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June 29, 2006

Corporate America's hidden risks - major headaches threaten companies that ignore their 'moral liability'

MARC GUNTHER, FORTUNE MAGAZINE, JUNE 28, 2006

NEW YORK (FORTUNE) -- Most FORTUNE 500 companies employ brigades of lawyers to limit their legal liability. But how many worry about their "moral liability"? Probably not enough, if only because the lines are blurring between the two.

Moral liability is the idea that companies will pay a price if they fail to meet society's expectation that they act ethically. Sometimes the price will be damage to a brand or reputation. Other times, the cost will be more concrete, in the form of lawsuits, damage awards or lost sales.

Either way, merely obeying today's laws will not protect a company because the expectations of business are rising. Indeed, sticking to a compliance mindset is dangerous because firms that do so risk missing bigger threats beyond the world of laws and government.

This may sound abstract. It's not. Ask executives at Nike (Charts) or Gap (Charts), companies that found themselves under assault, not because they broke laws, but because they tolerated substandard working conditions in overseas factories.

Or look at Yahoo! (Charts) and Microsoft (Charts), which came under attack for helping the Chinese government censor the Internet. Or Victoria's Secret, the target of an activist campaign, because it printed its catalogs (about 390 million a year!) on paper from ancient forests.

These companies obeyed the law but suffered big headaches anyway.

Two recent studies put a spotlight on this issue. The McKinsey Quarterly published a survey called "When Social Issues Become Strategic" by Sheila Bonini, Lenny Mendonca and Jeremy Oppenheim that reported: "Issues such as privacy, obesity, offshoring and the safety of pharmaceutical products can alter an industry's ground rules, and the financial and reputational impact of mishandling these issues can be huge." You can read the McKinsey report on the firm's Web site.

In an earlier study called "The Changing Landscape of Liability," Geoff Lye and Francesca Muller of the British consultancy Sustainability write: "Companies are operating in a new and more challenging environment where risks of legal action against them are greater than ever. . . Even if companies avoid trial and prosecution in real courts, society could put companies on trial in the court of public opinion." Their report is available at www.sustainability.com.

More is at stake here than reputation. Moral liability often evolves into legal liability, sometimes quickly. "Laws are a lagging indicator,"says Lye. "We're seeing very rapid shifts in society's expectations of business."

Here are some areas where business faces emerging moral liabilities:

Global labor standards: Most visitors to this Web site, as kids, never thought about how and where their T-shirts and sneakers were made. Now companies spend millions of dollars to monitor their supply chains.

The issue is moving into the courts: Last fall, a group called the International Labor Rights Fund sued Wal-Mart (Charts), on behalf of workers on four continents, employed by its suppliers. Wal-Mart says it is beefing up its inspection programs.

Human rights: Companies that do business in dictatorial regimes face negative press, boycotts and lawsuits. In Doe v. Unocal, plaintiffs charged that the California-based energy company Unocal was complicit in human rights abuses against Burmese villages while building a gas pipeline there in the 1990s; the company eventually settled, making a payment reported to be about $30 million. Other plaintiffs, using the Alien Tort Claims Act, which allows foreigners to bring suit in U.S. Court, have filed human rights claims against Chevron, Coca Cola, ExxonMobil, Texaco and Union Carbide, among others.

Climate change: Environmentalists want to hold companies accountable for spewing greenhouse cases into the air. While it will be difficult to attach legal liability to individual companies, the attorneys general of eight states and New York City last year sued major emitters of carbon dioxide, the primary pollutant that causes global warming.

The defendants include American Electric Power, Southern Company, the Tennessee Valley Authority, Xcel Energy and Cinergy. Even if the suit fails, it's a warning to the companies to clean up their act.

Philip Rudolph, vice president and general counsel of a consulting firm called the Ethical Leadership Group, says such lawsuits cannot be dismissed as nuisances. "The bounds of liability are beginning to stretch in ways that traditional lawyering does not address," says Rudolph, who has represented brand-name companies in the apparel, footwear, jewelry and food industries.

"You can have companies being sued by their own customers over the lawful use of a legal product," he notes, such as the obesity lawsuits brought against McDonald's, albeit without success.

(To read more about the initiatives some companies are taking to tackle global warming read my colleague Adam Lashinsky's column.)

Here's the good news - all these social issues present opportunities as well as threats. Timberland tells customers that its shoes and boots are made in factories where workers' rights are protected. The same goes, now, for Nike and Gap. Toyota (Charts) sells lots of hybrid cars, mostly because of rising oil prices but also because of the concerns over climate change. General Electric's "ecomagination" initiative aims to profit by selling products that save energy and reduce emissions.

That's the best way for business to avoid "moral liability" - become part of the solution instead of part of the problem.

Posted by bhola at 12:35 AM | Comments (0)

June 25, 2006

We found Saddam's WMD – and they were ours

DAVE DEBATO

Excerpt from Our Generals Don’t Even Know Who We Are, coming from Cumberland House Publishing in October

Amar Abdul Rahman was a survivor. He was also a fiercely patriotic Iraqi and thought of himself as an honest man – two things that did not always go together. Rahman had served for over fifteen years in the Iraqi Air Force as a Chief Warrant Officer in charge of all munitions in Region 6 – a vast, mostly desert area in north-central Iraq straddling the Tigris River approximately 80 kilometers north of Baghdad. There were several military installations located within Region 6, the largest being his current duty station, al-Bakr Air Force Base, named after Iraq’s fourth president – Hassan Ahmed al-Bakr. Al-Bakr was a very popular president and he was especially beloved by the female population of Iraq. He even had his own contingent of "groupies" present whenever he would appear in public. Many public statues of Al-Bakr were built all over Iraq as a tribute to his popularity. The common people just adored him.

He was of course assassinated. It was nothing personal. That was just the Iraqi way.

As a Shiite Muslim, Rahman knew that he would never have a chance at becoming a high ranking military officer. Those positions were all reserved for the suck-up Sunni loyalists who composed nearly all of the senior officer positions in the Saddam military. Yes, a few token Shia and even the odd Kurd here and there had been given some meaningless staff officer jobs from time to time, just to appease the masses, but everyone knew that all of the important roles in the Iraqi military and civilian leadership were reserved for members of Saddam’s own religious sect – the minority Sunni population. The most inner circles of Saddam loyalists were restricted further still to include only members of his own Tikriti tribe, all of whom were directly related to Saddam. At the innermost circle of all were immediate family members that made up what was referred to as the "Circle of 40." They alone had direct and daily access to the Iraqi dictator. Their access to Saddam was trumped only by that of his two sons – Uday and Qusay. Tribal affiliation and blood ties are absolutely everything in Iraq. They always have been and were made even more important under Saddam.

Rahman accepted that fact, just as he had accepted everything else about life in Iraq since the reign of Saddam began in the late 1970’s. In fact, at age 34, he had really never known any other way of life. It could be harsh and unforgiving to be sure, but if one did as they were told, stayed away from politics and did well in school as well as with their compulsory service in the military, one could manage to have an acceptable, if not well to do life. That was the most Rahman had ever expected and for the most part, he was happy with his lot in life.

As fate would have it however, Rahman is a distant relative of the number two man in the Iraqi government – Izzat Ibrahim al-Duri. Al-Duri is Saddam’s right hand man and second in charge to Saddam of the ruling Ba’ath Party, Deputy Commander of the Iraqi Military and the Vice Chairman of the Revolutionary Command Council. This fact had enabled Rahman to bypass the compulsory one-year service in the Iraqi Army as a lowly infantry soldier in 1988 and to enlist in the more respected and better paid Iraqi Air Force as a Warrant Officer, a position usually reserved for career service members as a reward for their loyalty and for bribes paid to senior officers over the years. Rahman considered himself extremely fortunate to have such a relative, even if it was a distant relative by marriage only – a distant in-law to be more accurate. But family was family and in Iraq, that was usually enough.

After receiving his initial military training in 1988 at Taji Air Force Base just north of Baghdad, Rahman was next stationed at the large air base in the As-Sulaymaniyah province located in northeastern Iraq and very close to the Iranian border. During the 10-year Iran-Iraq war that had just ended a few months’ earlier, As-Sulaymaniyah was one of the most active military posts in the country and had been on the receiving end of several Iranian Air Force bombing sorties into Iraq. There was still considerable damage to the base when he arrived in early fall 1989 and some basic services like sewage and electricity were not fully restored. Rahman was placed under the supervision of a senior Warrant Officer who would mentor him in his new occupation. Rahman was a very good student and he soaked up all of his training just like the parched Iraqi desert after a thunderstorm. He was proud to serve in such a trusted position.

During his six year tour at As-Sulaymaniyah, he received advanced training in the identification, transportation and storage of munitions and ordinance – in lay terms, weapons – all kinds of weapons ranging from landmines and machineguns to high explosive bombs and – WMD, specifically, chemical WMD. Of course, Iraqi had no WMD, right? Well, whatever WMD that Iraq didn’t have in Region 6 was about to be placed under the direct supervision of Munitions and newly promoted Chief Warrant Officer Amar Abdul Rahman – and Rahman had become a very good munitions officer.

In 1995 Rahman was transferred to al-Baker Air Force Base and for the first time in his career, he alone now assumed the responsibility of all munitions in his region. He was ready. Al-Baker was located in one of the most rural areas of Iraq. In fact, when the base was built in 1982 by Yugoslav and German contractors, Saddam had to seize thousand of acres of prime farmland and fruit orchards from the local farmers in order to build his immense new base. That did not sit well with the farmers and local tribal leaders, many of whom were Shia. They protested to Baghdad over the illegal land grab. Saddam soon sent in some agents from the Mokabarat (Iraqi Secret Service) and after several farmers disappeared and/or turned up beheaded, the controversy came to an abrupt end and the base was completed as scheduled.

Rahman enjoyed his new assignment and he dutifully cataloged everything in his charge and followed his orders to the letter, just as he had been taught since grade school. He had two junior officers and over 20 Air Force technicians assigned directly under him to assist with the inventorying, packing, labeling and transportation of the massive amounts of weapons systems and ammunition that he was responsible for. In addition to the 25 square km base at al-Baker, Rahman was also responsible for the 5 square km base munitions annex located approximately 3 km south of the base. It was at this sub-post that Rahman actually had his office and also where he kept his records.

Shortly after arriving at al-Bakr in the summer of 1996, Rahman received an unexpected visit from the Iraqi Air Force Vice Chief of Staff, Maj. General Hamid Raja Shalah. Shalah had made a special trip from Air Force headquarters in Baghdad to speak with Rahman in person because he felt that the subject was so sensitive that he did not trust talking on the telephone and he certainly would not use the unreliable Iraqi military radio communications system. No, this was a matter to be handled in person, one to one, face to face.

Gen. Shalah met with his eager new officer in Rahman’s cramped and dusty office at the annex. Rahman was understandably nervous since this was the highest ranking officer he had ever met and he did not know what to expect. The general spoke first. "Rahman, what I am about to tell you does not leave this room." Now Rahman was really nervous, but he managed to spit out a short, "Yes Sir."

"As chief munitions officer for Region 6, you will be responsible for some sensitive items that very few people in this country even know about, including your base commander. I am talking about chemical weapons that have been banned by the United Nations. Weapons that our president has sworn we no longer have. Do you understand me so far?" Banned weapons? I will be responsible? I don’t need this! But a crisp "Yes Sir!" was what actually came out of his mouth. "You will be receiving a shipment of some of these items next week on two unmarked flatbed trucks accompanied by Mokabarat personnel. Obey their instructions exactly Rahman and you will be well rewarded by me. Understand?" "Thank you sir" was the only thing Rahman could think of to say, at least to this guy anyway.

The "items" were indeed delivered the next week as the general had promised and Rahman followed the instructions he was given by the plainclothes intelligence agents accompanying the shipment. The weapons were inventoried, cataloged in his records and stored in a reinforced bunker on the main base. No one was told of their arrival or location, not even the base commander. Damn! Rahman thought. I just hope we never to go to war with the Americans again. I don’t want to have to deal with this!

He spent the next seven years playing a kind of shell game with the UNSCOM inspectors sent by the UN to monitor Iraq’s WMD program. Whenever UNSCOM sent one of its inspectors such as Scott Ritter or Hanz Blix, he would bury the WMD before they arrived, deny their existence and when they were gone, the large construction equipment, always under the watchful eye of the Mokabarat, would dig them up and move them to another location in the region. Rahman became very good at the game and he thought he would do so until retirement.

However, on April 9, 2003 all that changed.

That was the day the Iraqi forces defending al-Bakr deserted their posts after several days of bombing and brutal assaults by the American Air Force as well as units of infantry and armored forces of the U.S. Army’s Third Infantry Division. The cavernous main hanger had a huge crater in the middle of the roof and floor, the two main runways were pockmarked with bomb craters and the base was littered with burnt out hulks of Iraqi military vehicles and giant MIG-29s as the Iraqis attempted to tow them out of harms way. They didn’t make it. Rahman himself had ordered his men to destroy all of their munitions records. As per an impassioned phone call from Shalah the day before, Rahman had burned all records of the chemical WMD on file in his office. He gladly complied as he wanted no part of any war trials after this was all over, whenever that would be. Maybe he will be killed or taken prisoner and it will never be over for him.

But eventually, it was over.

Within a week or so after the initial American troops had captured and then bypassed al-Bakr on their way north to Tikrit and Mosul, a new group of U.S. soldiers arrived in a large convoy from Kuwait. They entered the sprawling, deserted and charred base through the battered south gate and set up camp in a vacant dirt field just east of the airbase control tower. These were the troops of the 223rd Military Intelligence Battalion, California Army National Guard. Among their number were a contingent of Counterintelligence Special Agents whose primary missions, among others, were the location of Saddam Hussein and Iraqi WMD. One of those agents was named David DeBatto, in Arabic, Daoud, or as he would eventually be referred to by both Iraqis and Americans alike – Mr. David, his host in this furnace of a tent on his former base.

"It was a new day for Iraq", he thought.

*****

After relating his background and experience to us, Rahman told us that there was indeed WMD in this area and that he would be willing to lead us to it. Not being overly trusting of Iraqis at that point and certainly not of a prior Iraqi military officer, I was very skeptical of anything he told us. I asked Rahman why he was telling us all of this and he said very matter-of-factly, "Because I love my country and I want things to change."

I looked at Weichert and asked him with my eyes what he thought. Weichert’s response was to Ask Rahman if he would lead us to the weapons right now and Rahman said, "Yes, of course." With that, the three of us got into our Humvee and drove to a bunker located at the southeast quadrant of the base, not even one mile from where were sitting.

The bunker sat in a deserted part of the base that had several similar bunkers spread throughout a large area and connected by a single serpentine road. All of the bunkers were constructed of concrete covered by tan stucco, which blended in perfectly with the surrounding desert. They were of various sizes, but all had two, large metal doors which either slid to the side or opened outward, leading into the one large storage area inside.

As we pulled up to the Bunker that Rahman indicated contained the WMD, I noticed that the dry, desert field surrounding the area was littered with ordinance, primarily aerial bombs. Some were rusted beyond recognition and lay half- covered in sand. Others were neatly stacked in the original shipping crates and surrounded by a high earthen berm, which looked like a small crater.

The high, steel doors of the bunker were ajar. Weichert and I each pulled one of them open and the three of us entered the dark and musty storage room. Immediately upon entering, I noticed a chemical detection kit lying open on the floor, just inside the entrance. The hair on the back of my neck went up and I looked over at Weichert, who was also staring at the kit. "Holy Shit!" we both said at almost the same time. That was not what I wanted to see at that particular time. I looked closer at the detection kit and saw that it had Russian lettering – not that unusual, since Iraq had many contacts with Russian scientists, engineers and military personnel over the years. They had also purchased a large assortment of military hardware and munitions from them – to include chemicals and related equipment.

Rahman pointed to a number of long wooden crates stacked up in rows three high along the wall to the left of the entrance. There appeared to be 25-30 crates in all. Two or three had their tops removed and grey, aerial bombs, about six feet in length, sat inside. Weichert and I walked over to the crates and looked at one of the open ones. It appeared to be a conventional high explosive bomb used on any number of military aircraft, both in Iraq and in elsewhere.

Rahman motioned for us to come over to where he was standing next to another of the open crates. He pointed to the midsection of the bomb and to what appeared to be a small, thin metal door or covering bolted shut with small metal pins and possibly covering a slot or chamber. Inside, Rahman, explained, was a small parachute. He told us that after the bomb was dropped from the aircraft, the metal covering was blown open and the parachute deployed at about two hundred feet, slowing the descent of the bomb. A chemical agent, which was located in another chamber located at the rear of the bomb, was then dispersed into the air in an aerosol spray and spread over as large an area as the prevailing winds allowed.

Rahman led us around to the rear of the bomb and pointed to the tail assembly. It had a circular piece of metal connected to spokes in a conventional sort of design, but the similarity stopped there. Where ordinarily the rear end of a conventional high explosive bomb would taper into a point, this bomb had apparently had the tail section cut off about six inches from the tip resulting in a flat, circular end. Into that flat end, a small handle was inserted like one on a drawer. Rahman motioned with his hand near the handle and said that this device was twisted in order to open the compartment and then the technician pulled the drawer out and inserted a chemical agent in the slot. When finished, the drawer was reinserted into the bomb and the handle was once again secured.

The chemical WMD was now ready to be loaded onto the aircraft.

Rahman next pointed to the hand lettered numbers on the side of the crates. They were numbered from 1-29. Rahman said that he placed hand-lettered numbers on each one personally and can assure us that were 29 chemical WMD bombs under his supervision. Not 28 or 30 – but 29. He seemed to be very proud of his accuracy and neatness in numbering each crate. He went on to say how he had spent the last eight years or so playing "cat and mouse" with UNSCOM (the UN inspectors). Every time they were due to come to his region for an inspection, he would be notified by his superiors. Then he would arrange for the bombs to be transported to a different area that was not going to be inspected. Sometimes, he told us, he would simply dig a deep hole near the storage facility and bury the bombs, crates and all, until the inspectors left and then dig them up again and put them back where they were. He was familiar with Scott Ritter and Hanz Blix in particular and said they never found any WMD in his region.

He even ran his hand along one of the crates and brushed off some dried clay, which was clinging to the outside. These were dug up after the last inspection before the war and placed back into the bunker with the large areas of clay still covering some of the crates. He was right – every one of the wooden boxes had varying amounts of dry, reddish clay – which is the common soil found at that location – caked to their wooden exteriors. These bombs had definitely been buried locally at some point just before being placed into that bunker – that was a fact.

Looking around the rest of the bunker interior, I could see dozens of metal chemicals containers – some apparently unopened, and some with their tops open and with dried, powdery substances on the floor all around them and inside the containers. Some containers were covered with what appeared to be dried liquids, almost like dry paint, streaming down the sides.

I can honestly say that I was having a hard time comprehending what I was seeing. Unless my senses were deceiving me, Weichert and I had actually found the mother load of Operation Iraqi Freedom – actual Iraqi WMD. I walked over to one of the crates and saw a plastic sheath containing what appeared to be a bill of laden. I cut it open with my Leatherman and pulled the documents out.

At this point I want to say that loud and clear that I very much regret not having either shoved that document in my pocket or made a copy of it and sent it home for safe keeping. At the time I actually thought that a report would be written and normal Army and intelligence protocol would be followed, so there would be no need for me to have to prove anything. But I digress…

I opened the folded off-white paper form and noticed several interesting things right away. The bombs had been purchased in the United States in 1988 from what appeared to be a government contractor called The Carlyle Group. I am almost embarrassed now to say that I had not heard of The Carlyle Group at that time so the name meant nothing to me. The only reason I remember it at all is that I was amazed that the bill was in English and I was stunned to see that a bomb that was used by Iraq in delivering chemical WMD – the only WMD found during the entire Iraq war – was in fact supplied to Saddam Hussein by the United States. Un-blanking believable.

The date on the bill was either 1987 or 1988, I don’t recall exactly. I do recall that the bomb was manufactured in Spain and shipped through France. So much for their claims of being holier-than-thou. I checked several more bills and they were all identical. These bombs had all been shipped together. Rahman told us that similar weapons had been used all throughout the Iran-Iraq war during the 1980s as well as against the Kurds. We were staring at what could have possibly been some of the same type of WMD used in one of the most heinous attacks in recorded history – the gassing of Halabja in March of 1988 which killed an estimated 5,000 Kurdish civilians.

I instructed Weichert to both videotape and take digital still photos of the bunker and its contents. The outside area which included many more chemical containers and HAZMAT suits were documented as well. At least fifteen minutes of video and 50 still photos were taken at that location. These were then incorporated and attached to the detailed written report that I wrote and sent up the chain of command through CI channels.

I also personally reported the discovery to the battalion commander of the 223rd MI, CA ARNG, Lt. Col. Timothy Ryan. Ryan seem excited by the news and asked to be taken to the bunker immediately. Weichert and I drove Ryan to the bunker within minutes after his request and showed him our discovery. He seemed genuinely impressed with the authenticity of our find. He commented to me, "You guys have found the real deal."

So we had. Too bad it was ours.

Copyright 2006 by David DeBatto

Posted by bhola at 10:47 AM | Comments (0)

Democracy searches for space in India

RAHUL KUMAR, 16 JUNE 2006, ONEWORLD SOUTH ASIA

No one could have thought that the visit of noted Bollywood actor Aamir Khan to the site of twin agitations – the Bhopal gas tragedy as well as the Narmada agitation - in April 2006 in New Delhi would spark off a furor that would refuse to die down even after two months. His comments propelled Gujarat, the land of Mahatma Gandhi, to ban his latest film Fanaa.

Both the agitating groups have been protesting for their rights for over two decades and both wanted the highest authority in Indian democracy – the Prime Minister’s office - to give them a hearing. People from both the groups had gone on a hunger-strike to force the government to do something.

On a visit to the Indian capital, Khan decided to pay a visit to Jantar Mantar – India’s hotspot for launching protests and agitations - where the Bhopal gas victims and the Narmada farmers had pitched their tents on opposite sides of the road.

The Bhopal victims wanted compensation apart from other demands and the Narmada agitators – led by Medha Patkar – wanted the government to relocate people who have been ousted because of the construction of a series of dam on the Narmada river in central India.

A mere comment by Khan that the Indian government should listen to the woes of the victims of the Bhopal gas tragedy and should rehabilitate villagers in the Narmada valley was quickly given a political hue by the Gujarat government.

Gujarat chief minister Narendra Modi, also known for his anti-minorities stance, does not accept alternative views easily. And when Khan voiced his concern over the tardy rehabilitation process at the Narmada valley, the BJP chief minister found an opportunity to gain mileage out of the dam controversy.

It is another matter that Narmada evokes such strong reactions in Gujarat that even the Congress party, which is a strong political opponent of the BJP, sided with the BJP’s irrational stand. The parties roused the passions of the common Gujarati so much that a youth even set himself ablaze in front of the lone cinema hall that was screening the movie.

Well, the film is doing well all over the country and as Khan said it is a loss for the Gujaratis that they could not watch it because of their government’s stand. The actor also refused to apologise to the BJP for voicing his opinion and maintained his posture that he was apolitical. Khan also promised to study the controversy over Coke and depletion of groundwater as he has been endorsing that company’s products.

What probably the actor did not realize when he made those innocuous Narmada comments in New Delhi was that he would end up enacting a real life role from his recent success – Rang De Basanti. This movie too was a roaring success and went down well with the Indian youth as its young protagonists successfully assassinate the country’s corrupt defence minister. Aamir Khan would have little known that he too would end up playing a young man in search of justice for his countrymen.

Posted by bhola at 02:17 AM | Comments (0)