Unchecked Corporate Power

Why the Crimes of Multinational Corporations Are Routinized Away and What We Can Do About It

Gregg Barak

• Publisher: Taylor & Francis
• Year: 2017
• Print ISBN: 9781138951426
• eBook ISBN: 9781317360520
• Edition: 1
• Topic: Business
• Subtopic: Business Ethics
• Index: Business

Why are crimes of the suite punished more leniently than crimes of the street? When police killings of citizens go unpunished, political torture is sanctioned by the state, and the financial frauds of Wall Street traders remain unprosecuted, nothing succeeds with such regularity as the active failures of national states to obstruct the crimes of the powerful.

Written from the perspective of global sustainability and as an unflinching and unforgiving exposé of the full range of the crimes of the powerful, Unchecked Corporate Power reveals how legalized authorities and political institutions charged with the duty of protecting citizens from law-breaking and injurious activities have increasingly become enablers and colluders with the very enterprises they are obliged to regulate. Here, Gregg Barak explains why the United States and other countries are duplicitous in their harsh reactions to street crimes in comparison to the significantly more harmful and far-reaching crimes of the powerful, and why the crimes of the powerful are treated as beyond incrimination.

What happens to nations that surrender ever-growing economic and political power to the globally super rich and the mammoth multinational corporations they control? And what can people from around the world do to resist the criminality and victimization perpetrated by multinationals, and generated by the prevailing global political economy? Barak examines an array of multinational crimes—corporate, environmental, financial, and state—and their state-legal responses, and outlines policies and strategies for revolutionizing these contradictory relations of capital reproduction, criminality, and unsustainability.

PART I

Routinizing the crimes of the powerful

Introduction

On the state routinization of unchecked corporate power

As global corporations have grown richer and more powerful than many nations, they increasingly operate without limits on their power or influence. Around the world, global corporations drive governmental policies, unchecked by strong global policies to protect public health, human rights and the environment.¹

In 2015 Apple Inc. reported a quarterly profit of $18 billion, the largest in history. During the same year its market-capital valuation of $765 billion reached the highest ever for any U.S. corporation. Based on total revenues of $233 billion for 2014/2015 for a private, public, or state-owned company, Apple ranked twelfth in the world.² However, its record for design and technological innovation has been second to no other companies. The Apple brand is also the most admired brand in the world. Several factors have contributed to Apple’s success, including the vision of the late Steve Jobs, the work executed by Apple engineers, the failure or refusal of Apple to pay a fraction of its fair share in taxes, and the super-exploitation of the workers who manufacture Apple products.³ In the case of tax thieving, a 2013 U.S. Senate investigation discovered that by “creating mail-slot entities all over the world and attributing its profits to them, Apple [had] managed to pay just 2 percent in taxes on $74 billion of income overseas.”⁴

More significantly, after a lengthy investigation the European Competition Commissioner Margrethe Vestager ruled on August 30, 2016 that Ireland must recover from the local Apple subsidiary up to as much as 19 billion euros ($21 billion), including interest for unpaid taxes dating back more than a decade. This ruling, a temporary bombshell at the very least, left at the tax doors of the world’s leading multinational corporations, was based on a “decision that tax benefits provided to Apple’s subsidiaries in Ireland through two tax rulings amounted to ‘state aid’ that was illegal” under the European rules of business competition.⁵ The case of Apple’s Irish operations is a radical illustration of tax avoidance accounting schemes enjoyed by such mega multinational companies as Facebook, Google, and General Electric. The Apple example involves two subsidiaries: Apple Operations Europe (AOE) and Apple Sales International (ASI). The value of these legal arrangements is that “any Apple product sold outside the Americas is implicitly first bought by ASI, Ireland from different manufacturers across the globe and sold along with the intellectual property to buyers everywhere except the Americas. So all such sales are by ASI and all profits from those sales are recorded in Ireland”,⁶ and are subject to much lower negotiated tax rates than permitted by the EU.

In the case of worker exploitation, the state routinization of the inhumane conditions under which Apple’s subcontracted employees work in China is well known thanks to the performance artist Mike Daisey’s one-man show at the Public Theater in New York in 2011, a New York Times follow up story in January 2012, and finally the BBC documentary Panorama that aired in December 2014. The film reveals a series of broken promises made in 2012 by Apple to various human rights and labor rights groups to improve the working conditions inside of a number of Chinese facilities where employees of Pegatron and Foxconn busily assemble the newest iPhones. The filmmakers recorded the regular breaching of the standards established for workers hours, ID cards, dormitories, work meetings, and juvenile employees. They also documented that in Indonesia, children were working in dangerous open cast mines and that the tin from these illegal digs was being used in iPhones.

Apple’s annual report for 2014 acknowledges that the compliance rate regarding its own standards was only 70 percent, down from 77 percent a year earlier. The enforcement of workers’ hours was also down from the previous year. In a nutshell, these subcontracted workers are exploited in various ways despite the reality that Apple’s labor costs amount to a tiny fraction of its profits, especially in the context of the generous compensation packages enjoyed by top executives. In 2011 and 2012, “the top nine members of Apple’s executive team received compensation packages equal to that of fully 90,000 Chinese factory workers.”⁷

Subsequently, in April 2015, Li Qiang, founder and executive director of the workers’ rights organization China Labor Watch, reported that “workers from Foxconn factories in Chengdu and Shenzhen were [being] sent to the Quanta factory in Changshu to work 12-hour days making Apple watches in order to meet the company’s April 24 release deadline.”⁸ As there was a shortage of dormitory space for the workers at the factory, they found themselves forced to sleep in buses. These workers also found themselves producing watches in freezing temperatures while wearing thin work uniforms, and where close to 100 workers became ill and had to be hospitalized.

Certainly one can argue that it’s not fair to single out Apple. Its record is far from the worst of the technology companies:

But Apple is undoubtedly the world’s leader, its customers the most loyal. (Hollywood isn’t making movies about the founders of Samsung, after all). The corporation could easily demand structural changes in the way its supply chains are constructed and workers are treated. But it can get away with only pretending to do so because the vast majority of its customers—to say nothing of its fan boy media following—care only about the coolness of its latest gadgets, and not a whit about the exploitation and misery experienced by the people who actually make them.⁹

In a similar vein, Apple is not alone in avoiding taxes. According to Citizens for Tax Justice, eighteen of America’s largest corporations, led by Apple, deployed the same tactics to avoid paying $92 billion in U.S. taxes in 2014. If this was not bad enough, the same Senate report found that

Apple—which has $181.1 billion socked away in offshore accounts—is among the group of multinational corporations lobbying Congress to grant them a second repatriation tax holiday so they can bring an estimated $1.7 trillion home at the significantly reduced rate of 6.5 percent. The last tax holiday passed in 2004 led to a cut of more than 20,000 U.S. jobs and lowered R&D spending—directly contrary to the arguments made on its behalf.¹⁰

In September, 2014, Louisiana District Judge Carl Barbier found British Petroleum, one of the world’s leading oil and gas companies with more than $400 billion in economic value in 2013 and with more than 80,000 employees working in eighty countries, liable for gross negligence under the Clean Water Act of 1972. Before that ruling came down, BP had already paid out about $28.3 billion in cleanup costs and fines, in compensation claims from injured businesses, and in relation to pleading guilty to criminal manslaughter charges for eleven men who died in the Gulf of Mexico from the Deepwater Horizon oil rig explosion. Under the Clean Water Act, gross negligence imposes penalties of $4,300 per barrel of oil spilled, as compared to only $1,100 per barrel for simple negligence. This could add up to an additional $18 billon in fines with some of that money charged to or paid by rig owner Transocean Drilling, the largest offshore drilling contractor in the world, or by Halliburton, one of the world’s largest providers of products and services to the energy industry. Not surprisingly, the “gang of three” has appealed the Barbier civil ruling to a higher court.¹¹ BP had already spent more than $1 billion for outside lawyers’ fees related to the oil spill. Meanwhile, there are estimates for the legal costs facing those state governments (e.g., Louisiana, Mississippi, Alabama, and Florida) most affected by the spill projected to reach as much as $100 million.¹²

Back in April 2010 the Deepwater Horizon rig exploded, resulting in a devastating 200-million-gallon oil spill, the biggest in U.S. history. While the well was capped in July 2010, oil and tar balls were still washing ashore in surrounding areas at least as late as 2015. For years after the spill and until recently, BP cleanup crews and government officials maintained that they did not know what happened to as much as 10 million gallons of oil. Thanks to a team of oceanographers from Florida State University, the “lost crude” was located in 2015 buried under sediment in the Gulf of Mexico. The contaminants from the oil portend not only long-term dangers for marine life, but these toxins are also finding their way into the human food chain by way of consumed fish that have consumed worms living in the sediment.¹³ Examination of these high-profile environmental and other related crimes committed by these three powerful multinational corporations and the responses to them, by various governmental agencies as well as news reporting organizations, reveal the extent to which the state and corporations will collude to conventionalize otherwise criminal activities. This was the case, even when these crimes were highly visible and their perpetrators were caught “red-handed” and slapped mildly with fines that have amounted to little more than adding another line item to the costs of conducting their business-as-usual affairs.

In “Blacking Out the Gulf,” a case study of the BP oil spill, Elizabeth Bradshaw provides ample evidence of the many forms or shapes that state-routinized crime may take. Her research documents the attempts of state-corporate “cover up” to suppress both the criminality and the environmental impact caused by the oil spill. Specifically, Bradshaw exposes the coordinated ways in which state and corporate actors employed several means to conceal from the consuming public the magnitude of actual damages. For example, a media blackout was implemented in the Gulf area, cleanup workers and other employees were censored, toxic chemicals were used to disperse the oil, and a deliberate manipulation of official images and information about the spill were circulated through mass media.¹⁴

On the other mediated hand, the detention of a BP-chartered offshore oil supply vessel in Scotland for having a group of unpaid workers on its crew, what trade union representatives have referred to as a “blatant example of modern day slavery,” made some news and was covered locally by the Wilmslow Guardian in June, 2016. Although the offshore oil and gas industry only accounts for a small piece of a forced labor industry that involves, worldwide, an estimated 19 million persons in domestic work, agriculture, construction, manufacturing, and entertainment who are super-exploited annually by private enterprises, while these workers generate illegal profits of $150 billion. According to the International Labor Organization, a handful of vessel detentions chartered by big oil companies like BP might not only force a bit more due diligence in the future,¹⁵ but these detentions might also help to shine some exposure beyond a global oil price crisis and a new wave of “slavery at sea” to a more fundamental examination of unsustainable dirty energy.

What has become business as usual are not the slap-on-the-wrist civil punishments that BP and other powerful corporations like them commonly receive from the state for their myriad of transgressions, but rather that these multinational corporations are increasingly negatively sanctioned, criminally penalized, or even charged and prosecuted for their criminal violations. As Laureen Snider argued in a 2000 issue of Theoretical Criminology, “The brand of state regulation known as corporate crime has basically disappeared.”¹⁶ Crimes of corporations she maintained had “been argued into obsolescence through neoliberal knowledge claims advanced through specific discourses by powerful elites.”¹⁷ Quite importantly, Snider further contended that “the acceptance of these knowledge claims cannot be understood without examining their relationship to the corporate counter-revolution that has, over the last two decades, legitimized virtually every acquisitive, profit-generating act of the corporate sector, transforming the developed (and developing) world” in its wake.¹⁸

Perhaps no better example of the use of specific discourses by powerful elites in relation to state-organized and state-routinized crime is the ongoing and selective war on drugs. This perpetual war continues to fuel the spreading violence in contemporary Latin America as it props up at the same time the interests of multinational corporations that are in pursuit of new resources and markets. “The logic of the War on Drugs, still firmly embraced in Washington and most of Europe” today, and dating at least as far back as the rise of powder cocaine as the “hip” or cosmopolitan drug of choice in the 1980s, had decades ago “created a vicious circle of murder and excess that united the arms manufacturers of America, the traffickers of South America and the coke habits of the middle classes from Berlin to Los Angeles.”¹⁹ As one observer of the 1980s and 1990s during the transition periods to democracy in both Brazil and neighboring countries alike has recalled, the discovery of powder cocaine would lead “to the first multinational corporation of Latin America and the first example of genuine economic integration: the production, the processing and the distribution of cocaine.”²⁰ Of course, the state violence, coca-related homicides, and police corruption revolving around cocaine cartels and heightened drug wars, cannot be historically or structurally separated from the governmentally created and neglected favelas in the Brazilian cities of Rio de Janeiro and Sao Paulo. During the months prior to the run-up to the August 2016 summer Olympics in Rio, these drug-related activities of violence and repression were a thriving, yet deadly business.

Not long ago, in 2012, there was a highly visible Summit of the Americas, held in Colombia, for the purpose of discussing an end to the failed war on drugs. “While the presidents of Guatemala, Colombia, Costa Rico and El Salvador” voiced support for ending the war, “President Obama rejected their calls for drug legalization during high-level talks at the Summit.”²¹ At the time of the Summit, despite Obama’s warning that “legalization could lead to greater problems,” many U.S. proponents for ending the losing war on drugs were optimistic, including Ethan Nadelmann, founder and executive director of the Drug Policy Alliance, a not-for-pro...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• List of illustrations
• Other books by Gregg Barak
• Preface
• PART I: Routinizing the crimes of the powerful
• PART II: Violating the commons
• PART III: Halting corporate harm
• Conclusion: Democratic capitalism, state-owned multinationals, and sustainable pragmatism
• Name Index
• Subject Index