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Monsanto Busted for Bribing Indonesian Official

Corporate Crime Reporter
January 10, 2005

Monsanto Gets Deferred Prosecution For Bribery

The Justice Department charged Monsanto Company with violating the Foreign Corrupt Practices Act (FCPA) in connection with an illegal payment of $50,000 to a senior Indonesian Ministry of Environment official, and the false certification of the bribe as "consultant fees" in the company's books and records.

Federal officials charged Monsanto, the St. Louis, Missouri-based multinational giant, with violating the anti-bribery and false books and records provisions of the Foreign Corrupt Practices Act.

But the company did not have to plead guilty to the charge ­ instead it entered into the now ubiquitous deferred prosecution agreement.

"Companies cannot bribe their way into favorable treatment by foreign officials," said Assistant Attorney General Wray.

Except that the Justice Department said that it would dismiss the criminal information after three years if Monsanto fully complies with the terms of the deferred prosecution agreement, which requires the company to pay a $1 million penalty.

Under the deferred prosecution agreement, Monsanto agreed "to accept responsibility for the conduct of its employees in paying the bribe and making the false books and records entries, adopt internal compliance measures and cooperate with ongoing criminal and SEC civil investigations."

An independent compliance expert will be chosen to audit the company's compliance program and monitor its implementation of and compliance with new internal policies and procedures.

Federal officials alleged that Monsanto hired an Indonesian consulting company to assist it in obtaining various Indonesian governmental approvals and licenses necessary to sell its products in Indonesia.

At the time, the Indonesian government required an environmental impact study before authorizing the cultivation of genetically modified crops.

After a change in governments in Indonesia, Monsanto sought, unsuccessfully, to have the new government, in which the senior environment official had a post, amend or repeal the requirement for the environmental impact statement.

The Justice Department alleged that in 2002, a Monsanto employee, having failed to obtain the senior environment official's agreement to amend or repeal this requirement, authorized and directed the Indonesian consulting firm to make an illegal payment totaling $50,000 to the senior environment official to "incentivize" him to agree to do so.

The Monsanto employee also directed representatives of the Indonesian consulting company to submit false invoices to Monsanto for "consultant fees" to obtain reimbursement for the bribe, and agreed to pay the consulting company for taxes that company would owe by reporting income from the "consultant fees."

In February 2002, an employee of the Indonesian consulting company delivered $50,000 in cash to the senior environment official, explaining that Monsanto wanted to do something for him in exchange for repealing the environmental impact study requirement, the Justice Department alleged.

The senior environment official promised that he would do so at an appropriate time.

In March 2002, Monsanto, through its Indonesian subsidiary, paid the false invoices thus reimbursing the consulting company for the $50,000 bribe, as well as the tax it owed on that income. A false entry for these "consulting services" was included in Monsanto's books and records.

The senior environment official never authorized the repeal of the environmental impact study requirement.

Monsanto has also settled related civil enforcement proceedings by the Securities and Exchange Commission by agreeing to pay a $500,000 civil penalty.


Monsanto "Seed Police" Scrutinize Farmers

by Stephen Leahy
Inter Press Service
January 15, 2005

BROOKLIN, Canada - Agribusiness giant Monsanto has sued more than 100 U.S. farmers, and its "seed police" have investigated thousands of others, for what the company terms illegal use of its patented genetically engineered seeds, and activists charge is "corporate extortion".

Monsanto prohibits farmers from saving seed from varieties that have been genetically engineered (GE) to kill bugs and resist ill-effects from the herbicide glyphosate (sold under the brand name Roundup).

Kem Ralph of Covington, Tennessee is believed to be the first farmer to have gone to jail for saving and replanting Monsanto's Roundup Ready soy seed in 1998. Ralph spent four months behind bars and must also pay the company 1.8 million dollars in penalties.

In total, U.S. courts have awarded Monsanto more than 15 million dollars, according to a new report by the Washington-based Center for Food Safety (CFS) called "Monsanto vs. U.S. Farmers".

"Monsanto's business plan for GE crops depends on suing farmers," said Joe Mendelson, legal director for CFS.

It is the first detailed study of how U.S. Farmers have been impacted by litigation arising from the use of GE crops.

In an interview with IPS, a company spokesperson said Monsanto was well within its rights to enforce patent laws. "Monsanto has never sued a farmer who unknowingly planted our seeds," said Chris Horner.

When asked how the company differentiates between intentional and unintentional use Horner said: "You can tell just by looking at field."

"It's not like we're actively going out to find farmers who illegally use our seed," he added. "But if it comes to our attention we'll look into it."

Horner confirmed that Monsanto provides a toll-free phone number for farmers to report suspected abuses by other growers.

While refusing to comment on the accuracy of the CFS report, Horner said it only looks at a very small group of its customer base. "We have more than 300,000 licenses with growers that use our products."

According to the report, court awards are just a fraction of the money the company has extracted from farmers. Hundreds of farmers are believed to have been coerced into secret settlements over the past eight years to avoid going to court.

Farmers generally lack the knowledge and the legal representation to defend themselves against Monsanto's allegations, Mendelson said at a press conference Thursday.

"Often, there's no proof offered but farmers give up without a fight," he said.

Very little is known about the terms of these settlements, but in one instance, a North Carolina farmer agreed to pay 1.5 million dollars, he said.

Monsanto has a budget of 10 million dollars and a staff of 75 devoted solely to investigating and prosecuting farmers, the report said.

The tactic has proved very successful. In 2004, nearly 85 percent of all soy and canola were GE varieties. Three-quarters of U.S. cotton and nearly half of corn is also GE.

Monsanto controls roughly 90 percent of GE soy, cotton and canola seed markets and has a large piece of the corn seed market.

The issue of GE crops and small farmers has featured prominently at the World Social Forum (WSF), an annual gathering of civil society groups from around the globe that has called for a moratorium on biotech agriculture.

Monsanto, in particular, has been singled out for "forcing GE crops on Brazil and the rest of the rest of the world", according to the environmental group Greenpeace.

This year's WSF takes place Jan. 26-31 in Porto Alegre, Brazil, and will present a new chance for anti-GE campaigners to compare notes on the successes, and setbacks, of the movement in the last year.

So why don't farmers just buy non-GE seed? North Dakota farmer Rodney Nelson says there is actually very little conventional seed left to buy anymore because seed dealers don't make nearly as much money from them.

Monsanto charges technology use fees ranging from 6.25 dollars per bag for soy to an average of 230 dollars for cotton -- more than three times the cost of conventional cotton seed. The company argues these fees are necessary to recoup its research investment.

The other problem is that some non-GE seed is now contaminated by Monsanto's patented genes, Nelson said.

Monsanto sued Nelson and his family in 1999 for patent infringement, charging they had saved Roundup Ready soybean seeds on their 8,000-acre farm. Two years of legal hell ensued, Nelson said. The matter ended with an out of court settlement that he is forbidden to talk about. "We won, but we feel forever tainted."

The report contains a number of similar individual stories that often end in bankruptcy for the farmer.

Even if a farmer decides to stop using Monsanto seeds, the GE plants self-seed and some will spring up of their own accord the following year. These unwanted "volunteers" can keep popping up for five or more years after a farmer stops using the patented seeds.

Under U.S. patent law, a farmer commits an offense even if they unknowingly plant Monsanto's seeds without purchasing them from the company. Other countries have similar laws.

In the well-known case of Canadian farmer Percy Schmeiser, pollen from a neighbor's GE canola fields and seeds that blew off trucks on their way to a processing plant ended up contaminating his fields with Monsanto's genetics.

The trial court ruled that no matter how the GE plants got there, Schmeiser had infringed on Monsanto's legal rights when he harvested and sold his crop. After a six-year legal battle, Canada's Supreme Court ruled that while Schmeiser had technically infringed on Monsanto's patent, he did not have to pay any penalties.

Schmeiser, who spoke at last year's World Social Forum in India, says it cost 400,000 dollars to defend himself.

"Monsanto should held legally responsible for the contamination," he said.

Another North Dakota farmer, Tom Wiley, explains the situation this way: "Farmers are being sued for having GMOs on their property that they did not buy, do not want, will not use and cannot sell."

"It's a corporation out of control," says Andrew Kimbrell, the executive director of CFS.

Unfortunately, he adds, there will be no help for farmers from the U.S. Department of Agriculture or the Food and Drug Administration as key positions are occupied by former Monsanto employees and the company has a powerful lobby in Washington.

To help farmers facing lawsuits or threats from Monsanto, the CFS has established a toll-free hotline to get guidance and referrals: 1-888-FARMHLP

Among other actions, the CFS supports local and state-wide moratoriums on planting GE crops, and laws to prevent farmers from being liable for patent infringement through biological pollution.


Monsanto Assault on U.S. Farmers Detailed in New Report

Center for Food Safety
Contact: Craig Culp, (202) 547-9359, or (301) 509-0925 (mobile)
January 13, 2005

First-of-its-Kind Analysis Reveals Thousands of Monsanto Investigations, Nearly 100 Lawsuits and Numerous Bankruptcies

Toll-Free Hotline Established for Farmers Facing Lawsuits or Threats from Monsanto to Get Guidance and Referrals

WASHINGTON - The Center for Food Safety released today an extensive review of Monsanto's use and abuse of U.S. patent law to control the usage of staple crop seeds by U.S. farmers. The Center (CFS) launched its investigation to determine the extent to which American farmers have been impacted by litigation arising from the use of patented genetically engineered crops. Monsanto vs. U.S. Farmers details the results of this research, discusses the ramifications for the future of farming in the U.S. and outlines policy options for ending the persecution of America's farmers.

"These lawsuits and settlements are nothing less than corporate extortion of American farmers," said Andrew Kimbrell executive Director of CFS. "Monsanto is polluting American farms with its genetically engineered crops, not properly informing farmers about these altered seeds, and then profiting from its own irresponsibility and negligence by suing innocent farmers. We are committed to stopping this corporate persecution of our farmers in its tracks."

The report finds that, in general, Monsanto's efforts to prosecute farmers can be divided into three stages: investigations of farmers; out-of-court settlements; and litigation against farmers Monsanto believes are in breach of contract or engaged in patent infringement. CFS notes in the report that, to date, Monsanto has filed 90 lawsuits against American farmers in 25 states that involve 147 farmers and 39 small businesses or farm companies. Monsanto has set aside an annual budget of $10 million dollars and a staff of 75 devoted solely to investigating and prosecuting farmers.

"Monsanto would like nothing more than to be the sole source for staple crop seeds in this country and around the world," said Joseph Mendelson, CFS legal director. "And it will aggressively overturn centuries-old farming practices and drive its own clients out of business through lawsuits to achieve this goal."

The largest recorded judgment CFS has found thus far in favor of Monsanto as a result of a farmer lawsuit is $3,052,800.00. Total recorded judgments granted to Monsanto for lawsuits amount to $15,253,602.82. Farmers have paid a mean of $412,259.54 for cases with recorded judgments. Many farmers have to pay additional court and attorney fees and are sometimes even forced to pay the costs Monsanto incurs while investigating them. "Monsanto is taking advantage of farmers with their marketing and their threats and lawsuits," said Rodney Nelson, a North Dakota farmer sued by Monsanto. "It's hard enough to farm as it is. You don't need a big seed supplier trying to trip you up and chase you down with lawyers."

Farmers even have been sued after their fields were contaminated by pollen or seed from a previous year's crop has sprouted, or "volunteered," in fields planted with non-genetically engineered varieties the following year; and when they never signed Monsanto's Technology Agreement but still planted the patented crop seed. In all of these cases, because of the way patent law has been applied, farmers are technically liable. It does not appear to matter if the use was unwitting or if a contract was never signed.

Various policy options supported by CFS include passing local and state-wide bans or moratoriums on plantings of genetically engineered crops; amending the Patent Act so that genetically engineered plants will no longer be patentable subject matter and so that seed saving is not considered patent infringement; and legislating to prevent farmers from being liable for patent infringement through biological pollution.

CFS has established a toll-free hotline for farmers facing lawsuits or threats from Monsanto to get guidance and referrals: 1-888-FARMHLP.

Monsanto vs. U.S. Farmers Report

Recently released report documents Monsanto's lawsuits against American farmers, revealing thousands of investigations, nearly 100 lawsuits and numerous bankruptcies.


Enemy of the State

The Guardian
January 19, 2005

Ignacio Chapela was once the cream of the scientific core at Berkeley university, California. Now he is reviled. He tells John Vidal how US academic institutions are being 'bought' by biotechnology firms that are backed by the government

Eight years ago, Ignacio Chapela was a rising star of American academe; an assistant professor of microbial ecology at Berkeley university in California, sitting on high-level scientific committees and with the seemingly certain prospect of career advancement and a well-paid job for life.

Chapela, a mushroom expert, had no problem with biotech crops. Indeed, he had worked for several years with the Swiss company Sandoz, which later became GM giant Novartis.

But now Chapela has lost his job, is unemployable in any other top-ranking US university, and admits he is "extremely biased" against the industry. He is furious with the highest levels of Berkeley, believing that it and other major academic institutions have been "bought". The biotech industry, he says, exerts a vice-like grip on the US government and Chapela is preparing to spend years in the courts.

What turned this once mild Mexican scientist into one of the world's leading defenders of academic freedom and one of the loudest critics of biotech? Chapela, in Britain to address the Soil Association annual meeting in Newcastle, says he gained "knowledge". Specifically, he questioned a "donation" to Berkeley by a GM giant and then discovered that GM maize was seriously polluting Mexico. In so doing, he has made powerful enemies.

There were several radicalisation points, he says. "One was when I was asked to be part of a National Academy of Science [equivalent of a Royal Society] committee supposedly looking at the scientific foundation for the regulatory status of GM. We were being asked, I realised, to give a scientific excuse for deregulation.

"'I have two questions,' I said. The first was about substantial equivalence [when a new food or food component is found to be substantially equivalent to an existing food or food component]; the second was whether we could review what happens if we lost control of the GM through, say, cross-pollination. For both, we had a big thumb's down from the top. We were told 'thou shalt not ask that'. A reasonable scientist should always react with suspicion to suppression."

That was the point, he says, when he decided to go to Mexico and research the potential spread of GM maize, which was flooding over the border. He sent a colleague, who found widespread GM contamination, with grave implications for biodiversity. After rigorous testing, they compiled a paper for the British science journal Nature, but even before publication a powerful campaign was mounted against them, involving a Washington PR firm, industry-friendly scientists in Europe and the US, and the Mexican government. Six months after publication, Nature effectively withdrew its support for his article. It was accused of being lobbied by the friends of the industry, but denied it.

At the same time, Berkeley tried to stop Chapela getting his tenure (a job for life). Despite overwhelming support by his academic peers, up to and including the dean, he was denied it and he has now given his last lecture. "The support was extraordinary," he says. "At least 200 people, perhaps more, demonstrated for me."

In itself, the Mexican research was probably not enough to lose him his job. But Chapela has "form". In 1997, when chair of a faculty committee, he questioned the ethics of an industry offer to Berkeley from his old company, and made many enemies.

"One of the reasons I needed to be kicked out is that I opposed a $50m [27m] donation to the university by Novartis," he says. In return, the company was to fund a third of all the work in the department and get a first look at all the research papers. "I stood against it and dragged the university all the way to the senate of California. In the end, the donation [was reduced] to $25m [13m].

"They hate me," he says, but he cannot say exactly who because the individuals who insisted he was fired "are anonymous, not accountable, hold enormous power and act as a corporate body. One of these power sources is unquestionably the biotech industry".

Chapela reckons that the industry has received more than $200bn (107bn) of US public money over the years and should be bankrupt by now. "It should have died three years ago," he insists. "Why is the industry still alive? It's bleeding like crazy. The answer is that the industry is in the national interests of the US. The state department handles it. It's not about economic value but government [strategy]. It is built into the rightwing agenda of the US at executive branch level."

But Chapela is baffled by the British government's support for agricultural biotech. "I can tell what is in it for the US. I can understand Bush [senior] and Dan Quayle thinking [in the 1990s] that it looked promising and taking the risk, but I have absolutely no idea what you guys [the British] are in it for."

He says the vast amounts of money put into US universities by biotech firms is fundamentally altering the way biology is approached. No one, Chapela says, wants to pursue the kind of research he undertook in Mexico because they are afraid of the consequences. "But there is a growing understanding that universities have been hijacked and the whole science establishment has become vested in this project. Professors are now becoming entrepreneurs and students are becoming employees. Now you get asked how many patents you hold when you go for a job."

Meanwhile, Chapela is preparing a court case against the university that he hopes will expose its relationship with biotech and other unaccountable industrial funders. He believes that the biotech industry wants it: "The industry needs to show the pain in standing up to it. It wants a case to show its chilling influence. We have no option but to keep challenging it.",7843,1392979,00.html


Will Biotech Feed the World? The Broader Context

by Craig Holdrege
The Nature Institute
January 2005

The article describes the broader ecological, agricultural, and social context of feeding the hungry. The often heard claim that biotechnology is needed to feed the world's growing population shows itself to be rooted more in hype than in reality.

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