How low can you go?

The corruption of corporate imperialism

If the bribery and cronyism that have so incensed anti-corruption crusaders are to be exposed and opposed, so too must corporate profiteering and monopolistic practices which heap misery upon people and plunder natural resources the world over. Above all, stresses Aziz Choudry, a clear position must be taken to confront the corrupt worldview which underpins the neoliberal agenda of shaping the world in the interests of big business.

Many corporations dogged by popular opposition to their environmentally devastating projects have rebranded themselves as ecological crusaders, hiring public relations consultants to greenwash their activities, and seek “dialogue” with their critics. So too the language of anti-corruption and good governance is being wheeled out in the face of growing popular resistance to corporate globalization as another weapon in the battle to give capitalism a more acceptable face while increasing profits and market share.

Enron is hardly the case of one bad corporate apple in a box of good ones. It - like Rio Tinto (remember their exploits at Panguna in Bougainville, Freeport in West Papua, the Ranger and Jabiluka uranium mines on Mirrar Aboriginal lands in Australia, and many others?), Shell (remember the murder of Ken Saro Wiwa and the Ogoni struggle against oil extraction in the Niger Delta?), Placer Dome (remember the Marcopper accident in Marinduque in the Philippines?), Vivendi (remember the July 2001 conviction of Alain Maetz, a senior manager in Vivendi’s water division, for bribing the president of the city council in Milan, and its rapacious snapping up of water and wastewater facilities in over 100 countries?), Bechtel (remember how a popular revolt overturned water privatization in Cochabamba, Bolivia, and how Bechtel is using a bilateral investment treaty to sue the Bolivian government for compensation?), General Electric (remember these generous sponsors of Reagan and George W. Bush campaigns, and their former CEO “Neutron Jack” Welch, ruthlessly slashing 100,000 jobs from 1981-1985?) and (how could we forget?) Arthur Andersen - is among the funders of the Transparency International movement which describes itself as “the world’s leading non-governmental organization fighting corruption”. Transparency International (TI) is the Secretariat of the International Anti-Corruption Conference (IACC) Council. The 11th IACC will be held in Seoul in May 2003.

There is considerable overlap between TI’s corporate funders and the membership of the powerful industry lobby groups which continue to greatly influence international trade and investment rules. Peter Eigen, Chairman of TI, even believes that the “WTO is the natural universal guardian against corruption”, and clearly supports “free and unencumbered international trade” (presentation to World Trade Organization Symposium, Geneva, 29 April 2002).

Transnational corporations (TNCs) are also the true beneficiaries of IMF/World Bank and ADB (Asian Development Bank) structural adjustment programmes with their privatization, deregulation and liberalization dictates.

Interestingly, the founder and president of another of TI’s funders, Swiss industrialist Stephan Schmidheiny of the AVINA Foundation, who has served on the boards of Nestle, ABB, Leica and Swatch, also established the World Business Council for Sustainable Development and served as principal advisor for business and industry to the secretary general of the Rio Earth Summit. The WBCSD lobbied against the regulation of business at Rio and, together with the International Chamber of Commerce, set up a joint initiative, “Business Action for Sustainable Development”, in time for the World Summit on Sustainable Development in Johannesburg in August, chaired by former Shell chairman, Sir Mark Moody-Stuart.

TI’s focus fits snugly with the language of good governance and the phony moral supremacy of the free market which the World Bank, the ADB, the WTO, the OECD, the Bush administration, among others, all promote.

While corporations, some international NGOs and currency speculator George Soros team up to fight corruption, bribery and kickbacks, and to call for transparency and “open society”, global capital continues to influence trade and investment regimes throughout the world. Soros, whose Open Society Institute is another of TI’s funders, is no ally to peoples’ movements for justice and self-determination. An ardent advocate of capitalism, he just wants to polish its battered image. We should be very suspicious of dialogues and coalitions with business which purport to be “anti-corruption”.

The corruption of economic policymaking

Cronyism, public sector mismanagement, graft and corruption should be exposed and fought against. But, when it comes to identifying corruption, a different standard and definition seems to apply to the activities of transnational corporations in wielding political and economic influence. Are not privatizations that allow for monopoly or oligopoly control, price hikes, lower quality and inequitable access over essentials like water fundamentally corrupt? Isn’t financial deregulation that leads directly to people’s lives becoming gambling chips as their societies become casino economies obscene? Isn’t the agricultural trade liberalization foisted upon the Third World through structural adjustment programmes and free trade corrupt, given that the handful of transnationals which control most of the world’s food crops are based on generous state support, land theft, dispossession and colonial greed?

The role of corporations in corrupting and influencing trade rules in order to serve their interests is no secret. Percy Barnevik, founder and former CEO of the ABB Industrial Group (another funder of TI!), succinctly defined globalization as “the freedom for my group of companies to invest where it wants when it wants, to produce what it wants, to buy and sell where it wants, and support the fewest restrictions possible coming from labour laws and social conventions” (quoted in The Success of Being Dangerous: Resisting Free Trade and Investment Regimes, Gerard Greenfield, 2000).

Take the WTO’s General Agreement on Trade in Services (GATS). According to David Hartridge, former Director of the WTO’s Services Division, “without the enormous pressure generated by the American financial services sector, particularly companies like American Express and Citicorp, there would have been no services agreement” (“What the General Agreement on Trade in Services can do”, speech to Opening markets for banking worldwide: The WTO General Agreement on Trade in Services, 6 January 1997, London).

The European Commission says: “The GATS is not just something that exists between governments. It is first and foremost an instrument for the benefit of business”. (“Where next? The GATS 2000 negotiations”, European Commission, DG Trade, June 1998).

Incoming WTO Director-General Supachai Panitchpakdi acknowledges that pressure from the corporate sector had influenced GATT/WTO negotiations. The agreement on intellectual property (TRIPS) “was one of the glaring examples of the pressure coming from the corporate sector on governments that ultimately resulted in some agreements being forced on countries that we have to try to prevent” (speech, World Development Movement summer conference, London, 8 June 2002).

The Intellectual Property Committee (a coalition of 13 large US corporations, including DuPont, Pfizer and TI supporters IBM, General Motors, Rockwell, Bristol-Myers and Merck) worked with the US Trade Representatives on a proposal to standardize world intellectual property laws along US lines, and to make them binding and enforceable under the WTO. They sought protection against the “theft” of royalties from brandname clothing, music and videos, and “proper” returns and incentives for investment in research and development in drugs and technology. So TRIPS was born. The appropriation, commodification and privatization of biodiversity, indigenous and traditional knowledge by mainly Northern-based corporations continues unabated.

Isn’t the catastrophic death and suffering, especially the AIDS crisis in Southern Africa, caused by profiteering drug companies’ pricing policies and monopoly rights, reinforced by the WTO TRIPS Agreement which they had lobbied to create, sheer depravity? Definitely not for one of TI’s funders, the powerful US drug TNC cartel, the Pharmaceutical Research and Manufacturers of America (PhRMA), which has lobbied to ensure that the US administration carry out their agenda. This has led to threats of trade sanctions against several countries, like India, South Africa, Brazil, Argentina and the Dominican Republic over compulsory licensing or parallel importation laws, as well as a notorious court case against the South African government. PhRMA actions aren’t just corrupt. They’re genocidal.

Ninety-six out of the 111 members of the US delegation negotiating on intellectual property during the Uruguay Round came from the private sector. Diplomats in Geneva say that the pharmaceutical industry drafted much of TRIPS, while the US government was its lead advocate. At the start of the Uruguay Round, the US negotiator deputed to head the delegation on what was to become the WTO Agreement on Agriculture was a former vice-president of agribusiness giant Cargill, who later returned to his corporate job.

The September 1997 “banana war” WTO ruling against the EU’s banana import scheme for Caribbean exporters illustrates the domination of TNCs in the WTO system. The complaint was filed by Ecuador, Guatemala, Honduras, Mexico and the US, although the US does not export bananas. The US filed the case on behalf of US-based TNC Chiquita which dominates the Latin American banana industry, which in turn claimed the ruling to be a victory for free trade. Under the North American Free Trade Agreement’s (NAFTA) controversial Chapter 11 on investment, and in many lesser-known bilateral investment agreements, private companies have enforceable rights to sue governments for laws or policies which they say affect actual or potential business activities. Such agreements place serious constraints on the ability of governments to enact social, public health and environmental policies.

In the US, corporations work very closely with US trade negotiators through 17 Industry Sector Advisory Committees (ISAC). The US International Trade Administration website claims that officials “work side-by-side with business leaders who serve as advisors to the US Government. The Department of Commerce and USTR [US Trade Representative] have joint responsibility for operating the advisory committees of the ICP [Industry Consultations Program]”. The Advisory Committee on lumber and wood products is comprised entirely of corporate executives and members of industry lobby groups.

Lobbying for lucre

Secretive consultations between big business and governments shape trade, investment and economic policy all over the world. Corporations need governments to maintain national economies in which they are subject to minimum regulation, and to advocate liberalization internationally. The list of corporate lobby groups at sectoral, national, regional and international levels is long. The US has the US Council on International Business, the American Chamber of Commerce and the Business Roundtable among others. New Zealand has the New Zealand Business Roundtable, the Life Sciences Network (promoting biotechnology) and the newly-formed Trade Liberalisation Network, set up explicitly to promote trade liberalization and sell free trade to the public in the face of growing opposition. In 1998 Wade Armstrong, former Director of Trade Negotiations in New Zealand’s Ministry of Foreign Affairs and Trade, told business representatives: “We very much want to ensure that New Zealand’s approach to the (WTO) negotiations is dictated by the business sector’s trading needs and priorities.”

The APEC Business Advisory Council (ABAC) has a formal advisory role to the Asia-Pacific Economic Cooperation (APEC) forum. A host of transnationals populate APEC’s various working groups, promoting private-sector interests such as deregulation, privatization and securing infrastructure projects. Current ABAC members include executives from Bombardier Transportation, Cargill, Honda, Fuji Xerox, Shell, Hopewell and American International Group. The OECD’s Business and Industry Advisory Committee was a key player in the attempt to draw up the Multilateral Agreement on Investment (MAI). These are powerful, well-funded activist organizations with privileged access to the top decision-makers in governments, but no accountability to the public.

The International Chamber of Commerce (one of the conference associates for the 10th IACC held last October in Prague) has especially close links with the WTO Secretariat. It calls itself the world business organization for promoting the global free market economy and claims 7,000 members in 130 countries. Former ICC President and CEO of Nestle, Helmut Maucher, said: “We want neither to be the secret girlfriend of the WTO nor should the ICC have to enter the World Trade Organization through the servants’ entrance” (“Ruling by consent”, Financial Times, 6 December 1997). This is the man who once said: “Ethical decisions that injure a firm’s ability to compete are actually immoral” (Leadership in Action: Tough-minded Strategies from the Global Giant, McGraw-Hill, 1994).

Just as there are revolving doors between government and the private sector the world over, so too we see Arthur Dunkel (until recently a director of Nestle and Credit Suisse), Director-General of GATT during the Uruguay Round, heading the ICC working group on International Trade and Investment Policy as well as being a registered WTO dispute panellist. Peter Sutherland (Chairman of Goldman Sachs International and former Co-Chair of BP Amoco, another TI funder), former EU competition commissioner and another former GATT Director-General, chairs the European Roundtable of Industrialists (ERT) which enjoys great influence at the European Commission. Mike Moore is reported to be “seriously considering providing international consultancy advice” (“Plenty Moore to come”, Business Monthly South, New Zealand, July 2002) after his term as WTO Director-General finishes at the end of August.

The ICC influences the WTO process directly through the intergovernmental organizations, and through the member governments of those organizations through its national committees. It has permanent representation at the WTO. It claimed credit for decisions taken at the first WTO Ministerial Conference in Singapore in 1996 to remove tariffs on IT products and establish new working groups on investment and competition. The ICC document “Multilateral Rules for Investment” reads like a blueprint for the draft text of the OECD’s failed MAI.

The 67-member US Coalition of Service Industries (USCSI), which includes TI funders Vivendi, General Electric, Enron, PricewaterhouseCoopers, and American International Inc., has lobbied US and other government representatives aggressively in the lead-up to the Seattle and Doha WTO meetings, and since. Their goal is to decrease barriers to trade in services by opening up foreign markets via international trade negotiations. To these corporations, essential services like water, healthcare and education are mere commodities to be bought and sold in the marketplace. In their 1998 submission to the US Trade Representative, the USCSI said: “We believe we can make much progress in the negotiations to allow the opportunity for US businesses to expand into foreign healthcare markets.”

Imperialist legacy

Who says that free trade and investment should be the yardstick with which to measure “good policy”? We need to reject the fake morality of market capitalism, in which transnational corporations are miraculously reborn as global guardians of integrity and valiant superheroes against corruption.

After all, where did these corporations come from? The planet Krypton? No. Classic colonialism spawned the prototypes of today’s corporations, like the East India Company. These companies worked hand in glove with colonial governments, enjoying monopolies, extracting enormous profit by plunder and conquest while destroying the societies, livelihoods and denying the rights to self-determination of the peoples whose lands they helped to subjugate. The beginnings of the Royal Dutch/Shell group were its registration in 1890 as the “Royal Dutch Company for the Exploitation of Petroleum Wells in the Netherlands East Indies”. Today’s TNCs continue this imperialist legacy with their quest for bigger profits and new markets, unrestricted access to cheaper labour, raw materials, manipulation of financial markets, and freedom to wander and plunder at will.

Trade and investment liberalization, deregulation and privatization are their preferred weapons of choice, although as we have seen, perhaps most vividly in relation to the recent actions taken by the Bush administration to protect US steel and farm producers, they have no hesitation in lobbying for protectionist domestic policies when it suits their interests. Do as we say but not as we do, remains a central tenet in the globalization gospel according to Washington.

In 1999, JK Galbraith wrote: “The crisis of the Washington Consensus is visible to everybody. But not everybody is willing to admit it. Indeed, as bad policies produced policy failures, those committed to the policies developed a defence mechanism. This is the argument that treats every unwelcome case as an unfortunate exception. Mexico was an exception - there was a revolt in Chiapas, an assassination in Tijuana. Then Korea, Thailand, Indonesia became exceptions: corruption, crony capitalism on an unimaginably massive scale, was discovered, but after the crisis hit. And then there came the Russian exception. In Russia, we are told, Dostoyevskian criminality welled up from the corpse of Soviet communism to overcome the efficiencies and incentives of free markets.

“But when the exceptions outnumber the examples, there must be trouble with the rules. Where are the continuing success stories of liberalization, privatization, deregulation, sound money and balanced budgets? Where are the emerging markets that have emerged, the developing countries that have developed, the transition economies that have truly completed a successful and happy transition? Look closely. Look hard. They do not exist” (“The Crisis of Globalization,” James K Galbraith, Dissent, Summer 1999, Volume 46, No. 3).

The Suhartos and Marcoses of this world are corrupt. But so too is an economic model based on an ideology which commodifies and redefines people, nature and essential services as things to be bought and sold in a mythical level playing field of a global free market economy. So too are the cosy, secretive consultations between big business and governments which shape national and international policies in a profoundly anti-democratic way, while the majority of us are denied any say about decisions which will impact our lives and communities until it is too late.

Some NGOs, trade unions and organizations are demanding more transparency and accountability from the WTO and other global and regional vehicles promoting corporate globalization. They are demanding that governments make their international trade and investment commitments subject to public scrutiny. But such demands often fall far short of rejecting the fundamentally flawed ideology which underpins such neoliberal imperialist projects. Unless these calls for increased transparency are based on a position that seeks to delegitimize and dismantle these agreements and institutions and which rejects neoliberal imperialism, they are likely to play into the hands of spindoctors who want us to believe that this exploitative and unjust model can be reformed.

If we are serious about fighting corruption in all its forms, we need to take a clear stand and ask some hard questions. Some of these must be directed squarely at the organizations which claim to be crusading against corruption. If bribery, nepotism and plunder by government officials and ministers are to be exposed and opposed, so too must corporate profiteering and monopolistic practices at the expense of ordinary people through privatization, deregulation and liberalization regimes. But moreover, we must take a clear position to confront the corrupt worldview which underpins the neoliberal agenda.                                                                                       

Aziz Choudry <> is an activist, writer and researcher on social and economic justice issues with Aotearoa (New Zealand)-based GATT Watchdog. The above is adapted from his presentation at the Asia-Pacific Conference on Corruption and Governance, 2 August, Quezon City, Philippines.

For more information on issues of corruption and governance, visit the website.

From Third World Economics No. 287 (16-31 August 2002)