitment lay in the second venue for the coming out party: the Senate floor. The upper chamber waited for the High Tech Summit to pass the Y2K immunity bill -- legislation that will give special protections from lawsuits related to computer systems' inability to process Year 2000 dates properly.

Even though the fear of litigation is what prompted many companies to address Y2K in the first place, the high tech argument was that computer companies need protection from lawsuits so they could concentrate on remediating Y2K problems. As a result of the Y2K legislation, victims of Y2K problems -- whether they are consumers whose VCRs stop working, small businesses who find special software programs fail to function, or communities who are forced to evacuate due to chemical releases -- will have the normal right to file suit against the perpetrators of harm vastly limited. The bill will hinder consumers from filing class actions, limit victims' ability to win punitive damages and put burdens on victims when more than one party (a software company and a chemical company, for example) was responsible for the computer harm they experienced.

The third scene in High Tech's triumphant week occurred not in Washington, but in Tennessee, with Al Gore's formal announcement of his presidential candidacy. The Gore-Tech connection is as tight as can be. The clearest manifestation of GoreTech is Gore's inner circle of advisers -- which prominently features men like Peter Knight, Roy Neel, Tony Podesta and Tom Downey, all of whom have cashed in on close ties to Gore by taking out consulting contracts to represent computer and other advanced technology companies.

High Tech's week of passage did not come without extensive preparatory work. The computer industry is beginning to escalate its political contributions, which totaled about $9 million in the 1997-1998 federal election cycle.

And they have forged a powerful lobby force, TechNet, headed by former Netscape General Counsel Roberta Katz. Made up of computer executives, TechNet specializes in bringing politicians to Silicon Valley and wowing them with their latest innovations.

Perhaps even more than other industries, High Tech's proclivity is to answer every question with, "Let the market take care of it," or "We'll self-regulate."

As privacy, antitrust, fair competition, consumer protection, liability and many other issues become increasingly important in the context of internet commerce, the new political strength of the high-tech industries seems certain to significantly shape the contours of the debate.

-- Robert Weissman


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