EDITOR\PUBLISHER: A.V. Krebs
ADDRESS: PO. Box 2201, Everett, Washington 98203-0201
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CONTRIBUTIONS WELCOME !!!
SCANDAL DU JOUR
"THE FIX IS NOW INSTITUTIONALIZED"
Anyone who ever doubted that the majority of the general public could care less about how the raw materials that go into the manufacturing of their food and how the companies that manufacture that food operate and conduct themselves need only look at their newspapers and television sets in this age of corporate scandal du jour.
The recent passage of the Farm Bill provided ample proof that while the majority of farmers and the organizations they affiliate themselves with groveled over legislative scraps and allowed the Cargills, ConAgras, ADMs and the Tysons to dictate and frame the domestic farm policy debate the public was being hoodwinked by the media into believing the U.S. farm economy was dependent on who gets federal subsidies and who doesn't.
Now we see the public being progressively shocked by one new corporate scandal after another. Yet these scandals, although much larger in dollars and cents to those which have been rampant in corporate agribusiness for the past several years, directly affect far few people (thousands of investors, stockholders, employees) as compared with those millions of people who eat the products each and every day that these scandal-ridden companies manufacture.
In recent years the media, the public and for that matter parochial farmers have paid little if any attention to such corporate agribusiness misconduct unless it resulted in their child dying from food poisoning, the loss of their farm or a close neighbor, or an environmental disaster that disrupted their daily lives. Rather, to the glee of the "merchants of greed" it has been usually the government and elected officials that has borne the brunt of the public's wrath when it comes to such health, economic and environmental tragedies.
That is not say that corporate agribusiness does not get its share of verbal outrage by farmers and consumers, but that is precisely the problem when it comes to corporate accountability, it is mostly verbal, and it is without specific focus and direct action. When one simply decries "corporate agribusiness" one decries no one.
A farmer who stands before you berating "corporate agribusiness" while wearing his Nutrena Feeds (Cargill) cap is undoubtedly what The Land Institute's Wes Jackson had in mind when he observed he wished that farmers would start using their heads for more than just corporate billboards.
Likewise, a group of activists standing around denouncing the evils of multinational corporations while sipping their Gallo wine and munching on squares of Kraft cheese or popping their cans of Coca-Cola somehow miss the point on the nature of their foes power.
While the public's attention has in recent months become focused on a continuing string of corporate scandals, similar scandals that preceded them within the food and agriculture sector continue to fester and as was the case in their infancy they continue to be ignored by the public and unreported on by the mainstream media.
Going back to 1995 when the FBI raided the Decatur, Illinois headquarters of Archer Daniels Midland ("Supermarkup to the World") in what was to be called "the best documented corporate crime in American history," where the nation's largest commodity processing company would be not only found guilty of price fixing, but stand accused of a variety of misconduct and questionable accounting activities, corporate agribusiness has remained impervious to genuine public accountability. For example:
In a September 1, 2000 letter to New York Times managing editor William Keller, David Hoech, who with his wife and business partner, Carol, co-founded the ADM Shareholders Watch Committee repeated instances of Times' reporter Kurt Eichenwald's "unethical conduct." They included among others:
"In early summer of 1996 Eichenwald had the information that Thomas Frankel [former ADM treasurer] had embezzled millions of dollars from ADM with the Andreas's knowledge. If he had written the story at that time, it would have informed the stockholders of all the fraud [Mark] Whitacre was talking about at ADM which would have rid the company of the Andreas Crime Family and prevented the stock from falling to less than $9. .. . . He took time in January, 1997 to write an article that really creamed Whitacre, yet he couldn't report on ADM shareholders being ripped off of millions with the sanction of the CEO Dwayne Andreas."
Likewise, Nicholas E. Hollis of The Agribusiness Council noted earlier this year after the Enron scandal began making national headlines that: "Policy makers are running scared and trying to distance themselves from the Enron "taint" but it runs deep. And there are rumblings of another imminent meltdown among the corporate high flyers: Archer Daniels Midland (ADM) the Supermarkup to the World. Still controlled as a family fiefdom, ADM has outraged huge state pension funds in Florida and California which hold millions of shares of the company's stock, by failing to provide transparency in accounting during the long, drawn out price fixing scandal .
"ADM stock prices nose-dived from the mid 20's into the single digits, missing the entire bull market, while unseen millions were spent to mount an enormous legal counterattack which aimed at stalling the government investigation and maintaining ADM's contracts with USDA (even after a guilty plea)."
In light of the ADM "coverup" it is ludicrous to now hear the Democrats (see article below ) in their struggle to find a salient campaign theme amid the war on terrorism, say they are planning to adopt a strategy to make the upcoming House elections a referendum on which party will put an end to corporate greed and corruption. One might question its party leaders where were they in the 90's for it was with a Democratic president, a Democratic administration, and a Democratic Department of Justice that allowed a politically powerful corporation like ADM to escape the full extent of the law when it came to corporate corruption ???
Even a recent review of political contributions from the 17 companies currently under scrutiny for questionable business practices found that more than 43% of their money in the past 18 months went to Democrats, according to figures compiled by the nonpartisan Center for Responsive Politics at the request of The Washington Post.
In still another questionable corporate scandal the merger between Tyson Foods, the nation's largest poultry processor and IBP, the nation's largest beef processor was "delayed" for months when inaccuracies in the financial statements of an IBP, Inc. subsidiary DFG, a small Chicago firm that made appetizers and desserts and which IBP acquired for $32 million in 1998, raised serious and troubling questions for Tyson Foods in its desire to purchase the nation's largest meat packing company.
Initially IBP had disclosed that it thought a $9 million reduction in pretax earnings in 2000 would cover the "inaccuracies" in its financial statements. Then IBP revealed it possibly faced a possible $47 million pretax charge. However, that is "only part of our concern" a Tyson spokesperson told Dow Jones Newswires pertaining to a letter in which the Securities and Exchange Commission (SEC) raised questions about numerous other financial issues. Tyson said the SEC's letter concerned various accounting issues, including the methods IBP used to account for recent acquisitions.
Then there was Farmland Industries, the nation's largest farmer cooperative. As Alan Guebert wrote in his Farm and Food File column of June 9, 2002 "After a long explanation of his global vision for Farmland Industries back in the 1990s, then-boss Harry Cleberg was asked what it all meant. In one of the most arrogant quips in the history of U.S. agriculture, Good Old Harry got a gleam in his eye and pronounced, `We're gonna' out-Cargill Cargill!'
"On May 31, Cargill stood like a rock; Farmland, however, the nation's largest farm cooperative, slouched into Chapter 11 bankruptcy. The biggest part of Good Old Harry's global strategy still in place that day was the massive debt Farmland owed German and Dutch banks.
"Like most masters of the universe, Good Old Harry had game when it came to spending others peoples' money. He lectured Congress on free trade, bankers on wild-eyed financing, and farmers on globalization. He built a $40 million export elevator in Argentina, bought a global grain trader called Tradigrain, ran fertilizer plants in Trinidad and Tobaga and made Farmland the unhappy owner of 50,000 corporate sows.
"Most of it, though, turned to mush. By 1999, Farmland was bleeding like a
stuck hog. Its long string of losing businesses had the dubious honor of holding
$1.46 of debt for every $1 of equity. But Good Old Harry was a man of action. He
planned to bury the choking debt by merging Farmland with Cenex Harvest States,
another regional co-op. Cenex members,
however, got wind that Good Old Harry and the Cenex boss would each pocket more than $3.5 million if their little old merger plan succeeded. Cenex members killed the deal, leaving Good Old Harry and Farmland holding an even bigger bag of mush.
"By Aug. 2000, the rubber-stamp Farmland board finally retired Good Old Harry, but not before awarding him $633,584 in salary and a $700,000 bonus."
Pile these infamous ventures onto the long list of food recalls, contaminated seeds, abusive and discriminatory treatment of workers, openly currying political favoritism through campaign contributions and you have an agriculture industry riddled with corruption, greed, and misconduct coupled with little or no public accountability. Where one might rightfully ask is the outrage !!! And, as can be seen by the accompanying articles below, the beat goes on !!!
In her Wednesday New York Times column "The Age of Acquiescence" Maureen Dowd succinctly notes: "Ralph Nader said the phrase he coined in 1970, `corporate crime,' is the new catch phrase in business magazines. Three and a half decades ago, the mantra among young people who railed against capitalist pigs and government lies was `the fix is in.'
"`The fix is now institutionalized,' Mr. Nader says. `When Congress won't double the S.E.C. budget in the middle of a corporate crime wave, it shows that the system is irreversibly decayed. As Brandeis said, we can have a democratic society or we can have a concentration of great wealth in the hands of a few, but we cannot have both.'"
In a rather sad and pathetic commentary on the party's sterility and desire to shift the blame Dowd notes "Of course some Democrats regard Ralph Nader as part of the problem and not part of the solution."
She adds, "People used to be shocked when a member of an administration said that what's good for General Motors is good for the United States. But with the Bush administration, the sinful synchronicity of business and government is just a day's work, and nobody is reeling from the spectacle. .. . . . "
It has been said that one of the fundamental challenges we face in today's corporate dominated agriculture is that consumers need to better know and understand what happens to their food before it reaches the farm gate and farmers need to know what happens to their product after it leaves that farm gate.
A fundamental step in that process is to focus on those specific individuals and corporations that are exercising, often unscrupulously, their financial and political power in controlling and dominating our food from the ground to the table.
The days of generalization are over, it is time we start taking names and
EUROPEAN INVESTORS IN UNANIMOUS AGREEMENT
THAT THE U.S IS NOT BEST PLACE TO INVEST
SEES A LACK OF A "CULTURE OF SHAME"
EDMUND L. ANDREWS, NEW YORK TIMES: It was not just WorldCom that took a beating today. It was also the United States itself, and the American gospel of how business should be done.
After years of pumping billions of dollars into the United States because it seemed the land of opportunity, foreign investors are pulling back. And people around the world who for decades have looked to the United States as the model for openness and accountability in business have been sorely disillusioned by the mounting waves of scandal.
"This is the most pessimistic sentiment against the United States that I have ever experienced in my career," said Wolfram Gerdes, chief investment officer for global equities at Dresdner Investment Trust in Frankfurt. "There is unanimous agreement that the U.S. is not the best place to invest anymore."
The immediate impact is discernible in the value of the dollar, which has been sliding since March. It fell [June 26] to its lowest level against the euro in 28 months. The dollar has also fallen against the Japanese yen, and even gold has been rising steadily in dollar terms.
The loss of foreign confidence in the United States is important in itself, because of the huge deficit the United States runs in its trade with the world. To cover that deficit, America must attract a net inflow of $1.3 billion in foreign money every day. Even a modest decline in the flow can weaken the dollar and drive up the prices of imported goods.
But the fall from grace is broader than just a turn in the monetary tide. The more enduring impact of the accounting and boardroom scandals may be the tarnish they spread on the "American model," a philosophy that emphasizes bare-knuckle competition, aggressive deal making, a high level of public disclosure and fantastic rewards for executives who deliver the goods.
Europe has had its own run of financial scandals, generally involving young technology and media companies, that match the worst cases to surface during the dot-com bubble. But Guido Rossi, a former chairman of Telecom Italia and now one of Italy's most outspoken advocates for modernizing the way companies are run in Europe, said: "What is lacking in the U.S. is a culture of shame. No C.E.O. in the U.S. is considered a thief if he does something wrong. It is a kind of moral cancer."
There is a groundswell among executives in Europe against the American system of corporate accounting --- the so-called generally accepted accounting principles --- that was supposed to be the gold standard in disclosure.
Before Enron, Global Crossing and WorldCom, America had been winning the argument on accounting standards. But now, a growing number of Europeans are convinced that the American system is both too complex and too easy to manipulate. "We always thought it was too good to be true in America, and this has proved it," said Angela Knight, the chief executive of the Association of Private Client Investment Managers and Stock Brokers in Britain.
To be sure, American corporate practices in general remain at least as open and accountable as those in any other country, and they have raised the expectations that shareholders elsewhere have of their own companies. And most experts agree that the main problem is not with the principles themselves but with people who are determined to distort their companies' financial results. . . . .
Indeed, advocates of improved corporate governance in countries like Japan say they only wish their companies were as accountable as those in the United States. The problem now, they say, is that the scandals in America will be used by opponents of openness and accountability to justify their intransigence.
"This has disappointed many people who tried to work to modernize themselves along the lines of the American model," said Haruo Shimada, a professor of economics at Keio University in Tokyo, who has pushed for freer markets in Japan and has been an adviser to Prime Minister Junichiro Koizumi.
In Russia, where corporate governance has all too frequently meant blatant theft and Machiavellian intrigue, corporate executives say the scandals prove that Russia is not so different from the United States after all.
"At a certain point, Americans began thinking that they were the ideal," said Anatoly M. Karachinsky, president of Information Business Systems, one of Russia's largest information-technology companies. "But there are no ideal laws."
The American model has put down roots around the world that are too deep to be uprooted entirely by the recent wave of scandals, especially in developing countries like India that have pushed hard to modernize in recent years. Executives there said that a decade ago, an Enron or WorldCom collapse might have tipped the policy argument against Westernization of the economy, but there is no turning back now. . . .
The American practice of executive enrichment is also coming under attack. Appalled at the tens of millions of dollars that executives at Enron and many other companies received through stock options, the chairman of Germany's biggest steel manufacturer cautioned his peers this week against following suit. "I warn people not to simply take over rules from the United States without first reflecting on them critically," said Gerhard Cromme of ThyssenKrupp.
European critics (and a growing number of Americans) say the American system permits companies to follow the letter of the law while violating its spirit --- to "tick boxes rather than use sound judgment," said Peter Wyman, president of the Institute of Chartered Accountants in England and Wales.
Whether the international standard wins out over the American standard or not, global investors are clearly anxious to see some kind of meaningful accounting reform before they plunge back into the United States. A survey this month by UBS Warburg and the Gallup Organization found that only 32% of European investors now rank the United States as the most attractive market in the world.
But investors do not have many other places to go. European economic growth is expected to remain slower than American growth for the foreseeable future, Japan remains moribund and other markets are seen as fraught with risks.
"The one major currency area that has been able to play the role of safe
harbor is the American area," said Jčrgen Mčller, a senior economist at
DaimlerChrysler. "Everybody in the world is staring at the U.S. economy.
Everybody is waiting for the U.S. economy to boom again."
DEMOCRATS EMBARK ON RISKY BET,
VOTERS WILL PUNISH PRO-BUSINESS REPUBLICANS
JIM VANDEHEI & JULIET EILPERIN, WASHINGTON POST: Democrats, who have struggled to find a salient campaign theme amid the war on terrorism, have adopted a strategy to make the House elections a referendum on which party will put an end to corporate greed and corruption.
In competitive House races across the country and here in Congress, Democrats are trying to take political advantage of the public's growing distrust of U.S. corporations by bashing drug companies for the skyrocketing cost of medicine and Tyco International, among others, for dodging taxes by relocating to offshore havens.
Democrats are making what some observers see as a risky bet that voters will punish pro-business Republicans this fall for the rolling wave of corporate transgressions and for any stock market losses left in its wake. They are also trying to make the case that this campaign, like the war on terrorism, is about patriotism --- "economic patriotism" in the words of Democratic spokeswoman Jenny Backus.
House Minority Leader Richard A. Gephardt (Dem.-Missouri.), the architect of this strategy, said Republicans, starting with the Republican Revolution of 1995, have "created an environment" conducive for corporations to break rules and escape penalty by repealing regulations and ridiculing the tax code.
Democrats, needing to pick up six seats to win control of the House for the first time since 1994, see the "corporate responsibility" theme as their best chance of knocking off GOP incumbents in what is shaping up as a fight over a very small number of competitive districts.
Gephardt has privately instructed top Democrats, particularly those on the House Appropriations Committee, to use the legislative process to force votes that will emphasize this new political theme, according to a senior Democratic aide. The Democratic Congressional Campaign Committee (DCCC) is inundating campaigns with memos outlining ways candidates can capitalize on the public's anti-business attitudes, which is showing up in polls conducted by both Democrats and Republicans.
Rep. Thomas M. Davis III (Virginia.), who chairs the National Republican Congressional Committee, said this new line of attack could work "if left unanswered." But, he added, "we're not going to leave it unanswered."
Republicans are pushing their own legislation to provide cheaper prescription drugs, crack down on the accounting industry, strengthen retirement funds and punish corporate wrongdoers. "It's not like we're protecting" corporate criminals, said Davis. "[Democrats] have no moral high ground on this at all."
Indeed, a review of political contributions from 17 companies under scrutiny for questionable business practices found that more than 43% of their money in the past 18 months went to Democrats, according to figures compiled by the nonpartisan Center for Responsive Politics at the request of The Washington Post.
Strategists said the GOP's best defense is perhaps the war on terrorism, which has diverted attention away from many of the hot-button domestic issues and created a new environment in which political attacks are seen as offending a public looking for bipartisanship.
While the war continues to dominate the news, as well as the focus of many policymakers in town, economic concerns are mounting. Chief executive officers involved in scandals are stepping down. The stock market is nose diving, dragging the value of many 401(k) savings plans along with it. And, based on polls surveying the public's attitude, voters appear fed up with the financial messes strewn before them.
Independent pollster John Zogby, who is widely respected inside GOP circles, recently found that voters no longer trust Republicans more than Democrats on economic issues. "The economy could be the sleeper issue," he said. "A lot of people, especially 401(k) holders, are scared." A Wall Street Journal/NBC poll earlier this month showed widespread distrust of everyone from oil companies and brokerage firms to corporate leaders in general.
Democrats concede their challenge is to convince the public that Republicans are to blame for the loose government regulations that permitted corporate scandals to go undetected, as well as for the plummeting stock prices that followed. The campaign, which is growing larger by the day, started with attacks on GOP support for partially privatizing Social Security and escalated with last week's prescription drug fight.
Now, Democrats are focused on tax-evading companies. . . . . .
ADM CRITIC CASTIGATES JOURNALISTS,
STOCK ANALYSTS' EVALUATION OF CONSEQUENCES
OF CURRENT ADM HFCS PRICE FIXING LAWSUIT
DAVID HOECH: On June 18, 2002 numerous articles appeared as a result of the Seventh U.S. Circuit Court of Appeals reinstating the civil suit against Archer Daniels Midland, Cargill, Inc., A.E. Staley, American Maize-Products, and CPC International.
Scott Kilman of the Wall Street Journal wrote an article titled "U.S. Appeals Court reinstates lawsuit alleging ADM and others engaged in corn sweetener price fixing," which appeared June 19 in the print edition. Kilman wrote: "`I have no idea about the merits of the case,' said David Nelson, an analyst at Credit Suisse First Boston. `But a trial would bring back that taint.'"
Michael McHugh, Dow Jones Newswires wrote an article titled "ADM, Cargill weigh court appeal, HFCS price fixing verdict could result in possible $4.2 billion in damages." McHugh wrote, "David Nelson, equity analyst at CS First Boston, said he doesn't see the case having a `big impact' on ADM, adding the worse that could happen would be some sort of fine.'"
Let us get this straight, first Nelson tells Scott Kilman "I have no idea about the merits of the case." Then he tells Michael McHugh that "He doesn't see the case having a big impact on ADM. "This is a civil case, not a criminal case, so therefore no fines will be forthcoming." You're right David Nelson, you don't know anything about this case much less the merits, but what you say is deceiving the investor. We hope to bring enough heat on you that you are fired from your position and banned forever from your profession.
For Michael McHugh of Dow Jones to write what David Nelson said as he must have known it was a blatant lie shows Wall Street is still whoring as usual. Let us say McHugh didn't know the difference then he shouldn't be a reporter. I believe I am safe in saying that neither one of these people read the Court Ruling.
Deborah Cohen, Reuters Company News wrote an article titled "U.S. court deals setback to ADM, other syrup makers." Cohen wrote, "`I would expect that ADM and all those named in the suit will fight this, and I think at some point we will get a resolution,' said Merrill Lynch analyst Leonard Teitelbaum. `I don't think at this time there's any way one can assess what the risk would be to the manufacturers in losing the case.'"
Yes, there is a way, Lenny, you just don't want to do it, as you would have to recommend a sell on ADM stock.Teitelbaum is another analyst who has a stench when it comes to ADM. All he has to do is read the filing, and surely he knows the exposure to each company if they lose the case. He doesn't want to say so, because if he did, more than likely the investors would take a good look at the company stocks of those involved in price rigging in HFCS.
After speaking with other shareholders, letters will be going out to the Securities and Exchange Commission asking for an investigation of CS First Boston's and Merrill Lynch's dealings with the companies that produce HFCS.
CS First Boston and Merrill Lynch both do investment banking for those involved in price fixing and are also aware the firms are financially overextended, with a lot of the debt being backed by the stock. Not only are the analysts less than truthful with the investment community, ADM's auditor Ernst & Young's Darryl Thorvilson has turned a blind eye to ADM's falsification of 10Q and 10K reports filed with the Securities and Exchange Commission. He is also aware of Thomas Frankel stealing over $20 million, and ADM stopping an FBI investigation afraid of what else they may uncover in ADM's dirty books.
On July 7, 1995 analyst Bonnie Wittenburg, at the time with the firm of Dain-Bosworth in Minneapolis, issued this bulletin on ADM: "Downgrading recommendation to SELL due to concerns about grand jury investigation. ADM, in an earlier release, said a grand jury in Chicago is conducting an investigation into possible violations of federal antitrust laws and related crimes in the food additives industry, specifically citric acid, high fructose corn syrup and lysine." At the time of the bulletin Ms. Wittenburg had all her retirement fund in ADM stock, which shows honesty and integrity to put a sell on a stock knowing you're going to lose your own money.
The most costly case to ADM will be settling the HFCS civil suit. They paid a $100 million fine for price rigging in citric and lysine but were not indicted for price fixing in HFCS. The Department of Justice antitrust attorney James Griffin said they were not going to indict them, but he also said it didn't mean they were not price fixing. The DOJ doesn't like to go to trial unless they are 100% sure they have a winner. Some feel the reason ADM and others were not indicted was that this was part of the deal in the plea agreement with ADM Another deal that was not in the written plea was that ADM could keep all the USDA business, where in the past every company convicted or that pleaded guilty to a felony were barred from doing business with the government for over three years.
The ex-convict and former vice chairman of ADM Michael Andreas is on FBI audio tape saying, "F--- the shareholders, they are lucky we let them own any of this company." Michael is right, the shareholders have been f----d, but he is wrong about us being lucky. Judge Mihm should release all the tapes on ADM and show the truth about the Dwayne Andreas Crime family (AKA white trash with money.)
Hoech is president of Global Consultants, Inc. and was an industry
consultant in agribusiness during the late 80s and 90s. He resides in
Hallandale, Florida with his wife and business partner, Carol who co-founded the
ADM Shareholders Watch Committee.
SENATORS CALL FOR "SWEEPING" GAO PROBE
OF FEDERAL AGRICULTURAL MORTGAGE CORP.
ALISON LEIGH COWAN, NEW YORK TIMES: Prominent members of both houses of Congress, including at least one longtime ally, promised yesterday there would be increased scrutiny of the Federal Agricultural Mortgage Corporation, the government-sponsored entity known as Farmer Mac.
The first salvo came in a bipartisan letter released [Wednesday] by the Senate Agriculture Committee. The letter was signed by Tom Harkin of Iowa, the committee's Democratic chairman, and Richard G. Lugar of Indiana, the ranking minority member. It called on the General Accounting Office to do a sweeping study of Farmer Mac that would assess how well it is performing its mission and whether its business is being run in a financially sound manner.
Later in the day, a spokesman for Richard H. Baker, the chairman of the House subcommittee on capital markets, insurance and government-sponsored enterprises, said Mr. Baker would ask Treasury officials to provide their assessment of Farmer Mac at hearings next month. In a statement yesterday, Farmer Mac said it welcomed the G.A.O. study as a way to clear up widespread confusion about its business.
Nonetheless, Farmer Mac's shares, which had been trading as high as $46 in April before reports on its business practices took a toll, fell 75 cents [Wednesday], to $26.25.
Farmer Mac, based in Washington, was created by Congress in 1988 to develop a secondary market for farm loans as a way to improve farmers' access to credit. It enjoys several benefits in return for pursuing that mission, including the ability to seek $1.5 billion in emergency money from taxpayers if it cannot make good on its guarantees.
But farmers now pay a higher premium over Treasuries on loans than they did when Farmer Mac was created, according to the Agriculture Department. And reports have described a company where insiders have reaped enormous gains while exposing the company to risk.
The G.A.O., which can delve into confidential information not available in public filings, was given a broad mandate [Wednesday] by the Senate Committee on Agriculture, Nutrition and Forestry.
Specifically, the committee wants the G.A.O. to look at Farmer Mac's financial stability, the independence of its directors, how it compensates insiders, its investment practices and how well it fulfills its mission.
The committee also asked the G.A.O. to consider the peculiar nonvoting status of the company's publicly traded C shares --- the nonvoting status makes it hard for average shareholders to wield much influence over the company. Though the Farm Credit Administration has historically had authority over Farmer Mac's safety and soundness, the committee said it wanted an independent analysis performed, one that would be free of some of the conflicts facing the Farm Credit Administration.
One particular challenge facing the Farm Credit Administration is Farmer Mac's increasing reliance on other farm credit institutions for 80% of its business.
Senator Lugar's signature on the request raised some eyebrows [Wednesday] in part because he had been a longtime friend of Farmer Mac. In 1998, when Farmer Mac wanted more time to respond to a request for information from the Farm Credit Administration, it arranged for Senator Lugar's office to send a letter insisting on more time, according to George D. Irwin, Farmer Mac's chief regulator within the Farm Credit Administration at the time.
Senator Lugar's comments have become more critical lately. On Tuesday, in
reviewing a presidential nominee for the Farm Credit Administration board, he
expressed concerns about Farmer Mac's leverage and loan reserves. "We need to
sort of wrestle this one to the ground before it gets out of hand," he told Doug
Flory, the nominee. "And I say that as somebody who was here at the beginning of
FORMER SMITHFIELD SUPERVISOR TESTIFIES
SHE WAS ORDERED TO FIRE WORKERS
WHO WERE SEEKING TO ORGANIZE A UNION
UNITED FOOD AND COMMERCIAL WORKERS INTERNATIONAL UNION: Sherri Buffkin bravely sat before a panel of United States Senators June 20 and admitted she fired people at Smithfield Foods who were trying to organize a union. Buffkin is the first supervisor ever to testify on behalf of workers and blow the whistle on the illegal union-busting campaign at Smithfield.
In testimony before the Senate Health, Education, Labor & Pensions Committee Sherri told the packed room, "Smithfield Foods ordered me to fire employees who supported the union, telling me it was either my job or theirs."
Sherri was a supervisor at the world's largest hog processing plant in Tar Heel, North Carolina during a union campaign in 1997 in which Smithfield waged an extensive, systematic, illegal campaign to suppress its workers' voices to join the United Food and Commercial Workers International Union (UFCW).
Smithfield promoted racial tension to separate workers. Sherri testified that, "Smithfield keeps Black and Latino employees virtually separated in the plant with the Black workers on the kill floor and the Latinos in the cut and conversion departments. The word was that black workers were going to be replaced with Latino workers because blacks were more favorable toward unions."
Senators Paul Wellstone (Dem.-Minnesota) and Tom Harkin (Dem.-Iowa) thanked Buffkin for exposing one of the nation's most disgraceful and undemocratic situations-a company- sponsored union-busting campaign that destroyed the lives of hundreds of hard-working people.
LaTasha Peterson, a former Smithfield worker, sat in the crowd with Buffkin's eleven-year-old daughter to support Buffkin's testimony. Peterson was part of the "A- Team," a group of workers who were paid by Smithfield to spy on their co-workers and campaign against the union.
"I earned twice as much money campaigning against the union and I didn't have to do any work," said Peterson. "I know what I did was wrong. I have union representation at my job now and I can see its better to have a union at work."
In 1999, Buffkin and Peterson courageously testified against Smithfield Foods in a National Labor Relations Board trial in which their testimony blew the whistle on the company's egregious acts against its workers. In December, 2000, an Administrative Law Judge of the NLRB issued a monumental 400-plus page ruling against Smithfield for massive violations of federal law, finding that Smithfield conspired with law enforcement to instigate violence at the vote count.
The NLRB Judge's decision contains some of the strongest language in recent labor history against a company's flagrant disregard for the law. The Judge found that Smithfield attorneys suborned perjury during the NLRB trial. The Judge also ruled that company witnesses "lied under oath" throughout the decision and that Smithfield managers conspired with the local Sheriff Department to physically intimidate and assault union supporters.
Senator John Edwards (Dem.-North Carolina) met briefly with Buffkin before she testified and thanked her for coming to Washington, D.C. to tell her story. Buffkin encouraged him to visit Tar Heel and see for himself the atrocious conditions the 5,000 workers endure every day. "I'm here to spread the truth and to ask you to go see for yourself. The workers at Smithfield need your help," Buffkin told Edwards.
[The] hearing, chaired by Senator Edward Kennedy (D-MA), was the first such hearing in 14 years about what happens to workers when they try to exercise their federal right to form a union.
When asked about a recent judgment against Smithfield Foods for civil rights
violations during the union campaign in which one former worker and the estate
of a UFCW representative were awarded $750,000 by a federal jury, Buffkin
responded, "That judgment is great for those two people, but what about the
other 5,000 workers at Smithfield? They
deserve justice too."
CLOSING TYSON FOODS
BACON PROCESSING PLANT
DEVASTATES NORTH CAROLINA TOWN
LUCINDA HARPER, THE WALL STREET JOURNAL: It is no secret that North Carolina's manufacturing sector was hit especially hard during the economic downturn. The textile and apparel industries have been fading for years. Furniture makers based in North Carolina, which were once among the dominant U.S. players, are suffering as Americans find better bargains on foreign-made furniture. The tobacco industry, which has become public enemy No. 1 in many U.S. cities and states, is in permanent decline.
Despite these many setbacks, folks [in Holly Ridge], a small rural town on the southeastern edge of the state, felt certain the pork industry would get them through the tough times. After all, pork is the largest agricultural commodity in North Carolina and pumps $8 billion into the state economy each year. And North Carolinians, like most Southerners, eat more pork than people in other regions.
But those facts didn't stop Tyson Foods Inc., Springdale, Arkansas, from abruptly shuttering its bacon-processing plant here early this month and putting nearly 500 people out of work, adding to the long list of factories that have shut down in North Carolina in the past two years. It was an incredible blow to a town of less than 700 people with almost no other major employers in a 20-mile radius.
How this could be happening in a state where pork is king is baffling to many workers at the 34-year-old plant and frustrating to local officials scrambling to make the best out of a bad situation. "We thought we made too much money for these doors to close," says Cheryl Hayes, who ran a slicing line at the plant and worked at the facility for 18 years.
By all accounts, the bacon plant was profitable, although Tyson Foods won't release actual figures. And while the pork industry isn't especially popular with some North Carolinians, due to problems of water-pollution related to hog waste, Tyson said that didn't factor into its decision to close the plant. In fact, the industry is in pretty good shape. "Bacon has had a tremendous resurgence in the last few years, especially on sandwiches," says Steve Meyer, director of economics for the National Pork Board in Des Moines, Iowa.
Instead, what is happening in Holly Ridge is symptomatic of the newly intensified cost-cutting culture that is sweeping across corporate America. Factory executives, traumatized by the deepest profits recession in post-World War II history, are finding ways to save every penny possible --- even when there aren't any immediate signs of trouble and even when the consequences can bring financial harm to an entire town.
Tyson Foods, founded in 1935, is the world's largest processor and marketer of beef, chicken and pork. The company has 120,000 "team members," as it calls employees and has more than 300 facilities and offices in 32 states and 22 countries. Tyson acquired the Carolina Brand Foods bacon-processing plant here as part of its purchase of IBP Inc. in September. Company officials say they will shift production of its bacon brands, which include Thorn Apple Valley and Colonial, to more modern plants closer to its suppliers in the Midwest. Tyson says it isn't sure how much money the move will save, but it is clear that the cost to this town is huge.
"There is a fierce cost pressure that is not a purely recession-related thing," says Richard Lefter, director of Massachusetts Institute of Technology's Industrial Performance Center. "Location has become an active focus," he says, especially since publicly traded companies often get a nice kick to their stock price after a move.
But that means little for workers here, say local officials. "This closing presents many unbelievable challenges," says Mark Wuntke, the rapid response coordinator for the area. Many of the workers affected by the plant closing lack a high school diploma and have never worked anywhere else. Several don't speak English. More than half of the laid-off employees are women or men supporting a family by themselves. Many workers had brothers, sisters, aunts or uncles working at the plant --- meaning the support network of the extended family in this tight-knit area is being hit hard as well.
The average age of the laid-off worker at the plant is 42 and many feel they are too old to make a major job change. "I'm too old to move. I'll just pick up the best thing I can," says Christine Watkins, who is 56 and made sure the bacon got vacuum packed properly before it left the factory. She would have celebrated her 25th anniversary at the plant on June 17, had it not closed.
To help prepare workers, state and local officials have been struggling to
get the workers retrained as soon as possible. But, says Mr. Wuntke, "the
machinery in the plant is so unique, that the skills the workers have learned
for so many years will not be transferable."
CALIFORNIA ALRB ADMINISTRATIVE JUDGE FINDS
PICTSWEET GUILTY IN BAD-FAITH BARGAINING
AND OTHER SERIOUS VIOLATIONS OF LABOR LAW
In a move bolstering legislation that would give farm workers binding arbitration during union contract negotiations, an administrative judge with the California Agricultural Labor Relations Board (ALRB) ruled on June 19, 2002 that Pictsweet Mushroom Farms in Ventura, California is guilty of bad-faith bargaining and other serious violations of the law.
In a 66-page decision, Administrative Law Judge Nancy C. Smith found Pictsweet broke the law by failing to provide a customary biennial pay hike in violation of the company's duty to bargain with the union, refusing to provide information the United Farm Workers needed to prepare for contract negotiations, violating seniority when conducting layoffs and recalls, and having a company lead-person condition a requested job transfer on the employee signing a petition to decertify --- or get rid or ---the UFW.
Every two years, Pictsweet had provided pickers with an increase in the piece rate paid for each unit of mushrooms they harvested. That raise was due in August 2000. However, in the previous January workers renewed their efforts at bargaining for the UFW contract they lost when the company was sold in 1987. Judge Smith wrote "that during the 2000 negotiations, Pictsweet unilaterally decided to end its practice of providing wage increases every two years to its pickers." Making such a unilateral change without first bargaining with the union is illegal.
The UFW is sponsoring SB 1736, by state Senate President pro Tem John Burton (Dem.-San Francisco), that would bring in arbitrators to help growers and farm workers overcome obstacles to agreement during union contract talks in cases such as Pictsweet. The bill has been approved by the Senate and is currently being debated in the Assembly.
In May, the members of the ALRB upheld an earlier administrative judge's decision finding Pictsweet guilty of firing mushroom picker Fidel Andrade in retaliation for his support of the UFW and for engaging in other activities protected by California's farm labor law. The company was ordered to offer Andrade his job back and to reimburse him for all lost wages and benefits.
The latest legal blow to Pictsweet, from Judge Smith's June 19 ruling, followed many days of testimony at a February hearing in Oxnard. A detailed nine-count complaint was issued in this case against Pictsweet on June 26, 2001 by prosecutors with the ALRB.
The latest set of negotiations between Pictsweet and its workers has gone on
since early 2000, with management refusing to respond to the workers' basic
demands, the UFW states. The Cesar Chavez-founded union has contracts protecting
about 70% of the mushroom workers on California's Central Coast.
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