Corporate Crime Wave - The Facts

Great Corporate Crimes

Anger with Union Carbide sweeps India. Photo: Gisele Wulfsohn / Panos

• Fifty years ago British researchers Doll and Hill established the link between tobacco and lung cancer. Smoking is also tied to heart disease, emphysema and bronchitis. The tobacco industry’s campaign of disinformation and denial has suppressed evidence and tried to avoid paying damages and health care costs for their millions of victims worldwide.
• In 1949 several US companies, including General Motors, Standard Oil of California and Firestone Tire and Rubber, were convicted of purposely destroying eco-friendly inner-city rail transit systems in more than 100 US cities. The companies were each fined $5,000 and one executive was fined a dollar.¹
• Since the 1920s the lead-additive industry has hidden information about the toxic effects of lead even though less harmful substitutes were available. Despite the clearly established danger – particularly to children – leaded gasoline is still exported to eastern Europe and the global South. Some 94 per cent of gasoline sold today in Africa contains lead.²
• On 3 December 1984 the gas leak at a Union Carbide agrochemical plant in Bhopal, central India, caused the death of 8,000 residents and caused permanent and debilitating injuries to another 150,000 in the surrounding areas.
• Major pharmaceutical companies have refused either to research or make drugs available for the deadly diseases of the global South and the poor in general – HIV in Africa, malaria, river blindness, tuberculosis – because the poor can’t afford to pay for them.

Does the Penalty fit the crime?

Anti-corruption campaign poster, Cambodia, 2001. H Davies / Exile Images

• Between 1992 and 2002 the US Securities and Exchange Commission turned 609 corporate criminal cases over to the Justice Department but this resulted in only 87 jail terms.³
• Corporate criminals actually sentenced to prison receive on average under 36 months, while first-time non-violent drug offenders get 64 months.³
• The $1.4 billion in combined penalties to 10 investment banks arising out of the US stock scandal amounts to 3 per cent of their 2003 earnings – a record poor year for the industry. Stock analyst Jack Grubman got a $15 million fine but made $67.5 million between 1999 and 2002.⁴
• Japan’s worst nuclear accident in 1999 resulted in suspended sentences for six executives who admitted negligence. Two workers were killed and residents of Tokaimura were exposed to radiation from the JCO Co refinery. The company was fined $8,500.⁵
• The FBI estimates all robbery in the US costs $3.8 billion a year compared to between $100 and $400 billion for healthcare fraud, $40 billion for auto-repair fraud and $15 billion for securities fraud. The 1980s’ US Savings and Loan swindle is alone estimated to have cost up to $500 billion.⁶
• The FBI estimates all robbery in the US costs $3.8 billion a year compared to between $100 and $400 billion for healthcare fraud, $40 billion for auto-repair fraud and $15 billion for securities fraud. The 1980s’ US Savings and Loan swindle is alone estimated to have cost up to $500 billion.⁶

Oil spill: the death toll mounts. Graeme Ewens / Panos

Peddling junk– dangerous products

• In 2000 Johnson and Johnson were forced to stop selling their heartburn drug Propulsid after it was connected to 80 deaths.³
• In August 2001 Bayer withdrew its highly popular cholesterol drug Baycol, which was linked to 100 deaths.³
• In the US companies were forced to recall 344 unsafe products in 2001 alone. These included turkey meat, child car seats and exercise machines.³
• Over 100 people in the US died in accidents linked to Firestone tire separations that caused their vehicles, mostly Ford Explorers, to crash.¹⁴

Disposable employees – death on the job

Peter Frischmuth / Panos

• According to the International Labour Organisation two million workers die either on the job or of work-related injuries every year. Cancer is the leading workplace killer with the asbestos industry alone claiming 100,000 lives annually.
• In the UK over 2000, workers and members of the public have been killed in work-related accidents between 1997 and 2003 – including four major train wrecks.
• Factory fires – 10 May 1993 188 workers burn to death at the Kadar Industrial Toy Company in Bangkok, Thailand.15 25 November 2000 48 workers burn at the Chowdhury Knitwear and Garments Ltd factory in Shibpur Bengladesh.¹⁶ 24 May 2002 43 workers die in a blaze at the Shree Jee International shoe factory in Agra, India.¹⁵
• Mine disasters – Over a three-week period in June/July 2002 mine explosions in China killed 115 miners (Jixi Coal Mine, 20 June), 46 miners (Yixingzhai Gold Mine 22 June) and 39 miners (Faqiang Coal Mine, 4 July).¹⁷
• The oil giant Esso was officially blamed for a ‘grievous, tragic and avoidable’ 1998 gas explosion that killed two workers and injured eight others at its Longford site in southern Australia. ¹⁸

Cooking the books – fraud

The Singapore derivatives market – not for the faint of heart. Chris Stowers / Panos

• In 1981 there were a total of three earnings ‘restatements’ by US corporations. By 2002 there were over 1,000 of these forced exposures of fraudulently optimistic corporate results.³
• Offshore (tax avoidance) strategies using tax havens as corporate addresses cost the US Treasury $70 billion a year.3 Oxfam estimates a $50-billion loss to developing countries.
• Some 153 US energy companies are under investigation for ‘round-tripping’ – booking income by selling energy to another company who sells it back at the same price. Round-tripping also makes the books look better in swaps of excess fibre optic capacity and internet advertising.¹⁹
• Since the deregulation of Indian capital markets in 1992 some 3,500 Indian companies and 250 billion rupees of investment have disappeared off the Mumbai Stock Exchange. Fraud is alleged in many of these disappearances.²⁰

Greasing the wheels – bribery

• In 2002 the Canadian engineering firm Acres International was convicted of bribery to promote a dam project in Lesotho and fined $2.2 million.¹¹
• The British pharmaceutical giant GlaxoSmithKline is under investigation in Germany (2002) and Italy (2003) for bribing doctors to prescribe its drugs with everything from cash payments to luxury travel and World Cup tickets.¹²
• In July 2003 Xerox reported certain ‘improper’ payments totalling $700,000 from their Indian subsidiary to government officials.
• ExxonMobil and other oil companies are under investigation for up to $500 million in bribes to the President of Equatorial Guinea – Teodoro Obiang Nguema Mbasogo.¹³