Will the Pope tell Gucci and Prada to please pay their taxes? (Mick Jagger and Microsoft too!)

Posted by Tonya Hennessey on August 14th, 2007

In the next few days Pope Benedict plans to issue his second encyclical – the most authoritative statement a pope can issue – which apparently will focus on social and economic inequity in a globalized economy. In the statement, he is expected to denounce the use of tax havens as socially-unjust and immoral in cheating the greater well-being of society.

According to the Times (UK) newspaper, the statement may have been inspired by a recent request to the Vatican by Romano Prodi, the Italian prime minister, who urged church leaders to speak out on tax evasion.

Prodi’s government plans to seek taxes on undeclared earnings of €60 million ($84 million) by Valentino Rossi, the world motorcycling champion. How about also asking Gucci and Prada, some of Italy’s best known fashion designers, to move their tax headquarters back to home turf (from the tax-saving Netherlands, see below) and contribute to Italy’s budget deficit?

As global capital has progressively unbound itself from traditional national constraints, excessive off-shore wealth seemingly knows no shame, with wealthy individuals and corporations setting up front companies abroad to avoid paying taxes, supported by a new class of financial services specialists.

While Caribbean island resorts are often assumed to be the places where the wealthy stash their money away for retirement, some European countries (and I don't mean Lichtenstein) have also newly seen the light.

A favored location is the Netherlands -- check out the November 2006 report by Dutch-based SOMO, "The Netherlands: A Tax Haven?" The report is the first comprehensive analysis of the complex system of double tax treaties, tax incentives, the relationship with the Netherlands Antilles and the now 20,000 and counting mailbox corporations operating within the borders of this small European nation. According to SOMO, "examples of companies with tax-induced headquarters in the Netherlands are Volkswagen, IKEA, Gucci, Pirelli, Prada, Fujitsu-Siemens, Mittal Steel, and Trafigura."

The issue has been in the news, mostly because big name musical artists (like Bono and Mick Jagger) and famous athletes (think David Beckham) have also been getting in on the act. When it comes to evading taxes on lucrative licensing and royalties, the Netherlands is fast emerging as the hip tax haven of choice because Holland levies no tax on earnings royalties.

In an article titled “Gimme Tax Shelter”, the New York Times reported on this in February 2007 as newly public documentation surrounding the assets and wealth-transfer plans of the Rolling Stones demonstrated that the wily rockers have paid a mere 1.5% (as opposed to the British tax rate of 40%), or $7.2. million, on $450 million in earnings routed through the land of tulips with the help of their company Promogroup.

'The Caribbeans are thinking about trading profits, not royalties, so the smaller European countries like Holland have had to be creative, tax-wise,'' David Pullman, an investment banker in New York who caters to entertainers and athletes told the New York Times. ''They are going for the high-end stuff and don't want to be seen as shady like some Caribbean haven.''

More scandalous was the 2006 revelation that super-rockers U2 had transferred their song-publishing catalog from Ireland to Holland's Promogroup, in order to avoid a change in Irish tax law introducing taxes on royalties earned in excess of 250,000 Euros per year. Much ado was made of Bono's unwillingness to pony up his share of the tax obligation in service of the global debt relief and poverty eradication for which he so famously advocates.

Another European country that has figured they can make money out of tax evasion is Ireland -- whose “Celtic Tiger” growth is largely the product of charming huge corporations like Dell, Google, Microsoft and Sun Systems to move much of their intellectual property patents over to subsidiaries in the land of Eire -- where the corporate tax rate is 12.5%, but no taxes are charged on royalties.

Microsoft has been a major beneficiary of this scheme for the last four or so years -- it slashed billions in tax receipts to the U.S. Treasury -- by setting up subsidiaries Round Island One and Flat Island Company in Dublin. Recently Microsoft took things a step further by re-registering the two patent-holding entities as unlimited liability companies which have no obligation to file their accounts publicly.

Indeed, the Sunday Independent (Ireland) reports that Ireland was the most profitable location for U.S. multinationals between 1998-2002, during which the “the profits of US companies with Irish facilities doubled.”

The Irish law exempting patent income from taxes also provides a sweet loophole for corporate executive pay. In November 2005 it was reported that Dell Ireland’s top executives were reaping the fruits of sumptuous pay, and saving the company taxes: between them the senior management shared nearly $3.8 million in tax-free dividends since 2003.

These corporate tax breaks have earned Ireland the distinction of being hailed “the world’s 7th freest economy” in 2007 by the conservative, DC-based Heritage Foundation, which says that “Ireland’s economy is 81.3 percent free.”

Most of this tax evasion, is sadly, quite legal. But ordinary citizens around the world who think that Microsoft and Mick Jagger should pay taxes, can take heart from the fact that some members of the global elite have been punished -- take the recent conviction of media mogul Conrad Black of Hollinger International. In July, Canadian and U.S. press reported on the lawsuits, corporate and civil, that are following his conviction for obstruction of justice and mail fraud, seeking remuneration from assets, including purported millions stashed in the Caribbean:

…"Not satisfied with receiving $20 to $40 million a year in excessive management fees, Black and the Ravelston insiders then directed significant portions of those fees to Moffat Management and Black-Amiel Management, which were empty shell companies registered in Barbados," a special report from Hollinger’s board stated.

"Even though these entities did nothing to earn fees, and did not have either employees or real operations, paying management fees to them on the pretense that they performed services allowed the recipients the prospect of transforming a portion of the enormous management fees that would otherwise most likely have been taxable in Canada (where the payments were received), or possibly the U.S. (where services were largely performed), into dividends received in Barbados (where nothing occurred)," the report stated.

NOTE: For more good examples of what tax journalist Lucy Komisar calls the “corporate bag of tricks called profit laundering,” check out the Tax Justice Network, and the Komisar Scoop -- who just revealed where did Rupert Murdoch get $5 billion to buy up the Wall St. Journal? (Answer: A collection of 800 offshore companies that helped him cut corporate taxes to 6%!)

CorpWatch stories on Iraq & New Mexico get mainstream coverage

by Pratap Chatterjee

We're gratified to see that the U.S. Congress and the mainstream media are picking up on some of the issues that CorpWatch has been digging into over the last couple of years. For example, there was a hearing on July 26th, 2007 in Representive Waxman's committee (the House Oversight and Government Reform Committee) on a topic that CorpWatch broke a year ago February: the use of trafficked Asian labor to build the US Embassy in Baghdad. Our original story can be seen here: Baghdad Embassy Bonanza Kuwait Company's Secret Contract & Low-Wage Labor by David Phinney, Special to CorpWatch February 12th, 2006 The two witnesses who testified yesterday were first featured in an extensive CorpWatch article in October 2006. See A U.S. Fortress Rises in Baghdad: Asian Workers Trafficked to Build World's Largest Embassy by David Phinney, Special to CorpWatch October 17th, 2006 To read the article from today's Washington Post about yesterday's hearing, go here: Foreign Workers Abused at Embassy, Panel Told By William Branigin, Washington Post Friday, July 27th, 2007 In related matters, we're also pleased to see that the Special Inspector General for Iraq Reconstruction (SIGIR) has been looking into why Bechtel did such a bad job in Iraq. (Answer: the fault lies quite heavily with the way that the U.S. government managed the contract.) Good coverage of the SIGIR report can be found in yesterday's New York Times. IRAQ: Bechtel Meets Goals on Fewer Than Half of Its Iraq Rebuilding Projects, U.S. Study Finds By James Glanz, New York Times July 26, 2007 But one thing: we'd like to note that SIGIR only looked at the second phase of Bechtel's work, what about the first phase? We ran a story on this some 40 months ago: Bechtel Fails Reconstruction of Iraq's Schools by Karim El-Gawhary, Special to CorpWatch December 2nd, 2003 Back on the U.S. home front we are also glad to see that the New York Times is following the story of the Sithe Global Power's proposed coal-fired power plant at Desert Rock in New Mexico on Diné lands: Navajos and Environmentalists Split on Power Plant By Felicity Barringer, New York Times July 27th, 2007 To get a better feel for how the company has divided the traditional Diné community, do read our story from April of this year: Speaking Diné to Dirty Power: Navajo Challenge New Coal-Fired Plant by Jeff Conant, Special to CorpWatch April 3rd, 2007

Digging for Dirt in the DRC?

Posted by Amelia Hight

Billy Rautenbach, a South African mining kingpin, was deported from Lubumbashi airport in the Democratic Republic of Congo (DRC) on July 18th. “He was accused of fraud, theft, corruption and violating commercial law [the expulsion document] said. He was persona non grata. He would have to leave,” writes Ben Laurence in the Sunday Times (UK).

Best known in South Africa and Botswana for his activities in assembling Hyundai cars, Rautenbach faces hundreds of charges of fraud, corruption and other crimes in his home country of South Africa (the reasons cited in the documents prepared for his deportation last week). South Africa is currently considering asking Zimbabwe to extradite him to stand trial.

But Rautenbach was also once a powerful man in the DRC. He ran Gecamines, the DRC’s state-owned copper mining company, from 1998 to 2000. At the time he was accused of under-reporting exports of sales of huge quantities of DRC cobalt when he was in charge – and diverting the profits to a company he controlled in the British Virgin Islands.

Although Rautenbach lost his job, he continues to play an important role in the mining sector, as he also happens to be a major shareholder of Central African Mining & Exploration Company (CAMEC), which won major contracts in the DRC a couple of years later.

CAMEC’s contracts were the result of an investor-friendly mining code introduced by the World Bank in July 2002. (An informative analysis of this code was done by the Bank Information Center.) While the code calls for a much-needed regulatory framework and environmental protection, it hands the responsibility for mining development to private companies.

However, it is doubtful that the Congolese public institutions charged with regulating the mining sector have the resources to carry through with it, and the World Bank certainly has not been successful in providing oversight. A memo leaked to the Financial Times in November 2006 details the World Bank’s failure to provide sufficient oversight in three major contracts made between Gecamines and international mining groups like CAMEC. Worth billions of dollars, these contracts reportedly gave these groups control over 75% of Gecamines mineral reserves. (In May 2007, the Financial Times also revealed that the World Bank withheld the findings of an inquiry into alleged mismanagement of funds in the Democratic Republic of Congo.)

More details on the business dealings of Rautenbach and CAMEC may emerge from a DRC commission that recently began a three-month review of mining contracts signed in the last decade. The commission is the first attempt of a new “democratically elected” government to investigate ongoing corruption in the DRC’s valuable mining sector. The new commission follows a string of attempts by previous governments and international financial institutions to investigate the exploitation of natural resources in the DRC.

If the commission hopes to be successful it must take a look at whose interests are being promoted/protected in the Congo and how. This would include an investigation into local elites, regional influences, international financial institutions and the powers they represent, and international corporations along with the relationships between these different actors.

History has shown that the more resources a nation or region possess, the more conflict and poverty the people of that nation are forced to endure. The DRC is the third largest country in Africa and is rich in natural resources, particularly cobalt, copper, diamonds and gold. It is home to one third of the world’s cassiterite, the most important source of the metallic element tin and holds 64-80% of the world’s coltan reserves, an ore that is the source of the metal tantalum, which is used in cell phones and other devices.

In an article for Alternet, Stan Cox quotes a miner responsible for digging the valuable cassiterite: "As you crawl through the tiny hole, using your arms and fingers to scratch, there's not enough space to dig properly and you get badly grazed all over. And then, when you do finally come back out with the cassiterite, the soldiers are waiting to grab it at gunpoint. Which means you have nothing to buy food with. So we're always hungry." This cassiterite will inevitably end up in cheap cell phones and laptops laying abandoned in American landfills.

Despite (or indeed because of) its abundance of resources, the DRC has been plagued by conflict, famine and political instability since its independence in the 1960s. Following the end of the 30-year dictatorship of Mobutu Sese Seko (who was brought to power by the U.S. in the 1960s), the greed of neighboring countries for natural resources forced the DRC into the center of what organizations like Human Rights Watch have deemed, “Africa’s first world war.” The war resulted in the death of three to five million people, many from famine, exposure and disease.

A cease-fire ended the war in 1999, but the DRC has continued to suffer the extraction of resources and wealth through corrupt deals between local elites and international companies. A 2006 report from the London-based watchdog organization, Global Witness, describes how copper and cobalt are mined informally and illicitly exported, robbing the Congolese people of any opportunity to reduce poverty.

The new commission’s plan to revisit mining contracts between the state and private companies is a response to years of domestic and international pressure. Hopefully, once the review is completed (assuming that it is a transparent and non-corrupt process), the international companies involved will be willing to re-negotiate contracts in a way that is more beneficial to the Congolese state and its citizens. An interesting precedent was established last year in Liberia when Mittal Steel, the world’s largest steel company, agreed to step down from an unbalanced concessionary agreement made with a corrupt transitional government once a democratically elected government was in place.

Web Sanctions Tool Backfires on SEC

By Pratap Chatterjee

Boycotts and sanctions are two key tools that activists and governments use to target corporations who do business with "unsavory" regimes. There is a long history of progressive activists calling for boycotts, for example, against companies doing business in South Africa in the 1980s, Burma and Nigeria in the 1990s, and most recently Sudan in an attempt to topple or change regimes with a history of human rights abuse.

In the old days, activists created boycott flyers to target companies that were wheat-pasted on walls, they picketed stores that sold goods from the offending companies, and most recently many activist groups have created websites created to encourage consumers to vote with their dollars: such as Ethical Consumer in the UK or tools to track companies in specific countries such as the Sudan Divestment Network.

The U.S. government has followed a similar but more heavy-handed tactic to enforce its anger against other governments, by passing laws forbidding companies from doing business in countries ranging from Cuba in the 1960s, South Africa in the 1980s, Iraq in the 1990s and most recently in Syria. (A State Department official suggest that sanctions have been imposed on foreign countries well over 100 times since the First World War.) Of course, unlike activists, the U.S. government has the power to prosecute companies who fail to comply.

Some of the targets of boycotts and sanctions have been one and the same: South Africa being a notable example.

How successful have these boycotts and sanctions been? Activists argue that the South African apartheid regime was felled by such pressure, undertaken in solidarity with local movements, although one might argue that anti-apartheid protests within South Africa itself played an even more significant role. A variety of think-tanks (mostly conservative) have argued that sanctions don't work.

In May, Christopher Dodd, a Democrat from Connecticut and the chairman of the Senate Banking Committee, called on the U.S. Securities and Exchange Commission (SEC) to make it easier for "shareholders to access reliable information regarding publicly traded companies' business transactions involving Iran and Sudan."

In June, the SEC decided to copy activist tactics by putting up a Web tool that tracks corporations with investments in countries considered by the U.S. to sponsor terrorism -- specifically Cuba, Iran, North Korea, Sudan and Syria. "No investor should ever have to wonder whether his or her investments or retirement savings are indirectly subsidizing a terrorist haven or genocidal state," Christopher Cox, the SEC chairman, said. In three weeks the site got "exceptional public interest," with more than 150,000 hits.

The tool generated some odd results: Reuters, the media company, had reported news-gathering activities in Cuba, Iran and Syria, so it made all three lists!

Not surprisingly, the Web tool provoked a storm of protest. "The list was fraught with distortions that could have actually harmed investors instead of informing them," Todd Malan, the president of the Organization for International Investment, which represents such companies, told reporters. "It was basically just a word search with no context, scale or reference."

Barney Frank, a Democrat from Massachusetts, called the list "unfair and perhaps counterproductive." He said some companies "apparently have investments that are so negligible they could not be considered material either to investors or the economy of the terrorist-financing state.

On Friday the SEC took the web page down and promised to rethink the idea -- either to return with a new, more sophisticated, tool or to figure out another way to achieve the same results.

"Our role is to make that information readily accessible to the investing public, and we will continue to work to find better ways to accomplish that objective," says the SEC. We await the results eagerly -- will the SEC try picketing the listed companies or dropping protest banners? If so, we just might know some folks who might be able to help.

Frequent Toxic Miles

By Pratap Chatterjee

The Wall Street Journal has an interesting article today about how toxics in the United States that are dumped in other countries may come back to haunt U.S. consumers. Toxics have been found in jewelry ranging from "Best Friends Forever" necklaces sold at a chainstore called Claire's Stores Inc. to necklace and earring sets with plastic "birthstones" sold by Kmart, another major retail chain.

Many of these products are made in China – which is probably the leading exporter to the U.S. But not many know that the reason for this is that the country also is a major importer of U.S. electronic waste, despite the fact that the country's laws essentially ban imports of such waste.

Reporter Gordon Fairclough writes: “For lead, the trip to China from the U.S. typically goes something like this: U.S. consumers and businesses send their old electronics to recycling firms -- often by way of innocuous recycling drives. Some of those firms then sell the electronics to dealers in the U.S., who sell them to dealers in China. Chinese companies buy the e-waste and strip lead and other re-sellable materials from it -- often discarding harmful materials along the way, adding to local pollution. The lead makes its way -- sometimes at toxic levels -- into trinkets sold to consumers in the U.S.”

The article is based on studies by Jeffrey Weidenhamer and Michael Clement, chemists at Ashland University in Ohio, who examined the composition of children's highly leaded jewelry and key chains and determined that some also contained levels of copper and tin that suggested the source was lead solder used in electronic circuit boards. Other jewelry samples were also found to contain antimony, a toxic metalloid element used to harden lead used in batteries.

Our friends at Silicon Valley Toxics Coalition have a great animated film showing how this works. (Full disclosure here: Aditi Vaidya, SVTC program director, is on CorpWatch’s advisory board) The video was created by Ben Goldhirsch’s Good magazine.

Two other good films can be obtained from the Basel Action Network, which has a film on e-waste in Asia as well as one on similar schemes to dump e-waste in Africa.

Says Jim Puckett, coordinator of BAN. “In a globalized world, pollution knows no borders so the US government’s policy of allowing a free trade in hazardous waste has come back to haunt and hurt us.”

None of this should be legal. Under the Basel convention, as of 1 January 1998, all forms of hazardous waste exports from the 29 wealthiest most industrialized countries of the Organization of Economic Cooperation and Development (OECD) to all non-OECD countries. Unfortunately although China has ratified the treaty, the United States has not, so the trade continues.

For U.S. consumers, SVTC has guides about less harmful ways to dispose of electronic waste and how to buy electronics more responsibly.

The European Union is way ahead of the U.S. here – it requires companies to cover the costs of recovery and recycling under the Waste Electrical and Electronic Equipment (WEEE) Directive. Last week, Britain become the latest country to enforce that law. For another fun way to learn about this issue, check out the WEEE man: a huge robotic figure made of scrap electrical and electronic equipment. It weighs 3.3 tonnes and stands seven meters tall – representing the average amount of e-products every single British citizen throws away over a lifetime.

Is Big Business Buying Out The Environmental Movement?

Philip Mattera, Good Jobs First

In the business world these days, it appears that just about everything is for sale. Multi-billion-dollar deals are commonplace, and even venerable institutions such as the Wall Street Journal find themselves put into play. Yet companies are not the only things being acquired. This may turn out to be the year that big business bought a substantial part of the environmental movement.

That’s one way of interpreting the remarkable level of cooperation that is emerging between some prominent environmental groups and some of the world’s largest corporations. What was once an arena of fierce antagonism has become a veritable love fest as companies profess to be going green and get lavishly honored for doing so. Earlier this year, for instance, the World Resources Institute gave one of its “Courage to Lead” awards to the chief executive of General Electric.

Every day seems to bring another announcement from a large corporation that it is taking steps to protect the planet. IBM, informally known as Big Blue, launched its Project Big Green to help customers slash their data center energy usage. Newmont Mining Co., the world’s largest gold digger, endorsed a shareholder resolution calling for a review of its environmental impact. Home Depot introduced an Eco Options label for thousands of green products. General Motors and oil major ConocoPhillips joined the list of corporate giants that have come out in support of a mandatory ceiling on greenhouse gas emissions. Bank of America said it would invest $20 billion in sustainable projects over the next decade.

Many of the new initiatives are being pursued in direct collaboration with environmental groups. Wal-Mart is working closely with Conservation International on its efforts to cut energy usage and switch to renewable sources of power. McDonald’s has teamed up with Greenpeace to discourage deforestation caused by the growth of soybean farming in Brazil. When buyout firms Texas Pacific Group and KKR were negotiating the takeover of utility company TXU earlier this year, they asked Environmental Defense to join the talks so that the deal, which ended up including a rollback of plans for 11 new coal-fired plants, could be assured a green seal of approval.

Observing this trend, Business Week detects “a remarkable evolution in the dynamic between corporate executives and activists. Once fractious and antagonistic, it has moved toward accommodation and even mutual dependence.” The question is: who is accommodating whom? Are these developments a sign that environmental campaigns have prevailed and are setting the corporate agenda? Or have enviros been duped into endorsing what my be little more than a new wave of corporate greenwash?

An Epiphany About The Environment?

The first thing to keep in mind is that Corporate America’s purported embrace of environmental principles is nothing new. Something very similar happened, for example, in early 1990 around the time of the 20^th anniversary of Earth Day. Fortune announced then that “trend spotters and forward thinkers agree that the Nineties will be the Earth Decade and that environmentalism will be a movement of massive worldwide force.” Business Week published a story titled “The Greening of Corporate America.”

The magazines cited a slew of large companies that were said to be embarking on significant green initiatives, among them DuPont, General Electric, McDonald’s, 3M, Union Carbide and Procter & Gamble. Corporations such as these put on their own Earth Tech environmental technology fair on the National Mall and endorsed Earth Day events and promotions.

A difference between then and now is that there was a lot more skepticism about Corporate America’s claim of having had an epiphany about the environment. It was obvious to many that business was trying to undo the damage caused by environmental disasters such as Union Carbide’s deadly Bhopal chemical leak, the Exxon Valdez oil spill in Alaska and the deterioration of the ozone layer. Activist groups charged that corporations were engaging in a bogus public relations effort which they branded “greenwash.” Greenpeace staged a protest at DuPont’s Earth Tech exhibit, leading to a number of arrests.

Misgivings about corporate environmentalism grew as it was discovered that many of the claims about green products were misleading, false or irrelevant. Mobil Chemical, for instance, was challenged for calling its new Hefty trash bags biodegradable, since that required extended exposure to light rather than their usual fate of being buried in landfills. Procter & Gamble was taken to task for labeling its Pampers and Luvs disposable diapers “compostable” when only a handful of facilities in the entire country were equipped to do such processing. Various companies bragged that their products in aerosol cans were now safe for the environment when all they had done was comply with a ban on the use of chlorofluorocarbons. Some of the self-proclaimed green producers found themselves being investigated by state attorneys general for false advertising and other offenses against the consumer.

The insistence that companies actually substantiate their claims put a damper on the entire green product movement. Yet some companies continued to see advantages in being associated with environmental principles. In one of the more brazen moves, DuPont ran TV ads in the late 1990s depicting sea lions applauding a passing oil tanker (accompanied by Beethoven’s “Ode to Joy”) to take credit for the fact that its Conoco subsidiary had begun using double hulls in its ships, conveniently failing to mention that it was one of the last oil companies to take that step.

At the same time, some companies began to infiltrate the environmental movement itself by contributing to the more moderate groups and getting spots on their boards. They also joined organizations such as CERES, which encourages green groups and corporations to endorse a common set of principles. By the early 2000s, some companies sought to depict themselves as being not merely in step with the environmental movement but at the forefront of a green transformation. British Petroleum started publicizing its investments in renewable energy and saying that its initials really stood for Beyond Petroleum—all despite the fact that its operations continued to be dominated by fossil fuels.

This paved the way for General Electric’s “ecomagination” public relations blitz, which it pursued even while dragging its feet in the cleanup of PCB contamination in New York’s Hudson River. GE was followed by Wal-Mart, which in October 2005 sought to transform its image as a leading cause of pollution-generating sprawl by announcing a program to move toward zero waste and maximum use of renewable energy. In recent months the floodgates have opened, with more and more large companies calling for federal caps on greenhouse gas emissions. In January ten major corporations—including Alcoa, Caterpillar, DuPont and General Electric—joined with the Natural Resources Defense Council and other enviro groups in forming the U.S. Climate Action Partnership. A few months later, General Motors, arguably one of the companies that has done the most to exacerbate global warming, signed on as well.

A Cause for Celebration or Dismay?

Today the term “greenwash” is rarely uttered, and differences in positions between corporate giants and mainstream environmental groups are increasingly difficult to discern. Everywhere one looks, enviros and executives have locked arms and are marching together to save the planet. Is this a cause for celebration or dismay?

Answering this question begins with the recognition that companies do not all enter the environmental fold in the same way. Here are some of their different paths:

Defeat. Some companies did not embrace green principles on their own—they were forced to do so after being successfully targeted by aggressive environmental campaigns. Home Depot abandoned the sale of lumber harvested in old-growth forests several years ago after being pummeled by groups such as Rainforest Action Network. Responding to similar campaign pressure, Boise Cascade also agreed to stop sourcing from endangered forests and J.P. Morgan Chase agreed to take environmental impacts into account in its international lending activities. Dell started taking computer recycling seriously only after it was pressed to do so by groups such as the Silicon Valley Toxics Coalition.

Diversion. It is apparent that Wal-Mart is using its newfound green consciousness as a means of diverting public attention away from its dismal record in other areas, especially the treatment of workers. In doing so, it hopes to peel environmentalists away from the broad anti-Wal-Mart movement. BP’s emphasis on the environment was no doubt made more urgent by the need to repair an image damaged by allegations that a 2005 refinery fire in Texas that killed 15 people was the fault of management. To varying degrees, many other companies that have jumped on the green bandwagon have sins they want to public to forget.

Opportunism. There is so much hype these days about protecting the environment that many companies are going green simply to earn more green. There are some market moves, such as Toyota’s push on hybrids, that also appear to have some environmental legitimacy. Yet there are also instances of sheer opportunism, such as the effort by Nuclear Energy Institute to depict nukes as an environmentally desirable alternative to fossil fuels. Not to mention surreal cases such as the decision by Britain’s BAE Systems to develop environmentally friendly munitions, including low-toxin rockets and lead-free bullets.

In other words, the suggestion that the new business environmentalism flows simply from a heightened concern for the planet is far from the truth. Corporations always act in their own self-interest and one way or another are always seeking to maximize profits. It used to be that they had to hide that fact. Today they flaunt it, because there is a widespread notion that eco-friendly policies are totally consistent with cutting costs and fattening the bottom line.

When GE’s “ecomagination” campaign was launched, CEO Jeffrey Immelt insisted “it’s no longer a zero-sum game—things that are good for the environment are also good for business.” This was echoed by Wal-Mart CEO Lee Scott, who said in a speech announcing his company’s green initiative that “being a good steward of the environment and in our communities, and being an efficient and profitable business, are not mutually exclusive. In fact they are one in the same.” That’s probably because Scott sees environmentalism as merely an extension of the company’s legendary penny-pinching, as glorified efficiency measures.

Chevron Wants to Lead

Many environmental activists seem to welcome the notion of a convergence of business interests and green interests, but it all seems too good to be true. If eco-friendly policies are entirely “win-win,” then why did corporations resist them for so long? It is hard to believe that the conflict between profit maximization and environmental protection, which characterized the entire history of the ecological movement, has suddenly evaporated.

Either corporations are fooling themselves, in which case they will eventually realize there is no environmental free lunch and renege on their green promises. Or they are fooling us and are perpetrating a massive public relations hoax. A third interpretation is that companies are taking voluntary steps that are genuine but inadequate to solve the problems at hand and are mainly meant to prevent stricter, enforceable regulation.

In any event, it would behoove enviros to be more skeptical of corporate green claims and less eager to jump into bed with business. It certainly makes sense to seek specific concessions from corporations and to offer moderate praise when they comply, but activists should maintain an arm’s-length relationship to business and not see themselves as partners. After all, the real purpose of the environmental movement is not simply to make technical adjustments to the way business operates (that’s the job of consultants) but rather to push for fundamental and systemic changes.

Moreover, there is a risk that the heightened level of collaboration will undermine the justification for an independent environmental movement. Why pay dues to a green group if its agenda is virtually identical to that of GE and DuPont? Already there are hints that business views itself, not activist groups, as the real green vanguard. Chevron, for instance, has been running a series of environmental ads with the tagline “Will you join us?”

Join them? Wasn’t it Chevron and the other oil giants that played a major role in creating global warming? Wasn’t it Chevron that used the repressive regime in Nigeria to protect its environmentally destructive operations in the Niger Delta? Wasn’t it Chevron’s Texaco unit that dumped more than 18 billion gallons of toxic waste in Ecuador? And wasn’t it Chevron that was accused of systematically underpaying royalties to the federal government for natural gas extracted from the Gulf of Mexico? That is not the kind of track record that confers the mantle of environmental leadership.

In fact, we shouldn’t be joining any company’s environmental initiative. Human activists should be leading the effort to clean up the planet, and corporations should be made to follow our lead.

Alcan pulls out of Utkal project in India

by Franocis Meloche

Alcan, a Canadian company, has decided to sell its 45 percent stake in Utkal Alumina International Limited, a company aiming to produce alumina in the state of Orissa in India. Alcan had been under pressure for years to withdraw or at least ensure the project had obtained the free prior and informed consent of local communities.

Community members, mostly "scheduled tribes" Adivasis, have opposed the Utkal project, to protect their right to control local resources and avoid environmental damage. The project, which is in its "engineering phase" has already started to displace the 200 or so families living on the site of the future alumina plant. Herders and others would also be affected by the mining operation. It is unclear how many people would be affected but some critics have estimated that over 10,000 people would suffer. At least 23 villages would be affected by the project.

In December, 2000, police in Kashipur opened fire on protesters opposed to the Utkal mine and smelter, killing three people. One of the partner at that time, Norsk Hydro of Norway, immediately pulled out and sold its share to Alcan.

Activists from Alcan't in India, a solidarity group based in Montreal, Quebec, Canada, are pressuring Alcan to compensate people whose "lives have been ruined through jailings, beatings, displacement, and even death due to Alcan’s involvement."

Last year, Alcan promised it would provide an answer to shareholder activists by March 2007 on its involvement in the project. Shareholders had filed a proposal (see 'Tis the Season for Shareholder Activism) asking for an independent study on the consent of the community, a proposal that received a surprisingly high 37 percent. (Similar resolutions typically get between zero and ten percent. Any resolution that scores in the higher end of that range is taken seriously by management)

The Indian partner in the Utkal project, Hindalco, the industrial division of the Indian conglomerate Aditya Birla group, which owns 55% of the project, has not given any indication that it will change its plans.

Alcan, on the other hand, invests a lot of money in public relations to promote its sustainability strategy, has portrayed itself as a minority partner that does not participate in the real decision making around this project.

“We have carefully weighed the opportunity and risk presented by the Utkal Project, and, given constraints within the governance structure that limit Alcan's ability to participate in key decisions, believe that we have acted in the best interests of all our stakeholders,” Jacynthe Côté, president and chief executive officer of Alcan Bauxite and Alumina, said in a statement.

Alcan says it will keep a commercial interest in the project by continuing to "benefit from an Alcan technology supply agreement", according to the Alcan press release, but it does not give further details.

Editor's note: The decision of Alcan to pull out of the Utkal smelter reflects similar dissatisfaction over aluminum smelters around the world. Sujatha Fernandes reported for us from Trinidad on a similar project in the Chatham/Cap-de-Ville area (see “Smelter Struggle: Trinidad Fishing Community Fights Aluminum Project") that was canceled in January 2007 although the Alcoa is now hoping to get permission to relocate the project to Otaheite Bay, which also serves as a nesting ground for the scarlet ibis, one of Trinidad and Tobago's national birds, as well as 36 other avian species.

And communities in Iceland have also been battling a proposed Alcoa smelter, for which the gigantic $3 billion Karahnjukar dam, north of Vatnajokull, Europe's biggest glacier, is being built. The Guardian did a great story ("Power Driven") on this in 2003, and the New York Times recently did a feature on what it called the angriest and most divisive battle in recent Icelandic history. Updates can be found at the Saving Iceland website.