Another “Good Character” Case From the CAFCA Archives
- by Murray Horton
The cases detailed in Quentin Findlay’s article (Cedenco and Archer Daniels Midland) were not the only “not of good character” complaints made by CAFCA. Not all have been published in Watchdog or otherwise made public. But one that was involved the then American owners of what was then Waste Management NZ. In 1999 the New York Times published allegations of insider share trading against executives of Waste Management Inc (the American parent). Watchdog 92, December 1999, (http://www.converge.org.nz/watchdog/92/2waste.htm) reported: “… So we wrote to the Overseas Investment Commission (OIC), in July 1999: ‘Waste Management of the USA is the parent of Waste Management NZ. The American parent has run up a most impressive record in all manner of legal jurisdictions across the entire US. That is the company as a corporate body. But it is instructive to consider that, in a December 1996 ruling, a Tennessee federal judge ordered it to pay more than $US90 million in damages and said: ‘...fraud, misrepresentation and dishonesty apparently became part of the operating culture of the Defendant company’. This gives some idea of the American judiciary's view of Waste Management, the corporation, and this must reflect directly on the character of those who head it.
“‘We draw your attention to the enclosed material. It is current; it comes from impeccable US sources (including the New York Times); it involves named individuals - very senior current executives and directors - who are demonstrably owning and/or controlling Waste Management (and hence WMNZ); and it involves them being accused of very serious matters, namely insider trading and/or securities fraud. The material from the law firm shows that the matter is being taken very seriously indeed. That being the case, we believe the Commission is obliged to reconsider its acceptance that those exercising control over Waste Management are of ‘good character’, which is a necessary condition of this transnational corporation being allowed to acquire assets in New Zealand...’
“But the OIC was having none of it. Stephen Dawe, Secretary and Chief Executive Officer, replied: ‘I believe it does not raise any reasons for the OIC to reconsider our acceptance that the persons exercising control over WMNZ are of good character. The material forwarded contains nothing but allegations and a request for parties to join taking civil action against Waste Management in the USA. These `greenmail' civil actions are common in the USA. They involve a law firm inviting people to become plaintiffs against companies - with the most likely beneficiary of the legal action being the law firm, who is normally on a percentage retainer. Accordingly, we will not be taking the matter any further at this stage. However, if you can provide us with more definitive evidence of matters relating to the good character of the persons exercising control over WMNZ we would be willing to look at that material’ (e-mail to CAFCA; 6/9/99). We thought the Press might be interested in this, and passed on the material. A story was duly written but never published - because of concerns about defamation. The fact that the source was the capitalist Bible, the New York Times, cut no ice. A pity - it was a good story….”.
Waste Management is now a division of Transpacific Industries Group, a finalist in the 2009 Roger Award for the Worst Transnational Corporation Operating in Aotearoa/New Zealand, so it’s good to see that it, or rather its parent, is still keeping its hand in, a decade later, when it comes to corporate wrongdoing. For the reasons why it was a finalist, read the Judges’ Report included with this issue, or online at http://canterbury.cyberplace.co.nz/community/CAFCA/publications/Roger/Roger2009.pdf.
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