Power and wealth of transnational corporations

By Shenali D Waduge

One hundred and forty seven companies are said to control 40% of the economic value of 43,000 corporations. Meanwhile, “the 500 largest corporations account for 70% world trade”. 

Of the 50 most interconnected companies, 48 are banks, hedge funds or other financial services corporations. Neoliberal mechanism remains thriving and is the driving policy of decisions making. How many are aware the extent of influence that multinational corporations yield in public policy making?  

There are about 200 large multinational enterprises or clusters of corporations which operate simultaneously in 20 or more different nations and are joined together by common ownership and management strategy. 

According to Joseph S. Nye, Jr. the $3billion value added annually by each of the top 10 multinationals is greater than the GNP of 80 UN member states. Ten companies control almost every large food and beverage brand in the world – Nestlé, PepsiCo, Coca-Cola, Unilever, Danone, General Mills, Kellogg’s, Mars, Associated British Foods, and Mondelez http://www.independent.co.uk/extras/these-10-companies-control-everything-you-buy-a7765461.html?cmpid=facebook-post 

Yet at the same time these companies are being accused of abusing child labor. According to Amnesty International Unilever, Nestle, Kellogg and Procter & Gamble are among nine multinational companies sourcing palm oil from Indonesian plantations which use child labour (http://www.indiatimes.com/news/world/the-word-s-biggest-mncs-are-using-child-labour-in-indonesia-according-to-an-amnesty-report-266496.html).

Transnational Institute State of Power report highlights the influence of corporate lobbying over policy decisions in the EU and in US. The report claims that there has been a $ 1.3 trillion a year shift in incomes away from European workers into the pockets of shareholders. 

The other concern is the influence of multinational corporations (MNCs) in international trade treaties. It emerges that MNCs can sue sovereign governments if national legislation potentially harms corporate profitability! There are said to be over 560 such cases filed by MNCs against governments! A third of these MNCs demand minimum $100 million as compensation. How many in Sri Lanka are aware of these realities? 

In 2006, Ecuador cancelled an oil-exploration contract with Houston-based Occidental Petroleum; in 2012, after Occidental filed a suit before an international investment tribunal, Ecuador was ordered to pay a record $ 1.8 b – roughly equal to the country’s health budget for a year. (Ecuador has logged a request for the decision to be annulled.) 

Bolivia attempted to extricate itself from the bonds of the investor-state dispute system after people took to the streets in 2000 to protest against the dramatic hike in water rates by a private company owned by Bechtel, US civil engineering firm. The Bolivian Government had to terminate the company’s concession. But the company filed a $50m suit against Bolivia. Bolivia cancelled international agreements giving investors access to tribunals but most have sunset clauses which stipulate their validity for 10-20 years even if treaties are cancelled. 

In 2010, Bolivia nationalised Empresa Elecctrica Guaracachi, the UK power investor Rurelec indirectly held 50.001% in it and took Bolivia to The Hague demanding $100m in compensation. Bolivia was ordered to pay $35m but after negotiations $31m amount was settled in 2014. Just how much of these ground realities do decision makers in Sri Lanka know about?

The UN’s Global Compact was inaugurated by the UNSG Kofi Annan and the Nestle CEO. The Nestle CEO in US deems water is not a human right. Most climate change negotiations are sponsored by companies whose profits compromise the environment.

In reality 0.1% controls $46 trillion between them – that is around 64% of the world’s combine wealth. While countries are demanded to enforce equitable economic sharing, neoliberal policies advocate their right to exploit the natural world for profit regardless of social or ecological concerns. 

Thirty large US corporations paid more money to Congressional lobbyists than they paid in taxes from 2008-2010, according to a new report from Public Campaign. The worst offender, according to the report, is General Electric. Companies making use of tax holidays, demanding concessions and making profits without paying taxes is an issue most countries face.

Companies, in particular MNCs and TNCs, wield enormous pressure not only upon governments, public sector but also indirectly using a plethora of entities that they fund and through them lobby to turn policy and decisions towards their benefit only.  As Sri Lanka strives to come out with a development plan, taking cognisance of these factors in inviting MNCs and TNCs to invest in Sri Lanka is imperative and there is greater need to have checks and balances plus the necessary arbitration clauses in place to ensure we do not end up compromising the entire country having failed to protect the country’s interest in signing international deals.