Multinational Monitor

VOL 27 No. 3


Combating the Culture of Corruption. Or Not.
by Charlie Cray

Corruption Roll Call: The Most Corrupt Members of Congreess
by Citizens for Responsibility and Ethics in Washington

Caught in Jack's Web: The Abramoff Associates' File
by Citizens for Responsibility and Ethics in Washington

Oil and Violence in Sudan: Drilling, Poverty and Death in Upper Nile State
by Egbert Wesselink and Evelien Weller


Hostile Takeover: The Corruption of Politics in the United States
An Interview with David Sirota

Exporting Corruption: How Rich Country Export Credit Agencies Facilitate Corruption in the Global South
An Interview with The Corner House

Searching for Transparency: Corruption and the Global Economy
An Interview with David Nussbaum


Behind the Lines

Structural Corruption and Reform

The Front
Human Trafficking in Jordan -- Third World Brain Drain

The Lawrence Summers Memorial Award

Book Notes
The rise and Fall of the Republican Machine -- The Life of Chinese Peasants -- Labor, Environment, and the Global Electronics Industry

Names In the News


Behind the Lines

Erin Brockovich Updated

An influential article downplaying the link between hexavalent chromium water pollution and stomach cancer was exposed as a fraud by an environmental watchdog group, resulting in the article’s public retraction from a prestigious medical journal in July.

The fudged article was planted by ChemRisk, a consulting firm whose clients include companies responsible for dumping hexavalent chromium (also known as chromium 6) into public drinking water supplies.

The role of chromium-6 in causing stomach cancer was made famous by the Hollywood movie “Erin Brockovich.” The movie was based on a lawsuit by residents of Hinckley, California against energy giant Pacific Gas & Electric (PG&E) for contaminating their drinking water with chromium-6. Residents blamed chromium-6 for the town’s high rates of stomach cancer and other illnesses. Hinckley residents backed up their claims with a 1987 study by Chinese scientists, showing a link between chromium-6 ingestion and cancer.

In 1996, PG&E settled the case, paying 650 Hinckley residents $333 million worth of damages.

However, the real life story does not have a simple Hollywood ending.

PG&E hired ChemRisk to disprove the 1987 study. ChemRisk paid JianDong Zhang, one of the study’s original authors, for his original data. ChemRisk then conducted its own flawed reanalysis of the data and submitted an article to the Journal of Occupational and Environmental Medicine (JOEM) under the byline of Zhang and his co-author ShuKun Li.

This was despite Zhang’s written objection to the 1997 “clarifications,” which alleged that a reanalysis of the study’s data showed that the original conclusion was wrong and that there is probably not a link between chromium and stomach cancer.

Zhang has since passed away, but JOEM located Li, who agreed the article should be retracted.

Because it is the only study of the link between chromium-6 and stomach cancer, the reversal of Zhang’s original findings had a strong ripple effect on the scientific community and deeply influenced public policy towards chromium-6 regulation. The doctored study was cited in a 2002 EPA decision to extend registration of a wood preservative that contains chromium, for example. A 2001 report that prompted California public health authorities to revise upward a recommendation for chromium-6 levels in public drinking supplies also cited the fake study.

Bill Walker, vice president of the Environmental Working Group (EWG), the nonprofit organization that publicly exposed the fraudulent article, says ChemRisk’s manipulation is not all that unusual. “ChemRisk is the poster child of a whole industry of consultants who conduct science for hire. So much of the science out there is being presented as peer reviewed independent science and is actually the work of corporate consultants.”

Ecuador Seizes Oxy

The Ecuadorian government’s May seizure of the operations of U.S. oil behemoth Occidental Petroleum has prompted the United States to cut off free trade talks with the country.

The Ecuadorian government claims that it took over Occidental’s operations in Ecuador because the company broke the terms of its contract in 2000, when it subleased some of its land to Canadian oil company EnCana without consulting the Ecuadorian government.

This is not the first time that Occidental has come under fire for its activities in Ecuador.

For years, Occidental has been accused of exploiting the oil-rich Amazon to the detriment of the local environment and indigenous communities.

Occidental has also been accused by the Ecuadorian government of underreporting gas production and cheating the government of royalties.

Before the confiscation, Occidental offered the Ecuadorian government $1 billion to settle the dispute over the EnCana sublease, according to BBC reports. Occidental did not respond to Multinational Monitor requests for comment.

U.S. officials insist that the Ecuadorian government’s confiscation of Occidental’s operations is a breech of foreign investment laws and declare it to be a total deal breaker for free trade talks.

Rove Helps Big Oil

It looks like Big Oil has hit another political gusher.

After years of political pressure and insider lobbying, the oil industry has successfully pressured authorities in Washington to roll back regulations relating to sediment and runoff from oil drilling sites. Top Bush aide Karl Rove seems to have had a hand in the matter.

In June, the Environmental Protection Agency (EPA) exempted oil and gas operations from requirements to obtain permits for runoff and water discharge, except in situations where this leads to water contamination. The revised EPA rule also excludes sediment from the definition of contamination, even though the EPA has previously identified sediment as one of the leading causes of water pollution.

The EPA instated the changes at the behest of White House budget officials. These officials claimed that the new rule is necessary to comply with a law passed by Congress in 2005, which lifts permit requirements at oil drilling and construction sites.

Critics charge that the new changes go beyond what Congress directed. The 2005 law mandated a permitting exemption for oil drilling and construction sites. Yet, discharge and runoff, exempted under the new EPA rule, affect more than just the drilling site; they seep into surrounding communities and environments, affecting public water supplies.

Recently exposed evidence suggests that the oil industry had a direct hand in forcing the EPA to adopt the new rule. In 2002, Texas oil tycoon Ernest Angelo wrote a letter to Karl Rove, an old hunting buddy, complaining that EPA regulations of the oil industry were “causing a number of our strongest supporters to openly express doubt as to the merit of electing Republicans when we wind up with this type of stupidity.” Rove wrote back to Angelo, assuring him that he had brought the matter to the attention of the EPA, and that a satisfactory solution would be reached.

Sharon Buccino, senior attorney for the National Resources Defense Council (NRDC), found the letters in an EPA docket and subsequently publicized them.

White House spokesperson Dana Perino told the Los Angeles Times that Rove had no involvement in the EPA rulemaking process.

But Buccino says that the letters prove that Karl Rove was involved. “This is a good example of the administration bending over backwards for its friends in the oil and gas industry at the expense of the environment,” she says.

Filipino Labor Leader Held

Arrested during a massive crackdown on leftist political leaders in February, Filipino trade unionist and Member of Congress Crispin Beltran remains in jail.

Beltran is a lifelong labor organizer and currently serves as chair of Kilusang Mayo Uno, a major trade union grouping (see “Challenging Martial Law in the Factories: An Interview with Crispin Beltran,” Multinational Monitor, January/February 1994). He also leads a progressive political coalition in the Filipino parliament.

Beltran is being held by the administration of President Gloria Arroyo on charges of “conspiracy to commit rebellion.” The warrant for Beltran’s arrest dates back to 1985 for his alleged attempts to oust the dictator Ferdinand Marcos.

In February, citing an attempted coup d’état, President Arroyo declared a national state of emergency, granting her administration authority to arrest people without warrants and to impose public peace-keeping measures.

Arroyo used her power to engineer a massive sweep up of political opponents. Police charged several leftist political leaders with rebellion and arrested Beltran, among others. They also raided the headquarters of newspapers and media networks critical of the Arroyo administration, banned public assemblies and ordered the violent dispersal of anti-Arroyo protesters.

Arroyo’s state of emergency declaration was rescinded after a week, and the Filipino Supreme Court eventually declared the arrests unconstitutional.

However, Beltran, who is 73 years old and suffers from hypertension, remains in detention.

Representatives at Philippine Embassy in the United States declined to comment on Beltran’s detention.

In an interview with Bulatlat, an online news magazine, Beltran expressed optimism that a popular movement will defeat Arroyo. “The Arroyo administration is now using government agencies and the courts to justify their repression of progressive solons and militant leaders. But in the end, it will still be the people who will decide.”

Lilly Tells Aussies: Pay

U.S. pharmaceutical giant Eli Lilly is fighting the Australian government’s refusal to cover the company’s osteoporosis drug Forteo as a part of its national prescription drug insurance scheme.

Eli Lilly is invoking a provision in the U.S.-Australia Free Trade Agreement (FTA) that allows companies to demand reviews of the Australian government’s decisions about which drugs to subsidize under its Public Benefits Scheme (PBS). This is the first time that the FTA provision has been used.

Under the PBS, the Australian government heavily subsidizes prescription drugs to the Australian population, in order to make medications more accessible and affordable. To be included in the PBS list, drugs must be cost effective and have a “certain clinical benefit,” among other requirements.

The PBS Advisory committee claims that Forteo falls short of these standards. The drug costs $850 per month, and its effectiveness is disputed.

Eli Lilly counters that the drug is essential for the small population that takes it, and that government subsidization is necessary to make it affordable for this population. Several European countries cover the drug.

Eli Lilly spokespeople declined to comment on the case.

The FTA appeals process has been heavily debated and criticized in Australia. The provision was put in place to appease the complaints of the global pharmaceutical industry, which charges that Australia does not pay enough for pharmaceuticals. However, defenders of the system say that in order to keep the PBS financially afloat, the Australian government must strictly evaluate which drugs to pay for. Diminished authority to do so could threaten the integrity of the whole health insurance scheme, they contend.

— Sarah Lazare

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