Dirt Diggers Digest No. 75

March 5, 2007

The spreading scandal about poor conditions at Walter Reed Army Medical Center in Washington, DC is starting to focus on a little known company that was given a contract last year to handle various administrative and “operational support” functions that were privatized at the facility. The company, IAP Worldwide Services, demonstrates not only the problems of privatization but is also at the heart of any unholy combination of political influence, the revolving door and hedge fund investments.

Since late 2004 IAP has been run by Al Neffgen, who used to be the chief operating officer of KBR, the controversial military outsourcing company that is being spun off by Halliburton. Ownership of the company is controlled by the giant hedge fund Cerberus, whose chairman is former Bush Administration Treasury Secretary John Snow. The IAP board of directors includes former Vice President Dan Quayle and retired Marine Corps Commandant Gen. Michael Hagee. IAP has received federal contracts for logistical work in Iraq and Afghanistan as well as for supplying ice and electric generators in disasters such as Hurricane Katrina. Recently, one of its subsidiaries got a contract from the British government to provide pre- fabricated prison units. Click here to see a set of profiles of IAP and other Katrina contractors written by Dirt Diggers Digest editor Phil Mattera last year.

The company ranking season is here again, with advocates of corporate social responsibility (CSR) as busy in this game as traditional players such as Fortune magazine. Just out is a list of the “100 Best Corporate Citizens 2007,” assembled by The CRO Magazine, which inherited the project when it took over Business Ethics magazine. (CRO is short for corporate responsibility officer.) This year’s list continues the practice of giving high rankings not only to CSR favorites such as Green Mountain Coffee Roasters and Starbucks, but also to a slew of high-tech companies such as Advanced Micro Devices, Motorola, Intel, IBM and Texas Instruments as well as supposedly reformed sinner Nike. Click here for a critique of last year’s list by Dirt Diggers editor Phil Mattera.

Business Week published a cover story on January 29 featuring the third annual Global 100 list of what are said to be the world’s most sustainable corporations. Among the companies on the list, prepared by Innovest Strategic Advisors, are General Electric, Nike, Royal Dutch Shell, Toyota and Unilever.

Two other recent reports put corporations in a less favorable light. A study of the companies in the Standard & Poor’s 500 by the Ceres coalition and the Calvert socially responsible investing firm found that climate risk disclosure practices “are severely lacking” when it comes to cooperation with the Carbon Disclosure Project, an initiative of more than 200 institutional investors with assets of some $31 trillion. Less than half of the 500 companies responded to inquiries, and nearly one third declined to share their answers with all investors, designating their responses as “confidential.” The other report, commissioned by two giant public pension funds in California (CALPERS and CALSTRS), looked at the performance of electric utilities around the world in cooperating with the Carbon Disclosure Project and found similarly disappointing results.

The UK group Corporate Watch (not to be confused with CorpWatch in the U.S.) recently celebrated its tenth anniversary with a retrospective issue of its newsletter that includes a history of the group’s work and the presentation of the “Corporate Crime Awards.” The “honorees” were “ten companies who have displayed heinous, misguided, and altogether antisocial behaviour over the last ten years.” Among the companies were media octopus News Corp., supermarket chain Tesco, and the pharmaceutical giant GlaxoSmithKline.

The Corporate Watch website also has company profiles, reports and other resources.

Your editor was recently at a conference where he met a staffer from SOMO, the Amsterdam-based Centre for Research on Multinational Corporations. Although SOMO has been around for nearly 25 years, the Dirt Diggers Digest has never had occasion to mention it—an oversight that we are happy to rectify. SOMO’s main mission is to do research on companies for activists in the global south and for labor unions. Its website (which can be read in Dutch, French, Spanish or English) has publications going as far back as 1999, including works dealing with specific companies, with sectors and with issues surrounding corporate behavior. SOMO has done extensive work critiquing corporate social responsibility practices and works closely with initiatives such as OECD Watch.

Tim Stanley, founder of the pioneering legal web resource Findlaw, recently launched a new legal site that includes a tool for easy searching of federal court dockets. Justia allows you to enter the name of a company (or other party) and find all of the federal cases in which it is involved. It covers cases filed since the beginning of 2006. A recent search under “Wal-Mart” showed 905 hits.

The search results show the type of suit, cause of action, case number and court. There are also links to the actual dockets and other case information, but to use those one needs to have a PACER account with the Administrative Office of the U.S. Courts.

Like their filings with the Internal Revenue Service, the state tax returns of corporations—even publicly traded ones—have been considered confidential documents. The inability of independent analysts to scrutinize these returns have made it easier for large companies to hide the fact that many of them do not pay their fair share of state taxes. Michael Mazerov of the Center on Budget and Policy Priorities recently published a paper that promotes the idea of disclosing the returns of publicly traded companies and offers model legislation for states that might be inclined to take that step. In response to those who argue that releasing returns would put companies at a competitive disadvantage, Mazerov proposes a 24-month lag time for disclosure.

This year’s U.S. proxy season is seeing a significant push by activist institutional investors to get companies to agree to provide comprehensive disclosure on their contributions to political candidates and campaigns. More than 40 resolutions have been filed urging companies to reveal how funds from their corporate treasuries are spent trying to influence the political process. Central to this effort is the Center for Political Accountability. Following the Center’s publication of a report on political contributions by trade associations, companies such as General Electric and Hewlett-Packard have agreed to disclose their payments to trade associations for political purposes.

USA Today reported recently on a rare instance in which a branch of the Bush Administration is seeking to expand a form of business disclosure. The U.S. Department of Agriculture wants to be able to post retailer names and store locations on its website when announcing meat and poultry recalls. Currently, retailer names on any food recalls are not released unless the product in question is a store brand.

While the prospects of the USDA proposal are uncertain, given food industry opposition, a new law on the same subject is set to take effect in California on July 1. The California statute, which grew out of the frustration of state health officials with current USDA policy, allows for the release of retailer names in the more serious recall situations.

Rep. Henry Waxman of California is making good use of his new position as chairman of the House Committee on Oversight and Government Reform. The committee has hired a slew of investigators and is holding hearings on issues such as waste and fraud in Iraq and Katrina reconstruction contracts. While we look forward to the results of these efforts, it should be pointed out that Waxman was pursuing these issues even when he was in the minority. The Digest failed to note the publication last year of his report called Dollars, Not Sense: Government Contracting Under the Bush Administration that tracked the rise of federal outsourcing. The report was accompanied by a searchable database of “problem contracts.”

When researching federal contracts, be sure you also check the Project On Government Oversight’s Federal Contractor Misconduct Database, which your editor has heard is being expanded.

OMB Watch, which last fall beat Congress to the punch in releasing a searchable database of federal contracts, grants and other forms of spending, recently announced that the FedSpending site has been upgraded and loaded with updated data for fiscal year 2006. Referring to the site’s new Summary View, the announcement said: “ This level of detail has been designed to provide a better overview of contractors, recipients, congressional districts, states, and agencies, as well as other data categories, such as recipient type, assistance type, grant programs, products and services contracted for, and extent of competition. The summary view also includes a new Trend bar chart to quickly compare changes over time.”

Meanwhile, the Office of Management and Budget recently announced that it has created a site to solicit public comments on the official federal spending website, which is scheduled to appear in interim form in July and in final form next January.

The Federal Trade Commission recently released a staff analysis of horizontal merger investigations covering deals that took place between fiscal years 1996 and 2005. The report shows how the mergers affected market concentration, especially in sectors such as supermarkets, energy, chemicals and pharmaceuticals. The FTC also recently released its latest summary of settlement agreements filed by pharmaceutical manufacturers reflecting resolution of conflicts over the marketing of generic drugs. The filings are required under the Medicare Prescription Drug Act.