Corporate power, corporate criminality and secret lobbying: Goldman Sachs

It has not been a good couple of weeks for Goldman Sachs.

A report by a bipartisan US Senate Committee  into US investment banks has recommended criminal charges be bought against Goldman Sachs . Goldman Sachs and other Wall St firms were described by the Senate Report  as a "financial snake pit rife with greed, conflicts of interest, and wrongdoing." 

Goldman Sachs, the nation's fifth-largest bank by assets, systematically misled clients, sold them financial instruments it knew to be junk, bet against them and profited off of their losses, according to a Senate report released this week.

The report, the product of a two-year investigation, paints the firm as Exhibit A of Wall Street's evolution from a place that raises and deploys capital to worthy businesses into a vulturous creature that preys on unwitting investors.

Goldman's conduct in the two years leading up to the near-implosion of the financial system show a firm dedicated to "sticking it to their own clients," said Senator Carl Levin, a Michigan Democrat who chairs the panel that produced the report. "Goldman gained at the expense of their clients, and used abusive practices to do it."

In the UK a  report published  by SpinWatch UK  exposes  Goldman Sachs political and financial lobbying muscle in the UK and Brussels (The European Parliament).

The report, entitled, Doing God’s Work: How Goldman Sachs Rigs the Game details Goldman Sachs’ secret lobbying activities in the UK and Brussels and links to politicians. It exposes:

• The extensive links between Goldman Sachs and the Conservative Party;
•   Political donations totalling £8.5million to British politicians in the past decade from Goldman and ex-Goldman people;
•    Goldman Sachs’ immense lobbying machine in Brussels, including active membership of over a dozen financial sector lobby groups;
•    Extensive meetings between Goldman Sachs and Conservative MEPs including: 9 meetings in six months with a key MEP on the Parliament’s Economics and Monetary Committee; and a total of 36 meetings between just four Tory MEPs and Goldman Sachs, its lobby groups or PR companies acting on their behalf;
•   The bank’s lobbying campaign to undermine political reform on derivatives and alternative investment funds including: private dinners and unminuted "after office hours” meetings, high-level conferences and targeted campaigns to Commission officials, MEPs and their assistants;
•   How Goldman Sach’s lobbyists tried to undermine amendments in a key report on derivatives, seen as “financial weapons of mass destruction”; 
•   The bank’s lobbying enabled them to gamble on food futures and drive up prices.

Report author, journalist Andy Rowell said: “A year ago, David Cameron said that lobbying was the next big scandal waiting to happen. This report shows that banks like Goldman Sachs – who are intricately connected to the Tories – continue to lobby to get what they want."

Rowell continued: "The entire regulatory process - and the lobbying activity that surrounds it - has to become significantly more transparent and accountable. If it is allowed to be captured by bankers, the next financial crisis will only be a matter of time.”

This is what privatization delivers: systemic crises in immigration detention

photo courtesy of the ABC

So another privatized detention centre burns. Only weeks after the Christmas Island detention centres erupted in protests, riots and fires, the unrest has spread to Sydney's Villawood Detention Centre.

Former staff of Serco, the UK multinational corporation that runs the privatized detention centres, are already pointing the finger directly at the corporation, claiming that it contributed to the crises. Serco whistle blowers claim that at Villawood (like Christmas Island), Serco's incompetence and mismanagement were a primary cause of the riots.

The whitleblower claims that:

• Serco management threw raw and untrained recruits into the detention centre without proper training
• Training courses for new staff were dropped
• Serco staff lack basic training and are forced to learn "on the job" 
• Serco management constantly understaff the centre
• Serco has no effective emergency management procedures for such events.

These are precisely the claims made against Serco at Christmas Island; claims that are now the subject of multiple investigations into Serco's management of the Christmas Island Centres, and it looks likely that the investigations will be extended to include Serco's management of Villawood.

The ABC reports that:

The detention centre was set on fire, while asylum seekers overwhelmed staff from the detention centre service provider, Serco.

The former guard says there would have been 11 staff members rostered on the night the asylum seekers rioted. 

He says his former employer, Serco, does not train staff properly and would not have known what to do when trouble starts. 

"From what I've seen, new recruits are basically put on the floor with no training whatsoever," he said. 

"They were told that they would be trained as they worked and that also has never happened before. Basically what is supposed to happen is, they go through at least a six-week minimum course and then have a year of on-the-job training. 

"Serco basically got rid of the six-week course using staffing levels as an excuse and basically threw the staff onto the floor and expected experienced staff to train them as well as do their normal jobs."

He says Serco has never emphasised emergency response training for incidents like fire and riots experienced on Wednesday night. 

"I am led to believe they still don't have any real effective emergency operational procedures. So basically (Wednesday night) would have been every man for themselves," he said.

In a statement, Serco acknowledged an increased number of arrivals and longer periods of detention have placed significant pressures on their operations. 

The company said its staff training program meets it contractual requirements and that it has provided additional training beyond what is contracted and has invested $1.5 million in staff training.

This is the second Australian immigration detention to be set on fire this year. Riots at the Christmas Island detention centre in March led to tear gas and bean bag rounds being fired at asylum seekers.

The former Villawood guard says the Federal Government should review Serco's contract. 

"They've had pretty poor performance. Basically the spate of incidents, major incidents, under Serco's control have been ... there's just been too many. So I really think that the contract should be reassessed," he said.

Privatization: when corporations and government profit from human suffereing

So this is how privatization and contracting out of public services works.

Serco the operator of Australia's immigration detention centres, is paid nearly $400 million by the Federal Government to run immigration detention. But Serco breaches its contract so much that it has been fined $4.5 million for contract breaches over a 2 month period (November and December). Information suggests that Serco were fined $2 million dollars in November and $2.5 million in December for breaches that include poor practice, incompetence, inappropriate treatment of detainees, incidents in centres, and escapes.

But the Government refuses to release any detail of the breaches, citing commercial confidentiality.

As Antony Lowenstein points out  rather than demand that Serco improve the treatment of detainees, or even rescind Serco's contract for constant breaches, the Federal Government simply pockets the money Serco pays in fines.

The immigration department has fined the company that runs its detention centres for contract breaches, including a series of breakouts.

The Department of Immigration and Citizenship contracts the UK-based Serco to run its detention centres. The latest contract – worth about $370 million – was signed in 2009.
“Under the contract between Serco and DIAC there are provisions for the imposition of fines and sanctions against Serco for lax practices or incompetence,” a DIAC spokesman said.
The fines reportedly exceeded $4 million, but the department has refused to reveal the figure.
“The details are commercial in confidence,” the spokesman said.

 Here is yet another example of Serco's incompetence. Just what is Serco's risk management strategy for managing a disturbance in detention centres? Call the Police.

This extract is from the Sydney Morning Herald:

Concerns whether NT Police would have the capacity to deal with a large-scale disturbance emerged on Friday, after it was announced late on Thursday that a new 1,500-bed detention facility would be developed at Wickham Point, on Darwin Harbour - opposite the CBD - to house single men.

The move, along with plans to almost double the bed capacity at the Darwin Airport Lodge Detention Centre, will take Darwin's immigration detention capacity to 2,900, eclipsing Christmas Island's 2,600 capacity.

 

NT Police Association president Vince Kelly told AAP he understood that Serco, the private security company that manages Australia's immigration detention centres, had no real plans to handle a major disturbance other than to telephone the police.

"It would seem that there has been no contemplation of the impacts this might have on the NT police, or about the capacity of NT Police to deal with a large-scale disturbance involving 1,500 people who are held in these facilities," he said.

"The safety of NT police officers is something that should be considered."

The forgotten history of WA's sacrifice zones

The story of the Esperance lead pollution scandal has been consigned to the "dustbin" of Western Australian history. Hopefully, new research by the Conservation Council of WA might focus attention on the contamination of the town by a mining company and its state government partners.

Over 2 years (2005- 2007) Magellan Metals and the Esperance Port Authority allowed lethal lead dust to escape from storage facilities and contaminate the town of Esperance and surrounds. Over 9500 birds died of lead poisoning and hundreds of children suffered lead poisoning from elevated lead levels.

A Western Australian Parliamentary Inquiry found that the Esperance Port Authority and Magellan Metals (and 2 other government agencies) were guilty of "critical failings" in their handling of toxic material in allowing lead carbonate particles to escape during Port operation.

The Inquiry concluded that the deaths of 9500 native birds in December 2006 and March 2007 resulted from lead poisoning from Magellan Metals lead carbonate concentrate which had been handled by the Esperance Port Authority from April 2005 until March 2007. A quarter of the children under 5 years of age who were tested showed a blood lead level over 5 µg/dL. The Committee concluded that the exposure of the Esperance community to lead was a result of:

• the ongoing transport to, and inloading practices at, the Esperance Port which occurred almost every second day over some 23 months;
• the escape of lead dust during the usual out loading practices at the Esperance Port, which occurred on 22 occasions; and
• a number of key dust incidents occurring during ship-loading of the Magellan lead concentrate at the Esperance Port, which released significant lead pollution into the environment, and in the absence of any containment or clean up, caused on-going exposures to lead.”

The Report found that the Esperance community had been let down by the actions of the Esperance Port Authority, Magellan Metals and the WA Department of Environment (DEC).

The Esperance Port Authority was fined over half a million dollars after admitting responsibility for the lead poisoning. Magellan Metals escaped without any serious penalty after agreeing to a $9 million settlement to clean up the town. As part of the agreement the State Government agreed not to pursue any criminal or legal charges against the company.

The scandal is back in the news this week as a result of resarch by the Conservation Council of WA. The Council reports that even though the lead pollution problem scandal was supposedly fixed, local research shows that local insect eating birds have lead levels in their feathers about 8 times background lead levels. The birds are at threshold level for lead pollution in birds.

These levels raise serious questions about the effectiveness of the cleanup. A State Government report released earlier this year claimed that three years after the crises the poisonous lead dust still present in the town  remained a major threat to bird life and animal life but presented no "serious threat to human health"  

But why should we believe a report commissioned by a State Government agency that has utterly failed in its job to regulate mining companies and their Government partners and has failed time and time again protect the community. During the Esperance crises, Government agencies, including the Health Department, continually downplayed the seriousness of the problem and denied any serious risk to human health.

Like many other places in WA, Esperance is what US author Steve Lerner calls a "Sacrifice Zone"- communities forced to live with the harmful social and environmental impacts of poorly regulated mining and industrial activity. 

Martin Bruckner's remarkable book Under Corporate Skies tells the shocking story of another Western Australian "Sacrifice Zone"- this time the struggle between the community of Wagerup and the multinational mining corporation Alcoa and its ally over three decades- the WA Government. Brueckner tells a story also consigned to the dustbin of Western Australian history. His book describes the the same pattern of denial, protection of mining and industrial interests, collusion by State Government agencies and  dismissal and trivialization of community concerns that has been evident in the Esperance scandal.

These "sacrifice zones" exist all over WA, in towns and communities where mining and industrial activity are dominant.  These are places and people sacrificed on the alter of corporate profit and economic growth. 

The harms caused by poorly regulated mining and industrial activity- ill health and death, scarred land, polluted, air and water, despoiled environment and human landscape and a fraying social fabric- are trivialized, and denied, and if proven, they are simply dismissed as a cost of economic prosperity or considered not serious enough to warrant attention

The most important West Australian book published in 2010

The book Under Corporate Skies, A struggle between people, place and profits by Martin Brueckner and Dyann Ross is the story of a West Australian community torn apart and people's lives destroyed by the power of a multinational mining company protected and supported by the WA government. 

 In WA we are used to State Governments actively protecting and promoting the interests of large mining and resource companies, but the story of Alcoa, the small southwest town of Yarloop and the WA Government is deeply troubling. In this review to be published in Online Opinion Professor Gavin Mooney concludes that this important book shines the light on the shocking state of democracy in WA. 

A community versus a corporation … while government looks on

Gavin Mooney, Co-convenor WA Social Justice Network, Honorary Professor University of Sydney

‘It seems that whatever Alcoa says the government has to do, they’re too scared to disobey…. I think Alcoa’s got all the control. They tell the government what to do.’  Yarloop resident.

The above is a quote from this book* which tells the David and Goliath story of the struggle between the small West Australian community of Yarloop and the multinational corporation, Alcoa World Alumina, which has a refinery at Wagerup, just next to Yarloop to the south of Perth. The win by David in the original version is pretty much story book stuff. In this real world version from Brueckner and Ross, David has lost out big time. And the original story is nowhere as poisoned as this one – with poison occurring at two levels – as perceived by residents through the pollution in the air at Yarloop and through the bastardry of government (and other institutions such as local universities).

Brueckner and Ross tell the story of this ‘struggle between people, place and profits’ in a remarkably dispassionate way. But it is all the more savage in its telling as a result of that.

The authors take us through the problems faced by the local community as a result of the pollution – air, noise and visual – from its corporate neighbour. They tell how so many local residents have had their lives destroyed and not just their health as a result of both the presence and the behaviour of Alcoa. Perhaps inevitably, given how these things work, the local neighbour when it comes to decision making was not truly local at all as the real power in Alcoa is in a far off board room in the US. It seems that at least some of the local Alcoa management were human in responding to the problems being created for the local community. But they had little power to act.

Thus the authors argue (p 245): ‘As a US-based multinational corporation with executive managers able to influence decisions of governments across borders, Alcoa exercised placeless power while at the same time maintaining a ‘powerful place’ at Wagerup by occupying the territory and pursuing its commercial interests.

One aspect of all of this that comes over strongly is that there is a degree of cleverness, one might say deviousness, with corporates that can be quite breath taking. In this case Alcoa set up voluntarily a ‘Land Management Plan’ which created a buffer zone around Wagerup which involved some financial compensation/relocation for residents in that zone. Sounds good. But it did not include all Yarloop residents and split the town in terms not only of compensation but also emotionally. Deliberate on the part of Alcoa? Who knows but it certainly resulted in weakening the community position vis-a-vis Alcoa.  Then because Alcoa did this voluntarily ‘the government refrained from being involved when residents fell foul of the voluntary relocation as proposed by Alcoa’ (p173). Deliberate on the part of Alcoa? Welcomed by the government? Who knows but it certainly resulted in weakening the community vis-a-vis not just Alcoa but also the government.

Scary stuff and heartbreaking to read about the desperate and despairing fight of the Yarloop residents. 

The book exposes a number of intriguing issues. Just a couple. The question of what constitutes scientific evidence (especially in epidemiology) and how and by whom that is interpreted is discussed and science and epidemiology do not emerge well.

How corporations can act to protect themselves and infiltrate social institutions is fascinating and worrying as again the book exposes. The authors write of how (p227) Alcoa ‘secured a Professorial  Chair and gave its name to a new research centre  - Alcoa’s Centre for Strong Communities (sic - or sick?) - at Curtin University of Technology’ in Perth.  When the authors questioned the company about this initiative they were told ‘there was to be no relationship (with Yarloop) as the new Centre was not going to be addressing the specifics of the Wagerup issue.’

This particular point is close to my heart. I was a member of staff at Curtin at that time and was invited on to local radio to talk about the fact that this ‘Centre for strong communities’ was being funded by Alcoa who were at the same time perceived by the Yarloop community as weakening them! On the afternoon of the interview I was summonsed by a senior manager at the university and had my fingers rapped for daring to speak out as I had in the media.

The influence of the corporations on government and other of our key institutions like our universities needs to be exposed again and again and again. This book does an excellent if frightening job of doing that.

So where does this leave us? There is a risk in the wake of the “success” of the mining corporations in destroying the tax on super profits that we grow to accept that this sort of behaviour by corporations is all fine and that business interests and the national interests as implied at the weekend by Michael Chaney are often synonymous.

Acceptance of that places our democracy at risk.

We need the Brueckners and the Rosses of this country to tell this sort of story and we must be glad that they do. But telling the story aint enough. We must read their story! Please do that. Their tale is horrendous so be sure to have a stiff drink before you start – especially if, as I do, you live in WA. 

 

*Under Corporate Skies, A struggle between people, place and profits. Martin Brueckner and Dyann Ross.  Fremantle:  Fremantle Press, 2010 $26.95. 316pp.

Serco and the running of immigration detention centres

As the crises in Australia's detention centres worsens, closer attention is starting to be paid to Serco, the global mega-corporation that runs the immigration detention centres on behalf of the Australian Government.  Serco has a contract worth $400 million with the Federal Government to run immigration detention centres on the Australian mainland and Christmas Island,although the value of the contract will increase with the massive expansion of detention facilities, such as Curtin in WA.

Serco is a huge multinational corporation that has benefited immensely from the privatization of public functions previously run by Governments. It has stepped into the void to run services that governments don't want to run. The great benefit for Governments is that they are distanced from criticism when things go wrong.

In Australia Serco is also a major player in the running of prisons for State Governments, including Acacia prison in WA, and also provides defense related logistical services, including running navy patrol services.

Journalist, author, blogger and activist Antony Loewenstein has been one of the few Australian journalists to focus on Serco's' role in the unfolding crises in immigration detention centres. He has written regular pieces on the shady and tawdry practices of Serco.

The Sydney Morning Herald has written this story about Serco, however it only scratches the surface on the role played by Serco. Antony Lowenstein will continue to be the major source of investigative reporting and writing about Serco, but let's hope that mainstream journalists start shining the light on Serco