WORLD ECONOMIC FORUM: Corporate mobsters to meet in Melbourne casino

Corporate mobsters to meet in casino

BY SEAN HEALY

If their rackets were heroin and prostitution, their meeting would be called a Godfathers' convention. But their rackets are more legitimate, or at least more legal, so their gathering is called an economic summit.

However, there the difference ends. Just as Lucky Luciano and Al Capone would divide up numbers games and booze smuggling on the Lower East Side and plot how they'd put the ice on the feds, the 800 corporate heavyweights gathering in Melbourne's Crown Casino for the World Economic Forum's (WEF) Asia-Pacific Economic Summit in September will plan how they will add to their already considerable wealth and power.

And, just like any hood, these corporate families all have records as long as your arm. Among the keynote speakers:

Capo di tutti capi

At the head of the table will be the capo di tutti capi, the boss of all bosses, Bill Gates, chairperson of Microsoft and the dominant corporate player in the “information revolution”. Gates will continue from where his sales pitch at the WEF's annual meeting in Davos in January left off: the internet and information technology can bring untold wealth and happiness, provided you buy his company's products.

Microsoft, whose 1999 gross revenues totalled US$19.7 billion and whose 1999 profits were US$7.7 billion, has reached its pre-eminent position, not through superior products or innovation, and certainly not through helping to close the “digital divide” between the world's rich and poor, but through corporate tactics that even other multinational corporations and the US government regard as too viciously predatory.

The company built up a near monopoly position in operating systems (90% of the market) and launched an aggressive technological acquisition campaign, buying everything it could to ensure it controlled new products coming onto the market. Those technologies it couldn't control, it copied and then bundled with Windows or Microsoft Office.

Microsoft then used this position as leverage to seek to wipe out its competitors in the computer language (Java), software (Lotus) and web browser (Netscape) markets. It could then charge consumers pretty much whatever it wanted to.

On June 7, after a year-long suit brought by the US Justice Department, a District Court found that Microsoft had breached the US's lenient and rarely enforced anti-trust laws and ordered the company be split in two. Gates announced the company would appeal, all the way up to the Supreme Court if necessary.

Consigliere

In the mafia families, there was always a consigliere, who whispered in the boss's ear about which deals to make and which to break. At this conference, that job falls to Kenneth Courtis, the Asian vice-chairperson of New York investment bank Goldman Sachs.

His advice will be that if the nations of the Asia-Pacific want some of Wall Street's cash to “leverage” themselves out of economic crisis, they will have to play by Wall Street's rules: deregulate their finance markets, privatise state assets, restructure battered industries and open up further to Western capital.

Courtis should know all about the Asian economic crisis. Before the meltdown began in Thailand in July 1997, the investment banks were among the leading “hot money” investors in the region. They speculated on everything: corporate debt, government debt, shares, futures, options on futures. Much of it was very profitable (Goldman Sachs' revenues for 1999 were US$25.3 billion, its profits US$2.7 billion), but also very risky.

When the Thai economy showed signs of faltering, the investment banks were among those who speculated on its collapse, and made billions by buying the country's foreign reserves when the central bank spent them in a vain attempt to prevent its currency's devaluation.

When the region's economies collapsed as the “hot money” flowed out and access to credit dried up, the investment banks made another killing, on the International Monetary Fund's bailout packages.

On Christmas eve 1997, Goldman Sachs, four other giant investment banks, six major US commercial banks and the US Federal Reserve Board discussed and decided the fine points of the IMF's US$57 billion South Korea bailout package. The first to be bailed out would be the country's Western creditors — themselves — whose risk exposure just evaporated, paid for by workers and the poor in Korea, Thailand and Indonesia.

Investment banks made even more money when they were engaged to draw up industry restructuring plans for the crisis-wracked countries. The restructuring threw millions out of work but allowed Western companies to buy massively marked-down assets and the financiers themselves to sign lucrative “alliance” agreements with the cash-starved local banks (Goldman Sachs, for instance, signed one with the Korea First Bank).

Now Goldman Sachs wants to be let back onto the merry-go-round.

Pirate

While privatisation doesn't benefit many, it does benefit some: one of its biggest fans, and biggest beneficiaries, will also speak at the Melbourne summit. Jean-Marie Messier's Vivendi is at the forefront of capturing undervalued state utilities and transforming them into privately owned money-making machines, especially fresh water.

Vivendi's motto is “Water is life” and, in a world where fresh water sources are increasingly scarce, you better be prepared to pay up big. In 1999, Vivendi earned US$35.2 billion in revenue and made US$1.2 billion in profits from this scam.

Its fastest expanding market is in the Third World where the privatisation of state water utilities is frequently enforced by the IMF. In April, the company won the contract to run the water services of Dar-es-Salaam, the impoverished capital of Tanzania. Twice, the company has been found guilty of using bribery to win its contracts.

A Vivendi subsidiary, Compania des Aguas, owns the once-public water services of Puerto Rico. Areas belonging to those who can pay, such as the golf courses at the five-star Palmas del Mar resort and the US Navy's Roosevelt Roads base, never have problems with water supply. But, said one resident of a poor community, “I live in front of the entrance to Palmas del Mar and in February I went without water for 15 days”.

Gun runner

The CEO of Siemens, Heinrich von Pierer, will no doubt speak in breathless tones of the growing “interconnectivity” of global communications — and hope that translates into more Asians buying his company's mobile phones.

Siemens is one of the biggest players in the global electronics market (US$66 billion in revenues in 1999, US$370 million in profits). But, as well as specialising in technology which may cause brain tumours, Siemens has an even darker side.

The company is the major force in the continuing operation of Eastern Europe and Russia's dangerous nuclear power plants. Without Siemens, those governments probably would have followed the World Bank's 1992 advice and closed their nuclear industries. Instead, they contracted Siemens to provide “safety upgrades”, which most experts deem inadequate. The only Eastern European reactor to be closed was in Greifswald, in Siemens' home state of Germany.

Siemens is also a major provider of military and spy technology. It sold a “traffic control system” to the Chinese government which was used to film pro-democracy protesters in Tiananmen Square in 1989 for later arrest. Its systems have also been installed in Lhasa, Tibet, a city not known for its traffic problems.

For all its high-tech image, Siemens built up its position of global dominance the old fashioned way. In October, Siemens and other major Greman companies offered to pay US$3.3 billion in compensation for their use of slave labour to make their products in the Nazi concentration camps. As its slogan says, “We can do that”.

Extortionist

If and when poor countries adopt “free trade” orthodoxy, they'll meet people like Michael Garrett, the Asia and Africa executive vice-president for Swiss food giant Nestle. He'll address the Melbourne summit, no doubt talking about the wonders of free trade.

For the countries which rely on export crops like cocoa and coffee for their earnings, this dependency is disastrous. The reason is not just that these commodities' prices are in long-term decline, but that they have to deal with food companies like Nestle, which control the market and dictate the terms.

Of the price of every jar of coffee, for example, the growers get only 10%, exporters get 10%, retail chains get 25% and the food companies, like Nestle, get 55%. In 1999, Nestle took in US$49.5 billion and made a profit of US$2.9 billion.

But this is the more scrupulous side of Nestle's work: the company has also been the subject of a public boycott campaign since the 1970s over its unethical marketing tactics in the baby formula market (of which it has a 50% share).

The World Health Organisation estimates that 1.5 million children in the Third World die each year because they're not breast fed. Where water is unsafe, the death rate for babies fed on formula milk is 25 times higher than those who are breast fed.

Whistleblower Syed Aamar Reza, a Nestle salesperson in Pakistan, revealed to the International Baby Milk Action Network in February how he had been directed to breach international formula milk conventions and Nestle's charter by bribing doctors to prescribe Nestle formula to local babies and by offering free samples during the crucial few weeks immediately following birth. Nestle's PR people deny the allegations.

Stand-over man

The WEF won't feature only international bosses; their local cousins, such as BHP chief Paul Anderson, will get their moment in the bright lights too. The Australian mining giant's speciality is using its considerable financial and industrial muscle (1999 revenues were $10.1 billion) to force workers and communities to toe its line.

BHP is the only game in town for many workers in regional Australia. Claiming the need to be “competitive” on international markets and threatening closure if it doesn't get its way, since the early 1980s BHP has demanded greater sacrifices from its workers and heavy subsidies from the government — and watched its profits soar ($1.08 billion in 1999).

The “reward” given to Newcastle steelworkers for doubling productivity during the 1990s was unemployment; the Newcastle steel mill closed in September. The “reward” the company plans for its mineworkers in Western Australia's Pilbara is to be pushed into individual contracts and have their unions broken.

Communities overseas are treated even more brutally. BHP's Ok Tedi copper mine in Papua New Guinea has been amongst its most profitable investments, and amongst the most environmentally destructive. BHP has avoided action against it by the PNG government by threatening to pull out and deny the government a valuable source of royalties.

The Mineral Policy Institute estimates that the damage from dumping mine tailings into the Fly River will last 60-100 years. The company is now trying to pull out of Ok Tedi, but is still seeking to avoid its responsibilities to rehabilitate the area.

BHP is facing action in the Supreme Court of Victoria by traditional landowners who claim that it has breached its articles of settlement by failing to meet commitments, including construction of an adequate tailings dam.

Loan shark

While most at the summit will preach high-tech virtues, Frank Cicutto, the CEO of the National Australia Bank, the country's largest bank, will probably speak of more homely ones: like gouging your customers.

The NAB makes its money ($9.6 billion revenue in 1999, $1.4 billion profits) by concentrating on the basics: charging higher rates of interest to its mortgage holders than it pays out in interest on deposits, whacking exorbitant interest rates on its credit cards and charging fees for such things as visiting a bank teller.

It has also benefited from a decade-long campaign of job shedding: the Finance Sector Union estimates that the four big banks sacked 50,000 staff over the 1990s. If the NAB's planned merger with insurance company MLC goes ahead, more jobs will go.

The NAB is at the centre of an intricate web of cross-company directorships, which binds Australia's capitalist class together. A 1997 study found that, in 1995, 657 directors held the available 847 positions on company boards and 62% had multiple directorships; the NAB's chiefs held the most cross-company positions.

The bank is also a prime mover in the Australia-Indonesia Business Council, from which position it has lobbied hard for the federal government to maintain close relations with Jakarta. The NAB is a major investor in oil operations in the Timor Gap.

While the similarities between this gang of thieves and the one that terrified 1920s Chicago and New York are obvious, this group has learned from its predecessors. Capone and Luciano used their own muscle and made their own hits; in the end that brought them into competition with the state, who eventually snuffed them out.

The Melbourne crew have been smarter: rather than compete with the state, they've formed an alliance with it. Senior politicians, like Prime Minister John Howard and US assistant secretary of state Stanley Roth, will rub shoulders with them in September and speak in loving tones of close business-government ties. And for muscle, the entire Victoria Police will be camped outside.

For those considering protesting against the tyranny of the modern multinational, their summit is an offer you can't refuse.