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The Facts


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Corporate crime / THE FACTS

Corporate Crime Wave - The Facts
Corporate criminality comes in all shapes and sizes.
It is seldom punished and then only through fines.
Criminal proceedingsare rare. NI surveys the terrain.

[image, unknown]
Illustration: Image Bill Texas / Courtesy Adbusters

Great corporate crimes
[image, unknown] 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.

[image, unknown] 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

[image, unknown] 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

[image, unknown] 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.

[image, unknown] 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.

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


Does the Penalty Fit the Crime?
[image, unknown] 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

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

[image, unknown] Corporate criminals actually sentenced to prison receive on average under 36 months, while first-time non-violent drug offenders get 64 months.3

[image, unknown] 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

[image, unknown] 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

[image, unknown] 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


caught in the act 7





Deliberately overcharging the US Medicaid insurance program.

$250 million (2003)


Bribery, fraud, kickbacks, military contract and export law violations.

$100 million (1999-2001)


Biggest loser in the $1.43 billion in fines levied against the 10 major US brokerage firms for misleading investors to get investment banking business.

$400 million (2003)


Settlement of a race-discrimination suit by black employees.

$192.5 million (2001)

Credit Suisse

High-tech booster manipulated initial public offerings of stocks to benefit favoured investors.

$100 million (2001)

Daiwa Bank

Awarded by a Japanese court for losses incurred by rogue trader Toshi Iguchi.

$750 million (2000)


Biggest loser amongst European and Japanese conglomerates caught price-fixing in the vitamin market.

$500 million (1999)

Royal Caribbean Cruises

For routinely dumping waste oil and hazardous chemicals at sea and then lying about it.

$18 million

TAP Pharmaceuticals

For fraudulent pricing and marketing conduct (kickbacks to doctors) in relation to its prostate-cancer drug Lupron.

$875 million (2001)


World's largest retailer caught forcing employees to work unpaid overtime.

$50 million (2000)


Types of Crime

[image, unknown] Exxon Corporation paid $125 million in claims for the 1991 Valdez oil spill for direct and unforeseen damage to the Alaskan wilderness and fisheries. It is contesting another five billion dollars in punitive damages.8

[image, unknown] The Norilsk Mining Company produces a seventh of all factory pollution in Russia – 2 million tons of waste gas and 85 million cubic meters of dirty water annually. Effects can be felt in Canada and Norway. Life expectancy of factory workers in Norilsk in sub-Arctic Siberia is 10 years below the Russian average.9

[image, unknown] Between February 2000 and August 2001, DLH Nordisk, an importer headquartered in Denmark, purchased its mahogany from five companies at the forefront of an illegal chain of supply in Brazil.10

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


Peddling junk– dangerous products
[image, unknown] In 2000 Johnson and Johnson were forced to stop selling their heartburn drug Propulsid after it was connected to 80 deaths.3

[image, unknown] In August 2001 Bayer withdrew its highly popular cholesterol drug Baycol, which was linked to 100 deaths.3

[image, unknown] 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

[image, unknown] Over 100 people in the US died in accidents linked to Firestone tire separations that caused their vehicles, mostly Ford Explorers, to crash.14


Peter Frischmuth / Panos
Peter Frischmuth / Panos

Disposable employees – death on the job
[image, unknown] 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.

[image, unknown] 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.

[image, unknown] 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

[image, unknown] 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

[image, unknown] 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
[image, unknown] 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

[image, unknown] 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.

[image, unknown] 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

[image, unknown] 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

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


Greasing the wheels – bribery
[image, unknown] 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

[image, unknown] 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

[image, unknown] In July 2003 Xerox reported certain ‘improper’ payments totalling $700,000 from their Indian subsidiary to government officials.

[image, unknown] 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

1 ‘The Street Car Conspiracy’, New Electric Railway Journal, Autumn 1995.
2 The Nation, 20 March 2002
3 Huffington, Arianna, Pigs at the Trough, Crown, New York, 2003.
4 National Post, 29 April 2003.
5 World Environment News, Planet Ark, 4 April 2003.
6 www.citizenworks.org.
7 George Draffen, www.endgame.org.
8 www2.exxonmobil.com/Corporate/Newsroom/Newsreleases/xom_nr_061202.asp
9 ‘Hell on Earth’, Nick Walsh, The Guardian, 18 April 2003.
10 www.archive.greepeace.org
11 www.transparency.org
12 ‘British drugs giant in Italian bribery investigation’, Sophie Arie, 13 Feb 2003, www.guardianunlimited.com
13 www.theprogressreport.org
14 www.citizenworks.org
15 ICFTU Press release 8 May 1998 and 29 May 2002.
16 www.global-unions-org 28 November 2000.
17 China Labour Bulletin, July, 2002.
18 www.vthc.org.au
19 Multinational Monitor, December 2002.
20 On the Net Business News, www.rediff.com, May 1999

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