From corporation-watch at countercorp.org Mon Jun 28 05:25:42 2010 From: corporation-watch at countercorp.org (Corporation Watch) Date: Mon, 28 Jun 2010 02:25:42 -0700 Subject: [Corp. Watch] China allowing labor strikes to re-balance its economy Message-ID: <8CC97D13-35AB-4A0C-9E81-53743D6BA0E2@countercorp.org> China Takes Hands-off Approach to Labor Strikes By Tini Tran (Associated Press, June 25) -- When workers at a Honda transmission plant in China went on strike for higher wages last month, they touched off a domino effect of high-profile labor disputes. As the strikes, many of them at foreign-owned plants, rippled through China's southern manufacturing heartland, the government -- usually quick to crush mass protests of any kind -- did not step in, but allowed them to spread. That's because it views the strikes less as a political threat these days than as an economic tool -- a way to help restructure China's current export-driven economy to a more self-sustaining one, driven by ordinary people with more cash to spend. The demand for higher wages reflects a younger, savvier work force that is better organized and has higher expectations, labor experts say. Boosting wages fits in with Beijing's strategy of closing the income gap and promoting more equal growth in coming years, said Liu Shanying, an analyst at the Chinese Academy of Social Sciences' Institute of Political Science in Beijing. "If incomes won't go up, how can domestic demand be boosted? Strikes for better pay are very much in line with the big trend of Chinese economic development," he said. The authoritarian leadership sees the gulf between rich and poor as a threat to Communist Party rule, and has cited widening income disparities as a factor in the protests. Policies aimed at raising incomes for working-class Chinese and promoting more equitable growth are a priority for the next five-year plan, which the government is drafting now. Despite moves by the government to raise wages, they remain strikingly low. Workers' salaries as a share of China's economy have declined for the last two decades, dropping from 57 percent of gross domestic product in 1983 to just 37 percent in 2005. The minimum monthly wage in southern Guangdong province was increased in March to between 920 yuan and 1,030 yuan ($135 - $150) in the capital of Guangzhou and cities in the Pearl River Delta manufacturing base. Elsewhere, it is as low as 660 yuan ($95). While China has taken a less confrontational approach toward striking workers, the workers have also helped their own cause, by generally keeping their demands limited and not calling for national independent unions, which are banned. Police intervention has been rare unless protests spilled into public roads and areas. "For several years now, the central government in Beijing has seen labor disputes to be just that -- disputes between workers and management," said Geoffrey Crothall, spokesman for the Hong Kong-based China Labour Bulletin, a worker advocacy group. "They are not related to culture, religion, or politics. They are pure economic disputes and should be dealt with as such." "We're not seeing the systematic repression of organized labor that we saw 10 years ago," Crothall said, noting that labor organizers used to be singled out for lengthy jail terms, but in recent years have been given one or two years. Striking workers in the recent unrest have largely remained calm and stayed out of the streets, said Liu. "If the tensions get resolved in a peaceful and reasonable manner, why [shouldn't the government] take a free ride on it?" he said. "After a series of mass incidents, the government has learned this the hard way," Lui added. "Now it won't go and confront [striking workers]. If the workers are right [in their disputes with companies], why should the government play the bad guy?" China has been wary of the increasing number of "mass incidents" -- large-scale social protests often aimed at government corruption or illegal land confiscation -- in recent years. There were about 127,000 protests in 2008, according to a 2009 China Labour Bulletin report. Roughly one-third are believed to be labor-related, according to Crothall. Because China does not release official data on the number of strikes that occur annually, there is no way to say for certain whether the recent rash of labor unrest marks an increase from previous years, said Chang-Hee Lee, a specialist on industrial relations at the International Labour Organization's Beijing office. Domestic media are often barred from reporting on labor strikes, so the recent surge in coverage by Chinese media is noteworthy, he said. "We see many more reported cases of strikes in the Chinese media," Lee said. "We don't know if it's increasing, but what we do know is that the nature of the strikes are changing." The spiraling labor unrest poses a problem for Japanese companies that shifted production to China in the hopes of taking advantage of lower labor costs. Toyota and Honda have had to repeatedly halt production at their car assembly plants in southern China since mid-May after parts suppliers were hit by strikes. The protests have served to highlight a more effective, organized workforce. Unlike past years, when the mostly migrant workforce protested over blatant violations, Chinese laborers now are fighting for things beyond their basic rights, such as improved working conditions and higher pay. That change reflects the attitudes of a younger generation who were raised in an era of relative plenty, compared to the poverty and unrest their parents and grandparents knew. "They are negotiating for their interests, not for their rights," said Anita Chan, a labor expert at the University of Technology in Sydney. "It's a very different set of stakes." "Normally, all the strikes that happened in this part of China in these foreign-funded factories tended to do with violations of rights -- wages not paid properly or paid at all, or cheating of wages," Chan said. Another reason behind the more assertive workforce is a shifting job market. Manufacturing has begun to expand into the Chinese interior, leaving traditional industrial enclaves on the coast competing for labor, and giving workers a stronger bargaining position. Workers "have the upper hand, and also sense the government is trying to address inequalities, so they feel more comfortable in pushing for high wages," said Lee. He also attributes some of the new worker awareness to the debate that surrounded passage of a 2008 labor law regulating contracts, lay-offs, and other conditions. China sought public input on the drafts before passage. "They received [more than] 190,000 public comments, and it created huge debate in the Chinese media," he said. "Though workers didn't know every detail [of the proposed law], they understood that this law provided better protection." In the recent string of strikes, workers are seeking salaries more in line with what their overseas counterparts are paid, said Lee. They also demand more vocational training, and reforms so that their salary and status can rise the more years they work, he said. "I was surprised to see the degree of sophistication in their demands," he said. "My sense is they are much better organized." From corporation-watch at countercorp.org Mon Jun 28 19:00:54 2010 From: corporation-watch at countercorp.org (Corporation Watch) Date: Mon, 28 Jun 2010 16:00:54 -0700 Subject: [Corp. Watch] Exxon Valdez lawyer: 'BP has enough money to bring legal system to a halt' Message-ID: <5CB8979E-E01E-4754-9883-26AF32BA99AC@countercorp.org> Exxon Valdez Lawyer Still Fighting for Clients By Chris Welch (CNN, June 18) -- Attorney Brian O'Neill has a lifetime of experience when it comes to the legal battles that ensue following major oil catastrophes. After the Exxon Valdez oil tanker crashed in Prince William Sound in 1989, O'Neill headed straight to Alaska. The Minnesota-based attorney had an interest in environmental issues and wanted to help because, as he put it, "there were an awful lot of hurt people." He soon represented 2,600 fishermen and others affected by the spill. What he thought would be a two- or three-year "adventure" is still the biggest thing on his plate -- one-third of his life later. O'Neill successfully argued the 1994 trial, after which a jury ordered Exxon to pay $5.3 billion in punitive damages to O'Neill's clients and others affected by the spill. Exxon appealed almost two dozen times, and O'Neill was there through it all. In 2008, the case reached the U.S. Supreme Court, where a 5-3 majority finally set punitive damages at $500 million. It was a significant blow to O'Neill and his clients. Today, O'Neill is working to make sure each of his clients receives the remainder of their payments from Exxon, which he expects will be complete by year end. CNN spoke with O'Neill about the similarities between the Exxon Valdez situation, and the current disaster in the Gulf of Mexico. CNN: What are some of the key similarities you see between the two spills? O'Neill: The "noise" and the feeling that you got in the early days of the Valdez spill is the same as the noise and the feeling that you get now, with people saying the same things and people reacting the same way. It's going to be interesting -- when the limelight is no longer on the Gulf -- as to how BP is going to act, and how the federal and state governments are going to act. Because once this is no longer on the front page of the newspaper, everybody's reaction is going to be 'We need oil.' Oil runs the universe, and you can see governments settling with BP relatively cheaply and you can see BP at some point in time changing its attitude from 'We'll pay you' to 'We'll pay you if the court tells us to pay you.' CNN: This week, BP agreed to set aside a $20 billion escrow account to compensate U.S. businesses and workers who have been adversely affected by the Gulf oil spill. What are your thoughts on that? O'Neill: I hope what it means is that they're going to use the $20 billion to set up a fund for victims so that they can go to the fund, and it'll pay victims interim money and then they'll pay them final money. That's my hope. And for a lot of the plaintiffs, they may not need to ever go to court, so they're not going to get tied up for 20 years. [In that regard] it would be really positive. If they're successful in starting to move money quickly, it'll be a huge success, but if they're going to pay anywhere from 30,000 to 100,000 people, that's awfully tricky. And it's going to take a lot of work and a lot of money to set this thing up quickly, and it only works if you set it up quickly ... For a lot of these people who live from year to year on their fishing businesses, they could be bankrupt by the end of the year. So that's what we have to do is we've got to get money to them quickly. CNN: Did anything surprise you once you started representing the fishermen and taking on Exxon after the Valdez spill? O'Neill: Like a lot of people think now with regard to BP, I thought that Exxon would want to settle the case relatively early and move on, and I was surprised a number of times with the fact that this was World War III to them, and they dealt with it that way ... They spent over $400 million on lawyers, essentially defending [themselves against] our claims. They took every appeal they could take, and every delay they could take, and filed every motion they could take. Don't kid yourself: The oil companies have the best lawyers money can buy. CNN: Is that one of the most important things you think people in the Gulf should keep in mind when thinking about filing a claim? O'Neill: I think that if they have a claim, they should file a claim with BP and see if BP will pay it. If BP doesn't pay it, I think they ought to go to the federal oil-spill fund and see if the oil-spill fund will pay it. And then if they have to file suit, [do so] with the knowledge that it's gonna be a long haul ? [And] make absolutely sure they're not giving up any legal rights. The major problem they face other than the legal system is that they don't know how hard they've been hit yet. If you're a shrimper, you could say to yourself, 'Well, I haven't fished for the last month.' But what happens if this toxic oil does something to that fishery [over the long term]? Or what happens if the presence of that toxic oil does something to the price of Gulf shrimp around the world? You're not going to know the answer to some of those things for two or three or four years. So you have to settle [only] part of your case now if you can ... because the [full] scope of the harm to you is unknown. It's as unknown as where that oil is going to go. CNN: You mentioned the legal system would be one of their biggest problems. Can you elaborate on that? O'Neill: Well if a company is rich enough and powerful enough to hire hundreds of lawyers, they can essentially bring the legal system to a halt. Most of these fishermen no longer believe that the court system of the United States provides equal justice. They've come to the same as the conclusion that I've come to, which is that our governmental institutions will always bail out Big Oil, and they did here. CNN: Do you think oil still has that great of an influence today? O'Neill: It's more than the influence that oil has. It's whoever controls oil rules the world. The fact that you came downtown in a car that needs oil, [and] the electricity in the office is probably the result of oil are everyday reminders of the strategic importance of oil to the United States And so if you're a judge, or you're the president ? you're aware of the fact that you need BP and Exxon, so why the heck would you punish BP or Exxon in any way that impairs their ability to survive? You wouldn't, no matter how many people they hurt. CNN: Do you have any regrets from this case? O'Neill: I regret that I haven't done a lot of other professional things for the last 21 years. It was never my plan to be a trial lawyer until I was 63 years old. I was going to go off and do something else, teach law school probably. But I didn't get the chance to do that, so that's my biggest regret. Second regret is it's hard on you emotionally, so then it's hard on your family to always be worrying about the same thing all of the time. But we got through it ... I am proud of the work I've done. I am not proud of the fact that I didn't make my clients whole. I had expected in 1989 that, at the end of the day, everybody would be fully compensated for their losses, and they weren't. And that's in part my fault. So while I'm proud I lasted 21 years, the result was not what my clients deserved. From corporation-watch at countercorp.org Tue Jun 29 16:27:59 2010 From: corporation-watch at countercorp.org (Corporation Watch) Date: Tue, 29 Jun 2010 13:27:59 -0700 Subject: [Corp. Watch] Impunity, arrogance emboldening corporations to re-take initiative from critics Message-ID: A Business Backlash? by Phil Mattera (Dirt Diggers Digest, June 25) -- By all rights, the laissez-faire crowd should be silent these days. Recent months have been marked by one example after another of the perils of deregulation, and the folly of trusting large corporations to do the right thing. From Toyota and Goldman Sachs to Massey Energy and British Petroleum (BP), 2010 has been the year of Big Business irresponsibility. As in 2002 (after the accounting scandals involving Enron, WorldCom, et al.) and 2008 (the meltdown of Wall Street), we?re now at one of those moments, following an outbreak of corporate misconduct, in which public sentiment about business is up for grabs, as is public policy. The business camp is already working hard to regain support, in ways ranging from BP?s seemingly benign vow to ?make things right? to Rep. Joe Barton?s shameless ?shakedown? outburst designed to turn the Obama administration into the villain. Here are some other signs that corporations and their defenders are already going back on the offensive: ? A federal judge with personal investments in the petroleum industry struck down the Obama administration?s moratorium on deepwater drilling, despite evidence brought to light by Congressional investigators that the practice is much more dangerous than we have been led to believe, and none of the oil giants have adequate accident response plans. The challenge to the moratorium had been brought by smaller oil service firms, but the judge?s decision was hailed by majors such as Chevron and Royal Dutch Shell. ? Massey Energy, apparently hoping for a like-minded judge, has filed suit against the federal Mine Safety and Health Administration in a brazen effort to pin the blame on regulators for the April explosion that killed 29 workers at the Upper Big Branch mine in West Virginia. ? Verizon Communications CEO Ivan Seidenberg, the current head of the Business Roundtable, recently gave a speech in which he challenged regulatory initiatives in the telecom and financial sectors, criticized efforts to limit tax avoidance by multinational companies, and declared: ?It?s time for us all to raise our game and embrace the power of the private sector that will create real value and real growth for our country.? If business advocates are emboldened to speak out so soon, that suggests that corporations have not been reprimanded adequately for their misconduct. The criticism expressed by the Obama administration and Congressional Democrats has had a ritualistic quality about it -- a Kabuki dance of disapproval that may not result in any real change. Even the $20 billion BP escrow fund feels inadequate, given the fact that there is no end in sight to the disaster. Although BP?s shareholders are agonizing over the suspension of the dividend payment, the company itself does not seem very put out by the creation of the fund, especially since it is being allowed to spread out the cost over several years. The ability of BP to buy its way out of the crisis contributes to the sense that large corporations can do the most outrageous things and emerge relatively unscathed. It is unlikely that the forthcoming criminal case against the company will cause much more discomfort. BP has already been through that process with previous disasters involving oil spills in Alaska and a deadly refinery explosion in Texas. It paid the resulting penalties with no problem, and the fact that it was put on probation has had little practical effect. What?s needed is a more dramatic response to corporate negligence. It might be the arrest of a top executive or an announcement that the federal government will no longer do business with companies with serious regulatory violations, or an anti-trust initiative to try to break up large firms which think that their size somehow makes them above the law. Only then might corporations think twice about lashing back and returning to business as usual. From corporation-watch at countercorp.org Wed Jun 30 02:56:28 2010 From: corporation-watch at countercorp.org (Corporation Watch) Date: Tue, 29 Jun 2010 23:56:28 -0700 Subject: [Corp. Watch] Corruption in America: Obama not too big to fail on finance reform Message-ID: <0A04D7CC-1E7A-4225-AB4A-B8A00726EA26@countercorp.org> 'Too Big to Fail' Survives Again Zombie banks, take comfort -- the zombie regulatory system lives on (Fortune, June 25) -- The financial reform legislation hammered out [last] Friday morning on Capitol Hill closes many of the loopholes that led to the last crisis. But it stops well short of breaking the bad habit that has fed outlandish risk-taking for almost three decades: too big to fail. The reform bill does take strides toward a safer financial system. It will create a process for liquidating troubled financial firms, making another American International Group (AIG) less likely. It will boost oversight and transparency in the derivatives markets, making the crisis virus less contagious. It will charge a group of watchdogs with keeping an eye on systemic risk, which could keep Wall Street wagers from bubbling over. "They have made solid progress setting up a system to ensure financial calamities are less frequent," said Raj Date, who runs the Cambridge Winter Center, a non-profit financial policy consultant. "I would give it a 'B' over all." But to earn an 'A' grade, reformers in Congress and the administration would have had to go further. They could have confronted the biggest threats to the taxpayer-funded safety net, and tied their own hands to send the message they won't rush in to save the next big fool that gets in trouble. Instead, they produced a 1,500-page bill that leaves the biggest financial firms untouched and preserves bailout powers that were infamously exploited in 2008. So too big to fail, born in the 1984 bail-out of Continental Illinois and assailed ever since, staggers forward to the next crisis. "We need to reinforce the expectation that there will be no bail-outs," said Richard Carnell, a law professor at Fordham University who served in the Treasury Department under the Clinton administration. "But the approach used here entrenches the bailout expectations." Early on, the administration decided it wouldn't de-fang the biggest risk to financial stability: the giant banks whose size and appetite for risk makes many observers nervous, and the two loss-soaked mortgage insurers, Fannie Mae and Freddie Mac. A bill proposed in April by Democratic Senators Ted Kaufman of Delaware and Sherrod Brown of Ohio would have capped bank size and leverage, forcing behemoths such as Bank of America and JPMorgan Chase to slim down. Proponents say they believe the bill was gathering strength in a Congress animated by anti-Wall Street sentiment, but was defeated by the administration's opposition. Wall Street has been a huge campaign contributor, and the White House was loath to be seen supporting a bill that could cost high-paying jobs in a globally competitive industry. "We were very disappointed in the way that vote went down," said Heather Slavkin of the AFL-CIO, which supported the proposal to reduce the size of the largest banks. The new rules do give regulators tools to break up banks that pose a threat to the health of the financial system. But once a big financial firm runs into problems, the market inevitably gets nervous. But taking that kind of decisive action without either creating market upheaval or resorting to bail-outs "is very painful," said Date. "We still haven't instilled dramatically different debt-market discipline, and that's what we need to do," he said. To that end, it's distressing that one of the most infamous loopholes of the last crisis lives on: the rule that allows the Federal Reserve to lend to just about anyone if they threaten to upset the financial apple cart. The bill would have placed conditions on the Fed's use of that power, but Philadelphia Fed President Charles Plosser would go further. This week he proposed that the Fed relinquish that authority, which was used in a potentially costly taxpayer-backed 2008 sale of Bear Stearns to JPMorgan. Plosser said the Fed bail-outs undermined the [Constitutional separation of powers] by allowing [an arm of the executive branch] to make spending decisions that rightly belong with Congress. He called for an agreement that "would eliminate the ability of the Fed to engage in bail-outs of individual firms or sectors, and place such accountability where it rightly belongs ? with the fiscal authorities." But regulators aren't exactly turning cartwheels about anything that would impair their flexibility when the next crisis comes. This, in turn, re-assures creditors who lend freely to giant firms, assuming they will be saved by the taxpayer bell should a calamity develop. The free flow of capital to too-big-to-fail firms lets them grow at the expense of smaller rivals. Until market overseers have a better grip on where the risks lie and show a willingness to act ruthlessly to stamp them out before they threaten the financial system as a whole, the mentality that fed the last bubble will live on. "Short-term stability is what's popular," said Carnell. "But you have to be willing to accept some near-term instability for the sake of systemic health, and there is no sign that they are." From corporation-watch at countercorp.org Wed Jun 30 18:07:10 2010 From: corporation-watch at countercorp.org (Corporation Watch) Date: Wed, 30 Jun 2010 15:07:10 -0700 Subject: [Corp. Watch] Corporate America's 10 Least Wanted list Message-ID: Most Hateable Companies (Not Named BP) BP is obviously the most loathed company these days, so we decided to rank the least likable firms that aren't ruining the Gulf of Mexico By David Goldman and Colin Barr (CNN, June 30) -- Hating British Petroleum (BP) is a cottage industry nowadays. A Google search on the term "I hate BP" pulls up more than 13 million hits. But it would be wrong to allow BP's folly to completely overshadow all the other corporate miscreants out there whose behavior is also worthy of your contempt. Big Business has done a great job of making people angry so far in 2010. There are companies that, at various times, soaked up billions of taxpayer dollars, jacked up fees just to show they could and provided customers with unbelievably bad service. Meanwhile their execs made off with millions. Great job, guys. So here, in our opinion, are the 10 most hateable companies that aren't named BP: #10. Microsoft -- We're so cool (well, aren't we?) For years, the software giant has been aggravating customers -- not to mention investors. Take Windows Vista: Plagued by bugs, software incompatibilities, sluggishness and annoying security alerts, the almost universally detested operating system nearly destroyed the tech giant's reputation with its customers. Then there are the countless product misfires. Windows Mobile: Flop. Zune: Seriously, do you know anyone who owns one? Through all of its problems, Microsoft CEO Steve Ballmer continues to live in the past and praise the PC -- even as multiple forecasts show mobile devices overtaking PCs in a matter of years. The company's stock has gone absolutely nowhere in the past five years and Apple now is worth more than Microsoft. The generally positive reaction towards Windows 7, Office 2010, and the new Xbox 360 have taken away some of the sting, but Microsoft is still a company that has a lot to prove to customers and investors. #9. Wal-Mart Stores -- Taking advantage of its workers It wouldn't be a most-hated list without Wal-Mart, the retailer that's synonymous with giant stores, low prices, killing off mom-and-pop stores, and worker grievances. The company has paid hundreds of millions of dollars over the years to settle suits alleging it locked workers inside stores, forced them to work through breaks, and worse. Yet those pay-outs could pale next to a class-action lawsuit claiming the company discriminated against women on pay and promotions. The company has said it does not think the claims made "are representative of the experiences" of its female workers, but lawyers say damages could run into the billions of dollars. Given the company's track record, who would even bat an eye? #8. Fannie Mae and Freddie Mac -- The biggest bail-outs are yet to come Money is pouring out of these bottomless reservoirs of taxpayer dollars at a rate rivaling that of the oil pouring into the Gulf of Mexico. Fannie Mae and Freddie Mac have received $145 billion of government capital in less than two years. In case you forgot, Fannie and Freddie needed this money because these federally chartered companies made reckless bets on housing, particularly sub-prime borrowers. Executives concede that they will need much more money as they struggle to shore up a sinking U.S. housing market. Estimates of the total cost range as high as $1 trillion. If that's not enough, the White House and Congress are so afraid of upsetting this fragile political ecosystem that they haven't even begun the process of fixing the mess. BP looks like a paragon of responsiveness by comparison. #7. Cablevision, Comcast, Time Warner -- People watch the Oscars? Maintaining a virtual monopoly for years, customers have long criticized big cable companies Comcast, Time Warner, and Cablevision for horrendous customer service. The American Customer Satisfaction Index ranked them the lowest among consumer service firms in each of the past nine years, and again in the first quarter of 2010. Recent spats with broadcast networks have only made customers loathe their cable companies even more. Earlier this year, high-profile battles between Time Warner and the Fox Network, and Cablevision and Disney, threatened to black out popular programs like "American Idol," the NFL playoffs and the Oscars for millions of subscribers. Customers were especially peeved when they found out the fees broadcasters were requesting amounted to 50 cents to $1 per subscriber. It's no wonder then that one in eight cable customers plan to scale back or completely eliminate their cable service this year, according to the Yankee Group. #6. Facebook -- Privacy, shmivacy The world's biggest social network unveiled a host of changes in April that CEO Mark Zuckerberg touted as "transformative" and would "create instantly social and personalized experiences on the Web." But there was a public outcry when it was revealed those changes allowed some third-party websites to access and store some users' personal information. Two weeks later, Facebook announced it found a bug that made some instant message conversations visible to a user's entire list of friends. Zuckerberg later apologized for not explaining Facebook's changes thoroughly enough, and for the company's lack of understanding of the public's privacy concerns. Facebook also launched easier-to-use privacy settings that made it clearer who could see each user's information. The fixes have helped calm some people down, and campaigns to get users to quit the social network failed. But users are clearly on edge about privacy, and Facebook likely can't afford another privacy mishap. #5. AIG -- The never-ending IOU Anger at the bailed-out insurer has died down some, but the company is still in hock up to its eyeballs to taxpayers, and efforts to sell off its crown jewels to raise capital aren't proceeding according to plan. More to the point, AIG is now shorthand for a debilitating syndrome that this year's financial reform push has left untreated: The urge to maintain short-term financial stability at any price. The failure to put an end to "too big to fail" means it's only a matter of time until there's another AIG to contend with. #4. WellPoint -- Sick of their act The nation's biggest health insurer is taking a bruising. It recently tried to jack up premiums by as much as 39% through its Anthem Blue Cross unit in California, at a time when many consumers aren't exactly rolling in dough. Then there were reports that the company was in the habit of automatically investigating breast cancer patients for fraud, in what some said was a ploy to deny claims. The company denies this, insisting that it was merely trying to prevent losses, but skeptics have their doubts. President Obama complained in May that "we have been held hostage to an insurance industry that jacks up premiums and drops coverage as they please," prompting WellPoint CEO Angela Braly to whine that "attacks" on the industry must end. Good luck with that. #3. Nike -- Standing by their men If this article were about the Top 10 Creeps of the Year, Tiger Woods and Pittsburgh Steelers quarterback Ben Roethlisberger would no doubt make the list -- Woods for serial adultery and, in Roethlisberger's case, alleged sexual assault. Yet Nike continues to stand by these jerks. Nike even launched a lampooned -- and, to some, tasteless -- commercial of Woods staring blankly into the camera as the voice of his late father asks him what he learned from his experience -- even though that lecture was not about cheating on his wife. The company's loyalty isn't surprising. Nike kept Kobe Bryant on its roster through the Los Angeles Lakers star's high-profile court battle over rape charges in 2003 -- charges that were eventually dropped. But Nike has proved that it wasn't shy of dropping publicly disgraced endorsers in the past. The sneaker and sports equipment maker dropped Michael Vick after his conviction in 2007 related to dog fighting. Many angry bloggers cited the Vick incident as evidence that Nike seems to care more about dogs than women. #2. AT&T -- Coolest product, lousiest service The nation's second-largest wireless carrier has long been a thorn in the side of iPhone lovers. But customers' ire towards Ma Bell has moved beyond the spotty 3G service and dropped calls that have made AT&T the butt of late-night jokes. In early June, AT&T was the first U.S. mobile provider to do away with unlimited data pricing, threatening to raise some iPhone and iPad customers' monthly bills. A week later, a security hole in AT&T's website allowed hackers to access more than 100,000 e-mail addresses of iPad 3G customers. AT&T fixed the problem, but took an entire week before the company chose to notify the affected subscribers. If all that wasn't bad enough, AT&T servers then couldn't handle the barrage of pre-orders for the iPhone 4. Apple apologized for the incident, but AT&T didn't -- it simply e-mailed customers to tell them that their phones would be late. #1. Goldman Sachs -- Needing a lawyer for God's work Life at Goldman Sachs has gotten more complicated since regulators sued the company in April for defrauding investors in a bubble-era housing debt deal. Goldman insists it's blameless, but the SEC action has spurred a race to the courthouse among those who lost money in other bubble-era deals as well. That's not all: The company has been accused of stonewalling crisis investigators too. And the fact that Goldman Sachs is once again raking in huge profits -- it earned $3.3 billion in the first quarter alone -- probably doesn't sit well with consumers either. Recalling happier days, shareholders are circling the wagons around embattled CEO Lloyd Blankfein, who put his foot in his mouth after saying, reportedly in jest, that bankers were doing God's work. Goldman investors and employees must know the slings and arrows have only just begun. From corporation-watch at countercorp.org Thu Jul 1 04:26:37 2010 From: corporation-watch at countercorp.org (Corporation Watch) Date: Thu, 1 Jul 2010 01:26:37 -0700 Subject: [Corp. Watch] "Dude, you're engaged in massive consumer fraud" Message-ID: <1EB15EB3-B3FE-4304-9D65-BD51DE5ADBDB@countercorp.org> Suit Over Faulty Computers Highlights Dell?s Decline By Ashlee Vance (NY Times, June 28) -- After the math department at the University of Texas in Austin noticed some of its Dell computers failing, Dell examined the machines. The company came up with an unusual reason for the computers? demise: the school had overtaxed the machines by making them perform difficult math calculations. Dell, however, had actually sent the university desktop PCs riddled with faulty electrical components that were leaking chemicals and causing the malfunctions. Dell sold millions of these computers from 2003 to 2005 to major companies like Wal-Mart and Wells Fargo, institutions like the Mayo Clinic, and small businesses. ?The funny thing was that every one of them went bad at the same time,? said Greg Barry, the president of PointSolve, a technology services company near Philadelphia that had bought dozens. ?It?s unheard of, but Dell didn?t seem to recognize this as a problem at the time.? Documents recently unsealed in a three-year-old lawsuit against Dell show that the company?s employees were actually aware that the computers were likely to break. Still, the employees tried to play down the problem to customers and allowed customers to rely on trouble-prone machines, putting their businesses at risk. Even the firm defending Dell in the lawsuit was affected when Dell balked at fixing 1,000 suspect computers, according to e-mail messages revealed in the dispute. The documents chronicling the failure of the PCs also help explain the decline of one of America?s most celebrated and admired companies. Perhaps more than any other company, Dell fought to lower the price of computers. It became synonymous with efficiency, outsourcing and tight inventories, and was taught at the Harvard Business School and other top-notch management schools as a paragon of business smarts and out-thinking the competition. ?Dell, as a company, was the model everyone focused on 10 years ago,? said David Yoffie, a professor of international business administration at Harvard. ?But when you combine missing a variety of shifts in the industry with management turmoil, it?s hard not to have the shine come off your reputation.? For the last seven years, the company has been plagued by serious problems, including misreading the desires of its customers, poor customer service, suspect product quality, and improper accounting. Dell has tried to put those problems behind it. In 2005, it announced it was taking a $300 million charge related in part to fixing and replacing the troubled computers. And Dell set aside $100 million this month to handle a potential settlement with the Securities and Exchange Commission (SEC) over a five-year-old investigation into its financial records, which will most likely result in federal accusations of fraud and misconduct against the company?s founder, Michael Dell. The problems affecting the Dell computers stemmed from an industry-wide encounter with bad capacitors produced by Asian PC component suppliers. Capacitors are used on computer motherboards and play a crucial role in the flow of current across the hardware. They are not supposed to pop and leak fluid, but that is exactly what was happening earlier this decade, causing computers made by Dell, Hewlett-Packard, Apple and others to break. According to company memoranda and other documents recently unsealed in a civil case against Dell in Federal District Court in North Carolina, Dell appears to have suffered far more from the bad capacitors, made by a company called Nichicon, than its rivals. Internal documents show that Dell shipped at least 11.8 million computers from May 2003 to July 2005 that were at risk of failing because of the faulty components. These were Dell?s OptiPlex desktop computers -- the company?s mainstream models sold to business and government customers. A Dell study found that OptiPlex computers affected by the bad capacitors were expected to cause problems up to 97 percent of the time over a three-year period, according to the lawsuit. As complaints mounted, Dell hired a contractor to investigate the situation. According to a filing in the lawsuit, which has not yet gone to trial, the contractor found that 10 times more computers were at risk of failing than Dell had estimated. To make problems worse, Dell replaced faulty motherboards with other faulty motherboards, according to the contractor?s findings. But Dell employees went out of their way to conceal these problems. In one e-mail exchange between Dell customer-support employees concerning computers at the Simpson Thacher & Bartlett law firm, a Dell worker states, ?We need to avoid all language indicating the boards were bad or had ?issues? per our discussion this morning.? In other documents about how to handle questions around the faulty OptiPlex systems, Dell salespeople were told, ?Don?t bring this to customer?s attention proactively? and ?Emphasize uncertainty.? ?They were fixing bad computers with bad computers, and were misleading customers at the same time,? said Ira Winkler, a former computer analyst for the National Security Agency and now a technology consultant. ?They knew millions of computers would be out there causing inevitable damage," Winkler said, "and were not giving people an opportunity to fix that damage.? Winkler served as the expert witness for Advanced Internet Technologies (AIT), which filed the 2007 lawsuit saying that Dell had refused to take responsibility for 2,000 computers it sold AIT, an Internet services company. AIT said that it had lost millions of dollars in business as a result. It declined to comment on the lawsuit. Some of the documents in the case that had been sealed under a protective order became public this month. Those documents show that after AIT complained, Dell representatives looked at the failed computers and claimed that AIT had driven many of the computers too hard in a hot, confined space. Dell?s sales representatives discussed trying to sell AIT more expensive computers as a resolution. Dell spokesman Jess Blackburn said the company would not comment on pending litigation. Lawyers for Dell deny AIT claims, and contend that AIT has cherrypicked and misinterpreted documents in the case. Dell?s lawyers wrote in a response to AIT: ?There was a Nichicon problem, and it affected different customers in different ways.? In addition to the charge, Dell extended its warranty on the systems and often replaced computers when customers complained. (In 2007, Dell re-stated its earnings for 2003 to 2006, as well as the first quarter of 2007, and lowered its sales and net income totals for that period. An audit revealed that Dell employees had manipulated financial results to meet growth targets.) But Dell did not recall the computers, so many of Dell?s OptiPlex customers may be unaware that they have problematic computers or why their computers broke. AIT says in court documents that the faulty capacitors touched off a variety of other problems that were often misdiagnosed. As a result, Dell could potentially face a raft of new complaints from some of its biggest customers. Crucially, in their complaints to Dell in the lawsuit, customers describe losing valuable information when their computers malfunctioned. Dell, by contrast, denied that that the capacitor issue had caused data loss. Dell?s supply chain had always stood out as one of its important assets. The company kept costs low by limiting its inventory and squeezing suppliers. If prices for components changed, Dell could react more quickly than its competitors, offering customers the latest parts at the lowest cost. But the hundreds of Dell internal documents produced in the lawsuit show a company whose supply chain had collapsed as it failed to find working motherboards for its customers -- including Alston & Bird, the law firm representing Dell in the capacitor suit. According to a person who saw Dell?s 2005 internal communications, company executives carefully devised a public relations policy around the OptiPlex situation. Company founder Michael Dell and CEO Kevin Rollins were told that the news media would be informed of Dell?s commitment to fix any systems that failed, that Dell was working with customers to resolve problems in the most effective manner possible, and that the problems posed no safety or data loss risk. Carey Holzman, a computer expert who investigated the capacitor problems and collected photos from people with broken motherboards, had a different take on the safety situation. ?Of course it?s dangerous,? Holzman said. ?Having leaking capacitors is a huge problem.? He found that the capacitors could cause computers to catch fire. As late as 2008, after Michael Dell had replaced Rollins and returned as CEO, Dell continued to circulate internal memorandums trying to deal with the fall-out from the capacitor situation. Dell salespeople, according to the lawsuit, fretted that technology directors at companies who used to buy from Dell could ?justify their job? by advising their companies of Dell?s PC failures and recommending the purchase of HP and Lenovo computers. To counter such lingering bad impressions, Dell salespeople were told to emphasize that the company?s business model allowed it to identify and fix problems faster than competitors. From corporation-watch at countercorp.org Thu Jul 1 16:33:47 2010 From: corporation-watch at countercorp.org (Corporation Watch) Date: Thu, 1 Jul 2010 13:33:47 -0700 Subject: [Corp. Watch] BP using $20 billion 'blood money' fund to limit future lawsuits, get off cheap Message-ID: <803F13A4-306D-42A6-92EA-396899346C3E@countercorp.org> With $20 Billion Fund, BP Limiting Liability: Feinberg (CNBC, June 20) -- The man in charge of the $20 billion British Petroleum (BP) oil-spill compensation fund said Sunday that by creating the fund, the giant oil company is taking the first steps to limit its legal liability. "Investors in BP should know that there's now an alternative to the litigation system in place," Kenneth Feinberg said in a telephone interview with CNBC on Sunday afternoon. "I think that's a really helpful sign if you're an investor." Feinberg, who was appointed last week as the independent administrator fund, said that recipients of emergency relief funds, which are being paid out in real time do not sign away their right to sue BP for damages. But, he said, those people who accept final settlements from the fund will likely be required to give up their right to sue BP. "You'll waive your right to sue," Feinberg said. "That's only fair." "It's a way for BP to avoid lawsuits in the end," Feinberg said. "And it's a way for a claimant voluntarily to get a check now. You don't have to litigate for years -- with some uncertainty about whether you'd win -- and you don't have to pay a lawyer thirty percent" of any final settlement from a lawsuit. Feinberg, whose previous experience includes overseeing the 9-11 victims fund and arbitrating executive compensation at firms that received Troubled Asset Relief Program (TARP) funds, said that only 94 of the 9-11 victims declined to take his settlement offer. Three thousand claimants accepted the deal. He said he's confident that the BP fund will similarly remove thousands of potential cases from court dockets. "The courts don't need thousands and thousands of cases," he said. "I am confident that the overwhelming majority of individuals and businesses will take my offer." Feinberg said the initial emergency-fund process could be in place for as long as three to six months, and then he will move toward final settlements. But that date is uncertain, because the oil is still flowing into the Gulf of Mexico and damage is ongoing. He heaped praise on BP for having already established a claims process -- which gives Feinberg infrastructure to build on -- but complained that "there's not enough transparency." "There's not enough sunlight as to the status of individual claims," said Feinberg, noting that thousands of claims have already been received. From corporation-watch at countercorp.org Thu Jul 1 20:48:48 2010 From: corporation-watch at countercorp.org (Corporation Watch) Date: Thu, 1 Jul 2010 17:48:48 -0700 Subject: [Corp. Watch] Big Pharma buys influence, drug sales by funding medical education Message-ID: Drug Pushers in Academia How Big Pharma "educates" American doctors By James Ridgeway (Mother Jones, June 28) -- The pharmaceutical industry has wormed its way into the hearts and minds of the medical professions in any number of ways -- wining and dining doctors, sending them off to vacation in splendid spas, and even buying their names to put on industry-written articles promoting different drugs. One little known facet of this drugster-doctor relationship is Big Pharma's role in continuing medical education (CME) programs, which are important in keeping medical professionals informed and up to date on the fast developing profession. Of the $2 billion or so spent on these programs every year, nearly half comes from the pharmaceutical business, which not-so-subtly uses the education programs to push new drugs. Last week, a conference at Georgetown University called "Prescription for Conflict" pulled together experts from academia, government, and industry to discuss the question: Should industry fund continuing medical education? The main instigator here is Dr. Adriane Fugh-Berman, a teacher at Georgetown University Medical School. Fugh-Berman long ago became the nemesis of Big Pharma with a stream of articles and talks questioning the different aspects of liaison between the drugsters and the medical profession -- and the PharmedOut.org website that seeks to educate the public on these liaisons, in part through written and video exposes. The conference at Georgetown included few critics as candid as Fugh-Berman. Those gathered included academics who hedged their criticism of industry funding, and regulators like Deputy Commissioner at the FDA Joshua Sharfstein, and Julie Taitsman, chief medical officer at the Department of Health and Human Services, who presented a list of the different laws that protect the public from industry influence. By the time they finished, I was so frustrated with government bureaucrats that I was about ready to join the Tea Party (except that they, of course, would want to do even less to control the Big Pharma greedmeisters). One blunt critique came from Paul Thacker, an investigator for Republican Senator Charles Grassley of Iowa, who has been the most visible Congressional muckraker on the doctor-drug company love-in. Thacker bluntly told the docs to get off their supercilious "Who, me?" attitude and come to grips with the scarcely believable conflicts of interest existing between the medical profession and the drug industry -- conflicts that more often than not have been to the detriment of their patients. The industry, as always, insists it isn't doing anything bad -- far from it. Big Pharma would have you believe that it's really performing a public service by trying to educate docs so they can do a better job. This conference, however, offered a different point of view, in the statement of an anonymous "pharmaceutical executive" who admitted that industry involvement in "CME has the potential for inappropriate promotional messaging and influence." The anonymous exec went on to state: "Typically, companies make CME investment decisions at annual budget meetings. The sales and marketing divisions dominate deliberations and distribution of CME cash." In deciding what institutions are to get money, he continued, "large ... influential institutions are not likely to be rejected ? Friendly institutions, as defined by access and volume [of the company's drugs that are prescribed], are more likely to receive grants than those that favor another company?s products. "Grants may also be made in support of programs including particular KOLs [key opinion leaders] whose opinions resonate with the promotional plan ? Similarly, those known for positions antithetical to the company?s promotional plan are less likely to be supported." In conclusion, the exec said, "CME contributions are commercial decisions." Too bad it takes a drug company whistleblower to make this statement of the obvious, rather than the medical organizations and government regulatory agencies who are supposed to be looking out for us. From corporation-watch at countercorp.org Fri Jul 2 19:32:52 2010 From: corporation-watch at countercorp.org (Corporation Watch) Date: Fri, 2 Jul 2010 16:32:52 -0700 Subject: [Corp. Watch] Orthodox economics is political indoctrination Message-ID: <1A069759-A96A-4DF4-B10F-ED37554F01DA@countercorp.org> Does Studying Economics Make You More Republican? By Patrick McGeehan (NY Times, June 7) -- Several academic studies have found that there is a link between education levels and civic behavior. But a new study from the Federal Reserve Bank of New York has concluded that how much economics people study can influence their political views and how they spend their spare time. The study compared the behavior of economics majors with those of business majors and other graduates of four large public universities -- Purdue, the University of North Carolina, Florida Atlantic University, and the University of Nebraska at Lincoln. The subjects attended those schools in one of three years: 1976, 1986, or 1996. Most notably, the study found that the more economics classes a person took, the more likely he or she was to be a member of the Republican Party and to donate money to a political candidate or a cause. But students of economics were no more or less likely than other graduates to have voted in the 2000 presidential election, the study found. Business majors, on the other hand, were less likely than other former students to have voted for president in 2000, or to have volunteered their time for a cause, political or otherwise. The authors of the study -- Sam Allgood, William Bosshardt, Wilbert van der Klaauw, and Michael Watts -- said they could not say > if those in different majors perceive the costs (value of time) or benefits of these activities differently. But our results clearly suggest there is more to the story than simply "being educated" -- so that what people study in college, or what they choose to study, is associated with their civic behaviors many years after they graduate." The study also gathered responses to seven questions about public policy issues, such as tariffs [i.e., protectionism], trade deficits, the minimum wage, and oil prices. On five of the seven, the authors found a link between the opinions expressed and the number of economics courses the respondents had completed. The more economics courses they had completed, the more likely they were to agree that tariffs reduce economic welfare, and that increases in the minimum wage raise unemployment, and the less likely they were to think that trade deficits adversely affect the economy, and that government should regulate oil prices. "In sum," the study said, "those taking more economics classes favored less regulation or government intervention affecting prices for specific goods and services, including wages and salaries." From corporation-watch at countercorp.org Sat Jul 3 09:02:06 2010 From: corporation-watch at countercorp.org (Corporation Watch) Date: Sat, 3 Jul 2010 06:02:06 -0700 Subject: [Corp. Watch] BP deliberately delaying clean-up to spread out costs Message-ID: <6669608C-2F3D-44A9-89F5-363972BB1094@countercorp.org> Gulf Residents Accuse BP of Skimping on Skimming Ships By Anita Lee (Sydney Morning Herald, July 3) -- From Washington to the Gulf, politicians and residents wonder why so few skimming vessels have been put to work soaking up oil from the Deepwater Horizon catastrophe. Investment banker Fred McCallister of Dallas, Texas, believes he has the answer. McCallister, vice president of Allegiance Capital in Dallas, has been trying since June 5 to offer a dozen Greek skimming vessels from a client for the clean-up. ''By sinking and dispersing the oil, BP can amortize the cost of the clean-up over the next 15 years or so -- as tar balls continue to roll up on the beaches -- rather than dealing with the issue now by removing the oil from the water with the proper equipment,'' McCallister testified earlier this week before the U.S. Senate committee on Commerce, Science, and Transportation. ''As a financial adviser, I understand financial engineering, and BP's desire to stretch out its costs of remediating the oil spill in the Gulf," he said. "By managing the clean-up over a period of many years, BP is able to minimize the financial damage as opposed to a huge expenditure in a period of a few years.'' BP spokesman Daren Beaudo denied the allegation. ''Our goal throughout has been to minimize the amount of oil entering the environment and impacting the shoreline,'' he said. But report released on Thursday by a U.S. House committee included a photo depicting ''a massive swathe of oil'' in the Gulf with no skimming equipment in sight. ''The lack of equipment at the scene of the spill is shocking," the House report concluded, "and appears to reflect what some describe as a strategy of cleaning up oil once it comes ashore versus containing the spill and cleaning it up in the ocean.'' McCallister's experience, along with the frustrations others have expressed in offering specialized equipment, contradicts pronouncements from BP and the government about the approval process. For foreign vessels, that process is complicated by a 1920 maritime law known as the Jones Act, which allows only U.S. flagged and owned vessels to carry goods between U.S. ports. Coast Guard rear admiral James Watson, who oversees the unified command catastrophe response in New Orleans, determined in mid-June that an insufficient number of U.S. skimming vessels were available to clean up oil, essentially exempting foreign vessels that could be used in the response from the Jones Act. Coast Guard admiral Thad Allen, the national incident commander, then promised expedited Jones Act waivers for any essential spill-response activities. ''Should any waivers be needed,'' he said, ''we are prepared to process them as quickly as possible to allow vital spill response activities being undertaken by foreign-flagged vessels to continue without delay.'' Captain Ron LaBrec, a Coast Guard spokesman, said 24 foreign vessels, two of them skimming vessels, had operated around the catastrophe site in federal waters without need for Jones Act waivers. He said Admiral Watson had the authority to approve operation of foreign-flagged vessels near shore, where the Jones Act comes into play. ''If the unified area commander (Watson) decides that it's a piece of equipment he needs, either BP would contract for it or he can do that himself,'' LaBrec said. ''The foreign equipment that has been offered that is useful for the response has either been accepted or is in the group of offers that is currently in the process of being accepted.'' BP spokesman Beaudo said McCallister was notified that his offer of skimming vessels had been declined because the vessels would not pick up heavy oil near shore, but McCallister said he had received communications from BP that his proposal was still under review. He sent further material on Thursday, which was accepted, to show the skimming vessels will pick up heavy oil such as that bombarding Mississippi's coast. He said the 54-foot vessels could skim high-density crude up to 5 miles off-shore. Equipment on board separates the oil from water. All the Gulf states dealing with oil have pleaded for more skimming vessels. Mississippi Governor Haley Barbour's office has ordered private shipyards to build skimming vessels because so few have been working in state waters. The Deepwater Horizon website indicates 550 ''skimmers'' were at work before bad weather suspended operations. George Malvaney, who heads the Mississippi coast clean-up effort for a BP subcontractor, said offers of skimming vessels and other equipment took time to review. He said he believed Mississippi would have a ''substantial skimming effort'' by late next week. ''Just because it's a skimmer doesn't mean it's effective,'' Malvaney said. ''There's a lot of people out there saying, 'We've got skimmers'. Some are effective, some are not. That's what we're trying to wade through right now.'' McCallister believes there is just more to it. ''Looking at it from a businessman's perspective,'' he said, ''if I am BP, assuming I don't have a conscience that would steer me otherwise, the best thing I can do for my shareholders, my pensioners, and everybody else, is to try to spread the cost of this remediation out as long as I can.''