World Ruled by Transnational Corporations

A World Ruled by Transnational Corporations

2002 was an annus horribilis for the corporate world. Scandals at the giant energy company Enron, involving individuals who were both close friends and financial backers of President George Bush surfaced late in 2001. Enron's demise was the biggest corporate collapse in history. Arthur Andersen, the firm that audited Enron's books, was convinced of obstruction of justice on June 15th 2002. In June, WorldCom, one of the largest telecom communications companies in the world, was accused of the biggest accountancy fraud in history. Mr. Scott Sullivan the chief financial officer boosted the company's profits artificially by $3.8 billion. He did this by counting some of the company's costs as capital investment. Ms. Anne Mulcahy, the chairperson and chief executive of Xerox, who assured the public in May 2002 that, "the company is completely transparent and the investors know everything", was embarrassed one month later when it was revealed that Xerox had overstated its revenue by $1.9 over the past five years. In May the Securities and Exchange Commission (SEC) charged the accountancy firm Ernst and Young with entering into a joint venture with PeopleSoft while auditing the firm's books. In June 2002 Omnicom, the world's third largest advertising group, rejected allegations that it too had employed questionable accounting procedures. Its shares dived when its chief executive resigned recently.

Politicians and regulatory agencies like Securities and Exchange Commission (SEC) in the US condemned the greed of chief executives and promised tough action. In June 2002 President George Bush stated that he was "surprised and outraged" by these revelations on numerous occasions. As Frank Rich explained in the op-ed column of The New York Times (July 6th 2002), "the corporate world has no reason to quake in its boots and submit itself to tough, independent regulations at national and global level. The reason is simple - corporations are now more powerful than many governments. Rich's article entitled "All the Presidents Enrons". He wrote, "Mr. Bush keeps saying all the right things. He is "deeply concerned". He will "hold people responsible". But words, like stocks, lose value when nothing backs them up. It is now six months since the President promised "a lot of government enquiry into Enron". Since then Playboy have done a better job at exposing the women of Enron than the Bush administration has done at exposing the men".

In an effort to steady the financial markets President Bush came to Wall Street on June 9, 2002 to deliver a major speech on corporate. True to form, the President talked tough but promised very little substantive reform. The editorial in The New York Times on June 10, 2002 entitled "The Corporate Scandals" came straight to the point, "at its core, however, the president's address was disappointedly devoid of tough proposals to remedy underlying problems in accounting, corporate governance and the safety net of federal laws and regulations that is supposed to prevent abuse".

The second editorial in, The New York Times, on that day raised serious questions about the president's own behaviour while a business man before being elected President. It stated that, "President Bush needs to speak much more frankly about the money he made in selling his faltering oil company to Harken Energy of Texas and later selling Harken shares shortly before the company's stock price collapsed". The company headed by his vice-President, Mr. Cheney, Halliburton is under investigation by the Securities and Exchange Commission (SEC).

The political reality at the moment on both national and global levels is that corporations have little to fear from governments for the simple reason that they have colonised governments to such an extent that their vested interests takes precedence over the rights of ordinary citizens.

TNCs are Mammoth Institutions
Transnational Corporations (TNC) are the most important economic and commercial organisations in the modern world. They have their roots in the Church and the State. The ecclesiastic roots go back to feudal times in Europe. The ruling class passed on their property to the children. The leadership of the Church and especially the monastic communities were composed of celibate individuals. In that situation the religious order transcended the individual monk so the property was held by the institution. This gave rise to the idea that institutions could own property and be considered a moral person.

The secular corporate goes back to state-sponsored corporations that were set up by colonial powers from the sixteenth century onwards. One of the most prominent of these was the British East India Company. The crucial element in these newly established trading entities was the notion of limited liability. A shareholder could not be held liable for an amount greater than his or her investment. The purpose of this was to encourage entrepreneurs to take risks. Many commentators at the time were opposed to the limited liability. They argued that it would lead to excessive risk-taking by managers and owners or what is today called 'moral hazard'. Adam Smith, for example, held this view. According to the economist Ha-Joon Chang, "limited liability provides one of the most powerful mechanisms to 'socialize risk' which has made possible investments of unprecedented scale ".

The transnational phase of modern corporations began to expand dramatically after the Civil War in the United States in the 1860s. With a legal framework to underpin them they could mobilize capital on an unprecedented scale, opening wide floodgates for horizontal and vertical integration of corporate structures. Much of the expansion of TNCs in the last decade of the 19th century and right through the 20th century was through take-overs and mergers. Gradually they began to dominate key industries - energy, tobacco, chemicals, steel, agribusiness, media, pharmaceuticals, aviation, PR and beverages. 1886 is one of the most important milestones in the development of the modern corporation. The US Supreme Court ruled in the case of Santa Clara county versus Pacific Railroad Company ruled that the 14th Amendment i.e. an amendment designed to protect human beings applied to corporations.

The Growth and Power of Transnational Corporations (TNCs)
After World War II the balance of economic and even political power in the world shifted from territorially bound, nation state governments to companies that roam the world with a single goal in mind - to maximise profits. Of the top 100 economic entities over half are now not countries, but corporations. General Motors for example is the world's largest corporation. It has an income similar to that of Austria has the world's 21st largest GDP.

These entities are not bit players in the global economy. The top 500 corporations, for example, control almost one third of global GNP and 76 percent of world trade. Their influence continues to grow. According to UNCTAD figures, TNCs controlled 17 percent of global GNP in the 1960s. This had jumped to 24 percent by 1984 and pushed ahead to 33 percent by 1995. Presumably this share has increased since then. Another way to look at this growing control of the global economy by TNCs is to realise that the sales of the world's 10 largest TNCs exceed the combined Gross National Product (GNP) of the world's 100 "least developed" (economically) countries. This includes all of Africa (2).

Many states offer favourable tax holidays and special corporate tax rates to TNCs. Ireland has one of the lowest rates of corporate tax. By 2003 it will be 12 1/2 percent. I think of the injustice perpetrated on elderly people like my late mother, Eileen McDonagh. When she died in January 2001, at the age of 91, she was paying about 22 percent of her income on income tax. She needed every penny of her income in order to stay at home in her own house yet the state felt that it was fair to tax her heavily while the tax burden on the corporate sector had been reduced enormously. The Justice Commission of the Conference of Religious of Ireland (CORI) was one of the few organisations to recommend an increase in corporation tax in the run-up to the 2002 general election (3).

The justification for lowering corporate tax is that the TNCs provide jobs. But even this is somewhat illusory. The number of people employed by the top 500 corporations is 18.8 million. This figure represents less than one-third of one percent of the world's population and as we will see later, they shed jobs even when they are very profitable. One way to stop corporations playing one country off against another in terms of environmental legislation and workers' rights would be to have a single corporate tax rate globally.

TNCs and Politicians
The political power of TNCs was clearly evident in the aftermath of the US Presidential election in 2000. It was obvious that the powerful corporations which had backed President Bush were looking for their rewards. The tobacco giant Philip Morris gave $2.8 million to the new President to fund his inauguration. In all tobacco companies had given $7 million to the Bush campaign. In response to this it now seems certain that the federal government will abandon lawsuits against tobacco companies. This will save tobacco corporations about $100 billion in terms of damages and compensations. Looked at from a business angle this is a huge return on their investment.

Within a few weeks of his election President Bush rescinded rules that would make mining corporations pay for the clean-up if they contaminated the public waste supply. He also dropped safety limits on the levels of arsenic in public water schemes that had been imposed by the Clinton administration. Mining companies contributed $2.7 million to Bush's campaign. President Bush sanctioned a reversal on arsenic in drinking water almost immediately after he arrived at the White House. At the same time Bush overturned a regulation that was aimed at protecting 60 million acres of national forest from logging. Logging firms contributed $3.2 million to the Bush campaign. In November 2002 the Bush administration announced the most sweeping move in a decade to loosen industrial air pollution rules and further damage the US Environmental Protection Agency (EPA). The former head of the E.P.A. Carol Browner described the changes as "nothing but a special deal for the special interests and comes at the expense of all who breathe and most particularly our children" (4).

The oil industry is very close to President Bush. The vice-president, Dick Cheney, worked all his life for the oil industry. In repudiating the Kyoto Protocol President Bush was pandering to big oil companies. These contributed $25 million to the Republican election war chest and only $7 million to the rival democrats. But he didn't stop there. Writing in The Guardian (April 23, 2002) George Monbiot reveals what must be one of the best modern examples of shooting the messenger. In 2001 ExxonMobil wrote to the White House requesting that Robert Watson, the chair of the UN's Intergovernmental Panel on Climate Change (IPPC) be removed from his office because of his strong stand on climate change. President Bush delivered for his friends even though he had commissioned a report from the National Academy of Science that stated bluntly that global warming was real and getting worse (5). President Bush did not allow the warnings from scientists to deter him from seeking Watson's removal from an international body. He was fired in April 2002.

The biotech industry is also well represented in Bush's cabinet. The secretaries of Defence, Health and Agriculture, the Attorney General and the Chairman of the House Agriculture Committee have had connections with the biotech company Monsanto or other similar corporations.

The Attorney General, John Ashcroft, received $10,000 (£6,800) from Monsanto in the 2000 elections. This was the biggest contribution that the company gave to any congressional candidate. He strongly advocated the promotion of GE crops in poorer countries during the past few years. The Secretary of Agriculture, Ann Veneman, was formerly a director of the GM company Calgene. This was the company developed the first genetically engineered tomato. It is now owned by Monsanto. Veneman has been promoting the GE crops in world trade talks. Donald Rumsfeld, the Defence Secretary, was president of Searle Pharmaceuticals when it was bought by Monsanto. Writing in February 2002 Charles Lewis, director of the Centre for Public Integrity, said, "It looks like Monsanto and the biotechnology industry have the potential to bring undue influence on the new government" (6).

Many other key players in the Bush White House have come straight from corporations. The new Treasury Secretary, Paul O'Neill worked with the giant aluminium company Alcoa. Mitchell Daniels, the head of the White House office of management and budget, is a former vice-president Eil Lilly which is a transnational pharmaceutical corporation (7). Thomas White who was vice-chairman of Enron Energy when it allegedly hid $500 million in losses and manipulated the California energy crisis is still Secretary of the Army.

TNCs are also powerful in Europe
While the links between big business and politics are legendary in the US people might feel that things are different in Europe. Many people who are favourably disposed to the enlargement and further integration of the European Union are unaware of the power that TNCs wield. Writing in The Guardian (June 20th 2001) the columnist George Monbiot revealed that a corporate lobby group called the European Round Table of Industrialists (ERT) have been the principle architects of European integration for the past 17 years. ERT promoted the idea of the Single European Act quite a number of years before it was completed in 1992. The drafters of the Nice Treaty bowed to ERT's demands that national parliaments be bypassed in some of the area of trade negotiation. In future, the Commission will negotiate such international treaties (8).

Given this connection between politicians and corporations many people are worried about the concentration of the world's food production and marketing in the hands of a small number of biotechnology and agribusiness companies. George Monbiot writing in the The Guardian (September 17, 1997) bemoaned the "astonishing rapidity (whereby) a tiny handful of companies are coming to govern the development, production, processing and marketing of our most fundamental commodity: food". He believes that "the power and strategic control they are amassing will make the oil industry look like a corner shop".

It is frightening to think that within a few short years the world's food supply could be dominated by 11 or fewer giant TNCs. Agribusiness, biotech and pharmaceutical, have increased their control through the provisions on Intellectual Properties (TRIPs) contained in the Uruguay Round of GATT. We face the appalling possibility that within a few years the entire genome of many species, including humans, could be owned by a handful of companies and corporations.

These mammoth institutions are responsible for most of the world's resources extraction, production processes, financial institutions, computer companies and media. On the demand side the advertising and PR agencies like Burston Marsteller has created a consumer culture which is totally unsustainable. These institutions are not above using all sorts of methods to promote their wares. Everyone knows that cigarettes are a health hazard. Nevertheless, corporations like British and American Tobacco (BAT) used heavy-handed tactics to ensure that Third World countries opened up their markets to their products. If a country seeks to ban BAT imports or impose steep health taxes, then according to David Leigh "smugglers simply flooded their country with cartons of black-market cigarettes. The files reveal how BAT connived at these smuggling rackets, which were hidden in company reports behind such euphemisms as "GT" for "General Trade" (9).

They have also cornered the services market. In the Uruguay Round of GATT giant US TNCs like American Express and Citicorp lobbied heavily for a separate section called the General Agreement on Trade and Services (GATS) (10). The service industry is big business and dominated mainly by Northern TNCs. These corporations want to expand into the lucrative service market but feel they are blocked at the moment since many services - health, education, transport, water, electricity etc. are provided or heavily regulated by public authorities. Freeing up trade in these services will benefit corporations so that they are the driving force behind the new wave of privatisation schemes that are now spreading around the globe.

In the wake of the Doha meeting of the WTO in November 2001 the European Union has signalled that it will not be willing to dismantle its tradition of huge agricultural subsidies unless Third World countries open up the above services to transnational corporation. Immediately after Doha the European Union set about targeting specific services in countries as diverse as the Philippines, Paraguay, Peru, India, Malaysia and South Africa which must open a variety of services to foreign competition. By April 2002 this document ran to 1,000 pages (11). In India, for example, the EU wants the markets in waste management and water distribution to be opened up to foreign competition.

Once again the poor will suffer. If TNCs are seeking to make profit out of water, health, education etc. then it is inevitable that those without the money and purchasing power will lose out. Once governments have opened up the service section to the WTO there will be no going back. The decision on how to organise these services will no longer be taken in the political arena with a consequent loss of democratic control. CATS will cause particular havoc in the South.

Aventis in Nenagh
TNCs have no loyalty to a particular people, country or place. Today they can locate anywhere in the world and operate efficiently from there. They are effectively accountable to no-one except their shareholders and are not held responsible for the social, cultural and ecological consequences of their actions.

My own town, Nenagh in County Tipperary, was on the receiving end of this kind of TNC behaviour in April 2002. Aventis Parma the giant French pharmaceutical company decided to close their factory in Nenagh with a loss of 230 jobs. Aventis had been in Nenagh for 20 years. According to the manager, Alain Leduc the move came as a result of a rationalisation programme which involved closing 37 plants world-wide. The sickening thing for the workers was the fact that according to Leduc the Nenagh plant had been one of the top performing plants in the European region, operating to FDA and Japanese market standards. According to the company there were other plants in Britain and France that would manufacture the products that were made at the Nenagh plant.

The decision was a body blow to the 230 workers many of whom have mortgages on their houses or are putting their children through third level education. The loss of 230 jobs is also a tragedy for a small town of 6,000 thousand people. But none of this figured in the decision of the Aventis bosses to abandon Nenagh. The engine that drives them and every other TNCS is the search for more and more profits so that the shareholders are happy and the stock market smiles benignly on the company. Everything else - the welfare of the community, the contentment of workers and prosperity of the wider community, and, finally the health of the local ecosystem and the planet- are all secondary and of little consequence.

One might ask wonder whether Aventis was losing money and had its back to the wall and so was being forced to shed workers in order to remain profitable? Nothing was further from the truth for Aventis Parma, the world's largest drug maker. The turnover for 2001 was euro 17.7 billion and after-tax profits reached euro 1.6 billion an increase of 40 percent over the previous year. But such a favourable balance sheet was not enough to save the jobs of people who had given 20 years loyal service to this company. They are simply being cut adrift to fend for themselves (12).

Lack of Social and Environmental Accountability
With the power of national governments being rolled back in recent years, there are few avenues open today for checking the power of large transnational corporations. In fact TNCs want the national and global systems - economic, fiscal, social, cultural, environmental and political to function for the purpose of providing a favourable climate for transnational investment and competition in the new global economy. John Vidal of the The Guardian (April 30, 1997) writes, "so immense are they growing and such is their skill in levering markets, so grand their resources and great their political influence that they are now effectively units of governance. Yet they have avoided, so far, the business of having to be socially and environmentally accountable, and are to all intents undemocratic and unaccountable".

Enron
The collapse of the giant energy corporation Enron towards the end of 2001 illustrates how the corporate world has structured itself to avoid any responsibility. The company soared from virtual obscurity to become a world player in the energy field in a few short years. It did this by adopting fraudulent accounting procedures which involved setting up around 900 shell companies around the world. In this way Enron was able to able to disguise heavy debts and losses. It also avoided paying federal taxes for four out of the previous five years.

Writing in The International Herald Tribune ( January 22, 2002, page 8) the columnist Richard Cohen captured the modern corporate ethos. "Enron supported many charities and cultural institutions, but only the ones it chose. It put its name on a stadium, but, again only the one it chose. It basked in the gratitude it received for such largesse". It did not, however, pay taxes. Many of Enron's executives and board members made a fortune before the collapse of the company, while thousands of workers lost all their savings.

But what was done, while immoral may not be illegal, since the laws are stacked in favour of the corporations. This point was made by two professors of accountancy in The International Herald Tribune January 23, 2002. They pointed out that during the 1970s and 1980s members of the US Congress, mainly from oil-producing states brought pressure to bear on the Financial Accounting Standards Boards and the Securities and Exchange Commission not to demand tougher standards for financial reporting in the petroleum industry. The professors conclude that Congressional involvement in financial standard setting has been pure politics, fuelled by a system of campaign financing that distorts the pursuit of the nation's legislative agenda (13).

Congress facilitated corporate greed by designing the nation's laws in favour of corporations. What Kennet Lay, affectionately named "Kenny Boy" by President Bush, did may not have been illegal. It was, however, profoundly immoral. Enron was the single largest contributor to George Bush's political campaigns since he first ran for Governor in Texas. It also made a massive donation to Bush's presidential campaign. The Republican political analyst Kevin Philips traced the Bush family favour-swapping with Enron back to 1988 and likened Enron's potential damage to the Harding Administration's "Teapot Dome" scandal. "The question now is whether what went up together will come down together" (14).

Very often the catch phrases "get government out of business" is used as a smokes screen by the corporation to allowed them to do whatever need to make more profits. For example at home in the US Enron had campaigned vigorously to free energy companies from government regulations with the usual "get the government off our backs" cry. But government help was eagerly sought for projects outside the US. In it's drive to build power plants overseas and control the energy market Enron benefited from a US$1.2 billion government backed loan from two US agencies. In February 2002 the Overseas Private Investment Corporation (OPIC) was still owed US$435 million while the Export-Import Bank was due US512 million. When it filed for bankruptcy in December 2001 Enron had approached OPIC for a further loan to bid for two major projects in Brazil. Enron did not tout the superiority of private enterprise when it was looking for, what in fact, is corporate welfare (15).

TNCs Dubious Partners for Development
During Preparatory Conference for the United Nation's Conference on Sustainable Development scheduled for Johannesburg in September 2002 many people from the NGO community were upset that First World countries seemed to have forgotten that - crippling debt, inequitable trade and minimal development aid - caused underdevelopment and needed to be addressed urgently. Many First World governments promoted the idea that TNCs ought to be seen as partners in delivering development goals. Many delegates from the South and members of the NGOS community insisted that TNCs could not be seen as partners unless they were willing to become much more accountable for their activities on the human rights, social justice and ecological fronts.

TNCs were very evident at the summit on sustainable development in Johannesburg in August 2002. Many were promoting themselves as environmentally friendly and an essential element in overcoming global poverty and environmental degradation. They would like people to forget their recent records on environmental and social issues. They have been the dominant actors in the present global economic system for over 50 years. They have been involved in the fossil fuel business and resolutely set their faces against any reduction in greenhouse gas emission. On the extractive side they logged tropical forests in unsustainable ways and promoted mining operations in unsuitable places. The agribusiness TNCs have made billions out of cornering agricultural activity globally and shaping it in a way that benefits the corporations rather than the farmers or consumers. Chemical companies have flooded the world with over 100,000 synthetic chemicals, many of which cause cancer or interfere with the endocrine and immune systems. Advertising companies have fanned the flames of consumerism in the First World and among the elite in the Third World.

Many NGOs were not impressed with TNCs green rhetoric. Elizabeth Stuart of Christian Aid felt that the business community hijacked the meeting. "What we are seeing is a history of business- friendly policies including self-regulation for corporate accountability" (16). Friends of the Earth headed a coalition of environment and development groups at the summit that were demanding that TNCs be regulated to prevent environmental and social abuse. But the business community set its face against any external audit at both Rio and Johannesburg. Maria-Livanos Cattaui, the secretary-general of the International Chamber of Commerce rejected Christian Aid's proposals. "Business would look askance at any suggestion involving external assessment of corporate responsibility, whether by special interest groups or UN Agency" (17).

The Johannesburg Summit only briefly acknowledged that unbridled consumerism and a throw-away mentality is totally unsustainable and needs to be abandoned as quickly as possible if we are to avoid increasing poverty and environmental destruction.

The Summit committed the international community to halve the number of people not connected to potable water supplies to 550 million by the year 2015 and to halving the number without proper sanitation to 1.2 billion by the same year. Such initiatives could save tens of thousands of lives. It is estimated that over 6000 children die each day from diseases caused by poor sanitation and hygiene. But typical of the woolly nature of the Summit's thinking, there are no clear guidelines or effective strategies for achieving such laudable targets. In fact, according to The New Scientist (September 7, 2002, page 7-8) individual countries and even corporations are, "left free to pursue approaches to managing water that are either wasteful or damaging to the environment". According to Jamie Pittock, water director of the World Wildlife Fund (WWF), "summit agreements to improve water will not work if natural sources of water are not conserved and water used more efficiently". Transnational Corporations would like to promote large building projects like dams and piping systems. The Summit played into the hands of the big building corporations according to Torkil Jonch-Clausen of the global water partnership; "this summit has reduced the debate on water supply to arguing about money and pipes. There is no discussion about managing our river systems. It is a step back to the 1980s, before Rio……. It is a prime example of how the development lobby (transnational corporations) have snatched back the sustainable agenda from environmentalists" (18). (quoted in The New Scientist September 7, 2002, page 11).

As I wrote above under the current of economic liberalisation TNCs are targetting public services. A water consortium heading the giant US construction corporation Bechtel Corp. took over the water system of Cochabama in Bolivia. Almost immediately it raised prices so high that people rioted and one protester was killed by the police. Feelings ran so high that the corporation's managers left the country and the service was returned to public ownership. Now Bechtel is suing the Bolivian government for $25 million (19).

I am always annoyed and appalled at statisticians who would have us believe that reducing the number of people without clean water by half to 550 by 2015 is something that we should be proud of. Why not provide clean water for every person on the planet. The Guardian newspaper brought out a supplement in preparation for the Summit entitled Earth. An article on "Food and Trade" estimates that it would cost $170 billion to provide clean water and healthy sewage for all. Surely that should not be beyond the resources of our present global economy. The Gulf war in 1991 cost $80 billion and I am sure the war against Iraq will cost at least twice that amount. Why not divert that to improving the quality of water and sanitation and improving the health and nutrition for all the world's people?

Government subservient to the corporations
So as governments have succumbed to corporate pressure even First World economists like Noreena Hertz realize that the ordinary citizen, either in the First World or Third World has not been protected from the ravages of neo-liberal economics (20). She accepts that politics in many western democracies has been co-opted by the corporations and, by in large, does their bidding. She points out that since the 1980s business around the world has sidelined national governments. Reviewing Hertz's book in The Tablet (August 4th 2001) Terry O'Sullivan writes that "meanwhile those citizens, or at least those that could afford to, have in every sense bought into this new arrangement, happily exchanging their democratic birthright for a mess of consumerism".

TNCs have resisted various attempts to make them accountable
Efforts to make TNCs more ecologically and socially accountable have been talked about since the 1960s. It was on the agenda of UNCTAD (UN Conference on Trade and Development) conference in Santiago in 1972. That led to the UN Economic and Social Council (ECOSOC) settling up a UN Commission on Transnational Corporations as a research and administrative body. Almost immediately a code conduct for TNCs became a top priority for this body. In the 1980s the US was in the grip of the President Reagan's neo-liberal economic policies which believed that regulating TNCs was anathema. In March 1991 during the George Bush (Senior) presidency the administration requested all its embassies around the world to lobby against any further move on the UN Code of Conduct for TNCs. This lobbying was so successful that further attempts to get codes of conduct on other activities was effectively halted. A few had already been agreed - like the 1981 International Code of Marketing on Breast-Milk Substitutes that I will discuss in a moment.

It is ironic that demise of the UN Commission on TNCs coincided with the UN Conference on Environment and Development (UNCED) which was daubed the Earth Summit in Rio de Janeiro in 1992. The pay-off for getting the corporate world on-side for the Summit was to emasculate the UN agency which had been attempting to draw up a code of practice for TNCs. The agency had its staff reduced, was transferred to Geneva and eventually disbanded (21). The secretary general of the Earth Summit, Maurice Strong, himself a well-know Canadian businessman who made his fortune in the energy business, invited the newly formed Business Council for Sustainable Development to write the recommendations on industry and sustainable development for Agenda 21, (UNCED's global plan of action). This was certainly a case of asking the foxes to guard the chickens.

There is an urgent need to renew the campaign for national and international agreements to monitor and regulate TNCs, so that they manage their economic activities in the service of the common good.

TNCs abhor outside regulation and have resisted it at every turn. But in the light of recent scandals corporations know that the heat is on and that it might be difficult to avoid calls for transparency and accountability. Even President Bush is talking a tough line. So many TNCs have decided that the best way to avoid outside scrutiny is to promote self regulation. Over the past few years they have been busy developing their own voluntary codes of conduct to show how sensitive they are to the human rights, social justice and environmental implications of their activities.

These voluntary codes, which only cover a few areas of commercial activity, have only been partially successful. For example organisations like the World Health Organisation (WHO) and the United Nations Children's Fund (UNICEF) and numerous NGOs have tried to stop the irresponsible marketing of infant formula foods by TNCs, especially in economically poor countries. The infant formula companies had used every marketing ploy to convince mothers to stop breast-feeding their babies even though all the medical evidence points to the superior quality of breast-milk. "In the 1960s, health professionals working in developing countries pointed out the potentially fatal consequence of the inappropriate marketing of breast-milk substitutes -commerciogenic malnutrition" as the director of the Caribbean Food and Nutrition Institute in Jamaica called it" (22).

After protest campaigns by many NGOs, Church based groups and the UN Agencies A Code of Marketing of Breast Milk Substitutes was agreed in 1981. While undoubtedly it represented some progress and banned blatant propagandistic advertising many corporations, like Nestle, continued to give free supplies of infant formula to health care workers. In Russia Nestle gave the authorities their Russian-language translations of the Code that watered down the provision considerably. For example, it allowed the companies to advertise directly in maternity wards in hospitals (23).

Global and national regulations must be drawn up in such a way that producers and consumers carry their own full production costs rather than dumping them on other people and on the environment which is what has been happening during the past few decades. This was recognised by the 1999 Human Development Report from the United Nations Development Programme(UNDP). This stated that, "Multinational corporations are already a dominant part of the global economy…yet many of their actions go unrecorded and unaccounted…They need to be brought within a frame of global governance, not just a patchwork of national laws, rules and regulations" (24).

Commercial confidentiality that is often used by corporations to defend themselves from public scrutiny ought to be drastically revised and should only be used to protect companies from industrial espionage. Otherwise they should be subject to the normal freedom of information procedures (25).

In chapter … I will discuss how three powerful agribusiness corporations refused to co-operate with the Mexican govern when researchers discovered that genetically engineered maize had been accidentally planted in Mexico. Mexico is the home for hundreds of varieties of maize so genetic damage to that reservoir could have disastrous consequence for planting maize around the world since it has now become a global crop. The companies involved Monsanto, Syngenta and Aventis cited commercial confidentially as their excuse for not co-operating with the Department of Agriculture in Mexico? Such corporate arrogance cannot be allowed to continue or go unchallenged particularly when the stakes are so high (26).

Mexico is not the only government that is afraid of taking on giant pharmaceutical companies. During the past 20 years in Ireland alone, 79 people have died and thousands of peoples lives have been destroyed by HIV or hepatitis C. They contracted these fatal and debilitating diseases through faulty blood products developed by transnational corporations. Many more will die from these conditions in the next few years.

Yet it is still not clear whether the Irish government will be willing to pursue the offending corporations for compensation. The Minister for Health, Mr. Martin told the Dail in November 2002 that "the Government was likely to launch an inquiry into the actions of US-based multinational pharmaceutical companies implicated in the infection of haemophiliacs with HIV and hepatitis C" . Within two weeks the Minister For Justice, Michael McDowell's was sounding a much more cautious note. He said that "if people engaged in a multi-million lawsuit, then it must have good chance of success. The Government should not simply rush into action to appear to be doing the popular thing when it could be a monumental waste of resources".

The chairman of the Irish Haemophilia Society, Mr. Brian O'Mahony criticised Mr. McDowell's and accused the government of lacking moral courage in its unwillingness to hold these companies accountable (27).

Pharmaceutical TNCs at times do act in irresponsible ways that prejudices the health of many people. In September 2001 thirteen of the world's leading medical journals, including The Lancet, The New England Journal of Medicine and the Journal of the American Medical Association, mounted a concerted attack on pharmaceutical companies accusing them of "distorting the results of scientific research for the sake of profits" (28). They claim that drug companies, "tie up academic researchers with legal contracts so that they are unable to report freely and fairly on the results of the drug trials" (29). This is an extraordinary and a very worrying development in terms of public health. It should be investigated immediately by competent and well-resourced government agencies and the medical profession itself.

The chances of that happening in the present globalized world environment is close to zero. In today's world TNCs are kings who are regularly wooed by governments and who dispense largesse to many doctors in the form of free trips to international drug-sponsored conferences. This courageous intervention by the reputable medical press is timely but once again it received little media coverage. This pressure by corporations on researchers will further deepen the distrust that many feel about the reliability of in-company research trials, where billions of dollars may either be made or lost if a drug proves successful or has to be discarded.

The Need to Strengthen Anti-trust Laws
Global anti-trust laws should be enacted to ensure that corporations do not grow so large that they enjoy effective monopolies as Microsoft does in the computer world. It controls 95 percent of the software run on desktop computers globally. During the anti-trust case taken by the US Department of Justice against Microsoft the government produced accusations that Microsoft bullied potential competitors out of the market. At the end of the trial in June 2000, Judge Thomas Jackson found Microsoft guilty of, "misusing its monopoly power and determined that it should be broken up" (30). It was fortuitous for Microsoft that the appeal should be heard during the new Bush administration. The US Court of Appeal, while it upheld a number of Judge Jackson's conclusions, criticised the judge's behaviour during the trial, struck down a number of his conclusions and, most important of all, did not direct that Microsoft be broken up. It is still possible that the US government will appeal this judgement but few expect this to happen as the new Bush administration looks very favourably on big corporate America.

Apologists for TNCs, among them the vast majority of governments, politicians and publications like the Economist Magazine claim that in the long run everyone benefits by deregulating capital markets, privatisation and the other aspects of globalisation. A paper, "The Emperor has No Growth" challenges this accepted view and supports the claims of NGOs that globalisation has benefited the rich and hurt the poor. The research took the UNDP human development index as the basis of their comparison rather than the more crude Gross Domestic Product (GDP) tables. They looked at two periods in recent history 1960 -1980 when governments intervened to protect their citizens and the 1980 - 2000 when many government proclaimed their faith in the market to solve social inequalities. The researchers found that the period between 1980 and 2000 showed a very clear decline in progress. The poorest countries went from a per capital annual growth of 1.9 percent in 1960 - 1980 to a decline of 0.5 percent a year between 1980 and 2000. Things were even worse in the middle group of countries. They plummeted from 3.6 percent growth in 1960-1980 and to just under one percent in the period 1980 and 2000 (31). Market forces alone will not produce economic growth or human and earth well-being.

There is no doubt but that the pressure on TNCs to be more accountable is gathering strength in many countries. In October 2002 Linda Perham MP for Ilford North introduced a private member's bill in Parliament entitled Corporate Responsibility (core) bill. Her bill would require corporations with a turn over of more than £5 million to publish reports on the economic, social and environmental impact of their business. The bill did not become law but it is interesting that 230 MPs indicated that they would support such legislation.

I will give the final world in this chapter to Alan Simpson the Labour MP for Nottingham South who wrote in The Guardian (December 15, 1999) of the "need for an international agenda which reconnects trade to democratic accountability and environmental sustainability".

1. Ha-Joon Chang, 2002, Kicking Away the Ladder, Anthem Press, PO Box 9779, London, SW19 7QA, page 86.

2. Financial Market Lobbying; A New Political Space for Activists. The Corner House, PO Box 31137, Station Road, Sturminster Newton, Dorset DT1O1Y, UK, January 2002, page 2.

3. An Agenda for Fairness, CORI Justice Commission, Tabor House, Miltown Park, Dublin 6. Page60.

4. Mathew L. Wald, "E.P.A. Says It Will Change Rules Governing Industrial Pollution" The New York Times, November 23, 2002, webpage http:www.nytimes.com/2002/11/23.

5. Robert Tait, "Bush warned to act now to curb global warming", The Scotsman, June 8th 2001, page 23.

6. John Vidal, "George Bush's America" The Guardian, February 1, 2002.

7. Borger, Julian, "All the president's businessmen", The Guardian (Supplement), April 27th 2001 page 2 and 3.

8. George Monbiot, "Stealing Europe", The Guardian, June 20th 2001

9. Leigh, David. "Clarke is not fit to lead the Tory party" The Guardian, June 25, 2001, 14.

10. Monbiot, George, "Cats gaffes", The Guardian, March 9, 2001.

11. Charlotte Denny and Larry Elliot, "The bananas for banking agenda", The Guardian, April 17, 2002.

12. Eibhir Mulqueen, "Closure of Aventis means loss of 230 jobs", The Irish Times, April 13, 2002, page 17.

13. Gandof, Michael H. and Zeff, Setphen, A, "Enron's Victims can Blame Congress", The International Herald Tribune, January 24, 2002, page 8.

14. Frank Rich "All the President's Enrons", The New York Times, July 6, 2002, page A13.

15. Associated Press Washington. "Agencies gave Enron US1$.2b in loans", Taiwan News, February 26, 2002, page 14.

16. Barry James, "challenges of development for corporate responsibility", International Herald Tribune, August 19, 2002, page 5.

17. Ibid, page 5.

18. The New Scientist, September 7, 2002, page11.

19. Barry James, op. cit. page 5.

20. Hertz, Noreena, 2001, Big Business Buys Politics, William Heinemann, London.

21. David C. Korten, 1995. When Corporations Rule the World, Kumarian Press, Inc.,West Hartford, Connecticut, page 375.

22. Codes in Context, TNC Regulation in an era of Dialogue and Partnership" The Corner House, February 2002, PO Box 3137, Station Road, Sturminster Newton , Dorset DT10 1YJ, UK, page 2.

23. Ibid. page 5.

24. UNDP, Human Development Report: Globalization with a Human Face, Oxford University Press, Oxford, page 100. Quoted in Codes in Context: TNC Regulation in an Era of Dialogues and Partnerships, February, 2002, page 17.

25. Monbiot, George, "Turn the Screw", The Guardian (Supplement), April 24, 2001, page 15.

26. Paul Brown, "Mexico's vital gene reservoir polluted by modified maize", The Guardian, April 19, 2002, page 19.

27. Christine Newman, "Haemophilia society criticises McDowell", The Irish Times, November 23, 2002, page 2.

28. Boseley, Sarah, "Drug firms accused of distorting research", The Guardian, September 10, 2001, page 2.

29. ibid.

30. Lillington, Karlin, "Government change may mean lighter penalty for Microsoft", The Irish Times, July 6, 2001, page 11.

31. Steele, Jonathan, "New research shows that economic growth worldwide has actually slowed during the era of globalisation", The Guardian, August 3, 2001.

BACK TO TOP