9-Misc: Shareowner resolution asks Monsanto to create ethics oversight committee
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------------------------------- GENET-news -------------------------------
TITLE: Shareowner Resolution Asks Monsanto to Create Ethics Oversight
SOURCE: Sicoal funds, USA, by William Baue
DATE: 26 Aug 2005
------------------ archive: http://www.genet-info.org/ ------------------
Shareowner Resolution Asks Monsanto to Create Ethics Oversight Committee
The company stonewalls inquiries related to the resolution, which springs
from a $1.5 million settlement with the SEC and DOJ earlier this year
regarding a bribe Monstanto paid in Indonesia.
SocialFunds.com -- Earlier this week, Harrington Investments Inc. filed a
shareowner resolution <http://www.socialfunds.com/pdf/0805/
Bribery_Resol.pdf> with Monsanto asking its board to create an ethics
oversight committee of independent directors to monitor compliance with
laws as well as the Monsanto Pledge <http://www.monsanto.com/monsanto/
layout/our_pledge/default.asp> and Code of Business Conduct <http://
www.monsanto.com/monsanto/layout/our_pledge/corp_gov/code.asp>. Why make
such a request?
The resolution recounts the company's $1.5 million settlement <http://
www.usdoj.gov/opa/pr/2005/January/05_crm_008.htm>with the US Department
of Justice (DOJ) and Securities and Exchange Commission (SEC) in January
2005 over violations of the Foreign Corrupt Practices Act (FCPA). In a
nutshell, a senior Monsanto manager authorized a $50,000 bribe to get a
senior Indonesian Ministry of Environment official to repeal a 2001
environmental impact assessment decree obstructing market entry for
genetically engineered crops.
"Although the payment was made, the unfavorable decree was not repealed,"
notes the SEC enforcement document <http://www.sec.gov/litigation/admin/
34-50978.htm> without commentary on this irony. "In addition, from 1997
to 2002, Monsanto inaccurately recorded, or failed to record, in its
books and records approximately $700,000 of illegal or questionable
payments made to various Indonesian government officials."
Such breaches of corporate ethics are unfortunately not anomalous. On
Monday of this week, the SEC charged <http://www.sec.gov/litigation/
complaints/comp19343.pdf> former Bristol-Myers Squibb CFO and another
officer with orchestrating a fraudulent earnings management scheme to the
tune of $1.5 billion. On Tuesday, the commission charged <http://
www.sec.gov/litigation/complaints/comp19344.pdf> the former Kmart CEO and
CFO with financial fraud leading up to the company's declaration of
"Bribery is illegal, and Monsanto's violation of federal law and the
company's own voluntary code of conduct prove that management cannot be
trusted to protect shareholders," said John Harrington, CEO of HII, a
Napa, California-based socially responsible investment (SRI) firm.
"Monsanto's management has once again shown its disregard for its
fiduciary duties and for U.S. law."
After several attempts to contact Monsanto for comment, SocialFunds.com
spoke briefly with Monsanto Public Affairs Director Chris Horner. The
phone call abruptly ended before Mr. Horner answered any questions and he
did not respond to follow-up phone calls and email.
The DOJ/SEC settlement requires Monsanto to retain an independent
compliance expert. A search of SEC filings posted <http://
www.monsanto.com/monsanto/layout/investor/sec/default.asp> on Monsanto's
website since January 6, 2005 did not disclose the retention of an
independent compliance expert, so it is unclear whether the company has
fulfilled this requirement.
The SEC enforcement document asserts that Monsanto "lacked internal
controls sufficient to detect or prevent the illicit payment schemes
operated by the Indonesian affiliates."
"In fact, from 1996 to 2001 Monsanto did not conduct any internal audits
of its Indonesian affiliates," the document continues. "The absence of
effective internal controls enabled the Indonesian management team to
conceal their illicit payment scheme."
It is unclear what changes Monsanto has made to its internal controls in
the wake of the settlement, if any. Monsanto's January 10 First Quarter
2005 Form 10Q <http://www.monsanto.com/monsanto/content/investor/sec/
ipage=3189802@repo=tenk>, the most recent SEC filing posted on its
website addressing the bribe in Indonesia, does not mention any changes
in internal controls.
The Monsanto Pledge, which is "the foundation of all that we do," states
that "integrity includes honesty, decency, consistency, and courage." The
Pledge also commits the company to several intentions, including transparency.
"We will ensure that information is available, accessible, and
understandable," the Pledge states.
European NGO Network on Genetic Engineering
Hartmut MEYER (Mr)
In den Steinäckern 13
D - 38116 Braunschweig
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