Multinational Monitor

MAR 2002
VOL 23 No. 3


The Enforcers: The Hague Convention and the Threat to Internet Freedoms and Consumer Protection
by Charlie Cray

E-Commerce Eludes the Tax-Man: The Click-and-Mortar Artificial Advantage in the New Economy
by Sarah Anderson

The Business of the Watchers: Privacy Protections Recede as the Purveyors of Digital Security Technologies Capitalize on September 11
by Wayne Madsen


Controlling the 'Net: How Vested Interests Are Enclosing the CyberCommons and Undermining Internet Freedom
an interview with
Lawrence Lessig



Behind the Lines

Keeping the On-Line Commons Open

The Front
Hi-Tech Trashing of Asia - Corporate Crime Sentencing

The Lawrence Summers Memorial Award

Names In the News


The Front

Hi-Tech Trashing of Asia

Dragging an electronic document into the trash bin on your computer screen may efficiently help clean up your desktop in the virtual world, but it does not do anything to address the growing problem of electronic waste in the real world.

The 1998 volume of electronics waste from the United States alone totaled 5 to 7 million tons, according to the best estimates, and is growing at a rate as high as 5 percent a year. E-waste includes household appliances such as refrigerators, air conditioners and televisions, but is increasing at such a fast pace because of discarded computers and computer-related accessories (such as printers and printer toner cartridges).

Disposal of electronics waste is complicated, because many of the more than 1,000 different substances in electronics waste streams are hazardous. That makes landfilling of e-waste in the United States illegal in many circumstances. As a result, efforts at computer and e-waste recycling are proliferating.

But e-waste recycling is largely a sham, or worse, according to a February report issued by Basel Action Network (BAN) and Silicon Valley Toxics Coalition (SVTC) with support from Toxics Link India, Greenpeace China and SCOPE (Pakistan).

Most alarmingly, the report documents that millions of discarded computer units intended for “recycling” are being exported from the United States to Asia, where they are processed in operations that pose severe threats to the health of workers, surrounding communities and the natural environment. Among the hazardous substances in e-waste are lead (present in very large amounts in computer monitors), cadmium, mercury, hexavalent chromium, plastics including polyvinyl chloride (PVC, which can form dioxins when burned), brominated flame retardants, barium, beryllium, toners and phosphor.

The report, “ Exporting Harm: The High-Tech Trashing of Asia,” features an on-the-ground investigation of e-waste recycling operations in China, India and Pakistan. The investigation focused on an area known as Guiyu, in Guangdong Province, in southeast China and four hours drive northeast of Hong Kong, where approximately 100,000 poor migrant workers are employed breaking apart and processing obsolete computers imported primarily from North America.

“We found a cyber-age nightmare,” says Jim Puckett, coordinator of BAN. “They call this recycling, but it’s really dumping by another name.”

Recycling Economics
Recycling computers is not a profitable business, because the value of the materials in a computer is small. In an old computer, according to Time Magazine, five pounds of steel might be worth $.25, the central processing unit with gold tips (and assuming the chip cannot be reused) might be worth $1.00; the motherboard, with gold, silver and copper connectors, might be worth $2.00; cable could be worth $.09; the hard drive with aluminum might be worth $.10; and the monitor yoke which can be 60 percent copper may be worth $.80.

As a result of the low value of computer raw materials, consumers must typically pay recyclers. Large commercial users in the United States must rely on recycling, because the hazardous materials in computers make it illegal for those disposing of large numbers to dump them in the normal waste stream. For individuals, throwing the computer in the trash — where it is likely to end up in a landfill — is often preferable to paying $10 to $30 for recycling.

Thanks to the economics of computer recycling, those computers that do go to “recyclers” in the United States more often than not are designated for export. Due to lower wage costs and more lax occupational and environmental standards, recycling costs in China can be as little as one tenth the cost in the United States.

“Most companies that call themselves recyclers of computers and e-waste often do more waste trading than actual waste recycling,” notes the report. “Informed industry insiders have indicated that around 80 percent of what comes through their doors will be exported to Asia, and 90 percent of that has been destined for China.”

Ash Covers the Ground
In China, the Basel Action Network investigators found that the Guiyu area has been transformed in recent years from a rice-growing community to an e-waste processing center. Residents no longer drink the local water in Guiyu, which they say has become foul tasting. Instead, they rely on water that is trucked in from a town 30 kilometers away.

The recycling business in Guiyu is conducted by small-scale operators, which purchase single truckloads of waste — mostly originating from North America — from a nearby port. The BAN investigators found very low-technology operations dismantling the residue from a high-tech society.

In one village, “residents make their living entirely by burning [computer] wires to recover copper,” according to the report. “The village exists in a landscape of black ash residue which covers the ground and the houses of the village. The burning always takes place at night, indicating that local authorities have likely frowned upon the black smoke plumes.” The report concludes that it is extremely likely that the burning of the wires is creating dioxins and other contaminants, which are polluting the air and nearby fish ponds.

The most environmentally hazardous part of the recycling operations, according to the report, involves the desoldering of circuit boards. Women and girls heat the boards over open flames, pulling out electronic chips from a molten lead-tin solder. The exposure to the solder fumes is likely to be very damaging to workers’ health, the report concludes. After the chips are removed (with some separated for re-use, and other destined for acid chemical stripping), the boards go to large-scale burning or acid recovery operations.

“Whole riverbanks were seen full of charred circuit boards reduced to blackened fiberglass,” according to the report. “This final burning process is bound to emit substantial quantities of harmful heavy metals, dioxins, beryllium.”

Other dangerous processes included manual toner sweeping, where workers scraped out residual toner; cracking of cathode ray tubes from computer monitors, with lead-laden monitor glass simply dumped; plastic chipping and melting with no respiratory protections for workers; and massive amounts of material dumping.

Whose Responsibility?
Under the Basel Convention, the shipment of hazardous waste — and the report argues that much of e-waste must be considered hazardous under the treaty — from rich to developing countries is banned. The United States, however, has not signed the treaty, and is not governed by its terms.

“To our horror,” says BAN’s Puckett, “we discovered that rather than banning [e-waste], the United States government is actually encouraging this ugly trade in order to avoid finding real solutions to the massive tide of obsolete computer waste generated in the U.S. daily.”

Not only has the United States refused to be bound by the Basel Convention, it has exempted e-waste from its own export laws, because the material is claimed to be destined for recycling.

While calling for the United States to immediately join the global ban on export of hazardous wastes to developing countries, the report locates the ultimate source of the problem in the rapid obsolescence of computer equipment, and the failure to hold computer makers responsible for handling discarded computers. Placing such responsibility on the computer makers — as the European Union is beginning to require — will give the industry incentives to design for longevity, upgradeability, repair and re-use, and to decrease the use of toxic inputs.

“Consumers in the U.S. have been the principal beneficiaries of the high-tech revolution and we simply can’t allow the resulting high environmental price to be pushed off onto others,” says Ted Smith, executive director of the Silicon Valley Toxics Coalition. “Rather than sweeping our e-waste crisis out the backdoor by exporting it to the poor of the world, we have got to address it square in the face and solve it at home, in this country, at its manufacturing source.”

— Robert Weissman

Corporate Crime Sentencing

The United States Sentencing Commission in February announced the creation of a 15-member advisory group to review the general effectiveness of the 10-year old federal sentencing guidelines for organizations, including corporations. The advisory group will serve for 18 months and will make at least one interim report to the Commission in the course of its work.

“There is more interest than ever in these guidelines and we have received some suggestions for strengthening them,” says Commission chair Judge Diana Murphy. “In order to foster dialogue about possible refinements to the organizational guidelines, we formed this ad hoc advisory group. In light of the current focus on preventing large-scale corporate wrongdoing, we believe the group’s work will be very timely.”

But 12 out of the 15 members on the panel represent corporate interests, and it is clear from interviews with some of them and with comments they submitted to the Commission over the past couple of months that they are interested in something other than “strengthening” the guidelines.

Nine members of the panel are from corporate or white-collar criminal defense law firms, or practice white collar criminal defense. Among them: B. Todd James, the group’s chair, who is a white collar criminal defense attorney with Robins, Kaplan, Miller & Ciresi. One of the panel members is from a health care corporation, and two are from corporate-sponsored ethics programs.

The remaining three members of the panel are Mary Beth Buchanan, the U.S. Attorney in Pittsburgh, Michael Horowitz, the chief of staff at the Justice Department’s Criminal Division, and Richard Gruner, a law professor at Whittier Law School.

The first meeting of the group is scheduled for March 8 at the Commission headquarters in Washington, D.C. The meeting will be closed to the public. Advisory group chair Todd James says that the first meeting will be a “meet and greet” and one of the topics of conversation will be whether to open up future meetings to the public.

“There has been no decision [on whether to open the remaining meetings to the public],” James says.

He said the first meeting is an “organizational meeting” and whether to open future meetings is “one of the topics we will discuss.”

“There are 15 people in the group,” James says. “I haven’t met a lot of them before. At some point, there will be one or more public hearings.”

Panel member Win Swenson, who was deputy general counsel at the Commission and was instrumental in developing the guidelines, is currently with Compliance Systems Legal Group, a law firm specializing in corporate compliance programs. In written comments to the Commission last November, Swenson urged that the new advisory group, on which he sits, “go beyond potential amendments to the definition of an effective program.”

The organizational guidelines became effective November 1, 1991. They provide incentives for organizations to report violations, cooperate in criminal investigations, discipline responsible employees, and take the steps needed to prevent and detect criminal conduct by their agents.

The guidelines mandate high fines for organizations that have no meaningful programs to prevent and detect criminal violations or in which management was involved in the crime.

“Aspects of the legal and enforcement environment make it much more difficult for organizations to operate the kind of compliance programs the guidelines intend to encourage,” Swenson wrote. “Existing penalty schemes such as the treble damage provisions of the False Claims Act can be — and I believe are — applied in ways that undercut the guidelines credit for compliance programs.”

Swenson said that the problem is not with the guidelines, but with “the broader legal and enforcement environment in which the guidelines’ compliance provisions operate.”

— Russell Mokhiber


The March 2002 Lawrence Summers Memorial Award* goes to Allergan, Inc. of Irvine, California for its injectable drug known as Botox.

About Botox, the New York Times reported in February 2002: “Without a peep of promotion, it has become the most popular cosmetic medical procedure in the country, despite the fact that it involves injecting the neurotoxin that causes botulism directly into muscles in the face, paralyzing them and thus erasing wrinkles.”

Botox has been available for a decade, after the Food and Drug Administration (FDA) granted approval to the product to treat eye muscle spasms. Cosmetic use is an “off-label” use which the manufacturer cannot promote, but which is legal.

Now Botox is on the verge of achieving FDA approval for cosmetic use, according to the New York Times, which will permit Allergan to begin marketing the drug for this purpose. Allergan is expected to launch a more than $100 million advertising blitz soon after.

“Botox has already worked its numbing magic on the face of America,” the Times reported. “Hollywood directors like Martin Scorsese and Baz Luhrmann [director of Moulin Rouge] have complained that Botox is so popular among actors that it is playing havoc with facial expression. In a variation on ‘The Stepford Wives,’ it is now rare in certain social enclaves to see a woman over the age of 35 with the ability to look angry.”

Although there is supposedly no risk of becoming infected with botulism from the injections since the neurotoxin is so diluted, there are risks. “For example,” the Times reports, “patients are advised not to lie down or lean over or even tie their shoes for six hours after treatment, lest the toxin seep and inadvertently paralyze other muscles.” There is more: “Because Botox paralyzes muscles that create wrinkles, doctors said it should not be applied on muscles that move as a part of everyday facial expression. Otherwise, they said, it could cause a person’s face to look immobilized, and render it waxy-looking.”

Botox treatments last for three to four months, after which more treatments are required to maintain the anti-wrinkle effect. The cost ranges from $300 to more than $1,000 per treatment.

Source: Alex Kuczynski, “In Quest for Wrinkle-Free Future, Frown Becomes Thing of the Past,” New York Times, February 7, 2002.

*In a 1991 internal memorandum, then-World Bank economist 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)?" wrote Summers, who went on to serve as Treasury Secretary during the Clinton administration. "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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