The Ten Worst Corporations of 1996

The United States is in moral decline. The Pew Charitable Trusts earlier this year announced that it was giving $1 million to fund a National Commission on Civic Renewal to study this moral decline and propose solutions. After holding three meetings early next year, the commission will file a report outlining the nature and extent of the moral decline and making specific recommendations on how to improve civic life. The commission's co-chairs: the Heritage Foundation's William Bennett and outgoing Senator Sam Nunn, D-Georgia."American leads the world in rates of murder, violent crime, juvenile crime, imprisonment, abortion, divorce and single-parent families, production of pornography, consumption of pornography, consumption of cocaine and other drugs. And that's just a partial list," says Bennett. "Something is wrong."Well, something is clearly wrong, but whether the Bennett/Nunn commission is structured in a way to paint a complete picture of this decline is doubtful. Bennett, after all, tends to focus his fire and brimstone outrage on street crime, while generally ignoring the moral depravity of corporate America.In announcing the formation of the Commission, Bennett failed to mention that the United States leads the world in corporate crime and violence, the destruction of the family by mass consumption of television, the proliferation of food outlets and the general mechanization and dehumanization of society.To show some good faith, the Commission might want to take a peek at the moral depravity of the largest U.S. corporations, since it is corporations, after all, which are society's most powerful members. Society, as they say, rots from the head down.So, why not start at the top?According to Bennett, the Commission will study the nation's moral decline during three one-day plenary sessions to be convened in Washington, D. C. According to the Commission, the 25 commissioners will "have the opportunity to enter into a dialogue with a wide range of Americans -- from scholars to community leaders -- who have wrestled with the challenge of civic renewal and will offer both analysis and concrete recommendations for the commissioners' consideration."The Commission might want to call Mark Whitacre, a former executive at Archer Daniels Midland to describe how ADM fixed prices on products that cost consumers hundreds of millions of dollars. Or maybe Richard Lundwall, the former Texaco executive, who taped his fellow executives making disparaging remarks about their fellow black employees. Or George Hacker, who is fighting the liquor industry's decision to start advertising on television. Or possibly Charles Kernaghan, the New York labor organizer who has launched a campaign to get The Walt Disney Company to pay decent wages in such Third World countries as Haiti, Thailand and the United States.Kernaghan is the longest shot of the bunch Not only is he fighting one of the nation's premiere entertainment companies, home to Mickey Mouse and Pocahontas, but guess who sits next to Nunn and Bennett on the National Commission for Civic Renewal? John F. Cooke, executive vice president, corporate affairs, for The Walt Disney Company, responsible for the company's worldwide corporate alliances, government relations and environmental matters.Imagine Kernaghan, recommending that, as an act of civic renewal, U.S. consumers stop buying Disney pajamas, stop watching Disney movies and TV and stop drowning our children in Disney toys. Imagine citizen leaders from northern Virginia, invited to testify before the Bennett/Nunn commission, telling their story of how, as an act of civic renewal, they rose up to defeat a gargantuan Disney theme park that would have destroyed their rural countryside.Well, imagine all you want. The commission is stacked.The Ten Worst Corporations of 1996 might be a more open forum than the Bennett/Nunn commission to document the moral depravity of U.S. leaders. This annual effort focuses attention on the inevitable effects of allowing the political economy to be run through the unaccountable and undemocratic structure that is the corporation.Unless the Bennett/Nunn commission turns its focus upward, it is sure to fail to reach one of its primary goals -- "to reach consensus on clear, practical, and dramatic recommendations for enhancing the quality of citizenship and civic life." Too many citizens have been run over by the corporate machine. Their voices must be heard.ADM: SUPERRACKET TO THE WORLDArcher Daniels Midland (ADM) is a cutting edge corporation -- a self-congratulatory/welfare queen/crime boss combo.Dwayne Andreas, the chair of the board of Archer Daniels Midland, went before a packed shareholders meeting in October and apologized for the crimes committed by his company."I consider this a serious matter which I deeply regret," he said. "The buck stops with me. You have my apology and my commitment that things are arranged so that this will never happen again."Just one week before the shareholders meeting, ADM pled guilty to various felonies and paid a $100 million criminal fine -- the largest criminal antitrust fine ever -- for its role in conspiracies to fix prices to eliminate competition and allocate sales in the lysine and citric acid markets worldwide. The two-count felony charges filed against ADM alleged that the company conspired with other producers (including previously charged Ajinomoto Co. Inc., Ryowa Hakko Kogyo Co. Ltd. and Sewon America Inc.) in the lysine and citric markets to set prices and allocate sales from 1992 to 1995.Victims and shareholders were livid over the plea agreement, under which all executives and employees of ADM except for two -- will he protected from prosecution if they cooperate with the government. Dwayne Andreas, the big cheese, was protected. Stock analysts applauded the agreement, saying that ADM could now put the matter behind it, and ADM stock went up after the announcement of the plea.Federal officials said that as a result of ADM's crime, seed companies, large poultry and swine producers and ultimately farmers paid millions more to buy lysine, an amino acid used by farmers as a feed additive to ensure the proper growth of livestock. It is a $600-million-a-year industry worldwide. In addition, manufacturers of soft drinks, processed foods, detergents and others paid millions more to buy the citric acid additive, which ultimately caused consumers to pay more for those products. Citric acid is a flavor additive and preservative produced from various sugars. It is found in soft drinks, processed food, detergents, pharmaceuticals and cosmetic products. Citric acid is a $1.2 billion a year industry worldwide.CATERPILLAR: PATCO REDUXUnion busting ought to be a crime.Unfortunately, in the United States, union busting is perfectly legal.Ronald Reagan busted the air traffic controllers union in 1980. Last year, Caterpillar effectively busted its union.The conflict began when the company locked out its employees in 1991. The United Auto Workers (UAW) went on strike in 1992. When Caterpillar said it would permanently replace the workers, the UAW buckled and suspended the strike. For two years, the workers remained on the job without a contract.In June 1994, the workers went back on strike. Because the workers were striking against allegedly illegal labor practices, Caterpillar was barred from permanently replacing them. Instead, the company replaced them with temporary replacements.Again, the strike was called off and workers were forced to return to work without a contract and on terms imposed by Caterpillar -- no wage increase, a two-tiered wage structure, and the right for the company to demand work periods longer than eight-hour days with no overtime pay.Union-busting may be legal, bur Caterpillar has repeatedly broken the law in its efforts to suppress its workers.The National Labor Relations Board (NLRB) has issued more than 300 unfair labor practice charges against Caterpillar, a record for a labor dispute. The NLRB issued its first rulings on these cases earlier this year, finding the company to have committed numerous violations of the National Labor Relations Act. Caterpillar Vice President Wayne Zimmer responded by calling the NLRB "biased."Zimmer dismisses the complaints as nothing more than a part of a UAW campaign to harass the company. "Harassing companies through the regulatory process is a classic tactic of big labor, and this is another step in the UAW's long-running campaign to harass Caterpillar into signing a patter labor agreement," he says. Caterpillar has appealed the NLRB decision.DAISHOWA INC.: KILL THE MESSENGERThere is a theory of corporate criminology that goes something like this: the culture of a corporation is reflected by how the company reacts to wrongdoing after the wrongdoing is exposed. Docs the company cover-up, attack the messengers and the whistleblowers? Or does it seek out the root of the problem, listen to its critics and reward those instrumental in correcting the wrongdoing and ensuring it will not happen again? By this standard, Daishowa, Inc., the Japanese multinational, appears rotten to the core.In 1989, the government of Alberta, Canada granted land timber licenses to virtually all 4,000 square miles of Lubicon Cree territory to a unit of Daishowa.In 1991, in an effort to pressure Daishowa not to clearcut the land until the Lubicon's land rights were resolved, Friends of the Lubicon, a group of activists in Canada, organized a boycott against paper bags manufactured by Daishowa.The boycott worked, as more than 45 companies, included fast-food chains, stopped buying bags from Daishowa, forcing the company to hold off clearcutting for the last four years.The company reacted harshly in January 1995, suing the organizers of the boycott, claiming tortious interference with Daishowa's business.Earlier this year, an appellate court in Toronto, Ontario, Canada ruled that the lawsuit against the boycott can go to trial, and ordered the Friends to suspend the boycott.The decision has been widely criticized throughout Canada as an effort by a foreign multinational to silence citizen dissent in Canada. "The decision seriously jeopardizes freedom of expression," says lawyer Karen Wristen of the Sierra Club Legal Defense Fund which is representing the boycotters. "The Court has said essentially that the intention to cause economic harm made this boycott illegal. But every successful boycott results in economic impacts on the company targeted. It is difficult to imagine how any boycott could be said to be legal following this reasoning."The Lubicon are a band of 500 Cree Indians who live in northern Alberta. When, in 1989, the government of Alberta sold forestry rights to the 4,000 square miles of Lubicon land to Daishowa to clear cut, the Cree issued a public call for help, and Friends of the Lubicon, which had organized in 1989 to increase the level of public knowledge of the plight of the Lubicon and to encourage a land claim settlement with the federal government, stepped in.The Friends launched a boycott of Daishowa consumer products, primarily paper bags. The Friends contacted fast food chains that bought Daishowa paper bags and called on the chains to purchase the paper bags from another company.The boycott campaign was "enormously successful," in the words of the appellate court. At least 43 companies representing 4,300 retail outlets joined the boycott. The boycott also affected the ability of Daishowa to acquire new customers. As a result of the boycott, Daishowa has agreed not to log Lubicon lands, but the decision is reviewed on a "year-to-year basis," according to Daishowa spokesman Tom Cochran.DAIWA BANK LTD.: MISSING $1 BILLIONU.S. citizens put billions of dollars every year for safekeeping in financial institutions, believing that their money is banked safely, securely and conservatively.Think again.Hot shot young traders around the world are violating the collective consumer trust by crapshooting billions of dollars of client monies through risky, reckless -- and sometimes criminal -- investments. Big bank executives are letting these hot shots get away with it, and the federal regulators are letting the banks get away with lax supervision. This year, the hot shots at Daiwa Bank Ltd. were caught red handed, but bank executives tried to cover their young tracks. The cover-up backfired badly.Daiwa, a Japanese bank headquartered in Osaka, Japan, is one of Japan's largest commercial banks and maintains branches around the world, including, until recently, offices in New York and 10 other states in the United States. The Daiwa Bank Trust Company is a United States subsidiary of Daiwa.In April, Daiwa pled guilty to 16 federal felonies and paid a $340 million criminal fine -- the largest criminal fine ever imposed in the United States. Earlier, federal regulators barred the company from doing business in the United States.Mary Jo White, the U.S. Attorney in Manhattan, told reporters at the time that her office made many efforts to obtain the bank's cooperation in the criminal investigation, "but no meaningful cooperation was ever given.""These corporate crimes represent companies at their highest levels acting at their worst," White said.According to federal officials, Daiwa committed a long series of crimes, falsifying records and deceiving regulators.First, from 1984 through 1995, Daiwa, acting through Toshihide Iguchi, a former executive vice president of Daiwa's New York branch, sold without authorization billions of dollars worth of securities that Daiwa held in custody for its customers. As of July 1995, when Iguchi disclosed his crimes to Daiwa, approximately $1.1 billion was missing from Daiwa's custody account, $377 million of which was owned by or held in trust for Daiwa's customers. Iguchi concealed his theft of customer securities by falsifying Daiwa's books and records, which in turn caused Daiwa to send false account statements to its customers.Second, Daiwa obstructed examinations by the Board of Governors of the Federal Reserve System and lied to the Federal Reserve about Iguchi's role in securities trading at the branch. During the course of regulatory examinations, including a Federal Reserve examination in 1992, Daiwa temporarily relocated its traders from its downtown office, where they were supervised by Iguchi, to its midtown office. Then the company disguised the trading room downtown to make it look like a storage room.Third, federal officials charged that Daiwa actively concealed Iguchi's crimes and the attending loss from U.S. regulators, from its customers -- and from the public. For two months after Iguchi confessed to the bank in July 1995, Daiwa sought desperately to hide the losses. Daiwa made extensive false entries in its books and records, prepared and sent false account statements, filed a false report with the Federal Reserve, explored plans to hide the loss permanently by moving it off-shore, secretly replaced the missing $377 million of customer securities and engaged in a fictitious transfer of $600 million worth of non-existent securities.Finally, Daiwa admitted committing similar crimes in connection with trading losses incurred by its wholly-owned subsidiary, Daiwa Bank Trust Company.When initially confronted with the charges, Daiwa executives indicated they would contest them. But as the evidence against the company came to light, it relented.DISNEY: MICKEY MOUSE GOES TO HAITIThe labor organizer who brought Kathie Lee Gifford to her knees over the issue of child labor in Central America has his sights on another high-profile target -- Mickey Mouse.Charles Kernaghan, the executive director of the National Labor Committee in New York City, has launched a campaign to get The Walt Disney Company to pay decent wages in such Third World countries as Haiti, Thailand and the United States. Disney has reason to worry. With high-profile corporate campaigns, Kernaghan has already forced Kathie Lee, The GAP, Inc., and Liz Claiborne to the table to negotiate the rights of the young Central American workers who make GAP jeans, Liz Claiborne sweaters, and Kathie Lee pants.A report released earlier this year by the National Labor Committee found that more than half of the approximately 50 assembly firms now operating in Haiti are violating the country's minimum wage law. In an extensive investigation of 15 assembly firms now operating in Haiti, 10 were paying less than the legally mandated minimum wage of $2.40 per day -- 30 cents an hour.Haitian contractors producing Mickey Mouse and Pocahontas pajamas for U.S. companies under license with the Walt Disney Company are in some cases paying workers as little as $1 per day-12 cents per hour -- in clear violation of Haitian law, according to the National Labor Committee. The pajamas are sold at Wal-Mart, Sears and J.C. Penney.Kernaghan says that Disney is using five factories in Haiti to produce children's clothing -- featuring Pocahontas, the Lion King, the Hunchback of Notre Dame and Mickey Mouse. The workers are being paid approximately 28 cents an hour, or about seven cents for every garment they produce.For an $11.97 pair of Pocahontas pajamas sold at Wal-Mart, the workers in Haiti are getting seven cents, according to the National Labor Committee."The workers are living in debt as indentured servants," Kernaghan says. "People go to bed hungry. People who are making Disney shirts are living in utter misery. The workers tell us 'Please bring Disney down here. All we want to do is talk to Disney. We want the jobs. We need the jobs. When they see how we live, we think Disney would like to discuss with us how to improve the circumstances."Kernaghan says that unlike Kathie Lee, who relented in response to citizen pressure and joined a federal task force to wipe out child labor in the U.S., "Walt Disney is refusing everything.""I'm getting sick of this," Kernaghan says. "For all of its so-called family values, Disney has turned out to be a vicious bottom-line company."Disney spokesperson Chuck Champlin says the company has conducted numerous inspections of its licensees' factories in Haiti and concluded that they are "models." He denies that any licensee is paying its workers less than the minimum wage. Asked whether Disney would be willing to accede to the Haitian workers' call for a living wage -- 58 cents an hour -- Champlin says, "The problem is, we don't own the factories; we are dealing with a licensee." He adds, "The request should not come to us," but to the licensees.Asked whether Disney should use its leverage to require its licensees to pay a living wage, Champlin says that would be "an inappropriate use of our authority." Disney contracts require licensees to follow local law, but when the licensees operate within the law, "we do not have specific authority to act," he says.FREEPORT MCMORAN: MINING MENACEIn 1967, in the early days of the Suharto dictatorship, Freeport McMoRan negotiated a contract with the Indonesian government that gave the multinational giant exclusive mining rights to the then recently discovered Erstberg copper deposit in Irian Jaya, the western half of the island of New Guinea in Indonesia. In 1988, Freeport discovered Grasberg, a huge copper and gold deposit. A 30-year contract giving the company unlimited nghts to the island's copper and gold soon followed.Today, the company operates a virtual colony in Irian Jaya, where it maintains exploration rights to about seven million acres and operates the world's largest gold mine and the world's third largest copper mine. The brutal Suharto regime controls about 9 percent of PT Freeport Indonesia, the country's largest taxpayer.Indonesian environmental groups charge that Freeport has dumped mine tailings from its open-pit copper mine into rivers for 16 years and have warned of health problems that are being covered up by the Indonesian dictatorship.Freeport categorically denies the charges.Human rights groups have criticized Freeport for its complicity in human rights violations committed by the Indonesian military in the vicinity of the mines.In April 1995, the Australian Council for Overseas Aid (ACFOA) reported that 37 Irianese civilians had been killed by Indonesian military personnel operating in an area of a Freeport mine, and alleged that Freeport security personnel "engaged in acts of intimidation, extracted forced confessions, shot three civilians, disappeared five Dani villagers and arrested and tortured 13 people." In August 1995, Bishop Munninghoff of the Roman Catholic Church of Jayapura published a detailed report which reaffirmed many of the allegations in the ACFOA report and included additional allegations, including "abuses at the Freeport workshop where three civilians died under torture."The company denies that it assists any "military personnel involved in combat operations," but admits that it provides "food, transportation and shelter to military personnel."After riots broke out around Freeport's mining operations in March 1996, the company's CEO, Jim Bob Moffet, flew from the United States to Irian Jaya to meet with community leaders. One month later, Moffet offered to place 1 percent of PT Freeport Indonesia's revenues into a community trust fund.Community leaders rejected the offer because more than 96 percent of the money will be given to the military and government-sponsored programs and local people will have no voice in how the money will be spent.In April 1996, the Amungme people of Irian Jaya filed a $6 billion class action lawsuit against Freeport in U.S. federal court in New Orleans. The lawsuit alleges human rights violations and environmental damages caused by Freeport's Indonesian operations. The company has said that the lawsuit is "frivolous and opportunistic" and has "no basis in fact." So far, the company's efforts to have the case thrown out of court have failed.GERBER: THREATENING GUATEMALAIn a little-noticed victory for Gerber Products Company and other multinational corporations seeking to upend national health and safety laws as barriers to international trade, the Supreme Court in Guatemala earlier this year exempted imported baby food products from the country's tough infant health law.According to former UNICEF legal adviser Leah Margulies, the Supreme Court decision represents the culmination of a successful four-year campaign waged by Gerber to force Guatemala to allow imports of Gerber food with packages picturing the healthy, fat Gerber baby. In 1983, Guatemala became one of the first countries to adopt the International Code of Marketing of Breast Milk Substitutes into law. The code and Guatemala's law were developed to protect the lives of infants by promoting breast-feeding over breast-milk substitutes.The law forbids the use of pictures of babies on baby food labels for children under two years of age. One goal of the law and the code is to counter aggressive marketing by baby food companies aimed at convincing mothers their products are superior to breast milk for their babies, Margulies says."You don't want to market these products in any way that would induce the mother to use them inappropriately or abandon breast feeding," Margulies says. "Breast milk protects infants from a wide range of diseases and is more nutritious than any man-made replacement.""A fat, chubby, blue-eyed westernized baby is an absolutely winning marketing strategy for Gerber," she says. "It seduces the mother into using baby food early. The idea behind the law prohibiting this kind of marketing is to minimize the corporate seduction of the mother." According to Margulies, in 1990, the Guatemala Ministry of Health ordered Gerber to phase out use of the baby face from its packaging on foods for infants under the age of two.But, after several years had passed, it became clear that Gerber did not intend to make the necessary changes to comply with the law, and Guatemala notified Gerber that it could no longer sell the nonconforming products in the country," Margulies says.At this point, Gerber began threatening Guatemala with trade sanctions under the General Agreement on Tariffs and Trade (GATT) and other trade measures. Gerber argued to the Guatemalan government that the country was violating its Gerber baby trademark by not allowing it to use the picture on its food labels."Upon the favorable and permanent resolution of this matter, we will withdraw all complaints before the CBI [Caribbean Basin Initiative], GATT and any other future instance before the authorities of the General System of Preferences," wrote Gerber's Vice President for Latin America, Frank T. Kelly to the president of Guatemala in a letter dated June 16, 1994.After years of resisting Gerber's pressure, Margulies says the government stopped enforcing the law in 1995, and, earlier this year, the Guatemalan Supreme Court held that imported products were exempted from the law's dictates.Gerber spokesperson Van Hindes says that the company has been marketing infant food products, including pureed fruits, vegetables, meats and infant cereals in Guatemala for 50 years. Hindes says that no Gerber-brand infant formulas are marketed or sold in Guatemala. Hindes calls the infant health law a "trade restriction placed on U.S. goods by the government of Guatemala.""The courts ruled that the law did not apply to our product, and we were allowed to continue to import and sell our baby food, with the use of the Gerber baby trademark," Hindes says.Lori Wallach, director of Public Citizen's Global Trade Watch, says that the Supreme Court of Guatemala only agreed to override its own domestic health laws because of the "threat of huge trade sanctions."MITSUBISHI: BOYCOTT IN FULL GEARWhat do Value-Rent-A-Car, Kirin Beer, Nikon Camera and Mitsubishi automobiles have in common? These products are produced by companies controlled by Mitsubishi Corporation, the Japanese consumer products giant, that is also known for destroying tropical rainforest lands and threatening endangered species and indigenous peoples around the world.Mitsubishi has timber operations on nearly every continent. It exports logs from the Pacific Northwest and trades in logs from Canada to Southeast Asia to the Amazon. In Canada, the company owns Alberta-Pacific, the largest single-line pulp mill in the world. Mitsubishi also owns the world's largest milling operation, Eidai do Brazil, in the Amazon.Since 1989, the San Francisco-based Rainforest Action Network (RAN) has urged consumers in the United States not to buy consumer products produced by Mitsubishi.The Boycott Mitsubishi Campaign is a worldwide effort to stop Mitsubishi Corporation's "destructive activities in the world's forests," according to boycott director Donna Parker.RAN continues to call for a total boycott of all products or services from Mitsubishi companies, including Mitsubishi automobiles, trucks, bicycles, televisions, VCRs, fax machines, microchips, Nikon cameras, Kirin beer, Value-Rent-A-Car and the Bank of California."Mitsubishi is devastating thousands of square miles of forests and broadly contributing to cultural disintegration," Parker says.Steve Wechselblatt, vice president of Mitsubishi International Corporation, says RAN's claims about the company "are not valid." "We have rainforest operations only in one place -- in Brazil," Wechselblatt says. "And its not a rainforest logging operation. The one in Brazil is the only one we have in the world."Wechselblatt admits that the company is also a trading company. "But it handles less than 0.03 percent of tropical timber used around the world," he says. "Our trade is not really great. We are not the largest company that trades tropical timber. RAN knows this. We are not even in the top five."What could Mitsubishi do for RAN to call off the boycott?"We want Mitsubishi to stop the destructive practices and look at systemic solutions," Parker says. "And we want them to stop any plans for new logging projects in rainforests. They must put real dollars and time into alternatives to trees -- like kenaf. Selling their operations is not acceptable. If they sell, someone else will do what they are now doing. They have to change their operations."SEAGRAM'S: ABSOLUT PROFITSIn June of this year, liquor giant Seagram Company broke the 48-year voluntary ban on broadcast advertising for distilled spirits. The company has now begun an expanded television advertising campaign for its Chivas Regal scotch and Crown Royal whiskey products. The first markers affected appear to be Boston and Houston, though the ads are expected to air also in Milwaukee, Portland, Oregon and San Francisco.Within days of Seagram's commencement of advertising on NBC-affiliate KRIS in Corpus Christi, Representative Joseph Kennedy, D-Massachusetts, and a bipartisan group of more than a dozen House of Representatives members introduced legislation to ban all advertising for distilled spirits from radio and television."Seagram's decision to start running television ads is a cynical, profiteering attempt to exploit a new generation of young people by attracting them to drink hard liquor," says George Hacker, director of alcohol policies at the Center for Science in the Public Interest (CSPI). "This is a classic example of putting profit ahead of the public's health. The action demonstrates the futility of industry self-regulation and the desperation of liquor marketers."Seagram's spokesperson Bevin Gove says the company is opposed to the Kennedy legislation. "Distilled spirits should be able to access broadcast advertising in a responsible way, much in the way that beer and wine currently do," Gove says.When asked whether it was easier to get drunk drinking whiskey than drinking wine or beer, Gove says "alcohol is alcohol."Since Prohibition, the hard liquor industry has voluntarily agreed not to advertise, first on radio and then on television. Since 1980, the consumption of spirits has declined steadily. Beer and wine are currently advertised on television and radio, but until Seagram's recent efforts to place television ads for Absolut vodka and Crown Royal, distillers restricted their advertising to print media and billboards.The Seagram's move has opened the door for the whole industry. A few months after Seagram's aired its ads in Texas, the Distilled Spirits Council of the United States announced the industry was scrapping its self-imposed television ad ban. Some distillers recently began exploring advertising on the Internet, setting up sites on the World Wide Web.TEXACO: DEEPLY ASHAMED"This diversity thing. You know how black jelly beans are." "All the black jelly beans seem to be glued to the bottom of the bag.""I'm still having trouble with Hanukkah. Now we have Kwanzaa."Conversation at a Klan meeting? No.A coffee roundtable sponsored by the Michigan Militia? No. These are, instead, the now infamous words spoken by high ranking executives of the giant multinational oil company Texaco at an August 1994 meeting about minority employees who brought a race discrimination lawsuit against the company. The lawsuit alleged that Texaco systematically discriminated against its minority employees and fostered a racially hostile environment.One executive who attended the meeting, Richard Lundwall, who at the time was the senior coordinator for personnel services at Texaco's finance department, was responsible for keeping minutes of the meetings. He kept a cassette recording of the meetings.In August 1996, Lundwall was dismissed from his job. He took the tape with him and turned it over to the lawyers representing Texaco's minority employees. Not only does the tape show blatant racism, it shows clearly the executives planning the destruction of documents demanded by plaintiffs attorneys representing minority employees in the lawsuit.In reference to one key document, company treasurer Robert Ulrich says, "you know, there is no point in even keeping the restricted version anymore -- all it could do is get us in trouble. That's the way I feel. I would not keep anything."Lundwall agrees, saying "let me shred this thing and any other restricted version like it."When these words hit the front page of the New York Times in early November 1996, shock waves were sent through the oil giant. In an extraordinary act of corporate contrition, Texaco Chairman and CEO Peter Bijur took to the airwaves. In a speech broadcast to all Texaco employees on November 4, 1996, Bijur said the "alleged behavior violates our code of conduct, our core values and the law."Texaco appointed an independent counsel to investigate the allegations. "Wherever the truth leads, that is where we will go," Bijur said. "Appropriate disciplinary action, including termination, will be taken against employees who are involved. We will not tolerate disrespect or prejudice in this company. Anybody who behaves like this will not work for Texaco."But civil rights groups were not appeased by Bijur's words. They point to a pattern of discrimination within the company. The discrimination lawsuit against the company unearthed evidence showing that black workers were harassed, that mid-level executives threatened to fire black employees who charged racial discrimination and that very few blacks make it into Texaco's executive suites. Of the 873 executives at Texaco who make more than $106,000 annually, only six -- or .7 percent, are black.A wide range of civil rights groups threatened to call for a consumer boycott of Texaco products if the company did not quickly settle the discrimination suit.With the clock ticking on the boycott threat, Texaco announced a $175 million settlement of the discrimination suit on November 15. If approved by the federal court, it will be the largest amount ever paid in a U.S. racial discrimination lawsuit.The terms of the settlement require Texaco to pay $140 million to minority employees at the company. Every minority employee will receive a 10 percent pay increase, and an additional compensation pool for minority employees will also be established. The company will allocate an estimated $35 million for restructuring its business operations to address concerns raised in the suit. It will establish a task force to review its human resources policy; require diversity and sensitivity trainings for its workforce; and change its promotion process.The U.S. Attorney's office in New York is continuing investigations into obstruction of justice charges against Texaco employees who may have destroyed documents related to the case. On November 20, the U.S. Attorney announced it had brought criminal charges against Richard Lundwall, the employee who gave the tapes to the Texaco employee plaintiffs, for his role in destroying documents.


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