ROGER AWARD 2002

STATEMENT FROM THE JUDGES

The task facing the judges of the Roger Award for the Worst Transnational Corporation in Aotearoa/New Zealand is always a sad and difficult one. The year 2002 is certainly no exception. Sad because all six shortlisted companies - and some others - score so badly in their treatment of Aotearoa/New Zealand and some or all of its people on many of the criteria of the award. These cover areas such as unemployment, abuse of workers, profiteering, political interference, cultural imperialism, and negative impacts on tangata whenua, women, and the environment. The judges also think it important to point out that government is an active collaborator in the bad behaviour of many TNCs. Many of the negative effects could have been prevented or reversed by government leadership - which appears to occur only occasionally if public outcry becomes too great to bear.

The finalists this year were Carter Holt Harvey, Novartis, Shell, Sky City Entertainment Group, Telecom, and Tranz Rail. Firms and industries sadly do not appear to change their spots. CHH and Tranz Rail are past winners, while Telecom has appeared on the shortlist before. The oil industry has previously made the shortlist with BP and Mobil, while public relations spin has been represented earlier through Shandwick among others and seed production/genetic engineering through former Roger winner Monsanto. Novartis, like Monsanto, combines seeds with public relations spin. Only Sky City represents a ‘new’ abusive industry. Its presence on the list is regarded as justified as a borderline TNC, with some 30/40% overseas ownership and its own ownership of the Adelaide casino in addition to three in New Zealand. For the rest,  it is appalling that the recidivists fail to improve their records or take account of bad past publicity and justified public reaction to their behaviour. 

Telecom’s appearance on the shortlist would surprise few readers. There is strong evidence of abuse of their near monopoly position over many years, but profiteering in a service essential to everyday living was particularly evident in 2002 with aggressive price gouging. The biggest outcry from their actions came when they announced huge increases in November in rural connection fees. Overkill through proposing a charge of one third of total cost, amounting in some cases to several thousand dollars per low density customer, allowed them to look responsive to public outcry and government pressure over near violation of Kiwi Share obligations. They toned down the increase to most low density connections, charging $500, still up 808% from $61.88, but retained the one third of cost for the remotest users, with increases to $250 and $95 for medium and high density areas. Other price jumps were 13% increases in wiring maintenance charges, 4.5% in residential line charges and toll charge minima based on one minute calls instead of 6 seconds. But its capacity to keep prices down where competition is involved was shown by street by street rental cuts where TelstraSaturn rolled out its fibre optic network.  We are not alone in accusing Telecom of exploiting its monopoly power. In November the Telecommunications Commissioner slashed its charges to other phone companies for using its network from $2.65 per minute to $1.13. Telecom’s first ever loss in 2001/2 is due mainly to unwise overseas ventures and past leakage of profits to overseas owners instead of using it for adequate investment, for example in its broadband network - yet more staff shedding has been one result.

Shell/Shell Todd Oil Services, like the whole industry, have attempted to persuade government to go soft on dealing with climate change, greenhouse gases and pollution generally, including working against ratification of the Kyoto Protocol. Greenpeace NZ demanded in May 2002 that Shell withdraw from the NZ Climate Change Pan Industry Group leading the anti Kyoto campaign, citing their hypocritical position while they were simultaneously lauding the economic benefits of reducing emissions and moving away from intensive fossil fuel use.  In Taranaki. the group engaged in a breathtaking piece of bureacratic chicanery, assisted by the Taranaki Regional Council. They avoided the requirements of community consultations over discharges from the Kapuni Production fields by splitting the consent into different parts and understating emissions. Shell has also ignored concerns expressed by local hapu in South Taranaki, pushing through resource consents to to drill in an area that is wahi tapu. Controlling 85% of New Zealand’s gas supply, Shell has monopoly power, which has enabled it to announce that the price of gas from the Pohokua field will up to three times the price of Maui gas.

Sky City’s first appearance on the Roger shortlist is due largely to the meanness they show in addition to the iniquities of any gambling business profiting from contributing to a dependence in those becoming addicted to a compulsion which ruins many lives. Such companies operate like the malarial mosquito - sucking blood from its victims and leaving many of them with a lifelong illness. Over 5,000 people newly sought help from gambling addiction services in 2001, with over 11% citing casinos as the primary source of their porblem, while over 2/3 of casino turnover comes from Sky Auckland. But in addition, the 1999 licence for Queenstown’s Sky Alpine Casino, opposed by two third of residents, was conditional on a $100,000 per annum contribution to the Community Benefit Fund allocation to welfare groups. In November, Sky applied to reduce this to $30,000 for its first 18 months of operation and $45,000 pa thereafter. For this affrontery, with the Sky City Entertainment Group making $85.1 million profit in the year to June 2002, the casino deservedly took out the inaugural “Gambling Greed Award” from Gambling Watch in December. And when Sky City were unfortunately awarded $50,000 costs against a group seeking to stop the Hamilton casino, they charmingly offered this sum to the Salvation Army - who demanded that it be used for research into gambling problems. Sky City refused, and kept the money.

SPECIAL SPIN AWARD - NOVARTIS

Two special awards are being made this year in addition to the overall winner. The first is a ‘spin’ award to Novartis Seeds, which after merging with AstraZeneca to become Sygenta, is the world’s largest agrochemical and seed company, with annual turnover as large as New Zealand’s total overseas trade. Reading Nicky Hager’s book “Seeds of Distrust: The Story of a GE Cover-Up” is necessary to grasp the whole of ‘corngate’, but in brief Novartis Seeds was responsible for bringing GE-contaminated sweet corn seeds into Aotearoa/New Zealand. The company showed contempt for New Zealand concerns about GE and utter disregard for the potential effects on New Zealand’s environment, international image, and public health, as well as on our democratic system of government. Its cover up operation to conceal the truth and pressure on government to change the rules were in the great tradition of TNC power over policies in defiance of public opinion - and Royal Commission recommendations. They were of course helped in this largely successful endeavour by the imminent general election.

The evidence of direct unhealthy influence on government policy also reflects appallingly on the government itself. Any government that allows itself to be pressured and a key policy to be manipulated and rewritten by a multinational company out of public scrutiny and then works with the company to help cover it up deserves community contempt. The 1999 Labour/Alliance government also deserves censure for their behaviour on ‘corngate’.

CONTINUITY AWARD - CARTER HOLT HARVEY (CHH)

Carter Holt Harvey were the disgraceful winners of this award last year (2001), as well as earlier appearing on the short list. They have not mended their ways. The range of negative impacts on New Zealanders for which they are responsible include subduing their workforce and damaging their conditions, bringing in scab labour and destroying the social and economic fabric of small towns dependent on their enterprise. One employee who was among those nominating CHH for this award accuses them of “an adversarial attitude to their workers”, with managers “given peace and sanctuary by this country”, after coming from regions without protective labour laws and with sweat shop situations “metaphorically putting their jack boots back on”. 

Their worst excess in 2002 was the axing of 381 jobs at Kinleith just in time to make the summer break miserable, with workers laid off soon after the CEO was awarded a 23% salary increase to more than a million dollars - a familiar pattern to New Zealanders through the past 20 years. Carter Holt Harvey’s corporate greed and lack of humanity, manifested in the dismissal of half of the work force, has a huge human cost while the wider effect on Tokoroa and its district will be felt for a generation at least. Ruling that the company’s procedures to consult staff about its plans had not met all its good faith obligations, Jodge Colgan’s August Employment Court decision delayed plans for a month for proper consultations. Concessions offered by workers and unions were ignored in the rush to outsource maintenance and cut costs.

Attacking the Resource Management act and the Kyoto Protocol in its annual report, CHH continued the efforts of the forestry industry to prevent New Zealand leadership on reducing greenhouse gas emissions Its other unwelcome activities have included participation in growing GM pine trees and lack of care for public amenities, with their earlier withdrawal of Hanmer’s public forest reserve, a popular local walking area.

WINNER OF THE ROGER AWARD - TRANZ RAIL

By now, by elimination it will be clear that Tranz Rail have won the Roger award for the third time. Their ‘proud’ record is victory in the first year, 1997, with a continuity award in 1998, victory again in 2000 and a position on the short list in all 6 years of the award. They would, sadly, have been worthy winners every year, as the input of the public to this award testifies. This company has taken a major community asset and run it into the ground over a period of 10 years.  The effects are not only to be worn by the community as a whole in terms of needing to fund an upgrade because of poor maintenance of the infrastructure but the appalling safety record of the company leaves one aghast.

NZ Railways was a public utility built up progressively over a hundred years by the tax payers of New Zealand. NZR from its inception in the 1880's to its privatisation in the 1980's built progressively a huge capital asset comprised of the network of lines, tunnels, bridges, deviations and stations that linked the major towns and cities of New Zealand. In addition, it accumulated rolling stock and locomotives, which it maintained and replaced when necessary, including the switch from steam powered locomotives in the 1950s-60s to diesel engines. Permanent rail gangs were employed to maintain the lines. NZR transported NZ produce to the ports for export, and thousands of passengers in safety.

Since privatisation, the company has cut staff, services, safety, and many corners. Recently, the culture of corporate greed has included extended depreciation, asset stripping and inflated income through creative accounting, with track renewals treated as capital expenditure and the costs added to fixed assets rather than treated as a deduction from revenue, practices which fooled the sharemarket into thnking that Tranz Rail was in good heart and its shares worth buying. Profits were also artificially inflated by the sell-off (and lease-back) of the Aratere ferry for $55 million and of rolling stock for $93 million. This generated a profit of $90 million. The hidden cost is the lease commitment of $542 million on these two deals over the life of the leases. These sharp practices initiated a recovery in the share price to $3.50 and $3.70 a share, whereupon Faye Richwhite and Wisconsin Central sold out in February 2002. in September these shares were worth only $1.70,  an indication of what the robber barons had done to TR. The other downstream effect of the failure to deliver service to customers is the proliferation of juggernaught truck and trailer rigs transporting logs and containers etc. on our roads that should be transported by rail.

The record in 2002 is no improvement on past behaviour, with disregard of the health and safety of passengers and the few workers who have not been downsized out of the company an ongoing scandal.  Another 350 jobs were cut in this year, with the contracting out of track maintenance together with the welding mistakes of the past resulting in the heat related chaos on the Wellington commuter system early in 2003. Heat buckled lines and derailments the previous summer caused the Land Transport Safety Authority to commission the Halliburton KBR report which found that passenger lives had been endangered by these decisions. LTSA ordered Tranz Rail to rehire 92 sacked staff and slow passenger trains to 40 kmh.

The sell off of infrastructure and retreat from passenger services to ferry and freight only continued with the sale of the Auckland rail corridor to government, with the lease and infrastructure priced probably too high at $81 million. Wellington is next. And there have been two more deaths of employees and a number of near misses. The saga never ends. Tranz Rail deserves huge censure with successive governments’ handling of rail little better. The Roger Award 2002 is the least Tranz Rail can expect.

A sting in the tail for the New Zealand government. We have referred above when discussing the award to Novartis to the government’s complicity. Any government that allows itself to be pressured and a key policy to be manipulated and rewritten by a multinational company out of public scrutiny and then works with the company to help cover it up deserves community contempt. The 1999 Labour/Alliance government thus deserves censure for their behaviour on ‘corngate’, as well as that and earlier administrations and the present one deserving censure for their actions and inaction on the Tranz Rail issues. Accordingly, the judges of the 2002 Roger Award decided to make an extra award:

To the 2002 Labour Led Government: A Collaboration Award - for failure to assert the public good against corporate pressure at a critical point.

Prue Hyman, John Minto, Sukhi Turner and Ranginui Walker

Roger Award Judges for 2002

31.1.2003