Getting politicians to bend policy to your company’s will is a fine art. It requires a combination of charm, dogged persistence, threats – and bushels of cash. But corporate lobbyists know just which buttons to press in order to persuade politicians to neglect human rights, public health, and the environment -- and put business interests first. Much as they shrink from the limelight, we think they deserve exposure. So here’s why we think the following 10 lobby groups have earned their place in the Hall of Shame.
1. Big Oil
Koch Industries likes to describe itself as the biggest company you’ve never heard of – but this American oil corporation couldn’t escape the headlines last year after revelations that it was funding the ultraconservative Tea Party movement that swept through the United States ahead of the mid-term elections in November. The media largely reported on it as a mass grassroots uprising, but behind its local meetings and cries of outrage, the free-market think-tank Americans for Prosperity was playing the role of puppeteer – funded by the oil wealth of Koch Industries.
The power of the oil lobby is well documented. Big Oil spent a reported $169 million lobbying in the U.S. in 2009, and millions more on political support. BP alone made $500,000 worth of political donations, including $71,000 to the presidential campaign of Barack Obama. Its total lobbying spending was far higher: $16 million.
But these figures tell only half the story. Undeclared and undercover, Big Oil is involved in funding a range of PR initiatives designed to sway public opinion and block action to tackle climate change. Its involvement with the Tea Party – exposed after David Koch was filmed speaking at an Americans for Prosperity event – is a fake grassroots campaign on a scale not seen before. This Koch-front movement has tapped into public concern over the state of the U.S. economy and direct it towards an anti-government, anti-regulation, anti-intervention agenda – which suits the oil interests very well.
2. Big Finance
Investment tycoon Warren Buffett has described Goldman Sachs and other members of the International Swaps and Derivatives Association as “financial weapons of mass destruction.” Nobel Prize-winning economist Joseph Stiglitz has called for a ban on their trading. But, despite wreaking financial havoc, the international trade in derivatives remains virtually unregulated – and banking lobbyists are working hard to make sure it stays that way.
Derivatives are financial instruments devised by traders to protect investments by hedging their bets. They create price volatility and played a key role in the bubble economy whose collapse led to the 2008 financial crisis. There is no transparency, so banks can merrily sell on bad debts without disclosing their true nature. Thus U.S. banks sold 40% of their toxic mortgage debts to banks in Europe. Big investment banks like Goldman Sachs, which trades in everything from the price of food to sub-prime loans, are the main players in the derivatives trade.
When such trading came under scrutiny following the 2008 crash, the traders’ lobby group, the International Swaps and Derivatives Association, swung into action. It had one clear message for would-be regulators: tighter rules are not needed – just continue to let the market regulate itself.
The banking lobby has been pushing to get rid of regulation since the 1990s – and with disastrous consequences. Between 1998 and 2008, the banking industry spent $3.4 billion on lobbying the U.S. government. The result: measures to prevent banks from taking high risks with people’s money were swept away and proposals to regulate the burgeoning trade in derivatives effectively blocked.
Not surprisingly, after Goldman Sachs was hauled before a Congressional committee that later rejected tighter regulation, it was discovered that the big investment bank had made sizeable election campaign donations to 10 of the committee’s members.
Why lobby the government when you can be part of it? Former Monsanto vice-president Michael Taylor is now a senior advisor to the U.S. Food and Drug Administration – going there from a corporation that aggressively promotes its genetically modified crops to a body that helps shape food safety policies.
The Obama administration is littered with former Monsanto executives who are now in positions of power in Washington. Islam Siddiqui, vice-president of the Monsanto-funded lobby group CropLife, is now a negotiator for the U.S. trade Representative on agriculture. Roger Beachy, a former director of a Monsanto-funded plant science centre, has become the director of the National Institute of Food and Agriculture.
Regardless of these insiders, biotech giant Monsanto still feels the need to be heard, investing more than $6.5 million on lobbying the Obama administration in 2010.
At the UN climate talks in Copenhagen in 2009, Monsanto lobbyists promoted GM crops as the solution to climate change. Monsanto argues that GM crops, such as its Round-Up Ready soy, minimize the loss of CO2 from the soil – conveniently ignoring the impacts on water, soil, and the climate by its chemical-dependent growing methods – chemicals which Monsanto also conveniently manufactures.
Monsanto is also an active member of the Roundtable on Responsible Soy, which is pushing its own “sustainability” agenda in the EU – which includes allowing GM soy to be used for biofuels.
4. The Tobacco Lobby
The tobacco industry knows it’s on its last wheeze, but won’t give up without a fight.
Each year, more than five million people die from tobacco use worldwide, and in many countries cigarette smoking is the greatest single cause of illness and premature death.
Desperate to escape more restrictions, British American Tobacco (BAT) joined forced with the pharmaceuticals industry in 1995 to persuade the European Union to take a novel approach to risk.
Key to their campaign was the European Policy Centre – a Brussels-based think-tank which served as an apparently “neutral” front group – with which BAT lobbyists worked to make their case.
The secret lobbyists argued that the EU was failing to assess adequately the economic impacts of proposed new regulation, and that assessing the risk of costs to business should take precedence over an assessment of health impacts.
They executed nothing less than a paradigm shift in impact assessment for law-making. Defying common sense, the European Commission agreed to put the interests of business first.
The tobacco industry and the chemical industry have since been able to use economic impact assessments to delay and/or weaken EU legislation intended to protect public health.
5. The Biofuel Lobby
They lobbied aggressively and they persuaded the governments of many countries to grow more corn and sugarcane to be converted into biofuel. The European Union has set a target to have 10% of the continent’s transport fuel sourced from biofuels by 2020. It’s all meant to sound clean and green – except that research shows that the way countries plan to go about meeting this target would require an area more than twice the size of Belgium to be converted into plantations.
Expansion of the biofuel industry flies in the face of a growing body of evidence that using crops for fuel will increase the cost of food for some of the world’s poorest people, force small farmers off their land, and destroy biodiversity.
If land use changes are factored in, carbon emissions will actually increase – equivalent to putting an extra 12-26 million cars on the roads by 2020.
Brazilian sugarcane industry interests, represented by lobby consultants Weber Shandwick and Cabinet DN, have launched an offensive to persuade politicians to increase the market for ethanol from sugarcane. They were supported by the Spanish energy firm Abegoa.
Not to be left behind, the palm oil industry, keen to promote the use of palm oil for biodiesel, has hired the lobby firm G-Plus to push governments in this direction.
Using misleading information, the lobbyists claim that most countries can grow enough biofuel crops to meet demand without the need for imports. But figures released by the EU countries show that most will have to import much of the biofuel that will be required to reach the 2020 target.
6. The Mining Industry
Mining is a mucky old business, for sure, but the mining lobby can also play dirty in politics. The industry loves its filth. It even threatened to sue Canadian MP John McKay after he introduced a private member’s bill designed to clean up Canadian mining operations overseas.
Ironically, the environmental and human rights standards the bill was seeking to make legal had already been endorsed by the mining industry’s main lobby arm, the Prospectors and Developers Association of Canada (PDAC). So why the hissy fit at McKay’s bill? Well, it seems that such standards, which make for good PR, are fine and dandy with the PDAC as long as they are voluntary. But turn them into law? They launched a venomous lobbying campaign, denouncing the bill as an attack on the nation’s mining industry.
Mining is big business domestically, but Canadian companies, including Barrick Gold, Pacific Rim Mining, and Blackfire Exploration, have empires around the world. They face a string of allegations over human rights abuses and environmental damage in Latin America, Asia, and Africa.
Canada’s mining industry is accustomed to an easy ride with the federal government. After all, didn’t the Harper government agree to the appointment of an independent corporate social responsibility investigator in 2009? And wasn’t this a post designed to investigate allegations of abuse, but only with the accused company’s consent?
But the threat of legislative force emanating from McKay’s proposed bill sent the mining company lobbyists into overdrive. MPs with mining operations in their ridings were particularly targeted. The bill originally had the support of all three opposition parties, but was eventually killed by the industry’s intense lobbying efforts.
There were also howls of outrage from the mining companies in Australia, home of mining giants BHP Billiton and Rio Tinto, at proposals for a mining tax. The Minerals Council of Australia claimed that this “tax grab” would drive investment overseas. The tax became an election issue following a proposed deal between the then Labour candidate and now Prime Minister Julia Gillard and the big players in the mining industry.
7. The Food Lobby
Obesity is the Western world’s ticking time bomb. Obesity-related ills such as heart disease, stroke, and diabetes are already soaring.
Health experts blame poor diets, but the food industry, which makes billions from the sale of processed junk foods, is desperate not to see its market for these products shrink.
When the EU made a modest proposal to add sugar and fat levels to food labels, food industry lobbyists quickly persuaded politicians of the error of their ways.
The Confederation of Food and Drink Industries (CIAA) – which in 2008 had launched its own voluntary food-labelling scheme – spent an estimated $1.3 billion successfully opposing the change, vastly outspending consumer and health campaigners.
The CIAA represents some big hitters: Cadbury, Cargill, Coca-Cola, Danone, Kraft, Unilever, and Procter and Gamble are all members.
In the United States – where statistically one in three people are now obese – the U.S. Food and Drug Administration (FDA) announced in 2009 that it would be issuing new front-of-pack labelling guidance. But the food industry stepped in first, with the Grocery Manufacturers Association (GMA) and the Food Marketing Institute launching a voluntary front-of-pack labelling scheme in October last year allegedly designed to “fight against obesity.” Just how manufacturers like Cadbury, Coca-Cola, and PepsiCo (all members of the GMA) plan to fight obesity without ditching the products on which their brands were built remains unclear.
In Australia and New Zealand, it has been estimated that up to 460 lives could be saved each year with the introduction of mandatory nutrition labelling.
8. Anti-Labour Rights in China Lobby
The charade of concern for human rights in China hasn’t stopped Western transnational corporations from relocating production there at the double. Not just that; they are actively using their economic and political clout to lobby against improvements in Chinese labour laws.
So, while Chinese citizens are denied freedom of speech and the right to organize, U.S. and EU corporations are able to influence Chinese legislation. A 2010 report from the Hong Kong-based NGO Globalization Monitor revealed how lobbying tctics have been adapted to conditions in China and the concept of guanxi (connections and personal ties). Developing the personal touch with government agencies is of crucial importance, building trust and offering favours, which often crosses the line into full-blown corruption.
Lobby coalitions such as the American Chamber of Commerce (ACC) and the European Union Chamber of Commerce in China (EUCCC) play key roles. The EUCCC has over 1,400 member firms, including TOTAL, Deutsche Bank, and Nokia. These two coalitions sprang into action when the Chinese government decided to review its labour laws in 2006 and was thinking of introducing the right for workers to have written contracts with their employers. In practice, the scant existing legislative protections for workers are rarely enforced, making the law worth little and allowing both Chinese companies and foreign transnationals to mistreat and underpay employees.
Still, the ACC and EUCCC lobbied hard against any improvements in labour protection, using their usual strategy – threatening that improved standards would lead to higher costs and force companies to bail out of China. The British Chamber of Commerce echoed this scaremongering by mentioning India, Pakistan, and South-East Asia as investment locations where labour laws and regulations offered more “flexibility.”
International unions blasted such irresponsible lobbying and, following some media coverage, the EUCCC backtracked, issuing a public statement supporting the Chinese government’s labour law amendments. By then, however, the damage had been done and the new laws had been watered down to the point of being ineffective.
9. The Arms Industry
When you’re in the killing – sorry, defence – business, it pays to grease some wheels. The arms industry spent a whopping $101,907,368 on lobbying the U.S. government last year. But the true power of the arms lobby is not just in the size of its spending; it’s in how cosy it can get with governments. It loves to play on the riffs of protecting jobs and defending shores – traditionally, that goes down well with both politicians and voters.
In the United States, Boeing is the biggest spender, followed by Lockheed Martin, United Technologies, and several companies specializing in electronic systems for defence. Some 428 lobbyists are registered as working for the defence industry in the U.S. – and, of these, 309 have gone through the revolving door, with executives having previously worked inside government.
The British arms firm BAE Systems, which has become the world’s biggest arms manufacturer, spent just under $3.5 million on lobbying in the U.S. in 2010. A trifle compared to the $400 million it had to shell out to U.S. authorities in penalties for wrongdoing, following an investigation by the U.S. Department of Justice into allegations of kickback payments in arms deals.
BAE Systems also lobbies in Europe, both in its own right and through arms industry associations and think-tanks. A particularly fruitful area is research spending, as arms firms can effectively obtain taxpayer-funded subsidies through the EU’s research program to develop new technologies for their own profit.
The European Union has become more attractive for the arms industry since the EU’s “security research program” was set up without consultation with member states. It draws instead on the “wisdom” of arms industry officials. This group naturally recommends increased spending on research, ostensibly to help EU arms companies compete with their counterparts in the U.S., but also ensuring the further lining of pockets.
10. The Carbon Trading Industry
Carbon trading has been described as the fastest growing commodities market. The carbon transactions made since 2005 have been reliably estimated to be worth a staggering $300 billion, with a further boom predicted that could see the market expanding to between $2 trillion and $3 trillion.
The carbon trading lobbyists have ensured that emissions’ trading is at the heart of UN and EU approaches to cutting carbon. Meanwhile, big polluters, such as heavy industry and power generators, lobby for exemptions, which in the EU come in the form of free pollution permits, allowing them to profit without cutting emissions at source.
Set up under the Kyoto Protocol, carbon trading allows rich countries and corporations to buy the right to pollute, and for traders (big banks and specialists) to speculate on the cost of such pollution.
Industry has played a key role in setting up the carbon markets. During the first phase of the EU’s emissions trading scheme in 2001, big emitters such as BP, Shell, RWE and E.ON lobbied governments for more free permits than they would actually need. The result was a vast over-allocation of permits – followed by windfall profits. Germany’s top four power generators were estimated to have made a cool $10.4 billion from this scheme.
Its next phase, due to start in 2013, proposed auctioning permits so that industry would have a stronger incentive to cut emissions, but the lobbyists got to it first. Big emitters whined that auctioning would force heavy industry out of Europe, resulting in “carbon leakage” or increased carbon emissions elsewhere. Studies show this threat is unlikely, but the EU caved in. Industry sectors considered vulnerable to carbon leakage will receive free permits in 2013.
The next phase of this scandalous lobby campaign aims to allow trading of credits from biofuels, GM crops, monoculture forest plantations, and other offset projects that harm local communities and the environment while doing little to reduce greenhouse gas emissions.
(Helen Burley and Olivier Hoedeman are communications officer and research coordinator, respectively, at Corporate Europe Observatory, a research group that campaigns against the undue influence of corporations on policy-makers. See www.corporateeurope.org)