Multinational Monitor

APR 2002
VOL 23 No. 4


The Cost of Living Richly: Citigroup’s Global Finance and Threats to the Environment
by Ilyse Hogue

Predatory Associates: Citigroup, Predatory Lending and the Credit Crunch for the Poor and Working Class
by Jake Lewis

Servicing Citi’s Interests: GATS and the Bid to Remove Barriers to Financial Firm Globalization
by Antonia Juhasz


Breaking the Brokers’ Sexual Harassment Culture
an interview with
Pamela Martens

Citi: Suing for Silence
an interview with
Al Giordano

Citi's Interests at EPA
an interview with
Hugh Kaufman



Behind the Lines

The Private Government of Citigroup

The Front
Philip Morris' Trade Card

The Lawrence Summers Memorial Award

Names In the News


Names In the News

Boeing’s Faulty Tests

The General Accounting Office (GAO) in March released two reports documenting how early claims made by Boeing and its subcontractor TRW about the success of antimissile-sensor technology were greatly exaggerated.

In 1997, Boeing and TRW, as part of the Pentagon’s ongoing missile-defense research, launched a test vehicle equipped with an infrared sensor to test the sensor’s ability to identify enemy warheads.

Although problems with the sensor’s cooling system and power supply caused it to confuse warheads with decoy balloons, the contractors pronounced the $100 million test “highly successful.”

Problems mounted when a lawsuit brought against TRW by a former employee, Dr. Nira Schwartz, alleged that the company not only used faulty algorithms in designing the test but that the company also later manipulated results.

MIT physicist and missile defense critic Theodore Postol and others, including the TRW whistle blower, a TRW retiree, and a Department of Defense investigator, refused to let the issue die, prompting an 18-month investigation that culminated in the GAO report.

The GAO report found that the Boeing infrared Sensor, the critical component that serves as the eyes of the exoatmospheric kill vehicle, failed to cool properly and seriously impaired the system’s ability to make precise measurements essential to distinguish real warheads from decoys.

Two-thirds of the data collected in the flight test turned out to be useless, noise in the sensor was much higher than expected, and the system experienced a false alarm rate exceeding Boeing’s requirement by more than 200 times.

The importance of these types of problems in the test results were not disclosed to the government until after Schwartz raised formal complaints, according to GAO. Even then, the contractors revealed problems only to low-level government officials in the project management office through undocumented oral briefings and later through a highly technical internal Boeing document.

Lead Crime

In the first-ever criminal prosecution in the United States related to failure to give lead hazard warnings, a Washington, D.C.-area landlord was sentenced in March to two years in federal prison for failing to give warnings to tenants that are required by the federal Lead Hazard Reduction Act of 1992.

David D. Nuyen, 65, of Silver Spring, Maryland, pled guilty to obstructing an investigation by the Department of Housing and Urban Development (HUD) and making false statements to federal officials, in order to conceal his failure to notify tenants of the presence and hazards associated with lead-based paint.

As part of his guilty plea, Nuyen has provided all tenants with new notices about lead paint assessments performed by an independent contractor required under the terms of a plea agreement with prosecutors. Nuyen has owned and managed approximately 15 low-income apartment buildings in the District of Columbia and Maryland.

Nuyen admitted that he had notice of actual lead-paint hazards in one of his apartment buildings from District of Columbia lead inspectors, who informed him that they found lead in the building. However, Nuyen failed to disclose actual and potential lead hazards before leasing to tenants. When HUD officials sought to determine whether he was complying with the Lead Hazard Reduction Act, Nuyen admitted, he presented the agency with false and backdated forms.

Do Corporations Kill?

The Federal Bureau of Investigation in March released a report finding that white-collar crime is only 4 percent of reported crime.

The report, “The Measurement of White Collar Crime Using Uniform Crime Reporting Data,” used the National Incident Based Reporting System (NIBRS), which provides arrest information for five separate types of white-collar crime — fraud, bribery, counterfeiting/forgery, embezzlement and other white-collar offenses.

An FBI spokesperson said it could not make the author of the report, Cynthia Barnett, available for an interview, because “she was not experienced enough” to give such an interview.

The FBI said it would only answer questions about the report that were faxed in to its press office.

The report notes the limitations of the study, finding that “much of the investigation and regulation of corporate white-collar crime is left to regulatory agencies and professional associations, and not to police or other law enforcement agencies.”

“White-collar offenses, in these cases, probably will be reported to the UCR (Uniform Crime Reporting) Program only if criminal charges are filed, which is extremely rare in instances of corporate crime. Corporate crime is usually handled within the regulatory agency, or corporations are made the subject of civil cases.”

The report goes on to note that “the idea of holding the corporation criminally liable is not a universally supported idea.”

“There is some case law to support the concept of ‘juristic person,’ when considering criminal behavior perpetrated by the corporation, butother white-collar crime experts are adamant that ‘corporations do not kill people, people kill people.’”

Russell Mokhiber


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