Multinational Monitor

MAR/APR 2007
VOL 28 No. 2


Big Pharma and AIDS Act II: Patents and the Price of Second-Line Treatment
by Robert Weissman

Manuel Cossa's Story: Mining and the Migration of AIDS
by Stephanie Nolan

Slow on Generics: Bush Policy Saves Lives, At a Premium
by M. Asif Ismail

HIV In Uganda: The Challenges of Getting Pills to Patients
by Richard Kavuma

Building Up Baja: US Suburbanization Comes to the Peninsula
by Dan La Botz


Cry for Action: Shameful Neglect and the Search for Hope in AIDS-Ravaged Africa an interview with Stephen Lewis

Four Million Short: The Healthcare Worker Shortage
an interview with Lincoln Chen


Behind the Lines

Deadly Dictates: The IMF, AIDS and the Healthcare Crisis

The Front
Climate Changing Africa -- African Inequality

The Lawrence Summers Memorial Award

Greed At a Glance

Commercial Alert

Names In the News


Names in the News

Chiquita Supports Terrorism

Chiquita Brands International Inc. pled guilty in march  to engaging in transactions with a terrorist organization. Under the terms of the plea agreement, Chiquita’s sentence will include a $25 million criminal fine and five years’ probation.  
The plea agreement arises from payments that Chiquita had made for years to the violent, right-wing terrorist organization United Self-Defense Forces of Colombia (AUC, after its name in Spanish).        
The AUC had been designated by the U.S. government as a terrorist organization. These designations made it a federal crime for Chiquita, as a U.S. corporation, to provide money to the AUC.      
In April 2003, Chiquita made a voluntary self-disclosure to the government of its payments to the AUC. “Like any criminal enterprise, a terrorist organization needs a funding stream to support its operations,” says Justice Department official Kenneth Wainstein. “For several years, the AUC terrorist group found one in the payments they demanded from Chiquita Brands International.”    
Chiquita made payments to th AUC through its wholly-owned Colombian subsidiary known as Banadex. By 2003, Banadex was Chiquita’s most profitable operation. Chiquita, through Banadex, paid the AUC nearly every month.      
In total, Chiquita made over 100 payments to the AUC amounting to over $1.7 million.

Chiquita began paying the AUC following a meeting in 1997 between the then-leader of the AUC, Carlos Castano, and a senior executive of Banadex. Castano implied that failure to make the payments could result in physical harm to Banadex personnel and property.        
Chiquita’s payments to the AUC were reviewed and approved by senior executives of the corporation no later than September 2000, including high-ranking officers, directors and employees. 
Chiquita sold Banadex to a Colombian buyer in June 2004.

Backdating Epidemic   

At least 257 public companies have option backdating problems.      
That’s according to a report released in March by Glass Lewis, a Denver-based shareholder services firm.      
The report found that to date, the options backdating scandal has resulted in an unadjusted initial decline in market value of $5.5 billion and the recognition of at least $12.3 billion in additional pre-tax compensation expenses.       
At least 85 executives and directors at 46 companies have been fired, demoted or resigned in connection with backdating, the report found.
The report also found that the scandal has resulted in 252 internal investigations, 128 Securities and Exchange Commission inquiries, 58 Department of Justice investigations, 129 shareholder lawsuits and six criminal cases.
A company gives executives or employees options to purchase the company’s stock sometime in the future, at today’s prices. This is intended to give them an incentive to work to raise the company’s stock price.
Options can be a very valuable form of compensation if they enable the recipient to purchase stock at a price below the market value at the time they are exercised.
In the backdating scandal, executives at many firms have been found to have received options made to look like they were allocated earlier — through backdating. In this scenario, the executive automatically receives a great deal, because the option is tied by design to a price lower than the current stock price.
A big chunk of the cases are in the computer industry, including 43 in software and programming and 37 in semiconductors
Beer Bust        

European regulators have fined Dutch brewers Heineken, Grolsch and Bavaria $370 million for operating a beer market cartel in The Netherlands.              
Between at least 1996 and 1999, the four brewers held numerous unofficial meetings, during which they coordinated prices and price increases of beer.           
“It is unacceptable that the major beer suppliers colluded to hike up prices and carve up the market between themselves,” says European Competition Commissioner (EC) Neelie Kroes. “The highest management of these companies knew very well that their behavior was illegal, but they went ahead anyway and tried to cover their tracks.”      
After the EC on its own initiative uncovered a cartel in the Belgian beer market, another brewer in the cartel, the InBev group, provided information under the EC’s leniency policy that it was also involved in cartels in other European countries.       
This led to surprise inspections on brewers in France, Luxembourg, Italy and The Netherlands.
The EC said it had evidence that in all four brewery groups high-ranking management — such as board members, the managing director and national sales managers — participated in the cartel meetings and discussions.       
There is also evidence that the companies were aware that their behavior was illegal and took measures to avoid detection, such as using a panoply of code names and abbreviations to refer to their unofficial meetings and holding these meetings in hotels and restaurants.

— Russell Mokhiber      


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