Price gougers, polluters and union-busters-oh my!
It is never easy choosing the 10 Worst Corporations of the Year. There are always more deserving
nominees than can possibly be recognized, and one of the greatest challenges is the directive not to select repeat recipients from the previous year.
The no-repeat rule forbids otherwise-deserving companies-like Bayer, Boeing, Clear Channel and Halliburton-from returning to this list. Keeping that in mind, here are the 2004 winners-in alphabetical order.
1. Abbott Laboratories
Webster's defines "chutzpah" as: 1. unmitigated effrontery or impudence; gall. 2. audacity; nerve.
In the next edition, it may want to add: 3. See Abbott.
In December 2003, the company raised
the US price of its anti- AIDS drug Norvir (generic name ritanovir) by 400 percent.
Norvir has become an increasingly important treatment in recent years. Scientists have discovered that while
Norvir is generally too toxic for safe use as a protease inhibitor (one category of anti-AIDS drugs), in lower doses it works well as a booster to increase the efficacy of other protease inhibitors. As a result, Norvir is frequently prescribed along with other protease inhibitors.
The Norvir price increase does not apply
when the product is used as a booster with
another Abbott protease inhibitor (in the combined product Kaletra). Thus the impact of the
Norvir price increase is to make Kaletra far cheaper than rival combinations of Norvir and non-Abbott protease inhibitors.
Norvir is
especially important for patients in need of a "salvage therapy" of new and powerful treatments because their virus has become resistant to other medicines.
Lynda Dee, co-chairwoman of the AIDS Treatment Activists Coalition's Drug Development Committee, called the price increase for these patients, who may have no
choice as to the medications
they need to survive, "pharma terrorism perpetrated against the patients who need new drugs the most."
Abbott justified the price spike by its need to raise money for research and development. "New medicines cost hundreds of millions of dollars to develop," Jeffrey Leiden, president and chief operating officer of Abbott's Pharmaceutical Products Group, told a National Institutes of Health meeting in May.
Moreover, Leiden said, the price increase
does not apply to federal AIDS drug programs, which cover 54 percent of people with HIV/AIDS. Price increases only apply to private insurers and to uninsured individuals, who Abbott says can get the product for free under a special program it operates.
Making the Abbott price jump especially pernicious in the eyes of consumer advocates was that the drug was invented on a grant from the US federal government.
2. American International Group, Inc.
When the world's largest insurer, American International Group, Inc. (AIG), was charged by federal prosecutors, it quickly cut a deal with the Justice Department that ended a criminal probe into its finances with a deferred prosecution agreement.
In a deferred prosecution, the corporation accepts responsibility, agrees not to contest the charges, agrees to cooperate, usually pays a fine and implements changes in corporate structure
and governance to prevent future wrongdoing. If the company abides by the agreement for a period of time then the prosecutors will drop the criminal charges.
(In a non-prosecution agreement-such as the one secured by Merrill Lynch in 2003 with New York Attorney General Eliot Spitzer-prosecutors agree not to bring criminal charges in exchange for corporate fines, cooperation and a change in corporate structure and governance.)
As for AIG, federal officials in October filed a criminal complaint charging AIG-FP PAGIC Equity Holding Corp. (an AIG subsidiary), with violating the federal securities laws, by aiding and abetting PNC Financial Services Group, Inc. (PNC) in connection with a fraudulent transaction to transfer $750 million in mostly troubled loans and venture capital investments from subsidiaries off of its books.
As part of the agreement, AIG and two subsidiaries will pay an $80 million penalty, and $46 million into a disgorgement fund maintained by the SEC. Earlier this year, the Department dismissed the criminal complaint against a PNC subsidiary after the company fulfilled its deferred prosecution agreement obligations.
Merrill, AIG and PNC are three of 10 major corporations that have settled serious criminal charges with deferred prosecution, no prosecution or de facto no prosecution agreements over the last two years.
3. Coca-Cola
includes extensive information on Coke and its bottlers' operations in Colombia. For example, an April 2004 report from a fact-finding delegation headed by New York City Council Member Hiram Monserrate contends "there have
been a total of 179 major human rights violations of Coca-Cola's workers, including nine murders. Family members of union activists have been abducted and tortured. Union members have been fired for attending union meetings. The company has pressured workers to resign their union membership and contractual rights, and fired workers who refused to do so."
The group also heard "persistent
allegations that paramilitary violence against workers was done with the knowledge of and likely under the direction of company managers."
These allegations were the basis of a 2001 lawsuit by the International Labor Rights Fund and the United Steelworkers of America in US courts against Coke on behalf of a Colombian trade union and union leader victims of violence at Coke bottling facilities in Colombia.
In 2003, a federal court dismissed the claims against Coke; the plaintiffs have since refiled their complaint.
Coke's statement on the Columbia situation, found on its website, reads, in part, as follows: "The pervasive violence in Colombia, and the targeting of union members by its perpetrators, has, unfortunately, touched The Coca-Cola Company in a very personal way. Employees of our Company and bottling partners in Colombia have been threatened, kidnapped, and some have even been murdered...In a lawsuit in Colombia, the court concluded that the bottler not only took proper steps to initiate investigation by the authorities, but went further to enhance its workers' safety by heightening security at the plant."
4. Dow Chemical
On Dec. 2, 1984, 27 tons of lethal gases leaked from Union Carbide's pesticide factory in Bhopal, India, immediately killing an estimated 8,000 people and poisoning thousands of others.
Today in Bhopal, at least 150,000 people, including children born to parents who survived the disaster, are suffering from exposure-related health effects such as cancer, neurological
damage,
chaotic menstrual cycles and mental illness. Over 20,000 people are forced to drink water with unsafe levels of mercury, carbon tetrachloride and other persistent organic pollutants and heavy metals.
Activists from around the world-including human rights, legal, environmental health and other experts-mobilized this year to demand that Dow Chemical, the current owner of Union Carbide, be held accountable.
(Union Carbide and its former chairman, Warren Andersen, were charged with manslaughter for the deaths at Bhopal, but they refuse to appear before the Indian courts.)
Here is part of Dow's statement on Bhopal:
"While Dow has no responsibility for Bhopal, we have never forgotten the tragic event and have helped to drive global industry performance improvements. This is why Responsible Care was created and why these standards are essential for the protection of our employees and the communities where we live
and work. Our pledge and our commitment is the full implementation of Responsible Care everywhere we do business around the world."
The people of Bhopal disagree that Dow has no responsibility.
A few other things about Dow Chemical:
• It's also the manufacturer of numerous other pesticides and herbicides, not to mention the silicon used and found to be harmful in breast implants.
• It managed Rocky Flats from 1952 to 1975.
• The Metal Trades Department of the AFL-CIO says Dow undertook an "unapologetic campaign to rid itself of unions" starting in the 1960s.
• The Tittabawassee, a river and river basin in Dow's home town of Midland, Michigan, has been polluted by Dow.
• In the 1970s, Dow's Texas operation put more than 4.5 billion gallons of wastewater per day into the Brazos River.
• A 1981 Philadelphia Inquirer story revealed Dow Chemical paid a University of Pennsylvania dermatologist to test dioxin on prisoners at Holmesburg Prison in Philadelphia in 1964.
5. GlaxoSmithKline
In 2003, United Kingdom health experts advised that children should not be prescribed Paxil, an anti-depressant made by GlaxoSmithKline.
In February 2004, the BBC program
Panorama
reported on internal documents from GlaxoSmithKline (GSK) showing the company knew that the antidepressant Paxil (generic name: paroxetine) could not be proved to work in children.
In March 2004, days after the Medicines and Healthcare Products Regulatory Agency (the UK's
drug regulatory agency) advised that Paxil dosages should be kept to low levels, an expert participating in the Paxil review resigned, claiming the agency had possessed evidence for more than a decade suggesting that Paxil dosages should be kept low, but failed to act on it.
By this time, the story had started to heat up in the US. Dr. Andrew Mosholder, of the FDA Office of Drug Safety, had conducted an analysis of clinical trials related to antidepressant use in children, and found a heightened risk of suicidality. But his superiors refused to let him present his findings to an advisory panel convened to look at the issue in the wake of the British action.
According to an investigation by US Sen. Charles Grassley, R-Iowa, the FDA actually tried to get Mosholder to present data that deceptively under-represented the risk of suicidality.
Although Paxil is not approved by the FDA for prescription to children, doctors routinely write "off-label" prescriptions for the product for children, a practice permitted under FDA rules. More than two million prescriptions for Paxil were written for children and adolescents in the United States in 2002.
In June, New York State Attorney General Eliot Spitzer filed suit against Glaxo, charging the giant drug maker with suppressing evidence of Paxil's harm to children and misleading physicians.
GSK responded in a statement that it "acted responsibly in conducting clinical studies in pediatric patients and disseminating data from those studies. All pediatric studies have been made available to the FDA and regulatory agencies worldwide."
In August, the company settled with Spitzer for $2.5 million, plus a commitment to maintain the policy of posting clinical trial results, for all drugs marketed by the company.
In October, the FDA ordered Glaxo and other SSRI makers to include a "black box" warning with their pills. The warning says SSRIs double the risk of suicide in children, though some medical researchers say the number should be higher.
6. Hardee's
When Hardee's introduced the Thickburger this year, Jay Leno joked that it was being served in little cardboard boxes shaped like coffins.
With other major fast food outlets moving to green salads, Hardee's, a subsidiary of CKE Restaurants, Inc. of Carpinteria, California, revels in big beef. From Hardee's press release of November 15, 2004:
"Now Hardee's is introducing the mother of all burgers-the Monster Thickburger™. Weighing in at two-thirds of a pound, this 100 percent Angus beef burger is a monument to
decadence, yet is still a throwback, as it features lots of meat, cheese and bacon on a bun."
Eating one Thickburger is like eating two Big Macs or five McDonald's hamburgers. Add 600 calories worth of Hardee's fries and you get more than the 2,000 calories that many people should eat in a whole day, according to Michael Jacobson of the Center for Science in the Public Interest.
The Federal Trade Commission earlier this year charged KFC Corporation, owner of the Kentucky Fried Chicken national restaurant chain, with making false claims in a national television advertising campaign about the relative nutritional value and healthiness of its fried chicken.
KFC had said that eating fried chicken, specifically two Original Recipe fried chicken breasts, is better for a consumer's health than eating a Burger King Whopper.
The FTC says that while it is true that the two fried chicken breasts have slightly less total fat and saturated fat than a Whopper, they have more than three times the trans fat and cholesterol, more than twice the sodium and more calories.
KFC settled the case.
There will be no law enforcement action brought against Hardee's. Hardee's makes no pretensions that the Hardee's Thickburger is good for you. The fast-food pusher's new advertising campaign is straight up: "Be afraid. Be very afraid."
7. Merck
David Graham, a Food and Drug Administration drug safety official, called it "maybe the single greatest drug-safety catastrophe in the history of this country."
Graham was referring to the risks of taking Vioxx, a Merck-made arthritis drug.
Testifying before a Senate committee in November, Dr. Graham put the number in the United States
who had suffered heart attacks or stroke as result of taking Vioxx in the range of 88,000 to 139,000. As many as 40 percent of these people died as a result, Graham said.
The unacceptable cardiovascular risks of Vioxx were evident as early as 2000-a full four years before the drug was finally withdrawn from the market by its manufacturer, Merck, according to a study released by the British medical journal
Lancet
.
"This discovery points to astonishing failures in Merck's internal systems of post-marketing surveillance, as well as to lethal weaknesses in the US Food and Drug Administration's regulatory oversight,"
Lancet
editors wrote.
Merck withdrew Vioxx Sept. 30, 2004 after a company-sponsored trial found a doubling of the risks for heart attack or stroke among those who took the medicine for 18 months or more. The company says it disclosed all relevant evidence on Vioxx
safety as soon as it acquired it and pulled the drug as soon as the September clinical trials gave conclusive evidence of the drug's dangers.
However, the
Lancet
findings came in the wake of new disclosures that suggest Merck was fully aware of Vioxx's potential risks by 2000. Further, The Wall Street Journal revealed emails that confirm Merck executives' knowledge of their drug's adverse cardiovascular profile-the risk was "clearly there," according to one senior researcher.
Dr. Graham, the federal drug-safety reviewer, continues to seek to publish his study demonstrating the dangers of Vioxx, but he has been delayed by top officials at the Food and Drug Administration. At the Senate hearing, Graham also said that at least five medications currently on the market-Meridia, Crestor, Accutane, Bextra and Serevent-pose such risks that their sale ought to be limited or stopped.
8. McWane
A three-part New York Times series exposed the egregious safety record of McWane Inc., a large, privately held Alabama-based sewer and water pipe manufacturer.
Nine McWane employees have
lost their lives in workplace accidents since 1995. More than 4,600 injuries were recorded among the company's 5,000 employees.
According to the Times, McWane pulled the wool over the eyes of investigators by stalling them at the factory gates and then hiding defective equipment. Accident sites were altered before investigators could inspect them, in violation of federal rules.
When government enforcement officials did find serious violations, "the punishment meted out by the
federal government was so minimal that McWane could treat it as simply a cost of doing business."
"After a worker was crushed to death by a forklift that apparently had faulty brakes, an Occupational Safety and Health Administration investigation found defects in all 14 of the plant's forklifts, including the one involved in the death," the Times reported. The fine was just $10,500. Employers are further protected by the workers' compensation system, which can make it hard for victims to sue."
According to the Times, in one McWane oven explosion that killed an employee, Frank Wagner, McWane "hired a well-connected lobbyist to lean on Dennis Vacco, then New York
State's attorney general, and ended up with a settlement in which it did not admit responsibility for the death."
The experts who looked at the case determined that the explosion that killed him was the result of reckless criminal actions by McWane, which was operating a cast-iron foundry in Elmira, New York, where Wagner worked.
"The evidence compels us to act," the prosecution team wrote in a confidential memorandum to Vacco in 1996. The team urged him to ask a grand jury to indict McWane
and its managers on manslaughter and other charges. A grand jury inquiry, senior investigators believed, could have taken them up the corporate ladder, the Times reported.
But Vacco never sought an indictment against McWane for any crime.
Only after an unusual intervention by the US attorney in Buffalo, who threatened federal charges, did McWane agree to plead guilty to a state felony and pay $500,000.
As the Times series showed, in plant after plant, year after year, "McWane workers have been maimed, burned, sickened and killed by the same safety and health failures."
McWane says it is changing. "Over the last several years, our Company has embarked on significant changes that are focused on setting the industry standard in employee safety, health and environmental programs," asserts a May 2004 report from the company on health and safety.
9. Riggs Bank
An explosive report from the US Senate Permanent Subcommittee on Investigations of the Committee on Governmental Affairs, issued in July, revealed that Riggs Bank in Washington, DC, illegally operated bank accounts for former Chilean dictator Augusto Pinochet and routinely ignored evidence of corrupt practices in managing more than 60 accounts for the government of Equatorial Guinea.
An ongoing internal investigation by Riggs reveals that the bank's dealing with Pinochet dates back to 1985,
while the Chilean despot remained in power, according to a November Washington Post report.
Riggs has not so far been cited for civil or criminal violations in connection with the Pinochet money-laundering scheme. In May, the bank paid $25 million in fines in connection with money-laundering violations related to the Equatorial Guinea and Saudi Arabian governments.
The Permanent Subcommittee on Investigations report found that from 1994 until 2002 Riggs opened at least six accounts and issued several certificates of deposit (CDs) for Pinochet while he was under house arrest in the UK and his assets were the subject of court proceedings. The aggregate deposits in the Pinochet accounts at Riggs at the time ranged from $4 million to $8 million.
According to the report, high bank officials solicited Pinochet's business, the bank helped Pinochet set up offshore shell corporations and open accounts in the names of those corporations to disguise his control of the accounts, altered the names of his personal accounts to disguise their ownership and otherwise worked to help him hide his money flow.
Although these activities seem to violate US banking rules, the Office of the Comptroller of the Currency did not take enforcement action against the bank after it learned of these matters in 2002.
Pinochet is not the only dictator for whom Riggs undertook money laundering. Equatorial Guinea is a small, oil-rich West African country dominated by a dictator, President
Teodoro Obiang Nguema Mbasago. Obiang, his family and cronies live a life of luxury, while the rest of the country remains desperately poor.
The Permanent Subcommittee on Investigations report found that from 1995 until 2004, Riggs Bank administered more than 60 accounts and CDs for the Equatorial Guinea government, its officials or family members. Combined, these accounts represented the largest relationship at Riggs Bank, with aggregate deposits at the time ranging from $400 to $700 million.
Riggs does not deny these activities took place, and its internal investigation is continuing. A number of Riggs employees involved have been fired or demoted.
10. Wal-Mart
Wal-Mart faces a class action lawsuit on behalf of 1.6 million women workers, alleging rampant employment discrimination at Wal-Mart.
The Service Employees International Union has announced plans to spend $25 million a year with the ultimate goal of unionizing Wal- Mart, the largest private US employer.
And the company-which has already lost more than 200 site fights-faces an even more intensified resistance to its efforts to locate new stores as it increasingly seeks to enter
markets in more urban areas. Nonetheless, the company remains the colossus of US-and increasingly global-retailing. It registers more than a quarter trillion dollars in sales. Its revenues account for 2 percent of US Gross Domestic Product.
A February 2004 report issued by US Rep. George Miller, D-Calif., encapsulated the ways that Wal- Mart squeezes and cheats its employees, among them: blocking union organizing
efforts, paying employees an average $8.23 an hour (as compared to more than $10 for an average supermarket worker), allegedly extracting off-the-clock work and providing inadequate and unaffordable healthcare
packages for employees.
In California, in November, the company staved off, by a 51-to-49 percent margin, a proposition that would have required every large and medium employer in the state to provide decent healthcare coverage for their workers, with the employer contribution set at a minimum of 80 percent of costs.
Wal-Mart dumped a half million dollars into the anti-Proposition 72 campaign a week before the vote.
