Issue 243 of SOCIALIST REVIEW Published July/August 2000 Copyright © Socialist Review


Corporate Criminals

US-born Greg Palast has established a well deserved reputation as an investigative journalist, willing to expose the machinations of the multinationals. He spoke to Pete Ainsley and Sonia Carroll
Capitalism kills

What aspects of world trade have you currently been investigating?
There is a revolving door between the multinationals and the organisations that are supposed to regulate them. So, when I was looking for a major capitalist figure to interview, Will Hutton suggested that I try Robert Rubin. Rubin has gone from being head of Goldman Sachs to working at the US Treasury to being the head of Citibank, which incidentally owns Goldman Sachs.

Three years ago Citibank merged illegally with American Express. But this was a mating of such large dinosaurs that the US government was afraid to move against it. Robert Rubin, in his role as US Treasury Secretary, instead of breaking up this illegal activity, said American Express-Citibank should have two years to change the law. Then Rubin resigned as Treasury Secretary. He announced that he was going to work with non profit making organisations. Suddenly it was Saint Rubin. He worked for six months for non profit making organisations and then, three days after the change in the banking law that was worth billions and billions of dollars to his old bank, Rubin is named head of Citibank. Interestingly, he was identified as the key behind the scenes broker of the new banking law...effectively, a lobbyist for the industry. It is illegal to lobby your own ministry for six months after leaving office. But Rubin did it...and his reward was the chairmanship of the new Citibank monopoly. People say, 'Well, he didn't do it for the money,' but none of them do. The fact that they are already very rich doesn't stop them from wanting to make money any sleazy way they can.

My column focuses on what happens inside corporate America. I don't believe there are a few rotten apples that should be exposed. I believe that the system creates deceit and fraud and damage on a world scale. This is generated by the corporate structure itself which overwhelms any one person's sense of ethics within the corporation.

Take the 1989 Exxon Valdez oil spill disaster which ruined the coastline of Alaska. This was no accident. When oil drilling in Alaska was first proposed, environmental groups warned of potential grounding of oil tankers. The oil companies responded by promising that sophisticated radar on board every ship would make a grounding impossible. My team's investigation discovered that, on the night of the grounding, the Exxon Valdez radar was turned off. The ship was two years old, and in that time the radar had never worked because Exxon felt it was simply too expensive to fix. So the grounding was not an accident.

Few people know that British Petroleum, not just Exxon, carries a big part of the blame for the oil spill disaster. BP, operating in Alaska under the name 'Alyeska', was supposed to have equipment and safety barges all along the coast, even at the exact point where the oil hit. But BP falsified documents and didn't provide what it promised.

You have recently told some stories that are not reported anywhere else in the press. What recent events deserved to have wider coverage?

One big story that should have been covered by the media was the fight against privatisation in Bolivia. A British/US based consortium bought the water company in the third largest city in Bolivia. It raised rates, officially by 35 percent but in reality probably by about 200 percent. This led to protests and, when the military were called in, six people were shot dead and two kids were blinded by teargas.

The Bolivian government convened a meeting with those leading the campaign against the Anglo-American water company, then arrested the protest leaders once they were inside the government building. This led to a general strike forcing the government to retreat and kick out the British-American water company owners.

Bolivia was an important story: there was television footage of the shootings. There were US and European companies involved. It happened just before the big explosion at the Washington meeting of the IMF. And it showed that globalisation could be stopped in its tracks. Yet it was barely reported in the press. This is not because of direct pressure from institutions like the World Bank (although the leader of the bank did rush to condemn what he called 'rioters'). Rather it is because of the strange and horrid consensus which has emerged, that there is no alternative to the New World Order, that the people of Bolivia--and Third World peoples everywhere--simply don't understand the future.

Another story that remains unreported is who really sets the agenda for the big multilateral agencies like the World Trade Organisation. Before the sale of the Bolivian water system was finalised, the policy of water privatisation was decided upon in a closed meeting in The Hague between big water companies and the European/American officials. There are other virtually anonymous organisations that meet to set the agenda for world trade. For example, the Transatlantic Business Dialogue pairs off the head of European and US corporations with the US government and EU officials. They meet to plan the legislative agenda for the WTO and devise detailed plans for changes in the laws of sovereign nations which the business leaders determine impede free trade.

What impact do you think the protests in Seattle and Washington have had on the multinationals?
I got in touch with some of the major capitalists after Seattle and I was very surprised to find their whole agenda had gone up in smoke simply because the public was dead set on supporting the anti-WTO protesters. The protests freaked out Clinton, who backed off pushing for a new trade round. Some of the corporate leaders started to panic and some delegates from poorer countries who had been bullied into accepting the agenda started asking questions about trade tariffs.

It all just blew up at Seattle and again at Washington. No one had really heard of the WTO a few months ago. Suddenly everyone is talking about it. Corporate leaders are in a panic about the public response. The protests destroyed their agenda and there are now splits between corporate leaders. For example, Shell Oil, which is really worried by blood on its hands in Nigeria, wants to open a dialogue with protesters, but it is being shouted down by business 'hardliners' who say there is no legitimate reason to talk to groups like Amnesty International and Greenpeace.

Of course those businessmen who want a so called dialogue are looking at groups like the Natural Resources Defence Council, a large American environmental organisation, which is now completely in the control of its corporate sponsors. This environmental group is fronting for industry proposals to trade pollution 'rights'. This would virtually destroy enforcement of the Kyoto agreement on reducing greenhouse gas emissions. The collapse of Russian manufacturing since 1990 has led to a reduction of pollution in Russia. Instead of reducing pollution in Europe and the US, the system of trading credits will allow corporations such as BP and Imperial Chemical to increase their own pollution by buying 'rights to pollute' from the Russians.

Your relationship with the New Labour project has deteriorated rapidly since it won office. Why is that?
I was invited to Britain by Jack Cunningham to be an adviser to Tony Blair when Labour was in opposition. Labour wanted someone who could rip up the Tories' record. So, for example, I advised the shadow cabinet when it discussed Tory plans to privatise the nuclear industry--Blair opposed nuclear privatisation then, but is now one of its strongest advocates. So my continued presence is an uncomfortable reminder of promises broken. One of the Major government's arguments for nuclear privatisation was, 'How dare you say that if the industry were privatised, executives would do dodgy things?' I replied, 'I know executives from the nuclear industry. They would irradiate their grannies for an extra 50p.'

I also advised Blair's shadow cabinet on controlling the utility monopolies. The biggest lie told about electricity privatisation is that it has lowered prices--this just isn't true. World prices for gas, oil and electricity have plummeted in recent years, and this has led to electricity and heating prices dropping the world over, but in Britain they have not fallen at all. Now you hear New Labour, who brought me here to expose these lies, repeating them. I haven't changed--in fact some of the pieces I have written recently started out as briefings I wrote for Jack Cunningham and Margaret Beckett. They used paragraphs from a memorandum I wrote for the Labour Party manifesto. It is Blair's positions that have changed.

I do believe there can be a 'Third Way' between the unregulated free market and state ownership, but I believe now that Blair's 'Third Way' is totally bogus. For example, take the system of utility regulation, a terrible system with incompetent regulators, which Labour has made worse by appointing even more terrible regulators. Why don't they open the utilities' books? Because they have something to hide. The whole system of business regulation here is monstrously undemocratic--words I wrote for Tony Blair when he was in opposition--and words which describe a system now worse than ever under his regime.

Blair also broke his promise of granting US-style freedom of speech. Britain's insane libel laws remain to frighten, intimidate and punish journalists. Libel laws should be seen as the privatisation of censorship. Corporations use the courts to punish those who speak out against them. On the other hand, individuals who are libelled have no redress because the process is so impossibly expensive. This was even true of the Nazi-apologist David Irving. He lost his libel case but imposed huge costs on the Observer newspaper and Penguin Books because they will never be able to collect the fees awarded against him.

However, I must add that despite Britain's horrid system of formal censorship, which will be made worse by the forthcoming Freedom of Information Act, political debate is more alive in the British than the US media. And it's easier to raise critical and oppositional points here than in the US. Over many questions, such as the failure of water privatisation in Bolivia or the contamination of crops with GM seed, the story is an old one: corporations lie and governments know that they do. In Bolivia the corporations acted deceptively in taking over the public water system. The same deceit, if not worse, is practised on the British and American publics. For example, I investigated a story about Monsanto's bovine growth hormone. US regulators ruled the bio-engineered hormone safe to use after a study on rats. It turns out the rats that died were excluded from the findings. This was labelled 'Gaps in the data'. More accurately, it was a world-scale fraud.

One interesting question remains. Yorkshire and Cochabamba, in Bolivia, suffered similar, abusive water rate hikes by private water companies. Why was there an uprising in Bolivia and not in Yorkshire?

Gregory Palast's articles can be found on the internet:

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