MNCs: Some Less Known Facts

The twin processes of “Globalisation” and “Liberalisation” have seen its wake an orchestrated campaign designed to showcase the merits of Multinational companies. What is glossed over is the gory face of a number of these companies, invisible today behind the facade of corporate respectability. We profile here two such “respectable companies”, both Pharmaceutical giants (and much more), with a long history of murder, mayhem and criminal conspiracy.

Hoechst – Rehabilitated War Criminals

 A chemist named Eugene Lucius founded Hoechst in a village of that name in 1863. The company rigged up a small engine and a boiler to mix aniline oil and arsenic acid, and soon it was producing fuchsia dye. In 1883, the company made its first move beyond dyes when one of its chemists discovered Antipyrin, an early analgesic. During World War I, the German dye companies (including Hoechst) altered their formulas to produce mustard gas and explosives, to support the war efforts of Germany.

 In the 1920s, dye industry leaders, led by Carl Duisberg of Bayer and Carl Bosch of BASF, successfully pushed for the merger of the dye makers into a single company. In 1925, the companies, including Hoechst, merged into IG Farben (Interest Community of the Dye Industry, Inc.) This huge corporation, which soon included related industries such as explosives and fibers, was the biggest enterprise in all of Europe and the fourth largest in the world.

 The company gave financial support to Hitler and became indispensable to the German military effort during World War II. The company used slave labor, locating one of its synthetic rubber facilities in Auschwitz to be near the captive labor supply of the infamous concentration camp. Lethal gas made by IG Farben was used in the death camps. After the war, a group of IG Farben executives were convicted of war crimes at the Nuremburg trials. Several years later, in 1952, the company was divided into several independent firms, including BASF, Bayer and Hoechst. (IG Farben survived as a shell company and remains one today.)

 Hoechst rebounded rapidly after the war, since its manufacturing facilities escaped heavy damage. The company emphasized synthetic fibers like polyester along with polyethylene and petrochemicals. By the 1960s, the company, once again a leader in the chemical industry, was making investments throughout Europe, in Holland, Austria, Spain and France.

 Hoechst also made a major investment in a French pharmaceutical company. That company was Roussel-Uclaf, founded in 1920 by Dr. Gaston Roussel. In 1968, the younger Roussel met a Hoechst director and was inspired to pursue a policy of “Europeanizing” his family’s firm. Although the French government was uneasy about the deal, Roussel sold a 43 percent interest in the company to Hoechst. After Roussel was killed in a helicopter crash in 1972, Hoechst ended up taking a majority stake in the company.

 Environmentalists have targeted Hoechst because of its production of chlorofluorocarbons (CFCs, used as coolants and in various industrial processes) that destroy the ozone layer and thus raise the risk of skin cancer. For several years, the German branch of Greenpeace made Hoechst the focus of a campaign that included the use of billboards depicting Hoechst chief executive Wolfgang Hilger as an environmental criminal. In early 1992, the company relented and agreed to phase out its use of CFCs by 1994. However, Hoechst, like Du Pont in the United States, announced that it would replace the CFCs with alternative products called hydrofluorocarbons that also destroy the ozone layer, though not as rapidly as CFCs. In 1991, the U.S. Food and Drug Administration (FDA) fined Hoechst $202,000 for failing to disclose that the company’s anti-depressant drug nomifensine had caused several deaths in Europe.

 A group of residents in Pampa, Texas brought a lawsuit against Hoechst Celanese in 1990, alleging that toxic emissions from its chemical plant had caused near- epidemic levels of leukemia and Down’s Syndrome (a disease causing severe mental retardation). The suit charges that “the people in Pampa are worse off than if they lived in Los Angeles always at rush hour. Celanese has certainly created a uniquely dangerous atmosphere for people in and around the plant.”

 Hoechst may no longer be identified in the public mind with concentration camps, but it still has a long way to go before it can be deemed a model corporate citizen.

Ciba Geigy – Masters of Chemical Genocide

 The 1970 merger of Ciba and Geigy, two Swiss pharmaceutical and chemical companies, created a massive corporation with operations in over 50 countries. Ciba Geigy is the third largest manufacturer of prescription drugs in the world, and the second largest producer of insecticides and fungicides. The company is the largest producer of dyes in the world. It also has a consistent record of disregarding the health and safety effects of the products it pushes throughout the world, bearing responsibility for one of the greatest drug disasters ever.

 One of history’s most horrifying cases of corporate negligence involved Ciba Geigy and its drug clioquinol (marketed in India as Mexaform). Ciba started marketing clioquinol in 1934 to fight amoebic dysentery. By the time the company entered the lucrative Japanese market in 1953, it was pushing clioquinol worldwide for all forms of dysentery. Ciba was permitted to market the drug in Japan for all types of abdominal trouble, with no limitation as to dosage or length of treatment. Ciba promoted the drug throughout the 1950s and 1960s as being safe and effective, even for children, and as having no adverse permanent side effects.

 By 1970, 10,000 Japanese citizens, and hundreds of others worldwide, were afflicted with a little-known but devastating disease called subacute-myelo-optico- neuropathy (SMON). SMON victims suffered a tingling in the feet that eventually turned into total loss of sensation and then paralysis of the feet and legs. Others suffered from blindness and serious optic disorders. Almost 90 percent experienced sensory disturbances in the lower back and limbs.

 In September 1970, just one month after receiving the report of a researcher attributing SMON to clioquinol, the Japanese Ministry of Health banned the drug from the Japanese market. Ciba Geigy (now merged) released statements defending the drug, stating that clioquinol could not be the cause of SMON because it was essentially insoluble and could not be absorbed into the body. However, in preparing a lawsuit against the company, attorneys found disturbing evidence that the drug could indeed be absorbed into the body and that it was hardly as safe as Ciba had been claiming – evidence that had been available to the company for many years.

 As far back as in 1944, clioquinol’s inventors advised, in light of animal studies, that the administration of the drug be strictly controlled and that treatment not exceed 10 to 14 days. In 1965, a Swiss veterinarian published findings that dogs treated with clioquinol developed acute epileptic convulsions and died. Ciba simply inserted a warning in the drug’s packaging in England that it should not be used for animals. In 1966, Swedish pediatricians Olle Hannson and Lenart Berggen studied a three-year-old boy who had been treated with clioquinol and suffered severely impaired vision. Hannson and Berggen reported in medical literature and directly to Ciba that clioquinol was absorbed into the intestines of the boy and that the drug capable of causing cancer, but it was not until 1988 that Ciba Geigy agreed to pull it off the market. In 1975 the company’s Indian affiliate Hindustan Ciba Geigy sprayed the pesticide monocrotophos on more than 40 Indian children and adult volunteers over the course of four days. The World Health Organization classifies monocrotophos as highly hazardous, and considers it a highly toxic organophosphate that is neurotoxic to insects and animals.

 Ciba Geigy’s vices are not restricted to its Third World marketing practices. The company has come under fire around the world for its environmental practices. In 1985, for example, the state of New Jersey fined the company’s U.S. subsidiary $1.4 million for illegally dumping hazardous wastes at three landfills near its Toms River dyeworks. A year later, an accident at a company facility in Basel, Switzerland led to the release of a large amount of the herbicide atrazine into the Rhine River. The

accident occurred only a few days after a fire at a facility of competitor company Sandoz led to the dumping of toxic mercury compounds into the same river.

Rolling out the Red Carpet

 The likes of Hoechst and Ciba Geigy are today poised to extend their suzeranity over the Indian market. In the pharmaceuticals sector for example, the 1994 Drug Policy has attempted to roll out the red carpet to these and other MNCs. India’s signing of the WTO agreement has further aided the entry of these “respectable” corporate citizens. Something might still be salvaged if the present Government does not change the Indian Patents Act of 1970 to suit the spirit of the unequal WTO agreement. The debate in India’s Parliament on this issue will be a more informed one, if the “Corporate dossiers” of those we seek to invite are studied carefully.