PhD 2006 Globalisation and Human Rights in Colombia: Crimes of the Powerful, Corporate Complicity...

Globalisation and Human Rights in Colombia:

Crimes of the Powerful, Corporate Complicity and the

Paramilitary State

Abstract

This research investigates the criminal modalities of the alliance between

multinationals, the state and the dominant class in Colombia. The theoretical approach

synthesises critical criminology with the dependency school, adapting the model put

forward by Pearce (1976) that understands corporate crime as the rational extension of

legally sanctioned activities. The research asks whether certain investment strategies

(ECLAC, 2003) lead to characteristic forms of rights violations. The methodology is

founded on dialogue with the affected social movements. There are three case studies

exemplifying ‘efficiency seeking’, ‘natural resource seeking’ and ‘market access

seeking’ investment strategies. The interaction between neoliberal policies, investments

and the Colombian state is found to be highly criminogenic. A clear economic rationale

Globalisation and Human Rights in Colombia

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emerges of violations consistent with the investment strategy, confirming Pearce’s

thesis. The research finds a common incidence of paramilitary violence as an informal

system of social control. Access to, and navigation within, these systems is a learned

behaviour that is transmitted through specific private networks and constitutes part of

the ‘social capital’ of the dominant alliance. The neo-classical theory of economic rent

underpins World Bank research problematising opposition forces rather than conflicts

arising form the multinational investment. This research concludes that on the contrary

corporate ‘rent seeking’ is an economic incentive to infringe on human rights claims

and to externalise social costs.

The thesis concludes by emphasising the profit motive, and advances a concept of

corporate crime as a means to increase exploitation. The pursuit of corporate crime is

likely to increase with greater opportunity and with the corporation’s neutralisation

capacity. Opportunities for crimes of the powerful are structurally greater in Third

World countries, where decentralised organisation enhances a multinational’s ability to

deny responsibility. This gives rise to the para-corporation, that is of the corporation but

not in it - a deniable, parallel existence complicit in ‘dirty’ behaviours.


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Dedication

This work is dedicated to the memory and enduring example of Eduardo Umaña

Mendoza, a campaigning lawyer who combined rigorous commitment to scientific

method with respect for people in struggle. He was assassinated on 18 April 1998.

At the time of his death Umaña was working to defend leaders of the oil workers union

USO, and telecommunications workers in the union SINTRATELEFONOS. Two

months earlier he published a call To the Workers of the World, a searing indictment

that shows how military intelligence interfered in the system of ‘justice without a face’,

the juryless courts used to incarcerate political opponents with absurd judicial

decisions.

Tens of thousands came to Umaña’s funeral, which became an important event giving

fresh momentum to resistance to the crimes of the powerful.


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Acknowledgements

The financial support of Middlesex University by way of a three-year Research Student

grant allowed me to even consider taking up full time study.

It has been a privilege to enjoy the stimulus and support from a supervisory team of two

fine educators.

Director of Studies Professor Vincenzo Ruggiero backed my original research proposal,

for which I am greatly appreciative. He has provided me with many pointers from his

professorial knowledge of criminology, as well as demanding the appropriate

concentration on clarity of expression that has been invaluable in my preparation as a

candidate.

Supporting supervisor Dr Francisco Dominguez opened up the Latin American

perspective and guided me to a much deeper understanding of the continent’s radical

intellectual traditions. Dr Dominguez has provided unwavering and timely effort in

checking the text and especially in improving my translations from Spanish.

My thanks to the two Colombian friends who worked hard to transcribe the interviews.

A special thank you to Dr. Mario Novelli, fellow committed researcher and solidarity

activist, with whom I have been pleased to discuss many of the ideas in this thesis. We

have both been deeply affected by the social movement in Colombia.

The final acknowledgement has to be to all the Colombians – most of them

extraordinarily decent, brave and heroic – who were interviewed or provided

information for this work. I hope it does you justice.


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CONTENTS

Chapter 1: Introduction 1

Points of Difference and Points of Departure............................................................... 1 Problem Definition ....................................................................................................... 2 Research Topics and Hypotheses ................................................................................. 5 Overview of Chapters................................................................................................... 6

Chapter 2: Corporate Crime, Dependency and Human Rights 9

Crimes of the Powerful as an Object of Study ............................................................. 9 Studying the Crimes of the Powerful in Latin America ............................................. 24 Human Rights, Globalisation and Dependency.......................................................... 47 Summary and Limitations of Theoretical Approach .................................................. 60

Chapter 3: Methods and Scope 61

Ontology – Antagonistic Interests in a Conflictive Society ....................................... 61 Epistemology - Campaigning Practice and Critical Criminological Theory.............. 64 Research Design ......................................................................................................... 68 Case Study Methodology ........................................................................................... 72 Data Collection........................................................................................................... 75 Ethics and the Role of the Researcher........................................................................ 79 Annex to Chapter 3..................................................................................................... 82

Chapter 4 Introduction to Case Studies 84

Theoretical Approaches to Social and Political Violence .......................................... 84 The Neoliberal Project in Colombia........................................................................... 97 Case Study Themes .................................................................................................. 102

Chapter 5 Coca-Cola: Violations, Flexibility and Corporate Denial 104

Introduction .............................................................................................................. 104 Labour Relations in Colombia.................................................................................. 105 A Contested Case ..................................................................................................... 112 Analysis of Coca-Cola Corporation’s relationship with its bottlers......................... 119 Responsible vs. Irresponsible Trade Unionism........................................................ 124 Ongoing Paramilitary Links, Violations and Criminalisation.................................. 129 Results - Structural Changes in the Coca-Cola System in Colombia....................... 134 Theoretical Observations.......................................................................................... 136

Chapter 6 BP’s Pipeline: The Strange Case of the Crimeless Victims 142

Introduction .............................................................................................................. 142 The Resource-Conflict Paradigm and an Alternative............................................... 143 BP’s Controversial Role in Colombia ...................................................................... 148 The Pipeline Case ..................................................................................................... 156 Theoretical Observations.......................................................................................... 180 Annex to Chapter 6................................................................................................... 186


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Chapter 7 SINTRAEMCALI: Anti-corruption as Class Struggle 189

Introduction .............................................................................................................. 189 Theories of Public Sector Corruption....................................................................... 190 Corruption and Privatisation in Colombia................................................................ 200 SINTRAEMCALI’s Fight against Privatisation ..................................................... 203 Economic Offences and Union Counter-strategies .................................................. 211 The Criminalisation of Social Protest....................................................................... 221 Theoretical Observations.......................................................................................... 223

Chapter 8 Findings and Conclusions 233

Summary of Case Study Findings ............................................................................ 233 Reflections on a Theoretical Model of Corporate Crime ......................................... 238 What Is To Be Done About Multinational Corporate Crime? ................................. 248

Chapter 9 References 251

Bibliography Published Works................................................................................. 251 Newspaper and Magazine Articles ........................................................................... 273 Primary Sources........................................................................................................ 277


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Chapter 1: Introduction

“ ‘What is wanted here is law, good faith, order, security… I pin my faith to

material interests. Only let the material interests once get a firm footing, and

they are bound to impose the conditions on which alone they can continue to

exist. That’s how your money making is justified here . . . It is justified because

the security which it demands must be shared with an oppressed people. A

better justice will come afterwards.’ ” Joseph Conrad, Nostromo

Points of Difference and Points of Departure

This study investigates whether an oppressed people can obtain justice, or whether the

‘material interests’ of money making and its security demands mean that the popular

search for justice is delayed indefinitely, that is denied until, in Conrad’s memorable

phrase “a better justice comes afterwards”.

Traditional criminology has shown a lack of interest, not only in the crimes of the

powerful, but to many aspects of corporate crime as well. The differences that the

present study takes with this orthodoxy are:

• the object of study is the crimes of the powerful - multinational corporations,

the state, and the dominant class. The research attempts to 'look up' rather than

'look down';

• the underlying political economy is Marxist rather than neo-classical, e.g. in the

use of the concepts such as class and capital accumulation;

• the principal sources of primary and secondary data are respondents in affected

communities, trade unions and other social movements in the Third World.

In terms of establishing independent points of departure, the theoretical originality

claimed lies in the attempt at integrating critical theories of corporate crime with the

dependency school's critique of modernisation theory. Together these critical traditions

provide the conceptual tools for the study of multinational corporate crime in an


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underdeveloped Latin American country. An interdisciplinary approach is taken in

surveying the context and in the treatment of the case studies.

The study also seeks to bridge a generation gap. The criminological point of departure

was first advanced by Frank Pearce in Crimes of the Powerful: Marxism, Crime and

Deviance published in 1976. Many of the themes originally addressed in the

dependency vs. modernisation debates at their height in the 1970s have been

reincarnated under the rubric of contemporary globalisation studies. Although there

have been changes, the continuities are much stronger than the discontinuities. I argue

that the globalisation discourse theorises a new phase of underdevelopment, or

‘dependent development’.

My aim has been to draw these two strands into a conceptual synthesis. On the way I

have discovered that similar and overlapping concepts have been advanced in different

disciplines of social science, reflecting a deep common impulse. The study investigates

a space where politics, crime and human rights violations overlap. There is

convergence of ideas between scholars from different disciplines: corporate crime,

human rights and international relations/globalisation concerning the pre-eminence

given to the rights of multinationals, to the extent that they enjoy impunity from

national laws.

Problem Definition

The focal point is the area of two overlapping problematics: the nature of the conflicts

that enmesh the Colombian state and society, and the role of multinational corporations

in the sphere of human rights.


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Defining Criminality in a State and Society in Conflict

That something is deeply wrong in Colombia is widely accepted. But the debate on

defining the country's problems and their solutions is polarised and highly charged.

Colombia is in conflict with itself, and defining the problem is part of the problem.

Defining what is criminal is a cardinal issue. Recorded levels of violent crime,

especially of homicides, are extraordinarily high. Official discourse has passed from the

criminalisation of political opposition movements, to the criminalisation of armed

guerrillas, to the criminalisation of drug traders, and now back again. The criminalised

actors have labels. Most strikingly, the hybrid term narco-guerrilla, invented by a US

Embassy official in Bogotá, has entered into common use internationally. It has since

morphed into the even harsher form of narco-terrorist. Linkage between the civilian

opposition and the guerrillas is signed by the use of the commonly applied term

subversives. It would be hard to define a more overtly ideological use of language.

While disputing the merging or linking of these distinct forms, we can see all of them

as examples of a common process of delegitimisation and dehumanisation. The

criminalisation of deviance is active and plays a pivotal role in ideological debate. At

the same time official violence and officially sanctioned violence has been

decriminalised, in an international context permissive of state repression so long as it

can be justified in terms of being against terrorism.

Colombia is nominally a representative democracy, and yet it suffers the worst political

violence in the Western hemisphere. The country's 'dirty war' has for several years

demanded the urgent attention of international human rights organisations. There have

been major retrospective analyses of human rights violations in countries like Chile or

South Africa that are recovering after years of dictatorship. Colombia today is certainly

not a post-conflict society ready for reconciliation. On the contrary, the main social

actors are still actively engaged in the conflict. This presents special problems for

researchers into human rights violations.

As the conflict in Colombia has sharpened, so has interest in its causes increased.

Critics point out that the crimes of the powerful are not included in the official

discourse. They see Colombian society in profound crisis, a crisis far beyond what can

be represented as a recent transition from an inclusive to an exclusive society -


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Colombia has been an exclusive society for over one hundred and fifty years. There is

nonetheless a specificity to the current period, since 1990 Colombian governments have

followed neo-liberal economic policies leading to further social polarisation, they have

courted the investment of multinational companies and invited US military

intervention. These very factors draw the Colombian experience into global debates.

Powerful States, Multinational Corporations and Human Rights

The interaction between states, multinational corporations and human rights is a highly

topical issue being addressed through two discourses, the one concentrating on the

corporation and the other on the state. Debates over corporate responsibility have

featured in the last two annual meetings of the UN High Commission on Human Rights

(UNHCHR, 2005). As for the state and human rights, the legality of the conduct of the

US and UK is questioned with regard to their intervention in Iraq. It is in contention

whether these powerful states break international law in pursuit of their foreign policy

objectives.

Theoretical explanations tend to make either the state or the corporation the unit of

analysis. For example, in their study of ‘elite deviance’ Simon and Eitzen (1986) adopt

a broad framework for study the crimes of the powerful. The problem with this

approach is its scope is so wide that it fails to analytically separate criminal from non-

criminal behaviours. By contrast, from Sutherland (1983 [1949]) onwards, most

studies of white-collar and corporate crime focus on the corporation as the unit of

analysis. Scholars from the critical criminology tradition have argued for an expansion

of the field of study to include a social environment of organised crime, state corruption

and the operation of markets. In the case of multinational corporations investing in

Third World economies, the environment is further constructed by the policies of the

host state, which under neoliberalism have become more permissive to corporations’

economic interests.

There are therefore a number of variables to be considered in their interaction, a

requirement suitable for a case study approach.


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Research Topics and Hypotheses

Consider the broad question: does modern, globalised, multinational corporate

capitalism tend to generate crimes of the powerful in Third World (developing)

societies? The analytically separate binaries First World/ Third World and clean capital

/ organised crime are combined concretely in the unequal world economy. The

proposition is that clean capital, multinational corporations based in the US and other

rich countries, works through organised criminality (including state criminality) in the

poor countries. Further, that the state only treats socially harmful corporate behaviour

as illegal when it is inconsistent with the mode of domination. From the other side of

the relation, multinational corporations overlook state criminality unless it is against

their interests. This collusion gives rise to highly criminogenic conditions, with no

protections for the local population save its capacity to generate a counter alliance to

defend human rights.

A second aspect concerns the relationship between forms of foreign investment and

forms of human rights violation. ECLAC’s (2003)1 approach of looking at corporate

investment strategies provides a useful variable to consider the human rights impacts of

multinational behaviour in a differentiated way. Do certain investment strategies lead to

characteristic forms of human rights violation?

A third aspect concerns the mechanisms by which human rights are violated.

Employing Dieterich’s (1986) notion that informal systems provide additional

advantages to the already privileged, these informal systems of corruption and extra-

judicial repression are extensions of the state. Could not corporate activity similarly

take advantage of these informal systems?

To test these propositions this study investigates claims from social movements that

multinational corporations in Colombia are linked with human rights violations. One

limb of the explanation concerns the tendency to use violent methods to preserve

economic and political power. Another limb of the explanation proceeds from an

historical analysis of the nature of the conflict in Colombia, and in particular the role

that US counter-insurgency policy has played in fomenting paramilitary violence as an

instrument of social control. A third strand of explanation concerns the neo-liberal

1 ECLAC Economic Commission for Latin America and the Caribbean


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policies of globalisation, and how Colombian governments have prioritised the

demands of foreign capital to the detriment of the unpropertied social classes.

The impact of globalisation will be distinguished at two levels of analysis. Most clearly

there is the macro-level, since 1990 governments have worked in a framework of neo-

liberal policies: open markets, deregulation, privatisation and labour casualisation. The

emphasis is on process. The link between globalisation and human rights violations at

the macro-level revolves around the question: in what ways has neo-liberalism created

the conditions for human rights violations?

At the micro-level the research will consider the conduct of particular corporations.

The emphasis is on the specific entity within the process. The central question is: how

are multinational corporations involved in human rights violations in Colombia?

Overview of Chapters

The work is in three parts. The first part comprises this introduction, a theory chapter

and a chapter on methods and scope. Three case studies with an introduction are

presented in the second part, and the third part presents a summary of findings and

reflects on the implications for a theory of multinational corporate crime.

The theoretical approach is outlined in Chapter 2, starting from the literature that

addresses corporate crime and the crimes of the powerful. Within this criminology a

strand is identified that is critical of the reproduction of modernisation’s assumptions

about development, positing the need for an alternative paradigm. From there I argue

that a study of the crimes of the powerful in Colombia must address theoretically and

historically the realities of state and society from a Latin American perspective, and

attention is turned to the dependista or dependency school that explains the continent’s

underdevelopment as the product of exploitation. A socially committed Latin American

trend of criminology that tackles the institutional violence of the state, US intervention

and human rights violations is retrieved. To this is added contributions with a political

science focus that question the quality and limits of democracy in Latin America. These

are priority questions in the analysis of Colombia. The final section of this chapter

looks at the relationship between human rights and dependency in the period of


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neoliberal globalisation, which is contextualised as a period of US-led imperialism. The

evolution of different concepts of human rights brings out the importance of collective

rights, and especially the right to development for many contemporary theorists from

the South. This is set in contrast to the direction of neoliberal policies, and especially

demands to recognise the rights of multinational investors. The chapter ends by

suggesting an intermediate framework to analyse the impact that policies designed to

attract multinational investment might have on human rights.

Chapter 3 presents the methodological issues in the research. It explains the basic

ontological position that Colombia is a society in deep conflict, and that this in turn

affects how corporate crime is perceived by social actors. The epistemology of the

research is to investigate this polarised reality through working with the social

movements that are both victims and actors appealing for a democratic hearing. The

chapter explains the research design and why a case study methodology has been

adopted.

The case studies are introduced in Chapter 4, which gives a Colombia-specific

theoretical context by summarising the main approaches to understanding the country’s

violence. I give special attention to critical theories that examine the phenomenon of

paramilitary violence and its connections with state policy and the economic motives

underlying it. The peculiar tensions of the neoliberal project’s implementation in

Colombia are highlighted, to explain the context and consequences of opening the

economy to multinational investment. This chapter ends by introducing the specific

themes to be addressed in the case studies: the social consequences of macro-economic

policies; empirically based evaluation of corporate responsibility and benefit from

human rights violations; the role of the state and its interaction with the multinationals

in dispute with its own citizens and testing the explanations advanced by the newly

constructed orthodoxy of World Bank theoreticians.

Chapter 5 reports an example of conflict associated with efficiency seeking capital, a

private sector trade union SINALTRAINAL campaigning against the assassination of

its members in Coca-Cola bottling plants. The organisation of production through

franchises, outsourcing and taking advantage of government ‘flexibilisation’ policies

complicates corporate responsibility. An interpretation of paramilitarism as an


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informal system of labour repression is introduced, as is the issue of corporate denial

and neutralisation.

Chapter 6 recounts how a group of peasants in a remote rural area affected by two oil

pipelines, with significant involvement by BP - an example of conflict associated with

natural resource seeking capital. Furthermore BP is a leading case of the construction

of corporate defences through the theory and practice of ‘social capital’. This chapter

critiques the official discourse constructing BP’s role in Colombia as positive, and

challenges the political economy of ‘rent-seeking’ that defines the problem as outside

of the multinational’s own role in exploiting natural wealth. The dictum ‘follow the

money’ reveals the scale of profits involved. The case of the displaced peasants is read

as an example of development for the benefit of a state-corporate alliance, rather than

for the people. Following on from the discussion of corporate denial, forms of

complicity are considered.

Chapter 7 evaluates a city-based public sector trade union SINTRAEMCALI concerned

with exposing corruption within the context of its opposition to privatisation; an

example of conflict associated with market access seeking capital. The case study

highlights dualities in the Colombian state, limits to democratic participation and the

line beyond which social protest is criminalised: opposition to the neoliberal project.

The research focuses on measures taken by the union against corruption and other

‘white-collar’ crime. Anti-corruption was championed as a means to keep services in

the public sector. This advanced practice is theorised as a challenge to the ‘rent-

seeking’ and ‘social capital’ underpinnings to orthodox interpretations of corruption.

Corruption is instead understood as another informal system of class domination.

Chapter 8 summarises the principal case study findings, and evaluates them in the light

of critical theories of corporate crime. The findings concentrate on the associations

between investment strategies and human rights violations, the criminogenic interaction

between neoliberal policies and the Colombian state, and the issues for corporate

responsibility encountered by the layering of corporate power. To conclude, I argue that

the profit motive is not an external force but ever present in corporate activities, and

that corporate crime can be considered as a means to increase exploitation.


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Chapter 2: Corporate Crime, Dependency and Human Rights

Crimes of the Powerful as an Object of Study

Corporate Crime as White-collar Crime

When he was first published in the 1940s, Sutherland opened the door to a new field of

study. His principal thesis is that:

“persons of the upper socioeconomic class engage in much criminal behavior;

that this criminal behavior differs from the criminal behavior of the lower

socioeconomic class principally in the administrative procedures which are used

in dealing with the offenders; and that variations in administrative procedures

are not significant from the point of view of causation of the crime.” (1983: 7)

Sutherland surveyed the statistical record for 70 large US corporations. He revealed the

broad extent of white-collar crime and discovered a clustering by industrial sector of

corporations (ibid.: 259). These patterns of criminality had an economic logic, for

example “that employers tended to be more accepting of collective bargaining if labor

costs were a relatively small part of their total costs and if increased labor costs could

be easily passed on in the form of higher prices (demand inelasticity)” – cited in

(Clinard and Yeager, 1983: 52). And Sutherland found the predominant mode of

white-collar crime varied by sector, and over time as “businessmen are resorting to an

increasing extent to ‘policies of social manipulation’ in contrast with the earlier

concentration on efficiency in production” (ibid.: 26).

Sutherland supplemented his quantitative study with a qualitative analysis of cases in

which corporations had engaged in illegal and threatening methods to break union

organisation. The most egregious example was Pittsburgh Coal whose company police

had beaten a striker to death in their barracks, and shot dead a storekeeper who had

expressed sympathy with the strikers. Sutherland concluded “the number of official

decisions against a corporation is not a good index of the extent to which it obeys the

law” (ibid.: 44). He challenged the criminological orthodoxy of his day in three

directions.


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Firstly, in terms of definition, he argued that these ‘white-collar’ phenomena were not

only socially harmful but also criminal (ibid.: 46). Sutherland provides a rich

discussion of the distinctions between white-collar and other forms of crime. He argues

that, notwithstanding the upper class affiliation of their authors and hence their

differentiated treatment, state prohibited white-collar behaviours are a type of crime.

Secondly, Sutherland added a further, more radical, interpretation. He considered that

these acts with harmed victims were “deliberate and have a relatively consistent unity”

(ibid.: 227), that is to say they had an organised character. He considered white-collar

criminality as a form of organised crime, which “may be either formal or informal”

(ibid.: 229). For Sutherland, white-collar crime demonstrates both differences and

similarities to professional organised crime. Attention to public perception is a key

point of distinction:

“In order that businessmen may maintain their conceptions of themselves as

not-criminal and their public status, public adherence to the law is necessary.

The policy of corporations is general public adherence to the law and secret

defections from the law.” (ibid.: 232)

Thirdly, Sutherland advanced the differential association hypothesis:

“criminal behavior is learned in association with those who define such criminal

behavior favorably and in isolation from those who define it unfavorably, and

that a person in an appropriate situation engages in such criminal behavior if,

and only if, the weight of the favorable definitions exceeds the weight of the

unfavorable definitions.” (ibid.: 240)

This can be applied to all types of crime. Sutherland looks for evidence to support the

application of the differential association hypothesis to white-collar crime. The

neophyte into business both learns specific techniques of violating the law and is

inculcated in an ideology that justifies law breaking. Illegal practices are diffused

through an industry by the mechanisms of competition and centralisation, and in

associations such as gentlemen’s agreements, cartels, trade associations and

conferences (ibid.: 250).


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Sutherland understood differential association as a “hypothetical explanation of crime

from the point of view of the process by which a person is initiated into crime”,

contrasting this approach to social disorganisation, “a hypothetical explanation of

crime from the point of view of the society.” (ibid.: 255) Social disorganisation can be

either a lack of standards to guide the behaviour of individuals (Durkheimian anomie),

or a conflict of standards between different groups in society.

Sutherland’s treatment of the learning and social disorganisation models, and his

evaluation of whether they are complementary or competing, is ambiguous. He notes at

one point that “these two hypotheses are consistent with each other and one is the

counterpart of the other” (ibid.: 256), and yet he also argues that,

“the explanation of' crime in general in terms of' social disorganisation has been

at the focus of' attention of many criminologists for at least a generation. This

has not proved to be a very useful hypothesis up to the present time. A precise

definition of social disorganisation has been lacking, and the concept has often

included ethical implications which interfered with its utility as an analytical

concept.” (ibid.: 257)

Another point about Sutherland worth reinforcing is that despite coining the term

‘white-collar crime’, the individualised focus of the theoretical conclusion was at odds

with the corporate level of his empirical results (Pearce and Tombs, 1998: 108). In

other words, Sutherland had provided the first systematic study of corporate crime.

Crimes of the Powerful – First Approximation

Frank Pearce was the first to reinterpret Sutherland’s analysis in the light of Marxist

social theory. He starts with a critique of labelling theory of crime for its “consistent

failure” to “adequately to confront historical reality or analyse social structure” (1976:

28). The critique argues essentially that a historical materialist rather than idealist

analysis is required, with the conclusion that

“there is a two-fold implication for the analysis of the state and society. First,

that any adequate theorising requires a scientific analysis of the society as a


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whole; secondly, that the importance of the state within this overall structure

must be specified.” (ibid.: 50)

It is this two-fold challenge that Pearce attempts to meet by locating the criminal

phenomena identified by Sutherland in their historical and structural context,

principally the monopolisation of US capitalism in the last decade of the nineteenth

century. Whereas Sutherland established the existence of corporate white-collar

crimes, Pearce's focus is the relationship of these phenomena to the demands of capital

accumulation and the attitude of the state. Pearce seeks to explain why there was not

more corporate crime reported. The first legislation was the Sherman Anti-Trust Act of

1890, passed in response to the rapid centralisation of industrial sectors in the US. The

purpose was to make combinations in restraint of trade illegal, although “in fact, the

legislation was rarely invoked during the McKinley and Roosevelt presidencies" (ibid.:

83). US big business changed their initial opposition to the anti-trust laws to active

participation in regulation. They decided to shape legislation to their advantage and

infiltrated the regulatory mechanisms for that purpose.

Pearce points out that under these conditions of an inherited laissez-faire ideology

being rapidly overtaken by monopolisation, for a corporation “a disguised monopoly is

the ideal” (ibid.: 84). The corporation as a capitalist entity committed to profit and

growth is the first element in Pearce’s proposed model of corporate crime. The second

element is that to achieve these goals the capitalist requires an environment that is

stable (achieved through control of supplies and prices), predictable (control

consumers, dominate labour, influence government) and secure “from any kind of

movement to limit his power, particularly those that may affect him through the

formally democratic institutions” (ibid.: 84). The third element in this model is

“the action of the large capitalists towards different institutions and groups is

essentially calculative and will depend upon such factors as their consciousness

of what is occurring (as in the case of consumers), on their degree of

organisation and strength (e.g. Labour), and on the amount of interference that

can be expected (e.g. government). The capitalist loyalty to democracy is only

provisional.” (ibid.: 84)


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Thus far Pearce’s reasoning has involved two transitions from Sutherland. The first

transition takes the focus on authorship from white-collar crime (of individuals) to

corporate crime (of capitalist entities) acting according to their economic rationale.

Pearce is not alone in this, Clinard and Yeager distinguish between individual, or

occupational, crime and corporate, or organisational, crime (1983: 17-18). The second

transition enters the realm of politics, posing the relationship between these

corporations and the state as one of the quality of democracy.

Pearce invokes a third transition when he indicates the significance of the international

dimension, citing “the leading example of 1954 invasion of Guatemala to remove

democratically elected government of Jacob Arbenz, that had threatened interests of

United Fruit Co.” (1976: 103) as an example of the interests of a US corporation being

implemented by the US state using illegal methods overseas.

Fourthly, the scope of Pearce’s concerns broadens further when he addresses the issue

of organised crime in the US in its historical context, indicating the conditions under

which the ruling class either sponsored or opposed criminal syndicates. Directions of

inquiry into international illegality and organised crime posit the generalised concept of

crimes of the powerful rather than corporate crime, and both point to the state as an

organising factor, “I have looked at the state, the ruling class and organised crime and

have described the criminal conspiracy so often tying them together during this

century” (ibid.: 158). Yet in his conclusions Pearce laments that “within sociology, and

particularly within criminology, the serious study of the state and its agents and of the

activities of the ruling class is virtually non-existent” (ibid.: 158). Pearce is conscious

of the preliminary, assertive character of his investigation, “more in the nature of

development of a theoretical framework for analysing the problem than a completed

piece of work in itself” (ibid.: 159).

Although Pearce does not formulate it as a direct critique of Sutherland, there has been

a re-adoption of a theory of ‘social disorganisation’ in the analysis. Does Pearce’s

enlarged concept of crimes of the powerful also fall to Sutherland’s objections that such

social theories are not useful, they lack precise definition of social disorganisation, and

include “ethical implications which interfered with its utility as an analytical concept”?


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Interestingly, Pearce both formulates a model of corporate crime and outlines a

framework of crimes of the powerful. The model is of capitalist entities seeking to

secure conditions for capital accumulation and impose them on other groups in society,

and through the state on society as a whole. This is a theory encompassing both social

organisation of factors favourable to capital accumulation and social disorganisation of

unfavourable factors. Pearce is positing a theory of corporate power shaping society to

serve its ends, striving to establish favourable conditions. In this context, as Sutherland

pointed out, the definition of certain actions as criminal is highly contingent. Actions

by corporations and their agents, which by other criteria could be said to be socially

harmful, can avoid a definition as criminal through various mechanisms involving

interaction with state institutions. Corporations cannot only contest allegations brought

against them through legal process, they can change, evade or avoid laws, and they can

influence or corrupt state institutions. The connecting concept between the corporation

and the state, and between the macro social dis/organisation level of explanation and

the learning theory preferred by Sutherland, is class. Pearce refers, in conventional

Marxist terminology, to ‘the ruling class’ and, Pearce argues, it is within this class that

criminal conspiracies are made.

Between Sutherland and Pearce there are different fundamental assumptions

concerning the character of the state and its legal definitions. In Sutherland the law is

class biased, in Pearce the law is class based. Returning to Sutherland’s definition of

crime, which in its fuller form is:

“The essential characteristic of crime is that it is behavior which is prohibited

by the State as an injury to the State and against which the State may react, at

least as a last resort, by punishment. The two abstract criteria generally regarded

by legal scholars as necessary elements in a definition of crime are legal

description of an act as socially harmful and legal provision of a penalty for the

act” (1983: 46).

Here the relation between state and society is unproblematic. Across the two sentences,

crime is simultaneously behaviour which is ‘an injury to the State’ and a ‘socially

harmful’ act. The State and society are an assumed identity. Certainly Sutherland was

aware of the partiality of the state concerning ‘white-collar crime’, see for example


15

(ibid.: 57). Sutherland’s definition could be recast to take account of the separation of

the state from society along the lines of;

The essential characteristic of crime is that it is behavior which is prohibited by

the State as an injury to society and against which the State may react, at least

as a last resort, by punishment.

But doing so side steps rather than confronts another aspect of the problem of crime,

state and society, it does not allow of any critical or independent framework for the

state’s own actions. Pearce’s position goes further. He locates the state alongside

corporations as a legitimate object of critical study, and is concerned with the crimes of

the powerful in general and not only of powerful corporations. Pearce identifies US

international business activity and its connection with military interventionism as a key

area. The case he cites, the US invasion of Guatemala is not consistent with our

reformulated definition, because the claim is that the state itself was involved in

causing injury or harm. For Pearce this is an example of a crime of the powerful.2

But Pearce does not provide a general definition that covers these cases. If we reject

Sutherland’s definition, even as reformulated, under what alternative general definition

can an injurious or socially harmful act caused by the state be classed as a crime?

Does Pearce overcome Sutherland’s charge of lacking precision? The issue is more of

whether greater breadth provides analytical insight to specific cases. Pearce invites us

to examine the context to white-collar crime, the domination over US society that

monopoly capitalism accomplished at the turn of the nineteenth to the twentieth

century. This period is deeply significant, an historic turning point. For it was in this

moment that the US emerged as a military power, declaring war against Spain in 1898

and occupying Panama in 1903 to establish an overseas commercial system of colonies

and neo-colonies - for the record of this qualitative change in the US’s international

presence see (Paterson, Clifford and Hagan, 2000: 1-31) who describe the period 1895-

1900 as an ‘imperialist leap’. Pearce’s frame of reference is the study of corporate

crime and its nexus, not with any old state, but with a powerful, imperial state.

2 He offers as another example of the elastic attitude of state agents to law breaking and crime, Brigadier Kitson, the leading theoretician of the British military at the time, who openly considered "the disposal of unwanted members of the public" (1976: 51).


16

More Approaches to Corporate Crime

Most contributions in this field of criminology (in the English language literature) have

been developments on the concept of corporate crime and suggestions of how to control

it, with less work on the theme of crimes of the powerful.

Clinard and Yeager conducted the next large-scale study in 1975 and 1976. Although

30 years of post-war boom lay between their data and Sutherland’s, their research

reinforced many of his original findings. They confirmed that types of violation might

be specifically linked to the conditions of production in an industry; large corporations

were the chief violators (the rate of violation increasing proportionate to size of

corporation). They too found that violations were concentrated in certain industries – in

their study the oil, pharmaceutical, and motor vehicle industries were the most likely to

violate the law; also that serious violations generally received minor penalties; and they

found that for some corporations monetary penalties are “simply part of the cost of

doing business” (1983: 124). These authors drew attention to new types of violation

such as environmental damage in the production process and violations of product

safety (ibid.: 114), and highlighted the heightened sensitivity to corporate image (ibid.:

29). The predicted consequence, confirmed by their investigation, was that “mass

media publicity about law violations probably represents the most feared consequence

of sanctions imposed on a corporation”(ibid.: 318).

Fisse and Braithwaite looked at the impact of publicity on corporate offenders in the

US and Australia. They selected cases where there had been a publicity crisis for the

corporation, irrespective of whether the allegations were true or false (1983: 4).3 The

focus of the study is on the response of the corporations, which they present as

responsive and reforming. They emphasise that since reputation is important to

corporations, informal social control is a vital dimension of curbing corporate crime.

3 All seventeen corporations reported on admitted to adverse impacts, but only in the short term. All the companies explained their side of the story, at least to employees. “The great majority of the companies”, however, “made a conscious decision not to run a counterpublicity campaign to ensure that their story was impressed upon the general public.” The main reason given by corporate executives was “the fear that adverse publicity over one crisis would spread and thereby bring other skeletons out of the closet” (ibid.: 228). Here one must raise the obvious alternative explanation that the allegations were in fact substantially true, hence the executives’ desire to avoid engaging in public debate of the case.


17

Such informal social control is manifest through consumer activism and investigative

journalism, using the law to pressurise for enforcement action and corporate disclosure,

leading to international exposure. They also discuss formal publicity as a means of

punishing corporate crime, by which they mean state action. But here their

recommendations are markedly tepid, and concerned with persuasion of corporations to

comply with the law rather than intervention against them. Their study was published

just at a time when Reaganomics was letting corporate misconduct loose. As Punch’s

review of the Maxwell, the BCCI bank and the Savings and Loans scandals shows,

Reaganism and Thatcherism encouraged white-collar criminality through the promotion

of a culture of rampant individualism as much as by specific deregulatory measures.

Punch returned attention to the distinction between the individual and the organisation,

pointing out that executives looted their own companies for personal gain (1996: 21).

On this reading Reaganism had loosened the rules of behaviour in corporations,

understood as organisations that provide temptations for crime. Corporate and

managerial misconduct arise in corporate cultures that treat law breaking ambiguously.

The corporation is reinterpreted as a criminogenic organisation.

An area of debate opened up amongst criminologists concerned with how best to

counteract corporate crime. The policy options considered were regulation, self-

regulation or mobilisation leading to public sanction. There are competing schools of

thought on the regulation of corporations. The "compliance school" advocates a

scheme of self-regulation; encouraging regulatory bodies to concentrate on building up

trust with the corporations and avoid confrontation (Braithwaite and Drahos, 2000). A

deeply apologetic strand had established itself in the study of corporate crime. This

school, Slapper and Tombs (1999: 180) argue, rests on the theory of good corporations

(80 percent) and bad corporations (20 percent). These authors argue for a regime of

strict regulatory enforcement. Punch considers ways of tackling business crime, but his

approach is largely descriptive and he eschews an overall theoretical explanation for its

pervasiveness.

Snider (1993) noted that different analytical approaches to the causes correspond with

distinct views on regulation. She divides the theorists into three strands: those who

focus on the socio-psychological, the personalities of the individuals in their corporate

setting; those like Punch who focus on the organisational systems and systemic factors

effecting executive decision-making – the middle level analysts; and those who


18

concentrate on the macro-level, including pluralists and Marxists who are distinguished

between how optimistic they are of finding remedies to corporate crime within

capitalism.

Lofquist proposes that there are two logics that between them tie together “the many

different criminological, organisational, economic and legal approaches to corporate

crime” (1997: 3). These he calls the ‘agency logic’ paradigm and the ‘structure logic’

paradigm. Agency logic assumes well-informed actors acting rationally according to

the rules of the market. Lofquist considers Sutherland a “conflict-oriented agency

theorist” who views “extant regulatory relations as excessively skewed towards the

interests of business” (ibid.: 25). And Lofquist sees Braithwaite as the exemplar of

“structure theorists” who “argue that crime control, in particular corporate crime

control, is a fundamentally social activity which must, to be effective, conform to social

conditions” (ibid.: 27). But structures are not by definition harmonious; the argument

advanced below is, using Lofquist’s terminology, a “structure-oriented conflict theory”.

Crimes of the Powerful – Second Approximation

While in the 1980s most analysts focussed their attentions on the specific modalities of

corporate crime, white-collar crime and organised crime, there were exceptions. Two

US scholars look at unethical as well as illegal acts, what they termed 'elite deviance'

(Simon and Eitzen, 1986). They consider that there are two primary conditions leading

to elite deviance. On the one hand elites have the power to keep actions secret, and on

the other “the benefits involved in such deviance far outweigh the risks of apprehension

and penalty” citing an official estimate of corporate crime of around $200 billion

annually (ibid.: 28). Their theory is based on the political sociology of C. Wright Mills,

who drew attention to systematic corruption of the wealthy in behaviours such as

expense accounts, stock options, tax avoidance that were not defined as illegal. “Mills

used the term higher immorality to describe a moral insensibility among the most

wealthy and powerful members of the Unites States corporate, political and military

elite (which he termed the power elite)” (ibid.: 39).

Simon and Eitzen itemise a wealth of examples. In one chapter alone the authors trace

“(1) unethical or illegal practices relating to U.S. defense policy; (2) the conduct of


19

multinational corporations abroad; (3) violations of human rights by nations supported

by the United States” (ibid.: 129). But this view of ‘elite deviance’ falls into the very

pitfalls that Sutherland warned of. The authors not only take a normative view, they

stress the need to adopt a moral stance. The point at issue here is not so much partisan

scholarship, as theoretical substance. Simon and Eitzen’s appeal to a higher morality to

counteract the 'higher immorality' of the US elite is a sign of the absence of a real

movement of opposition. The notion of elite deviance has been substituted for ruling

class power. The label of elite deviance is so widely applied the question arises of what

is specifically deviant about these behaviours, rather than the normality of a predatory

system. The corollary is that insufficient focus is given to the dynamics of the elite

breaking its own rules and laws. What is missing here is analysis of the dualities

involved: the contradictions between democratic processes and these behaviours,

between the covert and the overt spheres of operation. None of which detracts from the

value of Simon and Eitzen’s work as denunciation, rather it is to reflect on the

challenge that analysis of the phenomena must meet.

Multinational Corporations, Alliances and Criminogenic Conditions

Critical criminology has made advances on two fronts relevant to this study: how

multinational corporations profit from neo-liberal globalisation, and the complex

interactions of transnational organised crime with official structures.

Pearce and Tombs (1993; 1998) take the tragic case of Union Carbide (UC) and Bhopal

to question claims of corporate capital to social responsibility. According to official

figures, 3,329 people died and 20,000 were seriously injured by the lethal gases that

leaked from the Bhopal pesticide plant on 3 December 1984. The Indian government

and the victims’ families demanded US $3.3 billion compensation, but settled out of

court for only $470 million, “a large part of the reason was the successful effort by UC

to have the case tried in India rather than in the US” (1998: 212). The Indian

government had filed a civil suit against the parent company in a US federal court, but

the US judge ruled that the action should be heard in India (Steiner and Alston, 2000:

1079). Under Anglo-Indian law Union Carbide’s subsidiary could be held responsible

for negligence but not full liability, as it would be under US law. It was at this point

the claimants agreed an out of court settlement. Pearce and Tombs theorise the different


20

compensation rules between India and the US in terms of the emergence of the three

trading blocks (US, Europe, Japan and East Asia) each with its regime for regulating

corporations.4

Further work by this team has shifted from corporate crime to multinational

corporations (MNCs) and crime, in the context of the neo-liberal globalisation. Pearce

and Tombs (2003: 6) draw attention to the construction of a corporate friendly

international legal regime under WTO rules, as exemplified by NAFTA. Multinationals

such as oil corporation Exxon engage in an enormous lobbying effort. “Such activities

render multinational ‘crime’ less likely, through the ability of MNCs to affect the legal

framework within which they operate”. MNCs have other advantages when it comes to

evading legal sanction. They are able to move operations to national legal regimes

where there is less regulation, exporting hazards for example; they can impose

investment conditions on states and they can cloud issues of responsibility and liability

by creating legally distinct entities. Pearce and Tombs point out that because criminal

law has been constructed on the individual and “crucially, the concept of mens rea”,

that is criminal intent, “criminal law does not easily apply to the fictional individual

that is the corporate person” (ibid.: 7). Pearce and Tombs do not argue that

multinationals are criminal per se. Although they note that exploitative relations are

involved, their point is different.

“But we should emphasise that the particular forms of illegality or human

rights abuses in which particular companies are likely to be implicated is

greatly dependent upon the nature of the business in which they are

engaged.” (ibid.: 7) – emphasis in original.

Pearce and Tombs consider that the oil industry, i.e. not only Exxon corporation, is a

criminogenic business sector

To restate this as a more general proposition: forms of corporate crime are dependent

on forms of capital accumulation. I go on to argue that the forms of capital

accumulation have another important variable as well as the nature of the business

4 There are estimates of between 8,000 and 20,000 accumulated deaths, and up to 200,000 people still suffering loss of livelihood. The victims of the Bhopal disaster are still campaigning for just compensation (Srinivasan, 2001; International Campaign for Justice in Bhopal, 2003).


21

sector, and that is the location in the First World or Third World. In other words the

mistreatment of the Bhopal victims was symptomatic not only of the chemical industry,

but of multinational corporate criminality perpetrated against Third World victims. In

effect the US state endorsed this mistreatment and the Indian state was inadequate to

resist it.

The other point is that ‘human rights abuses’ as well as ‘illegalities’ are included here

as expressions of corporate crime. This extends the definition of corporate crime from

“acts and omissions which existent bodies of law proscribe and/or require”(Slapper and

Tombs, 1999: 19). As I will also argue, this definitional extension to include human

rights abuses stems from extending the scope of investigation from the ‘First World’ to

include corporate activity in the ‘Third World’.

Tombs and Whyte argue that much of the globalisation literature is mistaken in

counterposing corporate power to state power in a zero-sum way, arguing that the

relationship is much more complex and “the increasing social and economic power of

corporations may not be at the expense of, but may actually augment, the power of

particular national and local states” (2003: 4). The issue I take with in their (otherwise

commendable) analysis is that it does not distinguish sufficiently between the crimes of

the powerful in the First World and Third World. Are we considering the power of First

World states or Third World states? Analysis of the crimes of the powerful needs to

allow for an explicit, theoretical differentiation between the two.

There is another strand of critical sociological study of crime whose objects are more

diffuse than corporate crime, including forms of white-collar crime in their interaction

and social perception. We have a more detailed, contemporary analysis of alliances or

partnerships between organised and corporate crime. Ruggiero established the

connections and interchanges between ‘clean’ capital and organised crime in Naples

(1993), and his later work traces the wider European applications of this symbiotic

relationship between organised crime and corporate crime (1996). Ruggiero, South and

Taylor point out that

“the priorities of criminal justice prevailing in the new Europe are less

concerned with the social damage which may actually result from political


22

and/or corporate criminality and more concerned to identify in general terms,

those potentially 'dangerous groups' in society, representative of 'Otherness',

regardless of their real significance in criminal economies.” (1998: 7)

The authorities’ perception of the Other as dangerous, that which is to be criminalised,

tends to be that which is alien (non-European). In transnational criminal partnerships

between formal and informal actors, the informal element is often foreign. Ruggiero

draws on case histories of transnational crime that demonstrate a tendency for the

authorities to treat as criminal the informal and foreign element while partners in the

official economy benefit (1997a; 1997b). Conventional wisdom says that the necessity

of social control by the state comes from the existence of organised crime. Ruggiero

presents the contrary hypothesis, that “variations in the organisation of crime are

associated in variations in the conditions of social control” (2003: 171), and argues that

the construct of transnational crime is in reality concerned with illegal activity coming

from the ‘developing’ South to the ‘developed’ North (ibid.: 174).

The need for an epistemological break

We are faced with an apparent paradox. On the one hand, profit-seeking multinational

corporations tend to use socially harmful (human rights abusing and prima facie

criminal) methods, either directly or in alliance with local partners, more often in Third

World countries than in First World countries. On the other, Third World states are less

likely to prosecute socially harmful or abusive activity by multinational corporations.

The divergence between social harm and criminality is in general qualitatively different

in Third World countries than in First World countries.

Where the state does not act against multinational corporations’ harmful activities are

there other actors in society who do? If multinational corporation’s harmful activities

are not regulated and punished by the state’s legal process is there an alternative

framework in which to contest them?

We have seen that Pearce argued that: a) a theory of crime requires a scientific analysis

of the society as a whole that b) specifies the importance of the state within this overall


23

structure. Pearce applied these criteria to North American society. Our challenge is to

apply them to a South American society.

An epistemological break is necessary to address the North-South divide from the

southern side of the division. Our next task is to approach the ‘Other’ reality, and

develop an appreciation of its theoretical literature in search of a social theory of the

crimes of the powerful centred on the South. In the case of Colombian society and the

realities of Latin America, this enquiry leads to dependency theory and radical

reinterpretations of human rights culminating in the praxis of ‘liberation criminology’.


24

Studying the Crimes of the Powerful in Latin America

Introduction

This section revisits dependency theory as the basis for a critical political economy of

capitalism in Latin America and takes a criminological perspective on the dependency

versus modernisation debate. It then outlines the main contours of a critical

criminology based in the dependency theory paradigm that addressed the reality of

Latin American state and society. It looks at the challenges faced to continue this body

of work.

Dependency Theory Revisited

Established theories of development grouped under the broad term of modernisation

theory came from social science as practised in the US after the Second World War.

Modernisation theorists argued that all societies would evolve through the same cycle,

only that some are more advanced than others. The linear concept of successive stages

of development to be encountered by all societies is the cardinal idea of the paradigm.

The modernisation paradigm has characteristic expressions, such as the use of the terms

‘developed countries’ and ‘developing countries’. The division of the world into leaders

and followers is neatly summarised as “Latin America and its citizenries were not so

inherently ‘different’ from Europe and North America. Instead they were simply

‘behind’” (Skidmore and Smith, 2001: 6). Modernisation theory stresses the need to

overcome internal impediments to development, to encourage the transition to urban

society while at the same time protecting developing countries from political instability

during the transition period (Rostow, 1990).

The origins of dependency theory likewise lie in the immediate post war period, as it

was perceived from a South American perspective that explains the lack of

development as a consequence of the region’s relationship to the world economy, that

is by external factors. Early formulations located the cause of underdevelopment in free

trade, not foreign direct investment. Indeed, the main protagonist of these ideas, the UN

research group ECLAC encouraged multinational corporations to establish production

along with a programme of structural reforms, including land reform, to expand the

internal market for locally based industry (Klarén, 1996; O’Brien, 1975).


25

By the mid-1960s import substitution had reached an impasse as local markets were

saturated, the ECLAC model came under theoretical attack on two fronts. The political

context was the reverberations of the Cuban revolution and the US’s concern to provide

an alternative development path that would draw the continent more closely into its

orbit. On the one hand the application of modernisation theory was part of a

consciously anti-communist project intent on bolstering the entrepreneurial middle-

class (industrial bourgeoisie) as a stabilising factor (Lipset, 1967). On the other hand

the impact of the Cuban revolution on the left was expressed in a radical, anti-

imperialist reworking of dependency theory that emphasised the need for a

revolutionary break with existing conditions. Dependency theory matched the mood in

Latin America and, as Klarén rightly comments, “it became a distinctly Latin

American contribution to modern social science.” (1996:102)

Dependency theory argues that Latin America is not a ‘developing’ region, rather there

has been an active process of underdevelopment “as a consequence and part of the

process of the world expansion of capitalism – a part that is necessary and integrally

linked with it” (Dos Santos, 1970: 231). The region is in a dependent relationship with

other more powerful countries in the same world economic order. Dos Santos outlines

the three historic forms of dependence as 1) colonial dependence enacted through trade

monopoly complemented with colonial control over land, mines and labour in the

colonised countries; 2) financial-industrial dependence consolidated at the end of the

nineteenth century based on investments in raw materials and agricultural products

exported to the dominant countries; and 3) post World War 2 a new form of

dependence “based on multinational corporations which began to invest in industries

geared to the internal market of underdeveloped countries” (ibid.: 232).

The common position of the dependency school is that economic surplus is exported

from the dependent countries to the dominant ones, and this is why the process is one

of continuing underdevelopment. Dependency theory emphasises that the North

exploits the South. The position differs from classical theories of imperialism (e.g.

Bukharin, Hilferding, Hobson, Lenin, and Luxemburg) in its focus on the countries that

are the object of imperial expansion, rather than the rival imperial powers. As Sutcliffe

points out, the dependency school represents a second wave of theories of imperialism

(1999: 140-141).


26

Dependence theory is, like modernisation theory, not so much one theory as an

interpretative paradigm. In place of leader and follower nations there are exploiters and

exploited. Within the dependency paradigm, theorists differ in their analysis of the

transfer mechanisms (e.g. unequal trade, profits from direct investments, loans etc.) and

their social impact. Two schools emerged within the dependency paradigm: the ‘neo-

Marxists’ and the ‘structuralists’. Both maintain, contra modernisation, that economic

dependency leads to political authoritarianism.

I take two general hypotheses from dependency theory: 1) dependent development

conditions the existence of a dependent bourgeoisie working in alliance with the

multinationals and an authoritarian state. 2) dependent development provides fertile

conditions for bourgeois criminality through repression and corruption.

Studying Crimes of the Powerful within the Modernist or Dependency Paradigm

Orthodox criminologists Clinard and Abbott rebuked Development Studies on the one

hand for not encompassing the study of crime, and Criminology on the other for not

studying crime in ‘developing countries’. Yet their standpoint is firmly within the

modernisation paradigm (1973: v), with the conventional top down view of crime as

“committed primarily by youth and learned from companions” (ibid.: 1).5 White-collar

crime and political corruption are referred to by Clinard and Abbott, but not

investigated. They put forward the view that development will bring with it greater

opportunity for white-collar crime (ibid.: 50-51), but refer to occupational crime by

individuals of higher social status, rather than corporate crime.

As Colin Sumner’s critique argues, the most obvious weakness of the orthodoxy

represented by Clinard and Abbott is the failure to look at the crimes of the state which

preponderate in post-colonial African societies. “Genocide, political assassinations,

torture, terrorizing peasants off their land, and police brutality are regular aspects of the

underdevelopment process” (1980: 27). Sumner suggests that these crimes are such that

there is no inherent definitional problem: “there is certainly no question of playing with

the concept of crime in order to bring such acts into the arena: they break the criminal

5 Clinard and Abbott’s empirical study focuses on the anomic effects of rapid urbanisation in Uganda, an example of what Cohen (1982) calls the benign transfer model of crime control.


27

laws of nearly all nations” (ibid.: 27). Sumner emphasises that to understand crime,

there needs to be a theory of the state in a dependent economy, and (here the frame of

debate is primarily although not exclusively Africa) the state is indelibly marked by its

colonial formation:

“Development and the wonders of European civilization were not chosen but

produced by colonial force and the criminal law played an important part in this,

close on the heels of direct military conquest. Crime is not just a result of

'development' but a cause of it.” (ibid.: 30)

This is an important notion that takes us further. The state is here based on an ‘original

sin’ of foreign conquest and dispossession.6 According to this view the laws of colonial

states were fashioned to suit social control, capitalist domination was achieved by

coercion.

“'Modernisation' theory only sees crime as a result of 'development’ and

criminal law as crime's necessary counterpoint. What it does not see is all the

criminal law and crime that went into the very making of underdevelopment.”

(ibid.: 35)

The role of the state authorities and the police in underdeveloped countries are

themselves contributory causes to the growth of crime, because “the colonial past and

paramilitary nature of the police clearly reduce their legitimacy and popularity” (ibid.:

17). Sumner points out that policy recommendations for crime prevention require both

an adequate theory of underdevelopment and a theory of the causes of crime that is

appropriate to Third World societies.

Thus far we have followed two movements in thought: the movement within English

language critical criminology towards a methodology of analysing corporate crime and

crimes of the powerful, and the parallel movement stemming from Latin America to

provide a new paradigm explaining underdevelopment as the consequence of

exploitative relations. We have seen expressed in the essay by Sumner the necessity of

synthesising these two movements. It is to this process of fusion that we now turn.

6 Cohen (1982) calls this reversal of the orthodoxy, the malignant colonialism model.


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Latin American Critical Criminology - Institutionalised Violence as the Leading Factor

Latin American critical criminology emerged in the 1970s. Two originating

conditions formed the movement, the first was the general radicalisation of social

science in the preceding decade and the second was its abrupt confrontation with

institutional violence.

The search for praxis, the conscious connection of action with social theory, was a vital

theme in the radicalisation of social science in 1960s Latin America and in Colombia

especially, where sociologists like Camilo Torres and Fals Borda argued for a

sociology committed to social change. Partisanship on the side of the poor was for

example the leitmotif of highly influential liberation theology. The Latin American

Bishops' Conference held in Medellín in 1968 registered the high watermark of official

acceptance of radical ideas by the Catholic Church. For the first time the Church

“critically analyzed the socio-economic and political reality of the continent” and it

found that in many parts there was “a situation of injustice that could be called

institutional violence” (Vuola, 1997: 38). The notion that a society that did not provide

adequate means of subsistence to a majority of it members was itself a sinful society

shifted the whole mindset from the personal to the social, legitimating radical political

action.

The second formative experience was the shock of the military coup in Chile in 1973

(and subsequently the Argentinean coup 1976). Up to this time criminology in Latin

America had followed traditional lines, dominated by positivism - see (Bergalli, 1972).

From this point on advocates of the new criminology worked together. Their first

project was a comparative study of violence in Latin America. While a consciously

pluralistic endeavour, this was a criminology being constructed anew from within the

dependency theory paradigm, under the influence of the ideas of praxis of liberation

theology. Roberto Bergalli later explained these intellectuals' commitment to the

sociological study of crime was related "to the situations of acute social injustice and

severe violations of human rights that were apparent throughout the continent during

the 1970s" (1997: 36).


29

This was an intellectual watershed. The challenge was to create a criminology that was

politically aware of social injustice in Latin America. Rosa del Olmo, who had

translated Sutherland’s White Collar Crime into Spanish, was one of the founders of the

new, critical Latin American criminology. She argued that Latin American societies,

characterised as they were by dependence and underdevelopment, had their peculiar

characteristics of violence and, “there exists a conception of criminological theory also

peculiar to this continent as a result” (1975: 21). According to del Olmo there are four

types of violence: individual violence (certain types of crime); institutional violence

(e.g. police activities or torture); structural violence (poverty, hunger, unemployment,

exploitation) and revolutionary violence (guerrillas). The first and the last types are

often considered illegitimate; whereas del Olmo argued that structural violence is

determinant in Latin America where it is reinforced by institutional violence. She

argued that Latin American criminology must therefore break from an administrative

criminology out of kilter with its social reality, and dependent on the consumption of

foreign ideas, and develop its own theory to analyse violence ‘from above’.

Most of the output of the Latin American critical criminologists is not available in this

country. UNICRI published an important collection illustrating the range of interests.

This includes a Manifesto by the group in 1982 that declared:

“In the discourse of a centre and periphery of power, the question of social

control enters as a priority theme. The type of discipline necessary so that social

relations in the peripheral countries are maintained within the framework laid

down by the imperial powers, conditions the form and results of the control

systems.”7 (Aniyar de Castro, 1990: 16)

The movement set out to construct a critical theory of social control in Latin America.

From the outset the Latin American critical criminologists were well aware that such

politically charged concerns could lead them into danger. As the 1980s progressed and

7 Original in Spanish “En el discurso de la centralidad y la periferia del poder, se inscribe la cuestión del control social como un tema prioritario. El tipo de disciplina necesaria para que las relaciones sociales en los países periféricos se mantengan dentro del marco previsto por las potencias imperiales, condiciona la suerte y la forma de los sistemas de control”.


30

state violence leapt from the Southern Cone to Central America a number were driven

into exile or lost their lives (ibid)8.

Crimes of the Powerful from Critical Latin American Perspective

The elements proposed by Pearce were taken forward, but in an interpretative

framework of defending human rights in dependent economies, where

“Crimes of the powerful certainly do not figure in judicial statistics, nor do they

even motivate the action of any authority, that is their impunity is evident.”9

(Antony 1990: 123)

Antony distinguishes three broad categories of crimes of the powerful, abuses of

economic power, abuses of political power and organised crime. Within the category of

abuses of economic power she highlights the crimes of multinational corporations as

being especially linked with abuses of political power. Not only does corruption take

place under their aegis, but they seek to illegally influence the political process (to the

8 There is somewhat contradictory evidence concerning the trajectory of 'critical criminology' as a conscious movement of ideas. US scholars Dod and Shank report a hugely attended conference of the Latin American Critical Criminological Group in Havana in 1986. Certainly by this time the existence of a progressive government in Nicaragua had provided a second country to provide example and support for the critical criminology project, which by then grouped together all progressive criminologists from Latin America. Conversely in a reflective essay tracing its birth and development, Argentine jurist Carlos Alberto Elbert (2004) identifies an internal crisis from which the movement fragmented during the 1980s. Zaffaroni argued in 1990 that faced with a panorama of incredible violence, the new trend in Latin American criminology had to remain critical while attempting to apply its science in the search for alternatives to militarised societies. Zaffaroni denominated his approach, realismo criminológico marginal (lit. marginal criminological realism) meaning that the approach had to be realistic according to the marginal conditions of Latin American societies (1990: 46). A ‘realism’ that is appropriate to Latin America could take a very different trajectory to ‘left realism’ in Europe and North America. Zaffaroni’s proposed applied criminology would be one that stayed close to the concerns of social movements and in particular contributed to their defence of human rights. Other scholars took different paths, and the tendency was to move away from the study of crime as such. There has certainly been a break in continuity. There are efforts to rekindle the collective project. Elbert ends by calling for a return to a Liberation Criminology with local content “to confront globalisation and its consequences” (2004: 391). 9 “El proceso de desarrollo capitalista periférico de América latina ha provocado la aparición y/o agravación de nuevas formas delictivas, como los delitos por abuso de poder económico, los cometidos por las Empresas Transnacionales, el crimen organizado, el terrorismo en todas sus modalidades, la violación de los Derechos Humanos, los delitos por abuso del poder público, el saqueo de las riquezas naturales …, por nombrar sólo algunas de las figuras más frecuentes. Los delitos de los poderosos ciertamente no figuran en las estadísticas judiciales, más aún, ni siquiera motivan la actuación de autoridad alguna, por lo que su impunidad es manifiesta.”


31

point of making governments fall as with Salvador Allende). She points to a range of

influence strategies characteristic of the multinationals “the manipulation of the law,

legal evasion or direct violation of juridic norms” (ibid.: 126). Multinationals have

proven adept at finding chinks in laws that are in any case permissive. Their illegal

practices are “not even regulated” in the majority of Latin American countries. The

only exceptions cited are Colombia and Panama who recently passed laws against

ecological and environmental damage, and to protect consumers of pharmaceutical and

food products. Overall, the behaviour of multinationals shows that they do not have

“clean hands”.

According to Antony violence is institutionalised because of the structural defects of

Latin America’s economic development. Critical situations arise and in place of a

political solution to restore equilibrium, force is used. Hence “the institutionalisation of

violence in our countries is not something accidental nor episodic, but a result of a

structural failing of the system, which functions in a conflictive mode …” (ibid.: p127).

Security forces are used to contain protest and dissidence. The most serious forms of

abuse of political power concern strategies of elimination, “It might be judicially, or by

the police or military, or extra legally through paramilitary groups (death squads)

shielded by the protection of the authorities under the heading of the law of flight,

confrontations etc.” (ibid.: 128). Another form of abuse of political power is torture of

citizens. Antony calls these abuses state terrorism. She points out that military

governments justified their actions by being “in a state of war against subversion and

terrorism”, leading to “the dangerous confusion between the Rule of Law and a police

state”. This confusion was engendered by the National Security Doctrine that classifies

a social or political dissident as an enemy or terrorist against whom the rules of war

apply.

Organised crime is viewed as an enterprise with a division of labour demanding

absolute internal solidarity for its successful operation (ibid.: 128). The social

conditions of Latin America and the Caribbean have provided a ‘culture dish’ in which

organised crime flourishes. Traditional forms such as the ‘black market’, contraband

and tax evasion have all provided avenues of rapid enrichment with minimum risks.

The newer expansion in drug related crime has been remarkable for the extent that it

has been able to neutralise detection. The corruption extends far beyond official organs

of formal social control, although it has here penetrated up to the level of head of state,


32

but is spread through economic processes as well. The outstanding example is money

laundering “which uses banks and finance houses, building companies, import and

export operations and so-called ‘paper corporations’, all national and apparently licit

corporations, whose objectives are unsuspected” (ibid.: 129).

Impunity emerges as a clear theme covering all forms of crimes of the powerful with a

cloak of secrecy and acceptability. Although statistics are not available the picture

presented is of societies where crimes of the powerful are more insistent, more

embedded, more total in their presence as forms of social control.

Class Consciousness and the Dynamics of State Terror

The response of Marxist and radical scholars to events in the Southern Cone in

the1970s and Central America in the1980s provides further elements to a theory of

crimes of the powerful in Latin America.

The involvement of US multinational ITT in the coup in Chile was one of the cases in

the study cited earlier by Fisse and Braithwaite. They were looking at the impact of

adverse publicity on corporate offenders. ITT had owned 70 percent of Chile’s

telephone system amongst other investments. The company conspired with the CIA to

create economic chaos in an effort to stop nationalisation of its assets and block other

socialist measures by the government of Salvador Allende. Furthermore, ITT had

allegedly infiltrated spies into Chile solidarity groups in the US, and company

executives had subsequently been under federal investigation of allegations that they

either withheld or gave perjured testimony to US Senate hearings. In the end a deal was

struck by US prosecutors to drop the charges “to protect classified national security

information from public disclosure” (1983: 127). Fisse and Braithwaite found that the

company’s $10 million award winning counter-publicity campaign had used public

relations so effectively that it managed to “convert an adverse thrust into a new

corporate image” (ibid.: 228).

In a contrasting approach, Petras strives to locate criminal corporate behaviour in the

context of the political process in Chile. The innovation of his analysis of the 1973

coup is that as well as citing it as an anti-democratic act on the part of the military, the


33

act is seen as part of an illegal mobilisation by the bourgeoisie as a class. “In a word,

the illegal action is dictated by a conception of class interest which transcends the

boundaries of the legal system and which redefines the areas for political action.”

(1977: 14). Petras considers the period of Allende’s government (November 1970 to

September 1973) that had preceded the coup as one of systematic violations of the law

by the rich. Hence it is “as an appropriate case for considering the politically motivated

criminality of the bourgeoisie” (ibid.: 15). He analyses the types of criminality and their

impact – political assassinations, assaults, the formation of illegal paramilitary

organisations, employers lockouts, speculation and black market transactions, sabotage

of production and the illegal activity of the US. All of these activities by the military,

employers and right wing political formations were consciously dissimulated and

denied both inside the country and abroad. Petras considers the societal-wide scope and

prolonged intensity of these illegal operations of “great sociological and historical

importance”. Chile, it will be remembered, was considered exceptional in Latin

America for the continuity of its parliamentary institutions. And yet even in democratic

Chile, terror was applied to reverse the trend towards socialism (a transition not

countenanced by the modernisation theorists – Rostow had sub-titled his book ‘a Non-

communist Manifesto’).

Issues arise concerning the modalities of this process. How is bourgeois criminal

behaviour learnt and disseminated? What is the process by which law breaking emerges

as a response to this challenge, grows and engulfs the dominant class? The possibility

of legal denial of their property, their wealth and hence their power and dominant

position in society constitutes a threat alert to the dominant property owning class.

Petras posits crime as a form of bourgeois class-consciousness, internally sanctioning

illegal actions of the minority against the majority. He traces how the illegal behaviours

are conceived and spread by politically conscious activists within the bourgeoisie

linking up with operatives of US covert action; then official figures legitimising

illegality in terms of defence of order against the perceived chaos (that is over and

above law) and finally the plans are put into action to destabilise, weaken and

eventually overthrow a socialist government. In Petras’s depiction of the extremities of

this process:


34

“The contagion of bourgeois criminality erodes any sense of civility which may

have resided within the well-off citizenry. Lawlessness and violence appear to

take over among the mass of the bourgeoisie and petit bourgeoisie. The close

and intimate relation between bourgeoisie, petit bourgeoisie, fascist street

fighters and lumpen proletariat increasingly blurs the line between the

‘respectable’ and the ‘rabble’ – they become joined as respectable rabble.”

(ibid.: 19)

To summarise, Allende’s election triggered a scale of law breaking by the powerful that

went far beyond the gain seeking behaviour of an individual actor, and beyond the

amoral economic calculations of a corporation. It was a conscious political-social

mobilisation of the bourgeoisie that drew on all available allies, specifically the US

state, acting in concert to defeat a threat to their interests. It is under these most

pronounced, structurally configured political conditions that we encounter the ‘lumpen’

(that is backward, non-productive, criminal) face of the bourgeoisie. From the point of

view of bourgeoisie class response, the threat of a socialist transformation is itself

criminogenic.

Although he does not expressly do so, Petras’s understanding can be related to the

criminological theory of Sutherland and Pearce. The cultural factors that are the

concern of differential association, if they are not completely tautologous, have to be

related to the subjective dimension of class formation. Putting these together: I make

the proposition is that it is within the dominant class, and the institutions that serve it

with their attributes of association and isolation, that the learning of particular forms of

criminal behaviour takes place.

Corruption and its Connection with Informal State Repression

Dieterich looks at state terror from the point of view of an evolving instrumentality of

informal systems. He holds that an explanation of the longstanding phenomenon of

corruption can be used as a heuristic vehicle for understanding the evolved system of

enforced disappearances. Corruption here refers to exchanges in both directions

“between the dominant – and to a lesser extent middle - classes and the state. While the


35

rich use their wealth to buy political rights and legal privileges, state officials use their

power to become rich.” (1986: 42). In this view, corruption functions as an informal

system in parallel with the formal, legal one. This duality arises from a contradiction

between formally democratic institutions, and a class structure with extreme

concentrations of wealth and power. Dieterich adds that corruption is not the only

mechanism by which the wealthy maintain their position, it serves rather as an

additional access to privilege “over and above the already existing legal and factual

ones which they enjoy in all spheres of life” (ibid.: 43).

Corruption is an extension of the formal to the informal expression of class power. The

concrete form that the corruption system assumes in any given country “depends on the

totality of factors” including the form of the state, degree of wealth concentration etc.

Although this latter point is left vague (a comparative study of corruption would

involve analysis of the interplay of these factors) Dieterich’s purpose is to apply the

same concept of a basic contradiction between democratic state forms and capitalist

class structure, to the phenomenon of disappearances. Democratic structures limit the

capacity of the state to repress targeted groups or individuals, “therefore when the

system enters a real or perceived crisis situation, the formal democratic and legal

structure becomes dysfunctional and is partly or totally replaced” (ibid.: 45). It is at this

point that covert, extra-judicial operations are set in train, “while still retaining its

facade of formal democracy” (ibid.: 46)

While extra-judicial political murder is not new, Dieterich argues the current

‘perfected’ form was introduced in the midst of an anti-guerrilla counter insurgency in

Guatemala in the mid-1960s from whence it has became generalised. The introduction

of the technique was a deliberate act of US policy, “when the ‘reforms and repression’

approach of the Alliance for Progress was abandoned in favor of a brutal coercive

strategy to fend off the danger to the system” (ibid.: 51). The consequence for Latin

American states was a move by US agencies to direct involvement in the conception

and planning of operations against opposition sectors, including the use of paramilitary

forces (ibid.: 53). The consolidation of these policies into military doctrine and

structures has had profound and enduring consequences for the relationship between

state and society, the state’s coercive power becomes “directly and only responsible to

the repressive sectors themselves” (ibid. 47). Disappearances were adopted not simply


36

as a technique, but as a strategy and covert system of repression that was part of the

state structure and yet not part of the state structure. They gave an additional advantage

in dealing with perceived threats above and beyond legally available options. Dieterich

demonstrates that the informal repressive system, the abuse of military power for

political gain, can be understood in terms of the informal corruption system, the abuse

of political power for economic gain. He stops short of arguing a causal connection

between these two analogous systems.

The analyses by Petras and Dieterich are complementary, both point to US intervention

as a pivotal factor underpinning bourgeois criminality in Latin America. Their

difference lies in that Petras considers the heightened tension of the Allende years as a

conjuncture whose demands mobilised various forms of bourgeois criminality.

Dieterich invites consideration of a generalised structural change in the modality of the

state’s relation to society where government complicity contributes to the hiding of

bourgeois criminality, which has been the more normal case.

Pacification, the State and the Role of the US Counterinsurgency

The societies in Central America lie within the scope of the dependency thesis,

demonstrating the characteristics of agricultural exports under harsh conditions of

exploitation and concentration of wealth. The civil wars in the region during the 1970s

and 1980s cannot however be explained adequately by O’Donnell (1979)’s Bureacratic-

Authoritarian State thesis that relies specifically on industrialisation and urbanisation as

key explanations of the growth of popular democratic movements. The oligarchic

Central American countries were based on the export of primary products, with a

handful of landowning families monopolising political power. Despite the low levels

of industrialisation there was a mushrooming of rural based peasant and indigenous

social movements, political parties and guerrilla organisations opposed to the dominant

oligarchs – see (Jenny Pearce, 1981; Dunkerley, 1994). The outcome of these wars

owed even more to sustained US intervention, assuming overt as well as covert forms,

than did the South American military dictatorships. Summing up the experience of

Nicaragua, El Salvador and Guatemala in the “miserably harsh years” of the 1980s in

which by conservative estimate 160,000 people were killed10, Dunkerley calls this the

10 According to Petras and Veltmeyer, “In Central America, 350,000 people were killed and over 2.5 million went into exile” (2001: 148)


37

pacification of Latin America. In this he invokes association with the pacification of the

original Spanish conquest and possession of the region (1994: 1): the reference is to

US-led wars of reconquest and repossession.

A second essay by Petras advances a relational theory of state terror in the Americas.

He distinguishes two targets, “democratic and representative institutions” and the

intention “to defeat the attempt by the organised peasantry and working class and

burgeoning popular social movements form changing the ownership of property and the

distribution of wealth” (1987: 88). This is a concretisation of the notion of state crimes

as a response to threat. The state here is not so much weak, as a state whose legitimacy

is challenged because it defends an exploitative and exclusionist class system.

Summing up this theme, Petras puts forward a general proposition on state terror and

social movements that: “The level and intensity of state terror varies according to the

density of social organisation in civil society and the level of self-mobilisation” (ibid.:

107).

Turning to the forms of state terror, Huggins (1987) provides a critical history of US

police training in Latin America that shows how police training doctrine and methods

have served US foreign policy objectives in each period. According to conventional

criminology, US assistance to foreign police would result in improvements to criminal

justice that would “foster fairer, more rational, and more apolitical maintenance of

public order” (1998: x). Huggins’ research in Brazil found that the practice was

completely contrary to official discourse, “the more foreign police aid given, the more

brutal and less democratic the police institutions and their governments become.”

(ibid.: 6). The practices carried out by US-trained police forces trained institutionalised

torture, disappearances and murder (ibid.: 172).

Huggins’ analysis of these phenomena provides an exemplary application of critical

criminology to US intervention and the state in Latin America. Her study points to the

apparent paradox that US involvement leads to a de-professionalisation of policing.

The internal security system of the bureaucratic-authoritarian state had been

modernised under US guidance by way of an instrumental division of labour that

encouraged secrecy as well as specialisation. This set up a dialectic between an

authoritarian tendency to centralisation and a “deadly fractioning of the security


38

forces”. Elements in the official structures had become so autonomous that “they were

spinning out of control” (ibid.: 179). The tendency was towards the re-privatisation of

social control “as the state began to act more invisibly through privatized, although

police-linked, death squads” (ibid.: p186).

Impunity and the Debate on Transition and the Quality of Democracy

Critical anthropologist Jeffrey A. Sluka discusses the definitional distinctions between

“terrorism” and “state terror”. In so doing he offers this useful definition of state terror:

“the use or threat of violence by the state or its agents or supporters, particularly

against civilian individuals and populations, as a means of political intimidation

and control (i.e., a means of repression)” (2000: 2).

Sluka accumulates support for the thesis that the prevalence of regimes using state

terror in Central and South America is connected with US intervention. As to causality

for these state crimes, Sluka’s colleagues ask the question in classic anthropological

terms; “are the incredible cross-cultural similarities we observe in the practices of state

terror a case of ‘independent innovation’ or ‘diffusion’?” (ibid.: 9). Sluka’s evaluation

of the evidence is that the latter is the case, “that the structures, tactics, and technology

of state terror have been diffused, in fact aggressively marketed and exported as a form

of ‘military aid’ to developing countries.” (ibid.: 9). That is, state terror is a

consequence of the policy of the US and other Western powers. Sluka then argues that

this finding has methodological consequences:

“A focus on state terror at the level of individual countries tends to obscure the

fact that it is a global phenomenon supported by an international structure or

network, and local case are only comprehensible within this context.” (ibid.: 9).

This is consistent with the present discussion, which is building a theory of crimes of

the powerful in Colombia understood as a specific case within Latin America.

According to Sluka “individual states which are cultures of terror” are dependent on an

international culture “within which they are nurtured and without which they probably


39

could not long survive – that is, they are dependent on international support for their

continued existence” (ibid.: 10).

This raises the vital issue of impunity, the failure of governments to investigate and

punish human rights violations that are perpetrated by official or unofficial state agents.

The principal entry point for investigating the issue of impunity has been as part of the

transition from authoritarian rule. In her work on confronting state terror and atrocity

Hayner (2001) cites twenty-one ‘truth commissions’, that is officially recognised

investigations into past abuses, in Africa, Latin America and Eastern Europe.

Acknowledgement of the experiences of the victims is an essential component in

establishing the truth. The victims see recognition of the truth as a precondition for

reconciliation and the democratic process. Hayner describes victim reparation

programs, and examines how truth commissions have recommended institutional

reforms. The struggle to establish public recognition for past violations can be a

complex process, obliging victims to overcome their individual traumas and fuse them

into collective actions against the opposition of vested interests, usually the military

(Jelin, 2003). If those vested interests remain in power, the risk may be great for those

seeking to remove impunity. This was the case in Guatemala where Bishop Gerardi, the

principal author of the truth and reconciliation process, was assassinated (REMHI,

1999).

There have been two phases of transition from repressive military regimes to civilian

rule in Latin America’s recent past. The first phase saw the ending of the military

dictatorships in the Southern Cone countries of Argentina (1983), Brazil (1985),

Uruguay (1985) and Chile (1990). The second phase of transition is centred on Central

America with elections or negotiated settlements concluding civil wars in Nicaragua

(1989), El Salvador (1992) and Guatemala (1995). While putting together these two

processes of regime transition in a unified model is a valuable exercise in seeking

common patterns, it runs the risk of masking the specifics of the historical process.

Sandwiched between these two experiences are the South American states of the

Andean sub-region. I argue that Latin America has gone through a combined and

differentiated experience of US intervention since Reagan’s election as US President in


40

1980, and that this is a cardinal factor underpinning a regime of impunity for crimes of

the powerful in contemporary Colombia.

The transition from the military dictatorships of the Southern Cone was gradualist and

controlled, and in that sense very different to the conditions in which the military seized

political power. The asymmetry is further pronounced by the rightward shift in

intellectual climate following the defeat of working class movements and disarray of

the left (Dunkerley, 1994: 5; Petras and Morley, 1992: 153-188). That is to say, an

explanation based on class conflict was supplanted by more narrow institutional

analysis.

The more subdued approach is exemplified by the standard thesis of the transition to

liberal democracy by O’Donnell (1986). Concentrating on political processes, he

distinguishes the dimensions of democratisation and liberalisation. The transition from

absolute military dictatorship (dictadura) typically involves first a liberalisation

process, the reintroduction of protections such as the right to habeus corpus, freedom of

movement etc. to a “liberalized autocracy” or soft dictatorship (dictablanda). Then,

according to O’Donnell, a second phase of transition involving democratisation allows

for expression of citizenship through elections to government. O’Donnell applies the

term democradura for this state of limited political democracy to capture the

coexistence of democracy and elements of dictatorship. O’Donnell’s schema allows for

further transitions, adopting the term ‘polyarchy’ used by US political science to

describe these limited democracies with legacies of authoritarian rule. He presents any

further transitions from polyarchy as crossing a line in either one of two directions. The

first line distinguishes substantive benefits and entitlements from (merely) formal rights

and obligations, while the second distinguishes social institutions and economic

processes from public institutions and governmental processes. These two lines are

conceived of as forming a box, essentially a box defining the limits of acceptability to

the US and bourgeois order. Any transitions crossing these lines would be ‘outside the

box’. A welfare democracy, social democracy, popular democracy and socialist

democracy are all positioned outside the box. This graphic portrayal of the transition

depicts two possible movements from a democradura – to a limited political democracy

inside the box (acceptable), or to a popular democracy outside the box (unacceptable

because a transition to socialism). What concerns us here is less terminological than


41

the value of this scenario for identifying the crimes of the powerful and the processes

by which they remain protected. Certainly the imminence of transition is an important

consideration. One can conceive of internal lines or fractures between the radicals and

reactionaries being established within a democradura society.

Thus an apparently obscure historical debate turns out to be of continuing significance.

One reason is the coincidence of the controlled return of representative democracy with

the imposition of US sponsored neo-liberal economic policies in the 1980s; and the

claim that neo-liberal globalisation has been a force promoting democratisation, i.e. an

optimistic reformulation of the modernisation paradigm. Another reason is questioning

the legitimacy of limited democracies in which impunity for state crimes is ongoing.

This point is expressed succinctly by Mendéz, “democracies that coexist with alarming

incidences of state violence do not deserve to be called democracies” (1999: 21).

Ongoing impunity for state violence is part of a wider malaise of the “democracies

without citizenship” (Pinheiro 1996), as is also stressed by Boron who argues that at

root these societies are still short of the material conditions of equality: “the loss of

purpose and meaning of democracy itself is due to its lack of depth, its poor quality, its

unfairness and its incompleteness” (1999: 212). In the case of Chile, according to

Moulian, although economic crisis and popular mobilisations were decisive in forcing

concessions from Pinochet’s dictatorship, the military and the capitalist beneficiaries of

the coup remained protected, “in spite of a change in the model of domination, there is

no change in the dominant bloc” (1997: 145). That is to say, the controlled

transformation was essentially through a dual policy of containment and co-option that

left intact the dominant class and its economic model.

Petras and Morley take issue with O’Donnell’s re-democratisation thesis,

fundamentally because it confuses the state with a political regime. They argue that the

new political regimes of the Southern Cone exercised executive and legislative

initiative “within the framework established by the preexisting configuration of power”

(1992: 165). That is, without going beyond limits set by the permanent institutions of

coercion (army, police, judiciary), nor “those that control the economic levers of the

accumulation process” (ibid.: 164). These authors emphasise the connection between

state structures and capitalist class power, the continuity of economic policy, and the


42

role of the new regimes in limiting any social mobilisation that might challenge the

parameters of economic policy. The differences between Petras and Morley, and

O’Donnell are theoretically founded on Marxist and Weberian conceptions of the state

respectively. Petras and Morley insist that these new political regimes are the

executives of essentially capitalist states, and on “the interpenetration of electoral-

civilian regimes and authoritarian institutions, not their mutual opposition” (ibid.: 167).

To be fair to O’Donnell’s position, he too points to the limitations of polyarchy in Latin

American countries where, in contrast to highly developed countries, “the extension of

civil rights to all adults is incomplete” (1999: 311).

There is a parallel debate over the role of the US and its influence. Robinson, for

example, extends O’Donnell’s transition thesis to include Latin America’s relations

with the US as the hegemonic power. He argues that the US shifted its foreign policy in

the late 1970s to adopt “democracy promotion” or, to be precise, the promotion of

“polyarchic political systems” (1996: 318). According to Robinson the US had taken a

strategic turn towards consensual rather than coercive forms of social control. This

view stems from the experience of US promotion of an electoral alternative to the

Sandinista government of Nicaragua. But it over-extrapolates and needs to be modified

in the light of McClintock (2002)’s detailed study of US unconventional warfare, most

especially the systematic deployment of counter-terrorism in Central America during

the two terms of Reagan’s presidency 1980-1988. At least initially, Carter sought

human rights oversight of counter-insurgency operations: Reagan made counter-

insurgency a virtue. To paraphrase McClintock, Reagan re-launched the Cold War in

the periphery nations. The supposed protagonist was ‘international terrorism’, but the

US special operations that proliferated in Central America used illegal methods often

directed against the civilian populations. Thus, the US was engaged in brutal wars of

pacification in Central America while at the same time influencing limited

democratisation in the Southern Cone. Where differences exist they were more

concerned with the timing and modalities of repression rather than the overarching

strategy. In both cases, a cycle of repression first ensured that any possible radical

transition to popular democracy was defeated before re-opening political space to more

controlled changes.


43

While not every Latin American country was afflicted by brutal regimes in the late

1970s and 1980s, the dictatorships of the Southern Cone and the counter-insurgency

regimes of Central America settled an intimidatory climate upon the continent as a

whole. Colombia has been classified with the other South American nations as a third

type, a hybrid in economic terms between the limited industrialisation of the ‘semi-

periphery’ countries and the fully peripheral latifundista oligarchies. O’Donnell

grouped Colombia with Chile, Peru, Uruguay and Venezuela as intermediate countries,

which he discusses only in passing in his ‘modernisation and bureaucratic-

authoritarianism’ explanation of the military coups of the Southern Cone. Nonetheless

O’Donnell provides a useful perspective on violence in Colombia: the coups were

essentially to “de-activate already present popular movements”(1979: 51).

The political dynamics of state and society in the Andean countries as a sub-region in

this period is well captured by the concept of ‘low-intensity democracy’ (Gills,

Rocamora and Wilson, 1993). Whereas in Peru the Sendero Luminoso expanded their

millenarian rural insurgency, Colombia witnessed mass radicalisation of urban social

movements alongside several active guerrilla movements. In both countries formal

democracy was combined with prolonged counter-insurgency warfare. As a result, the

military enjoyed autonomy from democratic control, and a direct link with the US.

These were fertile conditions for what Sieder calls, in contrast to past impunity,

ongoing or contemporaneous impunity, “usually characterised by the lack of

accountability of the armed forces, a recurrent feature in a region where civilian rule is

often subordinate in practice to military power” (1995: 4).

The suspension of constitutional rights, direct military control of conflict areas and a

separate system of military justice all contribute to a lack of oversight over human

rights violators. ‘Low intensity democracy’ is a different configuration of the

democracy – dictatorship combination. What hitherto has been described as a serial

process of transition is here a parallel relation of separate yet interconnected structures.

The transition that is taking place is in the contradiction between the state’s democratic

and coercive roles. There is a logical pattern to the covert forms of political repression

under these conditions. Repression is selectively directed at the guerrilla movement(s)

and sections of the civilian population, whilst simultaneously claiming to defend

democratic institutions. Impunity here is more than the result of institutional failings,


44

rather it is a deliberate and concerted policy of concealment as part of the counter-

insurgency strategy which “makes the law a little more than a façade” (ibid.: p5).

Susan Lee identifies the phenomena as: the use of proxies – “paramilitary forces to

carry out the ‘dirty war’ waged against the civilian population in rural areas … enabled

the Colombian armed forces to evade accountability”; extra-judicial executions and

‘disappearances’ – that increased dramatically from the early 1980s; denial – “victims

of extra-judicial executions are routinely described by the military as guerrillas killed in

combat, or a by-product of armed confrontation with guerrilla forces. Alternatively,

killings are directly blamed on guerrilla groups or drug-traffickers”; perverting the

course of justice - techniques to block investigations including refusal to co-operate,

tampered or destroyed evidence and techniques to block members of the armed forces

facing trial. She concludes:

“the armed forces’ definition of the ‘enemy’ extends way beyond those directly

or even indirectly involved in guerilla activities to include all the civilian

population living in the areas of guerilla activity, social and community

workers, trade unionists, left-wing politicians and human rights activists.”

(ibid.: 29-30)

The social effect is that there are invisible but real lines constraining democratic

political engagement. Internally a climate of fear dominates - to use democratic

freedoms of expression and protest to draw attention to the abuses of the ‘dirty war’ is

to risk becoming one of its victims.

An important aspect to the evolution of the crimes of the powerful over this period was

how the dictatorships, controlled democracies and ‘low-intensity democracies’ provide

opportunity for rampant economic and social abuses of power. Studies of Latin

America’s exploding debt repayment crisis from 1982 onwards draw attention to the

insistence with which Western private banks had pushed their petrodollar surplus on the

dictatorships, and the special eagerness with which corrupt, unaccountable generals

contracted these debts on their countries’ behalf (Strange, 1998). Personalised

corruption found its counterpart in the class based corruption of the controlled

democracies where, despite mounting fiscal crises, “the Latin American rich refuse to

pay taxes” (Boron, 1999: 217), a trait of the wealthy that is a tradition dating back to


45

colonial times, and an enduring testament to their ‘lumpenbourgeoise’ criminal

formation that returned in full decadence in the 1980s. The more Latin American

governments dismantled public services, the more the rich felt vindicated in

withholding their taxes.

Then there are various forms of social crimes against the poor. Brazil is notorious for

the use of hired killers and vigilantism, which the police either abet or are directly

involved (see Huggins, 1991; 1999; Chevigny, 1999: 56), and the summary execution

of criminal suspects from the dangerous classes is not uncommon. Again impunity is

the norm. Another abuse of power that has exploded in many Latin American countries

is the shocking phenomenon known as ‘social cleansing’, the stigmatisation and

elimination of marginalised people, which seems related to the growth of the informal

economy on the one hand, and the persistence of impunity on the other. The issue here

is not however one of the state repressing society, nor simply of abuses by deviant state

agents, but of the state acting in response to conflict in society. The indigent poor

especially are seen as undesirables (desechables literally ‘throwaways’), by e.g.

businessmen who contract their liquidation to remove them from public spaces

adjoining their business. This type of criminal behaviour is not only tolerated but even

enjoys popularity amongst the well-off who, as one writer puts it, “regard the

underclass as aliens that threaten their personal security and their property” (Brodeur,

1999: 79). The prevalence of social cleansing is evidence of the breakdown of the

social contract, a class-based crime epitomising widespread contempt of the rich

towards the poor.

Moulian’s interpretation that the transition from dictatorship to democratic government

was a change in the model of domination shows potential as a useful theoretical concept

for explaining the shift in forms of crimes of the powerful. The previous, military

dictatorship, model of domination was structured around elimination of persons

considered to be political threats. This changed to a democratic yet authoritarian model

of domination, structured around the repression of marginalised social groups. This

shift in the model of domination is still within the context of underdeveloped,

dependent states.


46

We are now better able to appreciate del Olmo’s original insistence that Latin

American criminology must address institutional violence as the leading factor. While

critical criminology from ‘First World’ societies has been mostly concerned with

economic crime, there is a clear shift in the object of study in Latin America to include

forms of political and state crime that come much more to the fore as phenomena in

these societies. This leads on to further questions about why this should be so.


47

Human Rights, Globalisation and Dependency

We have allowed for the possibility of taking human rights violations rather than state-

defined criminality as the starting point for a study of the crimes of the powerful. This

section investigates the theoretical basis for such an approach, and recasts the foregoing

discussion on dependency versus modernisation in the context of the prevalent

discourse on globalisation.

East-West and North-South Debates over the Scope of Human Rights

Human rights is an international discourse that goes beyond the national jurisdictional

definition of crime. Conventional statements of human rights are embodied in the

Universal Declaration of Human Rights (UDHR) adopted in 1948. Article 3 of the

UDHR states "Everyone has the right to life, liberty and security of person" and Article

5 states "No one shall be subjected to torture or to cruel, inhuman or degrading

treatment or punishment." Moreover UDHR Articles 6 to 11 propound the rights of

due legal process and Articles 18 to 21 that affirm the rights to freedom of thought,

expression, peaceful assembly and participation in government.

The UDHR is not limited to political and civil rights, but enters into the social and

economic sphere declaring rights to social security, to work, to rest and leisure, to

education, to participation in cultural life and so on. Civil and political rights are known

as first generation rights, for liberty and against state oppression. Having been left in

the background, economic, social and cultural rights fought their way in to a place in

the discourse. The common theme of these ‘second generation rights’ is equality, a

demand for state action. The two sets of rights took distinct institutional paths through

the UN system, and in 1966 were both approved by the UN General Assembly as the

International Covenant on Civil and Political Rights (ICCPR) and the International

Covenant on Economic, Social and Cultural Rights (ICESCR). Ratification of these

Covenants by a sovereign state carries legal obligations. Yet the formal consensus

obscured deep disagreement over the priority and enforceability of the two Covenants

(Steiner and Alston, 2000: 237).

The orthodox (Anglo-American liberal) view regarded the extension of human rights to

include economic and social rights as deeply problematic and the general tendency was

to create a dichotomy between them and civil and political rights. Cranston, for


48

example, argues that civil and political rights are of “paramount importance” (1973:

67), that is in principle superior or prior to social and economic rights. The notion of

paramountcy could be acceptable in the case of the right to life, but it seems somewhat

arbitrary and even spurious to insist that, say, the right to freedom of peaceful assembly

is more important than the right to social security. Indeed, this issue fell upon ground

already well turned over by the East –West dispute over liberties versus economic

welfare. The UK and US had opposed the inclusion of social and economic rights in the

UDHR as being difficult to enforce through judicial systems.

Alston offers a sophisticated view of the relationship between the two sets of rights. He

points out that while the ratification of the ICCPR brought immediate compliance

obligations, ratification of the ICESCR obliged a nation state to “undertake to take

steps … with a view to achieving progressively the full realisation” of the rights

recognised in the covenant, subject to available resources (Alston, 1981: 48). The key

notion that emerged from this debate is that of the right to development, that is to say

the aspiration to bring about the socio-economic conditions that would allow the

ICESCR to be realised, and are hence implicitly embodied in it. The right to

development is as much a collective as an individual right, closely connected with the

right of nations to self-determination. The notion is that “equality of opportunity for

development is as much a prerogative of nations as of individuals within nations” (cited

in Alston, 1981: 99).

The right to development epitomises what is known as the third generation of human

rights, centred on the theme of solidarity.11 Unsurprisingly it was advocated by the

nation states of the South. Although there is no single agreed definition or

interpretation, Bedjauoui gives an important formulation of the international dimension

of the right to development as:

“nothing other than the right to an equitable share in the common and social

well-being of the world. It reflects an essential demand of our time since four

fifth’s of the world’s population no longer accept that the remaining fifth should

continue to build its wealth on their poverty.” (1991: 1182)

11 Other ‘solidarity rights’ include the right to peace, the right to environment, the right to the ownership of the common heritage of humankind and the right to communication (Steiner and Alston 2000: 1319).


49

More than rhetoric, this is a serious attempt to extend the human rights discourse to

bring it in line with the real conditions facing the majority of humanity. It is the right

to development that provides the underlying legitimacy for much of the UN’s

institutional activity as well as asserting the need for international solidarity more

broadly. Opponents argue that while the right to development may be a moral right,

can it as Bedjaoui (1991) proposes, be articulated as a legal right? The counter

argument is that the maximum that can be argued from the baseline of the UDHR and

the 1966 Covenants is the right to pursue development as inferred from the right to

national self-determination (Donnelly, 1985).

In its internal dimension, development as a right puts social and community needs on

the agenda, but how are they to be registered except through the exercise of political

rights? The right to participate in development is a synthesising notion, bringing

together the formal right and the process of identifying the developmental needs and

generating resources (Alston, 1981: 55). Thus we can say that by the end of the 1970s

there had begun to emerge a valuable theoretical integration, not just of the individual

and collective but also of political and economic rights encapsulated in the holistic

concept of the right to development.

There is an inherent tension between the right to development and the right to property.

Cranston recognised this, anticipating much of the subsequent discussion on

globalisation and human rights, even if his sympathies lay on the other side of the

argument. Cranston follows Locke in arguing that the right to property can be derived

from the right to life: “if a man is entitled to survive, he is entitled to retain the

possessions necessary to his survival” (1973: 49). While St Thomas Aquinas argued

that the right to life allows for a starving man to take the property of another in order to

survive, Locke denied the starving man this right (although he acknowledged the rich

man had a duty to give bread to the starving). Cranston applies the Lockean position to

modern taxation, which he argues on human rights grounds demands for equality may

not proceed so far as to rob a (rich) man of his property.


50

“At what point does high taxation become confiscation? Has President Allende

in Chile already crossed the line, as Dr Castro in Cuba crossed it years ago?”

(ibid.: 49)

This is the same line we saw earlier, the line that demarcates what is regarded as

legitimate and illegitimate political activity in the transitional societies of Latin

America. Here the definition of legitimacy is explicitly stated as defence of the right to

private property.

The distinction between the promised ideal and reality is an ever-present theme in

human rights discourse, but especially so concerning the right to development: it could

but not become embroiled in the North-South divide. How could one set about pursuing

development without undertaking a concrete analysis of the structure of state and

society in Third World countries and the international economic order? We have ended

up in a very similar place as before. Except that revisiting the problematic from the

human rights perspective is more than a case of pouring old wine into new bottles.

Within the dominant paradigm the notion of progressive realisation of human rights –

first civil/political, then social/economic, then collective (even if the latter are only

normative, programmatic and must await the material basis for their realisation) – gave

way to discussions of trade off between human rights and development. The model

Third World countries were those authoritarian democracies that had successfully

suspended short-term rights for long term growth (Santos, 1998: 199). Peemans aptly

refers to this significant downgrading of modernisation’s claims as ‘neo-

modernisation’, the last stage before neoliberalism (1996: 35).

Thus far we have traced the emergence of two broad trends within the human rights

discourse. The orthodox trend prioritises civil and political rights over social and

economic rights, and seeks legal mechanisms of enforcement. The critical trend

emphasises the indivisibility and interdependence of human rights and the right to

development as an integral concept, and seeks social means of realisation. It is not

surprising that, as with our previous discussion of crime and development, these trends

take entirely different views on globalisation and whether it has benign or malignant

consequences for human rights.


51

'Globalisation' as a new phase of US-led imperialism

The concept of 'globalisation' is hugely contested and the use of it here requires an

initial orientation. Held and co-authors develop a broad framework for the study of

globalisation as a transformatory process that attempts methodological rigour,

distinguishing between the spatio-temporal dimensions and organisational dimensions

of globalisation. The spatio-temporal dimensions are identified as extensity (stretching)

of global networks, intensity of global interconnectedness, velocity of global flows and

the impact propensity of global interconnectedness. The focus on distinguishing

different historical forms of globalisation is evident in the organisational dimensions

that Held identifies: infrastructure, institutionalisation of global networks and the

exercise of power, the pattern of global stratification and dominant modes of

interaction. While the framework is over-general for the purposes of this research,

Held and McGrew's notion of different types of impact of globalisation (decisional,

institutional, distributive and structural) is suggestive, as is the dimension of a dominant

mode of interaction, e.g. economic, military, or, indeed criminal (2000: 59).

For the purposes of this study, what is meant by globalisation is at root the globalisation

of capital, the explosion of greater and more rapid flows of capital across national

boundaries. There is much more to it, not least because the technical developments

have been pushed forward by multinational corporations seeking ever faster turnover of

their capital. The consequential leap forward in communications has also accelerated a

much broader cultural and political interconnectedness between different societies,

including social movements. Through Reagan and Thatcher, neo-liberal policies had by

1980 gained ascendancy in the US and Britain. What has been ‘globalised’, i.e.

imposed internationally, is a neo-liberal policy model that prioritises the individual and

demands a reduced economic role for the state. The model prescribes expanding

markets - through privatisations, removing taxes and other barriers to foreign capital -

de-regulation, high-interest rates, devaluation and debt repayments. The model

empowers international creditors and the multinationals. The international financial

institutions (IMF, World Bank and its satellites) are the implementers of the model, and

the guardians of its free trade orthodoxy. Structural adjustment became the standard

mechanism for pushing through neo-liberal policy.


52

The decade of the 1980s saw a series of national battles over structural adjustment.

Most Latin American countries became seriously indebted, dismantled controls on

capital movements and looked to encourage foreign direct investment (Green, 2003:

Chapter 3). In 1989 the US took advantage of the shift in international power relations

to consolidate its position. Globalisation in the 1990s saw the tendency to domination

of both the US military and the US dollar. But US supremacy was not a foregone

conclusion, rather a drive to expansion relying on the threat or reality of force,

emphasising the inherent volatility, instability and vulnerability to crisis of the

globalised world order (Strange, 1998; Gowan, 1999).

In short, the predominant characteristics of neo-liberal globalisation are not benign. The

movement of capital across boundaries does not signify the eradication of those

boundaries. Globalisation has neither ended the structural inequalities in the world

order, nor the absolute polarity between the rich countries of the North and the poor

countries of the South, nor the inequalities within countries.

This version of globalisation attempts a synthesis of the debate between 'sceptics' and

'globalists'. I draw from the sceptics the notion of continuity between the realities of

'globalisation’ and more classical notions of Western imperialism. The complementary

theses of the domination of finance capital, wealth extraction from the poor nations to

the rich, and the capitals of rich nations competing for leverage over the poor, still hold

true (Petras and Veltmeyer, 2001).

The globalists argue that there has been a full paradigm shift - that the cultural and

multi-layered political dimensions of globalisation mean that it has superseded and

encompassed imperialism within a more all-embracing social reality (Shaw, 2000).

This is an overstatement of the case, as can be seen in the continuities of unequal

international relations in 20th century Latin American history carrying over to the new

millennium. Nonetheless, the globalists' insistence that there have been qualitative as

well as quantitative changes carries weight on two points: the processes of financial

speculation; and the pivotal role of multinational corporations12 as primary economic

actors. The concept of globalisation informing this research is essentially one of a new

12 Multinational corporation - this term is preferred to transnational corporation because, following the argument of Hirst and Thompson, these corporations are not free of a nationally located headquarters. There are US multinationals, British multinationals and so on.


53

phase of US led imperialism, a renewed aggressive expansion commencing around

1980 and defining the historical period from 1989 onwards.

The dependency versus modernisation debate of the 1960s has been supplanted by the

globalisation discourse of the 1990s, nonetheless the underlying pro- and anti-

imperialism themes persist. In terms of globalisation and human rights, there are three

interrelated elements: humanitarian intervention; the role of the multilateral

international financial institutions; and multinational corporations. This study focuses

on the multinationals, but in the context of their inter-relationship with the other two.

The New Dependency, Foreign Investment and Impunity

It is part of the World Bank’s constitution that it promotes private foreign investment.

The Bank continually promotes the idea that people’s social and economic needs can be

met by the market place. As Thomas (1998: 176) puts it, “the private sector is

becoming more influential in affecting the fulfillment of economic and social rights”.

That is, simultaneous with institutional reformism, responsibility for social and

economic rights is being privatised. To make the point conversely, if the private sector

does not fulfill this responsibility those needs will not be met.

The role of the World Bank in the production of research is enormous. The Bank’s

influence is strongest in problem definition. The problem is never its own policies, but

uncontrolled and even perverse factors inside the object societies. When one speaks of

the orthodox view on Third World development this is almost invariably the World

Bank view. Thus the shift from the Washington Consensus to the post-Washington

Consensus was essentially a reformist response within and around the World Bank to

the problems its policies encountered in the mid-1990s. The World Bank actively

disseminates the notion of ‘social capital’ as the fulcrum of a framework of orthodox

social theory, and the Bank is sponsoring a raft of theories on corruption, crime,

violence and multinational corporate behaviour. There is no area of the crimes of the

powerful that we will consider that has not already been visited by the World Bank’s

research battalions, the effect of which is to spin a cloak of intellectual impunity for

foreign investors.


54

In the new phase of imperialism, economic survival hangs by the thread of attracting

foreign investment. The multinational corporation is offered every privilege. The more

the IMF/World Bank policies insist on private investment as the vehicle for

development, the more critical becomes the behaviour of private investors. A

development model driven by foreign direct investment (FDI) puts greater significance

on the accountability of those multinationals.

ECLAC’s report on foreign investment in Latin America and the Caribbean notes the

sharp decline in FDI from 2000 to 2002. It looks at the different investment strategies

of multinational corporations and makes recommendations to national governments,

encouraging them to fashion their inward investment regime according to what type of

FDI they want to attract. In the early 1990s there was a rapid build up of foreign

investment to Latin America and the Caribbean, annual average FDI to the region

quadrupled during the decade (2003: 55). The net transfer of resources peaked in 1999,

when the region fell rapidly into an investment crisis, largely because offset against the

net, if declining, inflow of FDI was a growing outflow of finance (ibid.: 12). The region

was haemorrhaging capital, causing a strong downward pressure on national currencies,

making debt repayments in dollar terms proportionally all the greater. The investment

crisis precipitated a debt crisis. The countries of the region were suddenly caught in a

vicious trap, the meltdown in Argentina being only the most shocking example in a

chain of national crises. The economies are so finely balanced on the edge of collapse

that there is an overarching imperative to return to a net inflow of capital. Attracting

foreign investment is a cardinal feature of the new, globally competitive dependency.

While it recognises that the principal causes of the investment retreat was the collapse

in share prices and the economic slowdown in the United States, ECLAC advises that

governments in the South need to find ways of attracting FDI (ibid.: 18) The question

is how?

ECLAC’s answer is that governments need to understand the different multinational

investment strategies and tune their policies accordingly. Looking at the flows of

investment by industrial sector and sub-region reveals a number of patterns: in finance,

foreign banks share in the Latin America’s banking assets shot up from “10 percent of

total assets in 1990 to over 50 percent in 2001” (ibid.: 16); investment in extractive

industries was the primary form of FDI in the Andean countries; in Mexico, FDI


55

concentrated in manufacturing and financial services; and so on. The report

distinguishes three types of multinational investment strategy:

Efficiency-seeking. The MNC is seeking above all to reduce manufacturing

production costs. Efficiency-seeking firms have targeted Mexico, Central

America and the Caribbean (Export processing Zones and maquilas).

Raw materials-seeking. The MNC is in the extractive industry (oil and gas) or

minerals. These investments are capital intensive, long term and have few

linkages with local economies.

Market access-seeking. The MNC is seeking to enter manufacturing or services,

and may be aiming at national or regional market share, e.g. in automobiles.

Public utilities are a good example of how this strategy can be a pressure for

privatisation, e.g. electricity generation. (ibid.: 35 – 43)

In what the authors call foreign investment modalities, the report looks at the mixing of

these strategies in nations and sub-regions, with a special study of the Andes countries.

Lifting restrictions on multinational capital and removing regulations on its operations

were the conditions of the FDI inflow. The social consequences of these profound

changes in the macro-economic regime manifestly affect the quality of development,

rather than the quantity of FDI. These concerns have been increasingly expressed

through the language of human rights. There is however no human rights impact study

of FDI similar to that proposed by Cheru (1999) in the related case of structural

adjustment.

The notion of modality of foreign investment in any given country can be expanded to

include the human rights modality of its implementation. Returning to the central

theme of this study, the crimes of the powerful, there are theoretical aspects to consider.

Stated generally, the first concerns the mode of social domination that corresponds to

an FDI-attracting regime. Specifically, does the investment friendly climate require a

collusive alliance between the local state and multinationals that is permissive of crimes

of the powerful? This permissiveness could work in either direction, state collusion

with corporate crime and vice versa. The research question is what forms of complicity

are functional to the investment-attracting climate. Impunity from criminal conviction


56

may be considered as a competitive advantage. Thus we need to investigate under what

terms the local state treats as criminal socially harmful behaviour by multinationals.

And, from the other side of the relation, multinational corporations may well overlook

state criminality where it suits their interests. An alliance between parties in impunity

may exist. If so, such conditions appear to be highly criminogenic, with no protections

for the local population save its capacity to generate a counter alliance to defend human

rights.

The second theoretical aspect concerns the relationship between forms of foreign

investment and forms of human rights violation. Here I take advantage of ECLAC’s

approach of looking at corporate strategies, which provides a useful structure to

consider the human rights impacts of FDI in a differentiated way. Do certain

investment strategies lead to characteristic forms of human rights violation? Recalling

Dieterich’s notion that informal systems provide additional advantages to the already

privileged, these informal systems of corruption and extra-judicial repression are

extensions of the state. Could not corporate activity be similarly extended into informal

systems?

The Rights of Multinationals versus Human Rights - Global Solidarity and Regulation

Can crimes of the powerful be addressed through human rights discourse? There is no

alternative available. The confrontation today is between rights for multinationals

versus rights for human beings.

The last twenty years has seen a Copernican revolution in human rights discourse. The

centre of gravity is in the South. Simpson draws attention to the prevalence of what he

calls ‘export theory of human rights’:

“This may be put in a pejorative way: human rights were for foreigners, who

did not enjoy them, not for the British, who enjoyed them anyway. They were

for export. The export theory of human rights was and indeed still is shared by

all the major powers.” (2001: 347)


57

And yet in a world of Third World states hamstrung by the constraints of the

international financial institutions, and apparently powerless in the face of the

multinationals’ take over of their economies, the initiative has passed to social

movements and the NGOs connected with them. This alliance has come to play a

critical role in reporting and confronting the power of the multinationals. Battles over

the environment have been to the forefront, and challenging corporate crime has

become part of the confrontation. The new social movements are heterogeneous, yet

amongst them are those who have adapted nimbly to the new conditions, making use of

global information networks (Castells, 1997).

Boaventura de Sousa Santos argues there is an emergent universalist human rights

paradigm based on the social movements of the South, using the spaces provided by

world-wide information systems (1998: 224). This anti-neoliberal globalisation

constitutes a new paradigm, based on the right to development yet going beyond it. The

‘global solidarity’ paradigm is emancipatory, for it embraces

“the right to bring historic capitalism to judgement before a world tribunal.

Represented by the central capitalist actors (multinational corporations and

states), capitalism must be made responsible for its part of the blame for

massive human rights violations, occurring under the forms of massive misery,

cultural impoverishment and ecological destruction ” (ibid.: 235).

A new generation of intellectuals organically linked with the social movements has

begun to emerge as international protagonists of the global solidarity movement. One

of the outstanding voices is Vandana Shiva whose originality is that while most

previous discussion had been focussed on the various rights that may or may not be

ascribed to the given human subject, she draws our attention to the real content of

human. Non-humans have been granted rights. Shiva (2003: 89) portrays economic

globalisation as the globalisation of inhuman rights, that is rights for corporations. And

most human beings are not in fact recognised as fully human by the international power

structures: “Globalization has made the citizen disappear and reduced the state to an

instrument of capital” (ibid.: 90 ).

Galtung picks up this theme. Insofar as national citizenship has been eroded then the

concept needs to be reshaped as a claim on global citizenship, with its associated rights


58

and duties. “This will change the structure as well as the content of human rights;

making human rights less stato-cratic, more global and geared to human needs all over

the world” (1998: 227).

There is a clear move to make multinational corporations accountable, and yet they still

enjoy a remarkable degree of immunity from prosecution for their activities in Third

World countries. And they have been campaigning to embed further privileges in

international law. The campaign for inhuman rights, that is for international legal

protections for multinationals’ investments, first surfaced during the Uruguay round of

GATT trade negotiations. The project’s initial form was the proposed Multilateral

Agreement on Investment (MAI). MAI’s aims were “investment liberalization,

investment protection and dispute settlement” (Thomas, 1998: 177). Although this

particular initiative fell, the rich nation bases of multinationals have nonetheless

pursued the project relentlessly. The US succeeded in getting these rights for

multinationals consolidated into the NAFTA agreement. And the US has negotiated

similar terms in its bilateral free trade agreement with Chile, and the just completed

Central America Free Trade Agreement. Meantime a new version of the agenda is

being pushed by the GATS negotiations to give multinationals legally enforceable

access to services anywhere in the world.

Multinationals move capital from the First World to the Third World in search of

resources and extra profitability, the powerful states’ intervention can be instrumental

to their project. The orthodox human rights trend sees humanitarian intervention from

the powerful states as a means of realising universality. International human rights

NGOs usually lobby western governments to take action short of military intervention.

Nonetheless the full critique of this approach is that it is consistent with, and potentially

provides a cover for, imperial ambition. Social movements and supportive international

NGOs present an alternative mode of transnational humanitarian action. Their forms of

international solidarity rely not on powerful states, but on mobilising social groups to

bring outside pressure to bear on a given local situation.

But this mode of transnational solidarity action against the crimes of the powerful has a

number of problems. The first problem is that the emergent global solidarity movement

has had no clear, unified legal standard against which to hold the multinationals to

account. There is a multiplicity of norms and standards concerning the behaviour of


59

multinational corporations, and yet no agreed international regulatory regime. This is a

situation in flux, the debate between the “compliance school” and the “regulators” is

being played out internationally through the United Nations. In August 2003 the UN

Sub-Commission on the Promotion and Protection of Human Rights unanimously

adopted Human Rights Norms for Business, which draw together all the pre-existing

codes and standards (Amnesty International, 2004). The draft Norms were proposed to

the UN Commission on Human Rights for acceptance in March 2004, and were not

welcomed by most multinationals. There is a group of companies affiliated to the

Business Leaders Initiative on Human Rights supporting the draft UN Norms, but they

are a small minority (ibid.: 6). The main organ of British business, the CBI is lobbying

the government “to reject plans by the United Nations to make multinational groups

legally liable for human rights, including abuses by their suppliers and customers”

(Guardian, 2004).

The second problem is the close relationship between the First World states and their

multinational corporations. In the UK alliance between business and politics is well

advanced, indeed with a complicit home state, in the absence of independent regulation,

the ‘irregularities committed abroad’ are all too regular, that is to say, the normal state

of affairs, as Ruggiero (2000: 143) explains. He points out (ibid.: 156) that the

dominant class has learnt to conceal its affairs. It is precisely this secrecy that

internationally agreed norms and independent procedures to monitor multinationals

would put at risk. There are two broad alliances that are essentially either trustful or

mistrustful of the multinationals. Each alliance has its national and international actors

(and each alliance includes an academic representation).

The third problem with applying the human rights discourse to the multinationals is that

it is concerned primarily with improving the situation and does not address what has

brought it about. To take a prominent example from the literature, Risse and Sikkink

(1999) have suggested a ‘spiral model’ of transnational exchanges where international

bodies strive to influence the domestic government policy so that it respects and

implements universal human rights norms. The model assumes a positive direction of

events under international pressure, but does not analyse the causes of the violations

including the potential responsibility of international actors. This illustrates the limits of

a rights-based approach to studying the crimes of the powerful; it is geared towards


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advocacy rather than analysis, and as such tends to underplay connections with political

economy.

Summary and Limitations of Theoretical Approach

Summary of Theoretical Approach

The Marxist study of corporate crime does not negate Sutherland’s pioneering work,

nor other studies of that type, so much as reconceptualise them in a historical

materialist framework of conflict in capitalist society. From Pearce onwards, Marxist

studies of corporate crime have recognised an essential link both with the state and with

organised crime. This theoretical chapter has attempted to rework Pearce’s framework

as applicable to the modern Latin American state and society. From that starting point I

have tried to construct a conceptual basis for studying the crimes of the powerful in

Latin America.

Colombia has been approached as part of Latin America, from the standpoint that the

principal theoretical constructs for understanding the crimes of the powerful in

Colombia are drawn from common experiences and shared intellectual debate covering

the continent. The task has been one of conscious recovery of a theoretical approach:

the dependency school’s encounter with underdevelopment, to build on that with

Marxist observations on corruption and repression as illegal forms of class rule; and to

integrate them with a view on globalisation and new lines of thinking on human rights.

Limitations of Theoretical Approach

The analysis has been social-relational rather than ideational or behavioural. As the

phenomena of the crimes of the powerful are studied, this risks being an artificial

limitation to understanding. The case studies are examples of the criminalisation of

social protest. Thus far the theoretical basis for the propositions is not Colombia-

specific. There remains the issue of understanding the internal dynamics, the

Colombian reality of and for itself. Just as Latin America has contributed dependency

theory to social science, so Colombia has contributed theories of violence, which will

be considered in Chapter 4.


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Chapter 3: Methods and Scope

Ontology – Antagonistic Interests in a Conflictive Society

The Nature of the Reality under Investigation

Colombian society is deeply conflictual: there is not so much a breakdown of standards

as a total clash of worldviews. It is not even agreed where the division lies. The state

presents the line of division as being between democracy and terrorism. This places the

majority of society with the state. But this definition of Colombia’s problems as a

society is not a shared one, and is rejected by the social movements. Their alternative

statement of where the line of divide runs is broadly between those who are in favour of

a new wave of neo-liberal capitalism and those who are against it. This definition

places the majority of society against the state project.

Behind these two definitions lie contending assumptions about the fundamental

character of Colombian society. In the former view, criminal actors are preventing

capitalism from providing society with the economic growth it needs to deliver

development. In the latter view, capitalism has generated underdevelopment, social

injustice and conflict, and its dominant class depends on violent, anti-social methods to

contain the popular response.

This study analyses the crimes of the powerful in conjunction with a critique of the

neo-liberal project in Colombia. It will look at forms of collusion between the

multinationals, the state and Colombian ruling class. The sponsors and beneficiaries of

the neo-liberal capitalism have material interests and security demands that they are

seeking to impose on the oppressed and society as a whole.

Alternative Approaches to Researching Corporate Crime

The close connection between assumptions about corporations, counter-posed between

the trusting and the sceptical, obliges an early fork in the road when it comes to

research methodology. The World Bank’s business survey on corporate social

responsibility is a prime representative of a methodology consistent with the trusting

approach. The research was commissioned to explore two issues “(a) how corporate


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social responsibility (CSR) issues influence the investment and purchase decisions of

multinational enterprises (MNEs) around the world and (b) how governments in the

developing world can create environments that companies will find attractive from a

CSR perspective” (Berman and Webb, 2003: 1). The commission was to formulate the

corporate view on corporate responsibility. Accordingly the research method was by a

survey of multinational corporations themselves (ibid.: 7). The research relied entirely

on access and co-operation from the multinationals and took no input from critical

social respondents.

By contrast, research into corporate crime based on sceptical assumptions has from the

beginning encountered difficulties of access and publication. Co-operation can be

withdrawn at any time. Famously, Sutherland had to engage in protracted battles to get

the names of the corporations in his work published. For most critical research of

corporate crime the issue of co-operation is encountered at an even earlier stage. One

researcher cites his experience of conducting a study on the oil industry, where access

was granted by a state body only to be blocked mid-project, once he reported interim

findings that did not fit in the official view (Whyte, 2000).

In their study of corporate responses to bad publicity, Fisse and Braithwaite relied on

access to corporations in US and Australia. The authors only reported on cases where

they had cooperation of corporate executives. Out of 25 selected corporations, eight

did not co-operate. Since their case study methodology relied on access to corporate

executives, the eight non co-operators did not appear in the findings. Of the 17 that did,

two withdrew their co-operation (1983: 4).13

Access problems are compounded when the scope of research area is expanded to

include the issue of state crime. Researching the powerful is a difficult enterprise when

conducted in the face of opposition from the state. This issue becomes acute when

researching the state itself. Hughes reports that researchers into the operations of the

South African police in the days of apartheid had to rely largely on newspaper reports,

because direct investigation of police practices was defined as “as beyond legitimate

public concern and, thus, beyond academic inquiry” (2000: 236). Huggins reinforces

this point when she writes of the problems that Latin American “scholars and human

13 Two of the companies that did not co-operate in the study - Occidental Petroleum and Nestlé - are also major corporate players in Colombia.


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rights workers face when conducting research” on questions of distributive justice,

human rights and crime: much of the information is not publicised; and “much social

science research in Latin America is politically dangerous” (1991: ix-x). Both these

observations are remarkably evocative of official culture in Colombia today.

There is one other potential research avenue: the crimes of the powerful include the

notion of a powerful class, as well as corporate criminality and state crime. Another set

of methodological issues arises with identifying and analysing the powerful class, as

demonstrated by Zeitlin and his co-workers in research in Chile in the 1960s. The

research used official records to cross map company registers to family kinship

patterns, revealing the definition a small number of determinant socio-economic

capitalist groupings (Zeitlin and Ratcliff, 1975). A similarly sharp, detailed and

contemporary mapping of the powerful in Colombia is a serious lack in the literature,

and lies outside the scope of this research.


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Epistemology - Campaigning Practice and Critical Criminological Theory

Standpoint Epistemology

One way out of the impasse is to adopt the theory of knowledge called ‘standpoint

epistemology’. Hudson argues this to be important for critical criminology that it

“is linked to campaigns on behalf of the powerless, such as prisoners' rights

campaigns ... Critical criminology has espoused the standpoint of minority

ethnic groups, of the poor and marginalized and, of course, women.” (2000:

183)

And she highlights the method of feminist criminology that ‘asks the woman question’,

i.e. how ideologies, strategies, policies, and theories affect women. The approach taken

here is to seek to adopt the standpoint of victims of crimes of the powerful. It is not

literally to ask ‘the working class question’ as these victims also include the peasantry.

At risk of clumsy expression, the point is nonetheless to ask ‘the oppressed classes

question’. This question must interrogate the practices of the powerful as well as their

ideational justifications. In other words the approach must serve beyond critique of the

dominant paradigm, passing to substantive research in the new paradigm.

The importance of NGOs and Social Movements

In his manifesto for a ‘green criminology’ South (1998: 445- 450) calls attention to the

importance of NGOs and social movements in tackling multinational corporate time.

This strand has become even more significant, such that one could even consider

critical criminology as having a natural place as the academic reflex of these

movements. Similar issues have been addressed in Pegg and Wilson’s assessment of

NGO report on the private sector role in Africa. The NGO reports reviewed are based

on field research, and “many of them excel at presenting complex security and political

economy causal arguments in succinct and lucid fashion” (2003: 1181). The NGO

reports differ from academic research on these topics in two respects: they have a

policy oriented purpose, often with explicit policy recommendations, while academic

research is much more concerned to “analyse ideas rather than effect policy change”

(ibid.: 1183); and they tend to enter into more detail than academics who, “with their


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focus on theoretical innovation, find such attention to detail positively detrimental to

the construction of theory” (ibid.: 1183). The reviewers conclude, “while academics are

now paying attention to how NGOs influence world politics, they could also benefit

from engaging their research more directly” (ibid.: 1180).

Concern with the Victim

This doctoral thesis is in an important respect victim–centred, occasioning an

interesting twist to the debate on the ‘new criminology’ and ‘left-realism’. This study

shares new criminology’s impulse

“to treat the victims and potential victims of crime as an important and crucial

voice that urgently requires a democratic hearing in the development of crime

solutions.” (Walton, 1998: 12)

This does not entail insisting that “all crimes are the product of the powerful” (ibid.:

11), but it does mean taking the victims’ claims against the powerful seriously,

including an evaluation of whether the victims have been denied a democratic hearing.

The conditions under which democratic hearing is denied may itself become a vital

focus. If the crimes of the powerful cannot be redressed through democratic process,

then there are profound consequences for crime in general. Arguably, the denial of a

democratic hearing in such a society provides slender purchase for ‘left realist’

criminology to engage constructively with the state in seeking victim-led solutions.

It is also important to retain the concept that unleashing of market forces as per neo-

liberalism’s generation of an exclusive society may itself be a criminogenic process. As

Currie observes there is a curious schizophrenia that “celebrates the causes” but

“deplores the results” of the ensuing problems (1998: 131). Such schizophrenia is not

confined to the United States, it has achieved a truly paranoid degree in Colombia.

This thesis is in large part a theoretical reflection of social movement initiated activity

that the author has also been engaged in as Secretary of the Colombia Solidarity

Campaign. The combination in one person of these two forms of relationship to the

material should not in principle deny the validity of the theoretical observations. From a


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critical perspective, practical engagement should enhance the relevance of the

theoretical questions being addressed.

Unusual Gatekeepers - Research in a dangerous environment

The principal gatekeeper was the Human Rights Department of the CUT, Colombia’s

biggest trade union federation, through whose offices contact was received from

lawyers representing peasants displaced by oil pipelines, and the trade union

SINALTRAINAL. In the case of SINTRAEMCALI, access has been through the

union’s president, who had to seek short-term refuge in the UK following an

unsuccessful assassination attempt against him in 2000.

Between January 2001 and December 2002, approximately the period of the main

fieldwork for this study, three hundred and eighty trade unionists were assassinated in

Colombia (ENS, 2004). One indication of the dangerous climate in which the fieldwork

has taken place is the circumstances of the principal gatekeepers. The former Director

of Human Rights at the CUT is now living in exile in Australia, due to persistent death

threats. The current post-holder’s personal security is similarly precarious, as he and his

family “continue to be victims of constant death threats and a supposed plan to

assassinate me” (Tovar, 2004). The principal gatekeeper for the pipeline case study is a

lawyer who now lives as a refugee in the UK due to the persistent death threats against

her (Lennard, 2002). The former president (since elected as a Congressman) and

current president, as well as the Human Rights Director of SINTRAEMCALI, the

public utility workers union that is the focus of the second case study, have all survived

assassination attempts. The leaders of SINALTRAINAL food and drink workers union,

principal respondent the third case study, operate under similar conditions. Most of the

respondents who are trade union leaders live in a special protection regime, constantly

under armed guard.

Through working with the social movements, the researcher entered this environment,

albeit as a short-term visitor. On one occasion, death threats were telephoned to the

researcher’s London home shortly after his departure to travel to the penultimate field

trip. These circumstances approximate to the discussion by Raymond Lee on doing

sensitive research, for which he offers the simple definition “research which potentially


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poses a substantial threat to those who are or have been involved in it”. This does not

quite meet the current case, as here the threat is already present independent from and

prior to the research. Lee also draws attention to circumstances where research

impinges on political alignments, “if ‘political’ is taken in its widest sense to refer to

the vested interests of powerful persons or institutions, or the exercise of coercion or

domination.” (1993: 4), which does meet the current case. Is it sufficient, though, to

formulate the issue as ‘research as threat’ under this circumstance? In the case studies

the research subjects were already under threat and are seeking public exposure of their

situation. The question still arises; will doing the research increase the risks for those

involved? There is the possibility that the doing of and publication of the research may

reduce the risks or otherwise alleviate their situation. In a broader sense that is what the

victims are seeking through forms of journalism, legal preparation and public lobbying.

In other words the respondents are not simply victims, but victims who are formulating

a sophisticated response to their victim status.


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Research Design

Levels of Analysis

Pearce’s contribution was a theoretical comment on Sutherland’s primary research.

Their unit of analysis was different, Pearce focused on interactions between state and

society in order to provide a reinterpretation of Sutherland’s mid-range conclusions at

the level of corporation and industrial sector.

In a field absent of primary research upon which to reflect, the research for this thesis

has engaged in primary research at the level of corporation whilst at the same time

proposing a theoretical construction of the state and society.

The socio-economic impact of globalisation is distinguished at two levels of analysis.

Most clearly there is the macro-level, since 1990 governments have worked in a

framework of neo-liberal policies: open markets, privatisation, labour casualisation.

The emphasis is on process. The link between globalisation and human rights violations

is examined at the systemic, macro or state level. Secondly, at the micro-level the

research will consider particular enterprises, viz. multinational and state corporations,

and the way they conduct their operations. The emphasis is on the specific entity

within the process. There is potentially a third level of analysis, the sector, but a

rigorous analysis at this level lies outside the scope except insofar as the individual case

studies also discuss sector factors, especially the legislative framework.

The central question is problematic, because of the possible consequences, legal and

otherwise, of the research results: how are multinational corporations involved in

human rights violations in Colombia? At this most concrete level, there is an issue of

the validity of qualitative data supporting a causal connection. One might express this

as the presentation of data that passes the test of legal evidence, which is direct proof of

culpability.14 Corporate responsibility is not the same as corporate culpability however.

Data that indicates responsibility will be treated as valid. There are other tests, such as

correlation or patterns of coincidence between human rights violations and powerful

economic interests. Indeed, the absence of legal evidence for phenomena which

otherwise demonstrate strong logic of inter-connection could itself be an indicator of

systematic suppression of evidence.


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Quantitative Data Sources Not Available

Sutherland applied a combination of quantitative and qualitative methods to his

research of corporate crime. His survey of the statistical record looked at officially

recorded decisions on 70 corporations. This was supplemented by three case histories

and an analysis of the recorded law violations of 15 power and light companies.

Clinard and Yeager used similar methods, with a special case study of the oil industry.

There is no equivalent official source of corporate or white-collar crime quantitative

data available for this research. The quantitative data that is available is on the pattern

of human rights violations, although there is significant disparity between statistics

from official sources and those collated by the NGOs. NGO supplied human rights

statistics are an important data source concerning the phenomenology of human rights

violations.

Consider first the availability of quantitative data sources. At nearly 80 homicides per

100,000 population per year, Colombia’s homicide rate from 1990-94 was over six

times higher than the average for Latin America and the Caribbean, and ten times

higher than the world average (Fajnzylber, Lederman and Loayza, 1998: 12-14). The

World Bank study from which this figure is taken adopts an economic individual

rational choice model to explain crime and makes no reference to either corporate

crime or state crime. The unit of analysis is the individual aggregated to national scope.

Nor are there any quantitative data sources on corporate crime referenced in the same

authors’ follow up guide for researchers of the causes of crime and violence

(Fajnzylber et al., 1999). This last study does distinguish between victim surveys and

official crime statistics, noting of the latter that “reporting (and recording) problems in

some of the countries included in this project are so problematic that this type of data

set has many problems”(ibid.: 1).

Official Colombian statistics on political homicides are of poor quality, as recognised

by a recent study that gives a broadly pro-state interpretation yet nonetheless developed

a data set based on inputs from two non-state sources: the Church affiliated human

rights NGOs, supplemented by newspaper reports (Restrepo, Spagat and Vargas, 2003:

14 although the test standard is different in criminal and civil law, and in different jurisdictions.


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9). The independent, victim reporting data collection methodology developed by

CINEP/Justicia y Paz (2004) is based on a theoretical foundation, which owes much to

the ideas of liberation theology.

Another relevant example, the most reliable data source on the assassination of trade

unionists in Colombia is the Escuela Nacional de Sindicatos (ENS), an NGO which

compiles all figures provided from the CUT and other trade union federations, as well

as individual unions (ENS, 2004). Data collection is again victim reporting through

affiliation to a trade union organisation. The relatively high degree of formal

organisation of trade unions (membership subscriptions, elected executives, minuted

meetings etc.) compared to other social movements probably leads to a higher

proportion of human rights violations being reported from this movement. Nonetheless

there is under-reporting of violations against trade unionists, especially those that do

not cause a loss of life. The probable explanation for this is intimidation and the

victims’ fear of reprisal. The public denunciation of human rights violation cases

indicates a particular political culture of defiance that is not always present.

There is no corresponding NGO data bank to CINEP/Justicia y Paz or ENS collecting

data on corporate crime in Colombia. Sutherland’s work was based on court recordings

and data from other official reports of corporate misdemeanours. Commenting on the

difficulties of obtaining quantitative data on safety crimes from official sources in the

UK, Tombs warns against “advocating qualitative work only when quantitative efforts

become overly problematic” (2000: 77). In principle, it may be possible to acquire

quantitative data on corporate crime in Colombia, although the difficulties involved and

risks for the researcher are likely to be extremely grave. It would be proper for the sake

of completeness to investigate what official data sources there are available on

categories of corporate crime, the risks notwithstanding.

The approach of this research has been to take primary qualitative data from the victims

and seek to verify it against corporate and/or official state accounts that are in almost

every respect conflicting. There is no avoiding that protagonism permeates the victims’

accounts, they have a fundamentally accusatory character. This approach is not

innovative; it is often used in both investigative journalism and by NGOs. Its use in the

study of corporate crime in Third World countries is probably indispensable. A good


71

example of the type is Gagnon and Ryle’s investigation of oil development, conflict

and displacement in the Western Sudan. The Talisman oil corporation had previously

commissioned its own ‘independent’ study, carried out by a consultancy firm, which

Gagnon and Ryle argue appeared “to be unacquainted with the basic literature on the

ethnography and rural economy of Western Upper Nile and the history of the civil war”

(2001: 7). The investigators argue that the only way to obtain independent knowledge

of the oil corporations’ activities was to use an alternative approach, they base their

work on “interviews with local inhabitants and displaced persons” in the oil producing

areas, supplemented by discussion with other social and political actors. While such an

approach can be depreciated as expressing an inherent ‘anti-corporate’ bias, this is not

so by definition, as recognised by Wilson and Pegg (2003: 1185). The principal

alternative, to gain access via the corporations, is even more susceptible to pro-

corporate bias.


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Case Study Methodology

Case Study methodology is a research strategy that is well suited to the in depth

investigation of a limited number of cases in their natural setting, focusing on

relationships and processes, and using multiple methods (Denscombe, 2003: 31), all of

which apply to this research.

Historical Context and Case Studies

The case study methodology adopted provides a historical context that also gives the

specific theoretical orientation to the case studies, as suggested in Yin (1994: 3-11).

The introductory chapter addresses theories of violence and dependent development in

Colombia, and then evaluates them in the context of the conflicts and crises of the neo-

liberal 1990s. This discussion draws on specialised Colombian literature, much of it

from NGOs and social movements. The contribution aspired to “is to focus on the

social preconditions of crime”, to address “the social-structural causes of crime” (Jupp,

1989: 10-11). Except that here we are considering the phenomenon of violence as

distinct from crime. If we are to interrogate the social-structural causes of violence then

at least a working definition is needed. I adopt the definition that states that violence is

“a specific form of human interaction in which force produces harm or injury to others

to achieve a given purpose” (Franco, 2003: 2-3). Note that although in this conception

violence leads to psychological as well as physical damage, damage is not itself the

purpose of the violence. In this view, violence is intentional and goal directed - it is the

instrumental means rather than the end itself. Thus, even where complex, violence is

not senseless but subject to rationality in its forms and aetiology. The purpose of the

chapter is to address the ‘why’ research questions. Why is there so much violence in

Colombia? Why is there impunity for the crimes of the powerful? Why is state policy

so geared towards attracting foreign direct investment?

The second, main section consists of three case studies, and is concerned with

investigating the conditions of variability of corporate crime. There is considerable

overlap between the historical and the sociological. The section’s emphasis is on

addressing the ‘how’ and ‘what’ questions. Specifically how does corporate crime vary

with investment strategy? What consequences does the state’s eagerness to attract

foreign investment have for human rights? A rights-based approach that is led by the


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experience of the local social movements as distinct to than the managerial concerns of

the multinational, as is most often found in the Corporate Social Responsibility

literature – for a good example of the managerial approach to human rights see Sullivan

(2003).

Case Study Selection

The use of case studies is well established in criminology and in analyses of corporate

crime (Hammersley, Gomm and Foster, 2000). The pilot started with two reported

incidents, one concerning peasants displaced due to the impact of an oil pipeline, and

the other a trade union fighting privatisation. The two cases were originally selected

primarily because of respondent availability rather than necessarily being representative

of their type. Access was the determining factor. In this sense the initial case selection

was arbitrary. Although in another sense the case studies selected the researcher rather

than the other way round, all three cases studied in this thesis spring from social

movements that were already actively seeking solidarity and dimensioning their

activities towards obtaining international support.

The theoretical framework for the research of different investment strategies was

adopted subsequent to the pilot fieldwork visit. The two initial cases were

retrospectively considered as examples of the different forms of FDI strategy, ‘raw

materials seeking’ and ‘market access seeking’ respectively, as formulated by ECLAC.

A third case study was then sought to exemplify the ‘efficiency seeking’ strategy – see

Annex Table 3.1.15

15 As can be seen from Table 3.1 the selection is incomplete, there is no example case study of the FDI strategy seeking market access through a multinational corporation acquiring a local corporation. There are historical examples of this case, but none appeared during the time period of the main research (2001-early 2003).


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Relationship of Case Studies to Theory Construction

The methodology tries to overcome the limitation of atypical selectivity by comparison

with known similar cases in each sector, to assess how representative the case is. The

cases tend to be typical in the experiences for their sector but atypical in the profile of

their response, which has indeed been sufficient to draw international attention.

The overall theory construction is to look at the inter-penetration of state and corporate

strategies, e.g. under what conditions their strategies reinforce or contradict each other.

The case studies will build a cumulative descriptive picture of corporations and human

rights in Colombia. Through induction they will also be used to construct a theory of

the conditions under which investment strategies will tend to increase human rights

violations. This is thus a procedure to construct a conditional theory of crimes of the

powerful (on this see Hammersley et al., 2000: 251).


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Data Collection

Fieldwork

There have been seven field trip visits to Colombia, on three occasions as part of a

solidarity delegation. This circumstance provided greater access, through group

sessions followed up by semi-structured interviews, but has caused no discernible

variation in the respondents. The interim report of the first of these delegations is itself

a research document (Colombia Solidarity Campaign, 2001).

The principal disadvantage has been lack of immersion in a social reality that would

have been obtained by a prolonged visit. The advantage has been that the 8 weeks of

fieldwork have been spread over two years (see Annex, Table 3.2), allowing for the

processes to be followed rather than a simple snapshot view being taken.

With one exception, the fieldwork is geographically situated in Colombia’s three major

cities. This limitation was partly due to time and money constraints, but principally for

security reasons. Remote areas are generally more complicated from the security

viewpoint. And rural respondents are much more nervous about speaking. Rural

fieldwork usually takes longer to set up, as found by Gagnon and Ryle who report 36

days were needed in East Africa to fix a 14 day trip in the field study zone (Gagnon and

Ryle, 2001: 10). The only field trip into a rural area, the pipeline zone, required a

similar time overhead – 7 days to fix a 2-day trip. The limitation of not doing more

research in rural areas, smaller cities and towns is partially offset by interviews with

respondents in the cities who have suffered displacement from those areas.

Additional interviews have been conducted with respondents visiting the UK in an

advocacy role as part of the ongoing interchange. Follow up visits in Europe assisted in

developing various aspects of the research project, as summarised in Annex Table 3.3.

The Interviews


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There have been three types of interview: individual interviews, group sessions, public

speeches or interviews for publication. The individual interviews were open ended.

The interviewees are generally very articulate, treading a shifting boundary between

individual biography and common experience. Although expressed through individuals,

a strong sense of collective identity comes through; they are an expression of ‘popular

memory’ in action (Chamberlayne, Bornat and Wengraf, 2000: 5). The respondents are

also often consciously political, commenting on the particularities of experience as

illustrative of a broader reality. That is, they combine social and political responses. In

that sense one can say that the interviews capture a political expression of the social

movement. Only with the displaced peasants in the pipeline study, who are much more

centred on their specific experience without formulating it in terms of process, was this

not the case.

The group presentations occurred as a function of the Colombian social movement’s

decision to invite solidarity delegations. The meetings hear from several to scores of

presentations from different unions and social sectors that are translated for the visitors,

with the intention of providing a democratic hearing of concerns. A high proportion of

the material recorded here has not been transcribed, in the first place because the sound

quality is generally poor. But apart from that there was a tendency for the contributors

to converge and repeat. Nonetheless these sessions were invaluable for sensitising the

researcher to the principal themes and provided the opportunity to follow up individual

cases. A selection of the group sessions has been transcribed in order to provide

thematic analysis.

The public speeches or interviews for publication constitute a third type. They were

mostly given while the respondent was on a visit to the UK in a public, representative

capacity.

In the two case studies based on trade unions there were considerably more male

respondents than female, reflecting the gender imbalance in membership. Women are

more often members and representatives of community based organisations. The

gender dimension of the (male) trade union and (female) community alliance is a

feature of the SINTRAEMCALI case study.


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The interview transcripts were analysed to produce a thematic matrix that was used to

feed themes into the case studies. All interview records, tapes and transcripts are held

securely and in confidence.

Documentation and Materials

Evidence collection on the field trip included considerable numbers of documents and

some audio-video material. In addition the researcher has received correspondence and

electronic Urgent Actions from the respondent social movements. Details will be given

in the Reference chapter of primary sources by case study.

Validity and Reliability

Multiple sources of evidence are used in the case studies. The principal source of

primary evidence is identified as the social movement involved in each case. The data

sources are mostly interviews and documents, and occasional field notes. Internal

validity is addressed by comparison between these sources. External validity is

addressed by comparison with interviews and documents received from other trade

unions and social movement actors, as well as secondary sources.

Following good practice to maintain reliability, as advised by Yin (1994: 94), for each

case study there is a database of all evidence collected in the study, only a subset of

which appears in the reference chapter. In the presentation of the case studies,

reliability is demonstrated by full referencing to the primary materials to maintain the

chain of evidence (ibid: 99).

Verification

Interim results, which are in summary before final write up, have been presented to the

principal social movements in each of the case studies. In the two case studies where

allegations are made against named corporations, the author has presented the

allegations to the corporations for verification. In both cases the corporations have

strongly denied the allegations in minuted bilateral meetings, as also in the public

domain. The denials are in the substantive essence rather than detailed refutations, and

themselves form part of the primary materials for analysis in these two case studies.


78


79

Ethics and the Role of the Researcher

Ethics are at all times fundamental to this research, in its motivation and conduct.

Role of the Researcher

The researcher works as a volunteer for a solidarity organisation that assists trade

unions and NGOs in Colombia. While starting from a different social position and

different national identity, the researcher shares many values with the respondents,

starting with a commitment to campaign against social injustice. The author is thus

playing two roles, one as a researcher and another as a campaigner.

My research approach seeks to satisfy the ‘rules of engagement’ highlighted by Tombs

and Whyte (2003: Chapter 13): for a political economic analysis that challenges neo-

liberal assumptions; bring the state into the analysis; go out of the “ivory tower” to

acquire knowledge and disseminate it; and for a “partisan objectivity” connected with

social movements. In regard to partisan objectivity, (Truman, Mertens and Humphries,

2000) discuss research on inequality and present arguments for an emancipatory

research paradigm through the lens of the researcher- participant relationship. They

introduce the idea of empowering research as an approach within the paradigm as

follows:

“'ethical research' -research on; 'advocacy research' - research on and for; and

'empowering research' - research on, for and with. The additional 'with' implies

the use of interactive or dialogic methods, as opposed to the distancing and

objectifying strategies positivists are constrained to use.” (2000: 3)

The empowerment is of the subjects/victims through their participation in the research

process. Reflecting on this I would locate my own approach as somewhere between

‘advocacy research’ and ‘empowering research’. The research is perhaps more ‘on, for

and alongside’. The participation of the social movements has been real, but there is not

a direct interactive feedback. And while much use is made of interview materials, the

case studies do not claim to be ethnographic or ‘dialogical’ studies16. There is not a

direct identification between me as researcher and the participant, but a division of


80

labour. The relationship is mediated through conscious co-operation on appropriate

solidarity activity. As researcher/activist I am not seeking to facilitate a change in the

social movement participants, rather in behaviour and consciousness in my society. The

purpose is for them in turn to defend their human rights and gain a fuller democratic

hearing: that is, to empower the participating social movements.

Language

The fieldwork interviews were conducted in Spanish. The researcher has taken every

effort to reach an adequate level to respond appropriately in the interview sessions.

Transcription of interview tapes is mostly in Spanish, and was carried out by

Colombian Spanish speakers to ensure understanding of accent and idiomatic phrases.

Some of the interviews were written directly into English for publication.

The literature is in Spanish as well as English. Primary documents related to the case

studies are mostly in Spanish, their interpretation takes account of their purpose and

authenticity, as well as social and cultural context.

All direct quotes from the interviews, literature and documents are included in English

in the main text, with original Spanish as a footnote and checked by the researcher’s

second supervisor, who is a specialist in Latin American Spanish.

Responsibility to University

There is a clear responsibility to cross check and confirm any specific allegations of

human rights violation and support statements of causality. The University will publish

the doctoral thesis into the public domain; hence any statements about any specific

corporate entities or individuals will be within the laws of libel.

Responsibility to Respondents

Particular care is given to protection of the interview respondents. Much of the existing

primary research on human rights violations has been conducted by Colombian NGOs,

many of who have as a consequence been victimised.

16 This is an appropiate methodological choice, taken by my colleague Mario Novelli (2003,


81

There are four classes of respondent. The treatment of their anonymity and

confidentiality is differentiated according to their class.

i) Public Victim Representatives. A small number of individuals who are

internationally recognised representatives of NGOs, trade unions or social

movements. They are experienced as public representatives and are in general

already at risk because of their role. Most of these interviews have already been

published with the full permission of the respondent. The respondent has

travelled to the UK or Europe on a public advocacy mission. In these cases the

name, organisation and their position is recorded. 10 cases.

ii) Victim Representatives and Individual Victims. Representatives of NGOs,

trade unions or social movements whose members are victims of human rights

abuses, or victims selected in the context of case studies. (Representatives of

these movements are also victims). In these cases the respondent is anonymous

and they are role classified, e.g. displaced peasant, union member. Thirty two

individual cases plus approximately forty contributors to group discussions.

iii) Professional specialists. A very limited number of individuals with expert

professional knowledge were interviewed. Three were professionals practising

in their field rather than academics. In these cases the respondent is anonymous

and they are role classified, e.g. labour lawyer. 4 cases.

iv) Organisation Representatives. There have been meetings with officials

representing organisations and corporations, at which the victims views have

been presented and a response asked for. Meetings are minuted, e.g. meeting

with BP Exploration Colombia. Attendees are named and identified in their

official position. 4 cases.

2004)


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Annex to Chapter 3

Table 3.1 Investment Strategies, Sectors and Cases

Investment Strategy

Raw Materials Seeking

Market Access Seeking – Public to Private (Privatisation)

Market Access Seeking – Private to Private

Efficiency Seeking

Industry Sector Oil Public Utilities - Soft Drinks Case C1: ODC /

OCENSA Pipeline

C2: SINTRAEMCALI and corruption

- C3: SINALTRAINAL dispute with Coca Cola

Related Cases Caño Limon Pipeline; production operations

EPM, Telecom, ETB, Atlantic Coast

- Nestlé; other soft drinks

Related Industry Sector(s)

Mining Other privatisations - Food processing; breweries; other private industry

Table 3.2: Summary of Fieldwork Visits to Colombia Date No of

Days

Purpose Location Results

Bogotá Social movement contacts Medellín Established contact with lawyers

and initial meeting with displaced peasants in Medellín.

February 2001 10 Pilot: evaluate feasibility

Cali Social movement interviews 10 a) Pipeline

Fieldwork Medellín, Zaragoza

Field trip to displaced peasants in Monravia, field trip to pipeline area

September – October 2001

10 b) Delegation to SINTRAEMCALI

Cali Observation and interviews focussed on community links, EMCALI internal processes.

March 2002 7 Delegation to SINTRAEMCALI

Cali Interviews on outcomes of occupation.

December 2002 7 Public Hearing on Coca Cola

Bogotá Interviews with SINALTRAINAL. Contact with Observatory on Multinationals and Human Rights

February 2003 4 a) Delegation to USO oil workers

Bogotá

Presentation of national human rights scenario with new government.

3 b) SINTRAEMCALI

Cali Observations

March 2003 7 Confirmation Cali Materials on corruption. June 2004 10 Presentation Bogotá,

Cali


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Table 3.3: Supplementary Visits in Europe Date No of

Days

Purpose Location Results

October 2002 2 International Public Hearing on Coca Cola

Brussels Established contact with SINALTRAINAL

November 2003

3 European Social Forum

Paris Two presentations given. Intellectual location of Colombia in Latin American developments

November 2003

2 International Tribunal on South Bolivar

Paris Consultation with Colombian experts. Materials on South Bolivar

Table 3.4: Interviews Summary Case Individual

Male

Individual

Female

Total

Individual

Group

Session

C1 Pipeline 2 3 5 1 C2 SINTRAEMCALI 12 2 12 1 C3 Coca Cola 7 1 8 1 General 13 7 18 2 Totals 34 13 4317 5

17 The discrepancy between the sum of individual male and individual female, and total individual is due to small groups of two or three individuals.


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Chapter 4 Introduction to Case Studies

This chapter introduces the specific context of the case studies through reviewing the

main theoretical approaches to the social and political violence that is one of

Colombia’s foremost characteristics, and outlining the particularities of the neo-liberal

project in the country.

Theoretical Approaches to Social and Political Violence

Analysing violence as a single category is problematic. As we have seen, del Olmo

identified four types of violence as characteristic of the Latin American reality:

individual violence; institutional violence; structural violence and revolutionary

violence. She argued that while orthodox criminology considered only individual

violence and revolutionary violence as illegitimate (and hence legitimate objects of

study), critical criminology must address the determinant factors of structural violence

reinforced by institutional violence. This gulf in theoretical approach is apparent in the

study of violence in Colombia, where its very contextualisation is the subject of a

polarised debate. Two schools of thought have evolved from the sociological study of

violence per se; one that treats violent phenomena as forms of criminality, and one that

considers violence from a human rights discourse. At first sight the first approach is

more concerned with agency, and the second more with structure. Both schools do

however take account of these factors. It is rather that their explanations of the

economic rationale and instrumentality of violence are profoundly different.

‘Violentology’ and the Sociological Tradition

Since in Colombia violence is a predominant phenomenon, it follows that the study of

violence has become a specific theoretical challenge. From the outset the sociological

study of crime was eclipsed by the study of violence, and 'violentology' is even termed

a field of study. The inter-disciplinary La Violencia en Colombia was the first study of

the historical period known literally as “The Violence” that claimed over 200,000 lives

from 1946 to 1958. The report was commissioned by the government and published in

1962 and 1964. It is largely descriptive of the forms of rural violence. The principle


85

modalities - the inter-party political violence between Conservatives and Liberals, and

regionally diverse patterns of conflicts over land – intertwined with a complexity that

has generated considerable debate. As Peñaranda (1992: 299) states, this effort was not

only the first attempt at a scientific study of the phenomenon of violence, it was a

seminal project in establishing sociology as a discipline in Colombia.

Different interpretations of the Violencia have a bearing on understanding the current

cycle of violence. Interest shifted from sociology to political science and the

institutionalist school, whose authors focus on the interplay between the civil war and

political processes, concluding that the institutional weakness of the Colombian state is

the cardinal issue (Oquist, 1980; Pécault, 1987; Sánchez, 1992; González, Bolivar and

Vázquez, 2003).

A second foundational work, again commissioned by the government, Colombia:

Violencia y Democracia was carried out by Gonzalo Sánchez and a larger team of

social scientists. This study addresses the new cycle of violence that started at the end

of the 1970s. The diversity of violent actors is striking (1987: 20-21). The overall

tone is that intolerance and social injustice were major causal factors, and the core

policy recommendations are for reconciliation and reform. Violencia y Democracia

points out that socio-economic violence does not only come from the lower orders, it

highlights practices such as fraud, the misdirection of funds, organised crime and other

‘white-collar crimes’. With regards to socio-political violence, the report is frank

(remarkably so given its official provenance) in criticising the state’s militarised

treatment of non-violent social movements. Socio-political violence arises from efforts

to achieve full participation being blocked by an exclusive political system. The report

advocates “a democracy without frontiers that would permit the civilised resolution” 18

of socio-political contradictions (ibid.: 23). This notion of a ‘democracy without

frontiers’ resonates with implied meaning. Recalling the earlier discussion, in the 1970s

and 1980s the US was very concerned to impose limits on representational democracy

in Latin America to avoid repetition of Allende’s Chile or any such experiment towards

social justice.

18 “Sin embargo, las contradicciones en lo sociopolítico no tienen por qué pasar necesariamente, a causa de una especie de atavismo belicoso, por la confrontación violenta. Una democracia sin fronteras permitiría resolverlas civilizadamente.”


86

The Violencia y Democracia report testifies to the impact of this US policy pressure, it

identifies President Turbay’s alignment with US president Ronald Reagan as a

determinant factor in triggering the new round of political violence. Reagan’s fears that

the Sandinista victory in Nicaragua and the rebel offensive in El Salvador would see

Central America fall to “international communism” precipitated a regional state of

alert, which crystallised at the end of 1979 with Turbay’s ideological and military

assault on all domestic opposition that threatened to go ‘outside the box’ of what is

permissible, whether linked to the guerrilla insurgency or not (ibid.: 241 – 245).19

Defining Violence as Criminal: the New Right and the World Bank

From the mid-1990s a new school of thought began to assert itself in the literature, a

New Right radical revisionism that rejects the very tenets of the sociological approach.

This is the reassertion of the control model that, using del Olmo’s four broad

categories, tends to criminalise revolutionary violence as well as individual (social)

violence, whilst removing institutional violence and structural violence from the field

of study. This school distinguishes between theories of violence centring on individual

motivations and theories that centre on collective motivations. Amongst the latter are

found “structural theories that find the origin of violence in the economic system or in

the type of relation between state and society” 20 (Gaitán, 1995: 122). In contrast, the

New Right points to “modern economics that considers individuals evaluating the costs

and benefits of their behaviour”21 (ibid: 121) as providing the preferred theoretical basis

for the study of crime and violence.

The New Right argues that the question “why do so many Colombians die violently?”

cannot be answered by the school typified by Violencia y Democracia, which failed to

provide empirical substantiation to back the ideological character of its thesis, and its

sociological approach meant that economic choices of individuals are not taken into

19 Although Sánchez et al do not provide quantitative data, this change of policy is indicated by NGO figures for political homicides and extra-judicial executions that increased fivefold from 96 in 1978 to 525 in 1982 (Franco, 1999: 117). For an introduction to this period and the contemporary history of Colombia, see (Jenny Pearce, 1990). 20 “Las teorías estructurales que encuentran el origen de la violencia en el sistema económico o en el tipo de relación estado sociedad.” 21 “La economía moderna que considera que los individuos toman decisiones racionales evaluando los costos y beneficios de su comportamiento”


87

account. Above all, the focus on intentions of certain social groups rather than on their

observable acts of violence lead to the suggestion that some intentions are more

legitimate than others, and an ex-post justification of political violence (Rubio, 1999:

74-76).

Rubio sees these as errors reflecting the influence in Colombia in the 1980s of the new

criminology “of Marxist derivation which combined with dependency theory, gave

emphasis to the role of the state in the definition and creation of criminal phenomena”22

(ibid: 83). Moreover, this ‘criminology of dependency’ neglects the problem of violent

homicide, and “when it is concerned with attempts against life it has been exclusively

in the context of crime committed by the State, violations of human rights, or in the

framework of political struggles for power”23 (ibid: 84).

Rubio and his colleagues are critical of the general hypothesis that Colombia’s

unusually high levels of violence since the 1980s can be explained by ‘objective

causes’ that “explain the violence as a result of, amongst others, poverty, exclusion, the

lack of State presence, scarce provision of social services and inequalities of income

and wealth”24 (Sánchez and Nuñez, 2001:3).25 While the New Right argue that the

available evidence offers little support to the idea that poverty and inequality have

played a significant role in the escalation of violence, they draw attention to studies that

find a positive correlation between crime and variables showing socio-economic

growth (Gaitán, 1995: 251; Gaviria and Velez, 2001: 6).

The New Right sees crime, the armed conflict and narco-trafficking as connected

phenomena. The increase in violent crime is theorised first of all by the growth of

narcotics, and secondly the linking between narcotics and armed political actors. They

argue that criminal actors are attracted to those parts of the country where they can

22 “una derivación marxista de la nueva criminología que, combinada con las teorías de la dependencia, hizo énfasis en el papel del Estado en la definición y la creación del fenómeno criminal”. 23 “y cuando se ha preocupado por los atentados contra la vida lo ha hecho exclusivamente en el contexto de los crímenes cometidos por el Estado, de la violaciones a los derechos humanos, o en el marco de las luchas políticas por el poder”. 24 “La primera que podríamos llamar la hipótesis de las causas objetivas, explica la violencia como el resultado, entre otros, de la pobreza, la exclusión, la falta de presencia del Estado, la escasa provisión de servicios sociales y la desigualdad de ingresos o de activos.” 25 These are in fact deficit theories rather than theories of objective causes.


88

extract the greatest income through “expropriative delinquency and violence” 26

(Gaitán, 1995: 256). Their policy recommendations are much more concerned with the

isolation and defeat of the criminal agencies than with reconciliation. Rubio condemns

an intellectual climate that, he claims, condones robbing the rich as a valid practice, and

which delegitimises state action in confronting crime (Rubio, 1999: 92-93). He believes

that the conceptualisation of social bandits as primitive rebels (a la Hobsbawm) led to

giving them privileged treatment, based on the supposed altruism of their intentions

(ibid: 104).

The ‘modern economics’ that is the basis of the New Right’s analysis of violence in

Colombia is rational choice theory. In a much cited paper, Becker (1968) argues that a

useful theory can be constructed by transposing economic choices into the sphere of

crime and punishment, where individuals make rational decisions as to the costs and

benefits of criminal behaviour. It is also important to note the institutional momentum

promoting this school, centred on research programmes of the World Bank. The Bank

has promoted two related strands based on rational choice theory - a strand linking

social capital and crime, and a strand on the political economy of civil war. Both

strands are central to the New Right’s theoretical redefinition of the problem of why

Colombia is so violent. Indeed, the New Right’s dialogue with these strands has led to

certain innovation within the paradigm, such that Colombia provides a leading example

of the notion of ‘perverse social capital’ (Rubio, 1997).

World Bank sponsored research now represents the orthodoxy in theories of crime and

violence in Colombia. This is not to say that this theorising is always crudely

economistic. On the contrary, there has been an evolution from a narrow,

individualistic economic approach, as in (Vélez, 1999), to a more sophisticated,

socially oriented perspective, as in (Moser and McIlwaine, 2000).

26 “En Colombia la violencia se desarrolla con mayor facilidad en las zonas ricas, lo que indica una relación entre la probabilidad de violencia y la probabilidad de desarrollo de la delincuencia expropiativa… la delincuencia y la violencia tenderan a ubicarse en las regiones relativamente mas ricas”


89

Critical Approach to Violence: Human Rights and the State

The critical approach addresses political violence through the lens of human rights

violations, and in particular the responsibility of the state. Some Marxist writers offer

historical materialist explanations that relate the violence with capital accumulation and

the particular form of Colombia’s underdevelopment.

According to the critical view, state policies and modalities of repression are the

leading factor generating political violence. State terror refers to the systematic use of

violence as an instrument of state power. Green and Ward distinguish between state

terror as “a technique of coercive governance” and state terrorism, “as a technique in

which state terror is coupled with denial” (2004: 122). In the Colombian case, the

notion of state terrorism includes both the committing of crimes by state agents, and the

regime of impunity that surrounds them. In a regime of impunity, denial is not post-

facto, but affects the very dimensioning of the repression. Paramilitary and covert,

hence deniable, forms have been predominant in the current cycle of repression.

An empirically based study adopting the state terrorism thesis by Matta (2002)

documents the sustained liquidation of members of the Unión Patriótica (UP) and other

left-wing parties from February 1985 to August 1994. After Eliécer Gaitán’s

assassination in 1948, the annihilation of the UP is the second reference used to

demonstrate real suppression of the left within a formally democratic system. In May

1984 the FARC27 guerrilla movement entered into an agreement with president

Belisario Betancur. The guerrillas did not agree to give up their arms, but did accept a

ceasefire in a guarded move to see if it was possible to re-engage in legal political

activity. The Colombian Communist Party, trade unions and other social movement

bodies joined the ex-guerrillas in the formation of a new political initiative that would

concentrate on election campaigns. In 1986, the first full year of its existence, the UP

won 9 seats in the Senate, 9 members of Congress, and nearly 400 elected

representatives in local government. The campaign of elimination had already begun,

230 UP members were killed that same year. The UP’s presidential candidate, was

assassinated, as was his replacement. The test was over, those ex-guerrillas who

survived this onslaught returned to the ranks of the FARC and took up arms again. The

27 Fuerzas Armadas Revolucionarias de Colombia – Revolutionary Armed Froces of Colombia.


90

UP had “endured considerable repression for a tiny opening into the political system”

(Jenny Pearce, 1990: 281). By the end of 1993, around three thousand members of the

UP had been assassinated, and 120 of its members forcibly disappeared (Reiniciar,

1995: 7).

Another example is the anonymously authored The Terrorism of the State in

Colombia28, a compendium of the curriculum vitae of 350 state agents (248 Army

members and 102 members of the National Police) documenting their alleged

involvement in “political assassinations, disappearances, massacres, torture and

paramilitary operations in the period between 1977 and 1991” (Anon, 1992: 4).

The body of empirical work by Father Javier Giraldo and his team over more than a

decade is outstanding – (Javier Giraldo, 1996; 1998; 1999; 2003a; 2003b; Nunca Más,

2000). Giraldo is a human rights advocate who has gone beyond the phenomenology to

establish a theory of state criminality. Crucially, he insists on the existence of a ‘para-

state’:

“We turn to the state to sanction human rights violations, assign reparations,

bring about justice--but the state itself has committed the crimes and is the

criminal. How can we turn to the victimiser for justice? It's a terrible

contradiction.

My conclusion was that the Colombian state is contradictory. It tries to fulfill

two functions. On the one hand it's a violent, discriminatory institution that

must favor a small wealthy minority. Even basic necessities are denied to the

great majority of its people. By its very nature, at its core, it is not democratic.

On the other hand, in public discourse it presents itself as a state based on law,

one that respects and implements justice, human rights norms, democratic laws.

How do government functionaries manage this contradiction? They maintain a

duality: the para-state, a structure that is illegal and clandestine, increasingly

takes over the dirty work, the repression. It doesn't appear to be part of the state.

For many years now Colombia's government has been creating and maintaining

these structures. The legal, constitutional structure exists parallel to structures of

a parastate and paramilitary. This is how the government has avoided doing

justice.” (2003: 21)


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Giraldo explains that this avoidance is expressed through a criminal justice system that

functions to deliver impunity in schizophrenic fashion:

“Human rights cases are handed over entirely to the justice system, and the

justice system limits itself to manipulable means. This is the functioning of

impunity. I've realised it's like schizophrenia in a human being. Schizophrenia

involves an internal rupture, a partitioning, of the ego. The person now encloses

an alien ego that is denied, refused recognition. In the political realm, this is the

parastate.” (ibid.: 21)

The formation of judges and legal professionals that permits such impunity is,

according to Giraldo, the separation of ethics from the justice system, itself justified by

a narrow legal positivism in their education in which “justice becomes mere technique.

Procedural truth is all that matters.” (ibid.: 21)

In Giraldo's theory there is an antagonism in the state's very structure between the

narrow interests it serves and its claim to democratic legitimacy. This is not resolved

but expressed in a dual state structure: overt state institutions and shadowed by covert

para-state organisation of repression. These realms inter-relate. Within the overt state,

justice is administered in such a way as to assist the continued cover up of the dirty

war, adopting various procedural forms to negate an outcome that might punish state or

parastate actors - see (Giraldo, 1999) for a review of these mechanisms. The specific

professional culture in which officials are formed encourages them to collude with the

denial of justice for human rights victims. The para-state is thus that network of the

informal systems referred to by Dieterich as offering special privileges to those who

have access to it.

Another important referent in a review of critical theories is the contribution of de

Sousa Santos, who combines a deep appreciation of the new wave of anti-globalisation

social movements and their emancipatory agenda with concrete knowledge of the

Colombian situation, which he sees as a complete collapse in the social contract. The

focus of Santos’s study is neo-liberalism as a social-political process. He believes that

28 El Terrorismo de Estado en Colombia. Known simply as 'the Black Book'.


92

Colombian society is going through a paradigm shift and is becoming increasingly

divided by multiple social apartheids. In the context of such extreme fragmentation, not

only has the sense of struggling for a common good been lost, but also “it seems to be

losing the sense of struggling for alternative definitions of the common good” 29 (2001:

19).

Processes of exclusion predominate over processes of inclusion, and the state has a

chameleon like character, changing its behaviour completely according to the

conditions, rapidly passing in and out of states of exception. The very acceptance of the

legitimacy of a near permanent state of exception30 demonstrates the special character

of Colombia’s political culture. Colombia is, in Santos’s words, a “laboratory of fascist

sociabilities in a politically democratic environment, or of absent dictatorship”.31 (ibid.:

45) This brings the issue of Colombia’s exceptionalism to the foreground. While the

rest of Latin America oscillated between representative democracy and military

dictatorship, Colombia claims continuity in its democratic institutions. And yet, as

Santos highlights, the left is excluded, politically and socially, from an unreconstructed

elite ‘democracy’. Dictatorship and democracy are interwoven and can only be

discovered close up, with sensibility to the highly differentiated and chameleonic forms

of class rule. The left experiences democracy as camouflaged, but barely restrained,

repression.

Santos draws attention to another paradoxical feature of Colombian political culture, an

excessive legalism which he argues is another consequence of political exclusion, in

that it is a symptom of the lack of space to reach consensus. Colombian governments

try and compensate for the state’s incapacity to deal with social demands politically

with a fierce insistence on the juridical dimension of these problems, the law is used

both symbolically and instrumentally to frustrate social demands (ibid: 73).

A combination of global and national factors have given rise to four forms of what

Santos calls ‘social fascism’. The fascism of social apartheid is abundantly evident: a

social inequality that has been accelerated by neo-liberal policies, the majority of the

29 “no sólo pierde sentido la lucha por el bien común, también parace ir perdiendo sentido la lucha por definiciones alternativas del bien común” 30 President Uribe’s declaration of a State of Internal Commotion in August 2002 was but the latest in a series of such ‘emergency’ suspensions


93

population subsist without rights in conditions of poverty. In the cities there are two

exclusive zones – the civilised and the savage – where the inhabitants “circulate by

paths pre-established from birth” 32 (ibid.: 49). Although there is a formal political

contract for those from the ‘savage zone’, the system denies them access to work and

meaningful labour. The system has in reality broken the social contract with them,

leaving them with insufficient incomes (ibid.: 45-47).

The fascism of the parallel state consists of the enormous distinction between the law as

written and the law as applied in practice. Furthermore the administration of justice

operates in a completely differentiated manner between the civilised zones and the

savage zones, where the ‘dirty war’ is carried out (ibid.: 48).33

Then there is what Santos calls para-state-territorial fascism. From the middle of the

century until the mid-1980s there was a double migration: one from the countryside to

the city, and another to remote regions, creating marginal urban barrios on the one

hand and frontier colono settlements on the other. Social apartheid and the fascism of a

parallel state have pushed these sections towards illegality; but the absence/

abandonment of the state in large parts of the country adds another factor, the growth in

the last fifteen years especially of the guerrilla and narco-trafficking (ibid.: 50).34

Finally, there is the fascism of insecurity, an absence of the most basic rules of citizens

living together, and those that supposedly exist are violated with impunity. “Certain

persons or groups, in certain interactive contexts, have an illegal coercive power, an

authentic power of imperium, which they can exercise in an unforeseeable way and

without resistance…Common violence is omnipresent in almost the whole national

31 “un laboratorio de sociabilidades fascistas en un entorno político democrático, o de dictadura ausente” 32 “circulan por caminos pre-establecidos desde su nacimiento” 33 “The normalisation of constitutional exception has allowed the generalisation of institutional practises on the boundary of law and no law, which are found in the savage zones and in the civilised zones according to the necessities of the moment…this type of practice are determined by their centrifugal force towards the savage zone of the ‘dirty war’- “La normalización de la excepción constitucional ha permitido la generalizacion de prácticas institucionales fronterizas entre el derecho y el no derecho, las cuales se distribuyen en espacios salvajes o civilizados según las necesidades del momento. Como se vera más adelante, este tipo de prácticas estan determinadas por su fuerza centrífuga hacia la zona salvaje de la ‘guerra sucia’. ” 34 The phenomenon is clear, but Santos’s use of the term ‘para-state-territorial fascism’ to describe it seems questionable.


94

territory” 35 (ibid.: 52). Santos argues that while the first two forms of social-fascism

are prevalent across Latin America, and are characteristic of neo-liberal globalisation,

the third and fourth forms are special to Colombia. His historical explanation of

Colombia’s exceptionality is focussed on a critique of the contradictory evolution of its

institutions. He gives great importance to the militarisation of the state, arguing that the

permanent state of exception has given the Armed Forces a central place in the internal

structure of state decision making (ibid.: 66). But, as with the state terrorism thesis,

this sensitivity to political-legal form is abstracted from the structural, and also

contradictory, economic evolution. In other words, Santos provides a critical,

dialectical analysis of the Colombian state but not of its political economy.

Critical Perspectives: Historical Materialist Explanations

Notwithstanding its commitment to the victims’ perspective, the analysis of the state

terrorism school is nonetheless incomplete. There is an absence, and that is in the

connection between the institutional and the structural levels, or between politics and

economics. This connection is made in the work of Libardo Sarmiento and Hector

Mondragón, who emphasise neo-liberal globalisation as the determinant of Colombia’s

continuing underdevelopment. Their notion of violent forms of capital accumulation

complements the state terrorism thesis, adding a structural level critique to the

institutional critique. In their perspective, the state is considered as an agent of

accumulation as well as an agent of social control and repression.

Libardo Sarmiento argues that “in the history of Colombia, violence has been

functional in the development of the Modern State”36 (1996: 47). Whereas the first

generation of globalisation in the 1970s and 80s centred on economic austerity, from

the beginning of the 1990s the second generation of restructuring incorporated social

and political themes. These policies crystallised at the World Bank conference in

Bogotá in 1996, which recommended that Latin America “create a new social capital

35 “ciertas personas o grupos, en ciertos contexto de interacción tienen un poder coercitivo ilegal, un auténtico poder de imperium, que pueden ejercerde manera imprevisible y sin resistencia …La violencia común es omnipresente en casi todo el territorio nacional.” 36 “En la historia de Colombia la violencia ha sido funcional el desarrollo del Estado Moderno”.


95

and achieve citizens’ more active participation in economic development”37 (ibid: 50).

These (in fact post-Washington consensus) policies did not replace the core neo-liberal

doctrine; instead they offered a strategy of co-opting opposition to it. According to

Sarmiento the strategy was to reinforce dualism in society, not between the old and the

new as in modernisation theory, but a new dualism between the included and the

excluded:

“For the former, the State offers all guarantees, for the latter, the ‘superfluous’

population, it applies a strategy that combines welfare with repression: on the

one hand humanitarian programmes reduced to maintain the biological

necessities of the poor, and on the other, assassination and repression for those

who still believe in the capacity to transform society”38 (ibid.: 51).

Thus, according to Sarmiento, the possibility hypothesised by Petras of distinctions in

the state’s attitude to the institutions of representative democracy and to social

movements is again realised in Colombia. And this differential repression arises not

just an act of will by the state, but from the way neo-liberal capitalism polarises the

very structures of these societies. Sarmiento argues that while half of Colombia’s

population is outside capitalist production, its special characteristics are the extent of

clandestine transactions, its geographical location and the attractiveness of its natural

resources and biodiversity. The expansion of the modernising Colombian state within

its own territory coincides with the violence, as regions that harbour great wealth

potential become subject to legal and illegal forms of possession (ibid: 53). The actual

forms of the violence in the current period need to be studied as regionally patterned.

He suggests that the paramilitary possession of Magdalena Medio department is a

prototype of this regionalised, violent modernisation.

Mondragón has contributed a series of essays on the cyclical nature of capitalist

development in Colombia, the nexus between domestic capital and multinationals, and

violence. He argues that during the 1990s an agrarian counter-reform has taken place -

37 “hay que crear un nuevo capital social y lograr que los ciudadanos particpen en más activamente en el desarrollo económico.”. 38 “Para los primeros, el Estado ofrece todas las garantias, a los segundos, la población <superflua>, les aplica una estrategia que combina lo asistencial con lo represivo: de una parte, programas humanitarios reducidos a mantener las necesidades biológicas de los pobres, y de


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a relatifundización – concentration of land ownership in big properties and ranches.

This came from the conjunction of three phenomena: paramilitary operations displacing

the rural population; narco-traffickers buying up land, and a drastic reduction in

cultivated crops as a result of cheaper imports (1999).

Mondragón’s thesis is that landed property has benefited from human rights violations.

Acute struggles have been taking place in the countryside that have brought about a

rapid concentration of landownership. Summarising official figures, in 1984 the top 3

percent property owners held 60 percent of registered land; in 1996 they owned over 65

percent. While from 1980 to 1995 the land reform institution INCORA processed a

million hectares for distribution to the peasantry, the expansion of drug lands reversed

this. Narco-traffickers bought up between 3 and 4 million hectares, some 12 percent of

land suitable for agriculture. The cumulative effect from 1980 to 1995 was an agrarian

counter-reform. But an even bigger change was to come in the next five years, by 2001

the top 3 percent owned nearly 76 percent of the land. The degree of concentration is

even more accentuated if the very biggest property holdings over 500 hectares are

considered: in 1984 the top 0.4 percent of landowners held 32.5 percent; and in 2001

this 0.4 percent held 61.2 percent of all registered land (Mondragón, 1999: 201;

Fajardo, 2002: 6).

There is a strong correlation between the accelerated concentration of landownership

and forced displacement of peasant farmers. Displacements averaged around 67

thousand people annually from 1985 to 1995, then they increased dramatically to

average 277 thousand people a year between 1996 and 2001, peaking at nearly 413

thousand in 2002. These ‘Colombian clearances’ have been led by the shock troops of

paramilitarism. The removal of the Medellín and Cali cartels in 1995 left the guerrillas

with the upper hand in many parts of the country. State officials acted rapidly to

reorganise the already existing right wing paramilitary groups, first regionally in

Antioquia and then as a national force under the banner of the AUC, to brutally attack

civilians believed to be offering support to guerilla insurgents.

Considering the shaping of class relations, the above processes violently separated poor

and medium peasants from the means of production to recast them as rural proletarians.

otra, el asesinato y la represión para aquéllos que todavía creen en la capacidad de transformar la sociedad.”


97

Colombia provides fresh evidence to the ‘lumpen-bourgeoisie’ thesis of a criminally

inclined propertied class. The thesis has three variants: that the lumpen-bourgeoisie is a

specific class fraction, a parasitic mercantile group living off the peasantry (Baran,

1962); that the lumpen-bourgeoisie is an entire class that has been historically formed

by its relation of structural dependency and underdevelopment (Frank, 1972); that a

local bourgeoisie resorts to criminal actions against democratic institutions and against

the social movements as a political class consciousness and mobilisation to prevent a

socialist transition, as in the case of Chile (Petras, 1979).

The Neoliberal Project in Colombia

Colombian Peculiarities and Foreign Investment

Compared to other Latin American countries, Colombia was relatively unaffected by

the debt crises of the 1980s, principally because trade brought in sufficient hard

currency due to strong international prices for coffee and, from the late 1970s onwards,

marijuana and cocaine. President Gaviria’s apertura or 'opening' of the domestic

economy to foreign competition in 1990 was intertwined with democratic reforms,

sealed in the 1991 Constitution declaring a ‘state of social right’. This historical

conjunction has led to contradictory effects as social expectations were raised at the

same time that a regressive economic model was adopted.

A second conjunctural factor was the pressing problem of violence perpetrated by the

Medellín drugs cartel, by then threatening to overrun the authorities. In similar vein to

the notion of the lumpen-bourgeoisie as a class fraction, Richani adopts the term

narcobourgeoisie to refer to “that fraction of the bourgeoisie that occupies the

commanding economic position in the illicit drug industry”, and points out as drug

lords laundered their profits through leisure ranches the increasing rentier-capitalist

takeover of the agrarian sector (2002: 181). There is a debate concerning the extent and

social impact of drugs profits. According to some authors the narcotics boom was not

limited to a specific fraction of illegal entrepreneurs, but spread widely among the

propertied classes by various mechanisms. Estimations of the extent of drugs income in

the late 1980s average around US $3 – 4 billion annually, one third of legal export

income (Thoumi, 2003: 150). Illustrations of participation in this trade amongst the

propertied class are the investment clubs that backed the merchant adventurers in joint


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ventures and netted spectacular returns, billions were distributed through leisure and

service sectors - finance, construction, beer, soft drinks and property. The fortunes of

the tycoons who today head up three of Colombia’s four biggest conglomerates were

built in the 1970s, and “blossomed with the main influx of drugs cash in the 1980s”

(Strong, 1995: 184). This points to a blurring of the lines between legal and criminal

entrepreneurial endeavours and widely tolerated criminality within the dominant class,

and penetration of state institutions.

These matters were of concern to the US, whose policy makers turned new attention to

the Andean region. President Bush senior launched the Andean Initiative in 1991 to

encourage the production of legal exports. This was legislated through the Andean

Tariff Preferences Act (ATPA) that granted Colombia, Peru, Boliva and Ecuador some

tariff concessions allowing access to US markets. ATPA was to add a free-trade carrot

to the stick of state repression against the drug cartels. These incentives did foster the

hot house flower industry clustered near Bogotá airport, but overall the policy failed

because the apertura had cut tariffs, leaving domestic producers unable to compete

against cheaper imported products. To make matters worse, coffee prices plummeted

after the international price protection agreement was revoked. The area of cultivation

for 13 major crops fell by 12.7 percent between 1993 and 2003, i.e. by 350 thousand

hectares or nearly three times the land employed in growing coca (Portafolio, 2004).

The apertura invited foreign direct investment (FDI), and in these terms it was

successful - at first. FDI to the Andean community peaked at US $14.7 billion in 1997,

with Colombia attracting $5.6 billion that year. Colombia’s FDI shot up between 1995

and 1997, largely due to privatisations that by 1997 accounted for 40 percent of its

inward investment (ECLAC, 2003: 62). Also there was a steady flow of oil investment

into Colombia until 1999, when there was a disinvestment in Colombia’s oil sector.

Thus we can see that during the 1990s Colombian government policies attracted

investment especially from ‘raw materials seeking’ corporations and ‘market access

seeking’ corporations. The general Latin American pattern of foreign penetration into

the finance sector was reflected in Colombia too, with the Spanish banks BBVA and

BSCH leading the way as foreign banks market share increased from around 7 percent

in 1990 to 31 percent in 2001 (ibid.: 88).


99

Alongside privatisation, the government’s adoption of neo-liberal policies to lift

restrictions and remove regulations was designed to encourage the inflow of capital.

From 1993 onwards Colombia’s current account on goods and services had been

running a significant deficit, but continuing inflows of foreign capital offset this.

Moreover the return of illicit drugs income was substantial enough to have

macroeconomic effects, keeping the peso high and adding an extra degree of volatility

in capital movements. As opportunities for profitable investment dried up so too did the

capital flows, and the instability inherent in the model was exposed, throwing the whole

economy into crisis. Multinationals curbed direct investment and dis-invested their

portfolio assets and, expecting a currency collapse, rich Colombians also began sending

capital out of the country, mostly to the US. In 1998 there was a net outflow of $2.23

billion of short-term capital (portfolio plus other short term movements). Against this,

although less than previous years, long term incoming direct investment held up at

$1.21 billion (Banco de la República, 1999). Between these two figures was a net

outward movement of money capital of over $1 billion. The situation was about to

become unsustainable.

The 1998/1999 Economic Crisis

In 1998/99 Colombia suffered its worst ever economic crisis, FDI inflows collapsed

and only started to recover in 2003. Incoming investment is concentrated in the

extractive industry enclaves, oil and coal especially, whose products are shipped

straight out for export. Uniquely in the Andes, Colombia is semi-industrialised,

factories in the Antioquia region are capable of producing textile products and

assembling cars, hence the country is a net exporter of manufactures to its immediate

neighbours. But as elsewhere, neo-liberal policies caused an explosion of the informal

economy such that, despite the ATPA incentives, the apertura led to relative de-

industrialisation of the economy as a whole.

One of the first signs of the crisis was the drop in export income; as coffee and oil

prices fell (Ferrari, 2000: 142). As in the Asian crisis, an expected fall in profitability

had triggered capital exodus and then currency devaluation, encouraging further

withdrawals. Colombia became the latest example to emphasise the multiplying

effects of capital exodus on a dependent neo-liberal economy, i.e. one that is


100

completely geared to attracting foreign capital. The collapse in demand for the peso

was such that the central bank hiked up interest rates, at one point they reached over 80

percent. Manufacturing output plummeted by 12.5 percent in 1999, while construction

was even harder hit with a collapse of 24.5 percent in the sector. And as construction

was hit with bad debts, there was a knock-on effect to the banks, the financial sector

also contracted, by 6.4 percent (Eduardo Sarmiento, 2000).

Colombia’s debt dependency increased sharply. External debt grew from $26.34 billion

in 1995 to $38.14 billion in 2003. As of 2003 total private and public external debt

stood at 48.7 percent of GDP. While private external debt has remained steady, public

external debt shot up from US $16.87 billion in 1996 to US $30.93 billion in 2003. By

2003 servicing of the external debt (public and private, interest plus loan repayments)

took about one tenth of the country’s GDP, and 59 percent of all export income (Banco

de la República, 2004).

The 1998/99 crisis precipitated Colombia’s first ever formal agreement with the IMF

signed on 3 December 1999. The IMF agreed to lend Colombia US $2.7 billion over

three years, with a further $4.2 billion from other multilateral banks. In exchange

President Pastrana (1998-2002) agreed to follow standard IMF policies, their central

focus was to tackle the fiscal crisis through an austerity programme of structural

reforms in the public sector.

According to the neo-liberal right, state overspending had brought on the crisis. In other

words, the 1991 Constitution stood in the way and its limited social gains would have

to be rolled back. The orthodox explanation emphasises that foreign investment is the

progenitor of growth with the positive factors that: domestic private investment is

insufficient; FDI helps to identify the most promising sectors of the economy; it

promotes technology transfer; it imposes discipline on the economic authorities to be

prudent and stable and it reinforces the rules of the economic game, and, “foreign

investment has been the principal source of training the work force and management

capacities in the emerging countries” (Echeverry 2002: 34-35). As a corollary,

Echeverry rejects the very concept of a national development model, which he

dismisses as fashionable in intellectual circles but an inadequate substitute for “a

parsimonious and patient evolution of the rules of the game” (ibid.: 40).


101

Indicators of the Social Effects of the Crisis

The neoliberals argue for more market and less state as the solution to the crisis.

Government expenditure cuts have accelerated the overall social effect of the crisis:

polarisiation due to increased inequalities of income and wealth. Average incomes fell

sharply from US $ 2,663 per capita in 1997 to US $1,870 in 2002. By the end of 2000,

at 19.7 percent the official urban unemployment rate had become the highest in Latin

America (soon to be overtaken by Argentina). Apart from the marked gender difference

(17 percent unemployment for men and 23 percent for women) the unemployment

statistic is misleading without underemployment, estimated at 34 percent, also being

taken into account. More than half of those in work are not in regular, stable work -

between 1998 and 2000 the informal sector increased from 55 percent to 60 percent of

the working population (DANE, 2004). By 2004 the poverty rate had shot up to over 66

percent (López Montaño, 2004).

At the end of the 1990s, 74.5 percent of Colombians had an income less than the

national average (Eduardo Sarmiento, 2001; 2002; Libardo Sarmiento, 2000: 46-47).

This is in part due to a change in the tax regime around 1995-1996, switching the

weight from taxes on income to taxes on spending (Garza, 2001: 261). Colombia’s tax

system is extremely regressive, with evasion rates of up to 30 percent (Fedesarrollo,

2003: 9).


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Case Study Themes

As discussed in Chapter 2, one starting point for an investigation of corporate

criminality is to follow an FDI strategy and see if it extends to harmful, potentially

criminal, behaviours. What we have further established is that in Colombia is an

unusually violent society, and that the macro-economic policies of Colombian

governments from 1990 onwards have pivoted on attracting flows of foreign capital

into this situation.

According to Correa and Kumar (2003: 131), foreign investors generally seek two

conditions to be satisfied before proceeding with direct investment projects: they

require an ‘investment climate’ that assures long term protection, and they seek

‘investment opportunities’, that is specific profitable openings. As a host nation seeking

foreign investment as the cornerstone of its programme (Vegalara, 1995), Colombian

government policies address both elements. Taking each in turn, an acceptable

‘investment climate’ is firstly conditional on marginalizing any impacts from the armed

conflict, and secondly on fiscal adjustment to prevent the public debt from rising. But

both of these, in effect, preconditions for foreign investment have profound

implications for the role of the state, with governments increasingly driven by security

priorities above social welfare concerns - as argued by Libardo Sarmiento (2003).

Hence in all of the case studies the role of the state and its interaction with the interests

of multinationals and its own citizens’ rights is a key theme. The introduction of

foreign investment can occasion more state intervention, especially in the sphere of

social control, rather than less, so the terms of the discussion here is not so much ‘state

versus market’ as modalities of interaction between multinationals and the state on the

one hand, and social movements on the other.

The creation of profitable openings in Colombia, as globally, has been driven by the

core neoliberal economic policies of “privatisation, deregulation and flexibilisation”

(Munck and O’Hearn, 1999: 13). Rather than obsessing on the quantity of foreign

direct investment (FDI) as official studies tend to, the following case studies investigate

the social consequences of qualitative changes in the macro-economic regime. Each of

the case studies concerns a government policy to create openings that corresponds with

an investment strategy seeking to gain advantage from the policy. That is,


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flexibilisation as a policy to attract efficiency seeking investment is a significant

variable in the case study on Coca-Cola; the quality of environmental regulation in

attracting natural resource seeking capital is a significant variable in the case study on

BP and the oil pipeline; and government privatisation policy is a significant variable in

the SINTRAEMCALI case study. In this way, each of the case studies seeks to

investigate a neoliberal policy in its implementation.

Another important theme is whether, and in what manner, investing corporations are

responsible for, gain advantage from, or are otherwise complicit in, human rights

violations. Different possibilities of association need to be aired. Human rights

violations may be the intended or unintended consequences of corporate polices. They

may be intended but not recognised as violations. They may be enacted through official

or unofficial channels. An official culture of impunity for human rights violators would

seem to be a critical factor in whether or not multinational corporations fall into the

temptation of realising their investment strategy through abusive acts.

As the research unfolded it became increasingly clear that in the meantime a new

discourse was being generated by the World Bank. Founded on the concepts of ‘rent-

seeking’ (Collier, 2000), and ‘social capital’ (Moser and Lister, 1999), the World Bank

has funded a raft of research into conflict and resources, corruption, crime, and

violence. The theoretical reflection on the first case study seeks to test out and fill out

the main contours of a critical theory of corporate crime, whereas in the second case

and third case studies the theoretical focus is increasingly engaged with contesting the

conceptual framework of the World Bank’s newly constructed orthodoxy.

Drawing these strands together, in each of the case studies is a threefold transition:

presentation and critique of the dominant discourse, evaluation of the empirical case,

and alternative theory construction. A set of common themes is addressed: the political

economy of the sector; how the legal and institutional reforms of the 1990s affect

foreign investment opportunities; any manifestation of relevant human rights

violations; connection of violations with investment strategy - including the possible

use of informal systems; counter-strategies from the social movements and corporate

responses to social demands; implications for theoretical understanding of the crimes of

the powerful.


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Chapter 5 Coca-Cola: Violations, Flexibility and Corporate Denial

"Trade Unionists out of Coca Cola” paramilitary slogan painted on bottling

plant wall in Barrancabermeja (Interview Juan Carlos Galvis).

"Neither Coca-Cola or its Colombian subsidiary owns or operates any bottling

plants in Colombia.”

Rafael Fernandez Quiros, manager for international public affairs for Coca-Cola Corporation (Nicaragua Solidarity, 2001)

Introduction

The Coca-Cola Corporation’s strategy in a market such as Colombia where it has had a

long-term presence is focused on improving the ‘efficiency’ of its investment. Since at

least the early 1990s there have been three factors that have combined to encourage an

aggressive implementation of an ‘efficiency seeking’ investment strategy. The first has

been the state’s policies embodied in a legislative framework encouraging

‘flexibilisation’ of the labour force, the second is the socialisation of class based

violence, and the third is the corporation’s own policy. The case study describes an

aggressive corporate employment strategy in which the mechanisms of sub-contracting

play a major part.

There are two central protagonists, the food and drink workers union SINALTRAINAL

(Sindicato Nacional de Trabajadores de la Industria de Alimentos), and the Coca-Cola

Corporation with its subsidiaries and franchisees. The union alleges that these

corporate entities, and named managers:

“hired, contracted with or otherwise directed paramilitary security forces that

utilised extreme violence and murdered, tortured, unlawfully detained or

otherwise silenced trade union leaders of the Union” (Kovalik, Collingsworth

and Thys, 2001: 4).

One of Coca-Cola Corporation’s principal lines of defence against these charges is that

the US corporation is not responsible for the actions of its bottling companies “all of


105

which are independently owned businesses”.39 Coca-Cola’s relationship with its

bottlers will be examined in some detail, not simply to evaluate the truth or otherwise

of its statement, but because of the insight that may be gained into how the sub-

contracted modus operandi of a multinational may affect issues of corporate

responsibility and liability.

Labour Relations in Colombia

Neoliberal Insecurity and Stigmatisation

In a comparative study, Dombois evaluates Colombia’s labour relations climate as one

where

“the political context blocks the development of negotiated forms of regulation

in the labour field. Colombia is one of the countries in Latin America where the

trade unions have achieved the least social recognition and the least political

influence… in the terrain of collective bargaining they have only achieved the

power of negotiation at plant level where, nevertheless, they are accustomed to

meeting fierce resistance”.40 (1999: 319)

Dombois notes that the rate of union organisation in Colombia is one of the lowest in

Latin America, with only a minority of labour relations being mediated through union

collective agreements. This is explained as a consequence of the exclusive and

clientelistic traditional political system that has never allowed a working class based or

even a populist party. Moreover the decades-long presence of an internal armed conflict

tends to rapidly polarise labour struggles, given that the authorities see social

movements as pursuing subversive interests. Consequently unions “have been

politically stigmatised from without and also, frequently, instrumentalised and divided

39 Coca-Cola statement in Leeds University students’ debate 16 November 2004 40 “el contexto político bloquea el desarrollo de formas de regulación negociadas en el terreno del trabajo. Colombia es uno de los países de Latinoamérica donde los sindicatos han logrado el menor reconocimiento social y la menor influencia política, tanto en el escenario político como en el ámbito empresarial; en el terreno del collective bargaining han alcanzado algún poder de negociación solamente al nivel de las plantas donde, no obstante, suelen encontrar una fuerte resistencia.”


106

internally by political interests; they have become a target in the dirty war” 41 (ibid: 319

- 320).

There is a high degree of fragmentation and political division in the union movement

with 880,000 workers being represented by 2,267 separate union organisations. Most

collective agreements are with a given employer, and then at plant level. There are

three union federations, the biggest of which the CUT42 is internally divided between,

broadly speaking, the militant and social democratic left (ibid: 320).

Dombois includes employers’ hostile attitudes to trade unions as an essential element in

this picture of the institutional setting. He states that employers habitually regard

unions as “Trojan Horses for the left or the guerrillas …if management cannot avoid

the creation of unions – by sacking the protagonists – they seek at least to limit their

action to economic aspects – salaries and social benefits – or to combat them through

the creation of parallel unions or pacts – collective arrangements negotiated with

informal representatives of the workers”43 (ibid: 321). The perception of a combined

state-corporate attack targeting trade union militants, in part for their political

sympathies, is widespread, as confirmed by an exiled trade unionist:

“In the mid 1980s the trade union movement was strong in the private sector.

The employers and the state combined in a counterattack. The employers passed

on a list of union leaders and then there were raids and arrests. Some of those

arrested were tortured as a tactic to intimidate others. This managed to clamp

down the power of the union movement, but not to break it.” (Interview Exiled

Trade Unionist)

41 “Han sido estigmatizados políticamente desde afuera y también, con frecuencia, instrumentalizados y divididos interiormente por intereses políticos; se han convertido en blanco de la guerra sucia”. 42 CUT Central Unitaria de Trabajadores de Colombia – United Workers Centre 43 “Los empresarios y administradores suelen considerar a los sindicatos como cuerpos extraños o ajenos. Cuando no como caballos de Troya de la izquierda o de la guerrilla, son vistos como prueba viva de relaciones sociales deterioradas. Si la dirección de las empresas no logra evitar la creación de sindicatos — mediante despidos de los protagonistas— busca, por lo regular, limitar su acción a aspectos económicos — salarios y prestaciones sociales— o combatirlos mediante la creación de sindicatos paralelos o de pactos —reglamentaciones colectivas negociadas con una representation informal de los trabajadores. Entre los sindicatos que no están bajo regímenes paternalistas, se despliega una mentalidad marginalizante que promueve


107

A further factor contributing to the instability of private sector union organisation

entered in the late 1980s as Colombian employers initiated a modernisation programme

to restructure their organisation and processes. These measures included closer

supervision of recruitment, which in the prevailing conditions of counter-insurgency

had particular consequences, as this interview with a former trade unionist from the

Cauca region illustrates:

“In Yumbo the army had a fort built on the entrance to the industrial estate. The

pressure built up inside the factories. The army was on a state of alert. They

were involved in intelligence gathering. The local employers were linked in

with them. When you joined a company you had to fill in an application form,

and these details were passed on to the army. They had a special unit called B2

working on these things. If you were known to be a militant then your

information was passed on to the other employers, you would be blocked.”

(Interview Exiled Trade Unionist)

It was also in this period that corporations began to widely introduce sub-contracting –

defined as an agreement between two parties where one supplies the other a service,

process or phase of production (Valero, 1999: 93). For the corporation, sub-contracting

is a means to achieve ‘flexibility’. Valero argues that ‘flexibility’ is a term that covers

two distinct strategies, either to engender a working culture where innovative ideas are

encouraged in the lower levels, or to reduce costs (ibid: 100). As (Puig et al. 1999:

145) point out, from the employer’s viewpoint the cost-cutting concept of flexibility

includes various dimensions: varying the number or workers in relation to variability of

volumes of production; internal adaption of the workforce to variations in throughput;

workers multi-tasking or working in different functional areas; and varying wages

according to volume of production or the economic circumstances of the corporation.

Sub-contracting is most suited to achieving flexibility in the first sense, as it facilitates

variation in the size of the workforce. This does not exhaust the advantages to the

corporation of sub-contracting, which has a potential additional advantage in reducing

the labour cost per unit as well as the number of units, but this latter advantage depends

una concepción antagónica-conflictiva de las relaciones laborales que deja poco espacio para políticas cooperativas.”


108

crucially on reducing the employment rights and wages of the sub-contracted labour

force.

As outlined in Chapter 4, Colombia’s introduction of the neo-liberal model coincided

with a new Constitution declaring a ‘state of social right’, a circumstance that led to

contradictory effects. In 1990 the Colombian Congress passed two laws, Law 50 and

Law 60, covering labour relations for the private and public sector respectively. The

content of Law 50 was heavily shaped by employer interests, and introduced neo-

liberal doctrine into employment law. Crucially, it replaced the presumption that labour

services are lent under a labour contract, with the presumption of a service contract.

Law 50 introduced fixed term, temporary contracts. These two measures alone

undermined the norm of a permanent employee with protected rights, as did measures

such as removing additional protections for employees of more than 10 years,

undermining the cesantía schemes44 in which employers paid a month’s salary each

year into the employees savings fund 45 and making it easier to carry out mass sackings.

Another measure was to allow a corporation to circumvent acquired labour rights by

setting up new production units outside existing collective agreements (ibid.: 29). Law

50 was complemented by Law 10 of 1991, ostensibly to facilitate the formation of

worker cooperatives, but in reality an alternative vehicle to temporary service

providers. These ‘cooperatives’ were exempt from paying non-wage benefit

contributions (Interview Labour Lawyer).

Although unions were legalised in Colombia by Law 83 of 1931, it was the 1991

Constitution that enshrined constitutionally for the first time the right to form a union,

and the right to strike - except in the case of essential services - (Puig et al., 1999: 38).

There is a tension between the Constitution, and Laws 50 and 60; the former is to

protect and guarantee rights of citizens, while the latter embodies private capital’s

concerns of economic competitiveness and human resource management (ibid: 198).

The right to organise is legally recognised, yet every legal advantage is available to

corporations to undermine any substance to that right. The changes brought about by

Law 50 saw a marked increase in the use of employment agencies, and an employer

44 One literal translation of cesantía is redundancy, another is retirement pension – but neither quite applies. The sense here is of a loyalty scheme. 45 The workers’ right to accumulate their cesantía payments and retrospectively use them was gained in the 1965 general strike (Interview Labour Lawyer).


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offensive to withdraw rights that permanent, unionised workers had acquired and

consolidated in collective agreements. The annual negotiations where unions put their

sets of demands were being met with employer counter-demands46 attacking especially

the 50 percent of non-wage costs. A 2004 survey of corporations in Antioquia,

Colombia’s most industrialised region, found that union collective agreements are

nearly two thirds of all the agreements, but they cover only 44 percent of the employed

workforce in corporations where they are reached (ENS, 2004).

There are only three private sector industrial unions, and collective bargaining takes

place at employer or sub-employer level. Employers and the political establishment are

very wary of treating trade unions as a legitimate social actor. Workers selling their

labour power into the effective managerial control of private capital do so in one of

three forms: as permanent employees under a traditional contract of indefinite duration;

as temporary workers under a fixed term contract; or as task workers employed under

an agency service contract (Puig et al., 1999: 147). What for the employers is

‘flexibility’, has for most of the workforce become insecure employment conditions

with no stability, and for the unions institutionalised hostility and marginalisation

(Dombois, 1999: 330).

Trade union assassinations

The second environmental factor is class violence through the use of right-wing

paramilitary squads and direct state repression. The phenomenon of paramilitarism is

not unique to Colombia; it was present in the 1980s in Guatemala during the civil war

counterinsurgency that claimed over 150,000 lives, many trade unionists amongst them.

But it has been particularly prevalent in Colombia where human rights NGOs attribute

to the paramilitaries at least 80 percent of the annual toll of about 6,000 socio-political

assassinations outside of armed combat; and they link the paramilitary groups to the

official military apparatus, evidencing a state policy of ‘dirty war’ against the social

movements and political opponents, encouraged by the intervention and training of US

agencies (Human Rights Watch, 1996; 2001).

46 pliegos and contrapliegos


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Focusing specifically on the patterns of violence against trade unionists, an

investigation by the Bar Human Rights Committee reported that nearly 4,000

Colombian trade unionists have been assassinated between 1986 (the year the CUT was

formed) and 2002. The investigation also reported that only five convictions have

resulted from these murders (Cooper, 2004: 1). ENS (2005: 14) reports that from 1992

to 2004 it registered 1,981 homicides, and compares this with information provided by

the state prosecutor that there had been 19 prosecutions. Thus, while there is some

discrepancy in the figures, the variation is in the range between one in a hundred, to one

in a thousand of the murderers of trade unionists being convicted, a situation of near

complete impunity for such crimes.

Trade unionists suffer many other violations including death threats, assassination

attempts, disappearances, raids, detentions, harassment, kidnapping, displacement and

torture. Between 2002-2004 there were 369 homicides amongst a total of 1,774

violations, a figure that as ENS comments due to data classification is an

understatement of the extent (ibid.: 24).

In two thirds of cases reported in 2004 the author of violations against trade unionists

was either not known, or not identified. Of those cases of violation where the author

was identified, responsibility was paramilitaries 49.3 percent, state organisations 39.9

percent, employers 1.9 percent, guerrillas 2.8 percent and common delinquency 6.1

percent (ibid: 10-11). Available data concerning the authorship of homicides is

somewhat patchy. ENS states that of the ten identified cases in 2004, seven were by

paramilitaries and three by state organisations. A report by the CUT for 2001 states that

of 171 homicides, 84 were carried out by paramilitaries, 5 by the guerrillas (presumed

FARC) and 82 were by unknown perpetrators (US Leap, 2002). Thus the pattern is that

the high majority of assassinations of trade unionists are carried out by paramilitaries.

This is confirmed in the style of the threats that often precede the act of assassination,

and on certain occasions the paramilitaries have admitted their responsibility, as in the

assassination of Aury Sara, a regional leader of oil workers union USO (USO, 2001),

and the attempted assassination of Wilson Borja, then president of state sector workers

union FENALTRASE (El Tiempo, 2000). The news media has published statements

by paramilitary leader Carlos Castaño that confirmed a policy of targeting union

activists and leaders, including: “Blind attacks? Us? Never! There is always a reason.


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Trade unionists for example. They stop the people from working. For that we kill

them”47 (Lévy, 2001).

Concerning those killed, the sectors that are most targeted are predominantly education

and other state sector services that in recent years have been engaged in anti-

privatisation struggles. In the private sector, people organizing in the food and

agriculture industries are the most targeted. And in recent years there has been an

increase of violations against women trade unionists, who suffered 63 homicides in the

2002-2004 period and an increasing proportion of other violations (ENS, 2005).

This environment of incessant, targeted, unpunished violence against the trade union

movement means that “Colombia continues to be the most hostile country in the world

for trade unionists” (ICFTU, 2005). The threat or reality of becoming a target must be

considered a major factor in discouraging union membership. In 1980 union

membership approached 3 million workers, 25 years later union membership fell to a

little over 850,000, mostly in the public sector (Cooper, 2004). The point of the case

study is to move beyond identifying the statistical correlation between decline in union

membership and the incidence of violations, and to analyse the mechanisms by which

this might take place. Thus far we have established a pattern of covert linkages between

the military and paramilitary, and the self-declared role of the paramilitaries in

assassinating trade unionists. What is yet to be established is any connection between

corporations and targeted, illegal armed actions.

47 "¿Atentados ciegos? ¿Nosotros? ¡Jamás! Siempre hay una razón. Los sindicalistas, por ejemplo. ¡Le impiden trabajar a la gente! Por eso los matamos".


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A Contested Case

The Court Case Allegations

A civil action on behalf of SINALTRAINAL and six named members was lodged by

lawyers of the United Steelworkers of America and the International Labor Rights Fund

with the Florida southern district court in Miami on 20 July 2001, under the 1789 Alien

Tort Claims Act (ATCA). The claim is for relief and damages due to a campaign of

violence committed by paramilitaries employed by Coca-Cola’s bottlers in Colombia,

and is against the Coca-Cola Company, the bottling company Panamco, and the

bottling company Bebidas y Alimentos and its named directors (Kovalik et al., 2001).

The action argues that SINALTRAINAL “has been decimated by the intimidation,

kidnap, detention, torture and assassination of numerous of its leaders by paramilitary

forces working as agents of corporate concerns, including Defendants, in Colombia”

(ibid: 2-3). It details four specific incidents: the murder of Isidro Segundo Gil by

paramilitaries in the Carepa Coca-Cola bottling plant; and that five other claimants

were ‘subjected to serious human rights abuses, including murder, extra-judicial killing,

kidnapping, unlawful detention, and torture’ whilst working at Coca-Cola plants in

Bucaramanga, Cúcuta and Barrancabermeja (ibid: 4-5).

Isidro Segundo Gil worked at the bottling plant in Carepa in the far north Urabá region

of Antioquia department in Colombia, towards the border with Panama. The Carepa

plant was run by Bebidas y Alimentos de Urabá S.A., owned by the Kirby family based

in Key Biscayne, Florida. Gil was assassinated inside the Carepa plant at 9am on 5

December 1996. He was a leader of the local branch of SINALTRAINAL, and on 18

November 1996 had tabled the union’s demands in the annual negotiation round with

the bottling company. Gil was shot dead by right-wing paramilitaries, the fourth union

member at the Carepa plant they had assassinated since 1994. After the first two

assassinations the local union executive members fled, and Gil was elected as a

replacement. According to the civil action, the very paramilitaries who had forced the

union’s officers into flight were then employed by Bebidas y Alimentos. Plant manager

Ariosto Mosquera sacked union representative Dorlahome Tuborquia, but a court

decision obliged his reinstatement. Mosquera then proclaimed that he wanted to ‘sweep

away the union’. The paramilitaries pressured Tuborquia to leave and seized his home.


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There was close complicity between the plant management and the paramilitaries over

years; Coke drinks were supplied to their parties. Early in 1996 the local

SINALTRAINAL branch tried to negotiate protection for its members and an end to

Mosquera’s threats, and when plant owner Kirby denied this request the union launched

a national campaign urging Coca-Cola Colombia and Panamco to act to prevent more

paramilitary attacks. Three weeks before Gil’s own assassination he presented union

proposals that included provisions to safeguard life (ibid 21-23).

After murdering Gil the paramilitaries burnt out the local union office and took

possession of it. Two days later they re-entered the plant, called the workers together

and made them sign prepared letters resigning from the union, the rest of the local

union leaders were given three days to get out of town. According to witnesses the

letters had been printed on company machines and were collected in by the

management. The union branch was indeed decimated, in all fourteen activists and their

families had to flee Carepa, over forty members resigned from the union. Technical

manager of the plant and union member, 65 year old José Herrera was forced out of the

plant and assassinated by paramilitaries on 26 December 1996 and, after a four year

battle to get justice for her murdered partner Gil’s wife, Alcira del Carmen Herera

Perez, was murdered in front of their daughters (ibid: 24-25).

Gil’s extra-judicial killing is the most egregious crime in an extraordinary catalogue of

violations suffered by union members in other plants, apart from Carepa all owned by

the company Panamco and its subsidiaries.

According to their court action and interviews, three local leaders of SINALTRAINAL

at the Bucaramanga bottling plant were persecuted for union activities. The plant’s

managers had initiated hostilities during the 1992 contract negotiations by stigmatising

the union leaders as ‘guerrillas’, which in Colombia is the way to label people as

paramilitary targets. Then in 1995 management withdrew medical benefits for families

from the collective agreement, five local union leaders initiated a hunger strike that

reached the national and international news media. A former army officer was put in

charge of plant security and on 6 May 1996 accused three workers, two of them union

leaders, of planting a bomb inside the plant. They were imprisoned for sixth months

under charges of terrorism that were subsequently shown to be false. One of them was


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beaten by the police, two of them were held in great danger on a paramilitary wing in

the prison, where they were only allowed one family visit a month (ibid: 26-29;

Interview Bucaramanga Worker).

Events at the Coca-Cola bottling in Cúcuta followed a similar pattern. Local managers

started to publicly denounce the union leaders in 1997, and from 1998 there

commenced a series of shootings, beatings, kidnappings and intimidations. In one

incident two armed men abducted a local union leader and interrogated him, showing

press accounts of his work and threatening to retake him if he persisted in organising

against Panamco (ibid: 30-32).

SINALTRAINAL leaders in Barrancabermeja, also owned by Panamco, have been the

target of threats and assassination attempts by the main paramilitary group the

Autodefensas Unidas de Colombia (AUC). Prominent activist Juan Carlos Galvis had

been threatened by the AUC for years, but his situation became seriously worse when

the paramilitaries took effective control of the city. The civil action alleges that

“Coke, Coke Colombia, Panamco, and Panamco Colombia have failed to take

any action to protect Plaintiff Galvis from the specific death threats that

defendants knew about and that originated from Defendants’ actions to use the

paramilitaries as agents to oust the local SINALTRAINAL union”48 (ibid: 32-

34).

The lawyers in the case argue that since the legal system in Colombia does not bring

the perpetrators of such anti-union crimes to justice, and indeed to bring such a case

would expose the victims to even greater risk, there is no legal remedy except to apply

for damages under US jurisdiction (ibid: 4-5).

In relation to Coca-Cola’s corporate responsibility for the alleged crimes, the union’s

lawyers argue that

48 For brevity the court case refers to ‘Coca-Cola Corporation’ as ‘Coke’, a practice followed here.


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"There is no question that Coke knew about, and benefits from, the systematic

repression of unions at its bottling plants in Colombia …This case will make the

company accountable" Terry Collingsworth quoted by Leech (2001).

Coke Denies the Allegations

Coke vigorously denies any wrongdoing. The corporation’s denial of the allegations is

categorical, as in:

“It is our belief that Colombian labor union SINALTRAINAL's oft-repeated

allegations against the Coca-Cola Company and its Colombian bottling partners

are completely false. They appear to be nothing more than a shameless effort to

generate publicity using the name of our company, its trademark and brands.”

(Coca-Cola Corporation, 2003a)

It is noticeable that there are defensive and offensive strands to the above denial/

Although Coca-Cola’s stance has changed in emphasis at times, there are distinct

elements in its position: denial of the factual basis of the allegations, denial of

responsibility for what occurs with its bottling companies, and denial of the legitimacy

of SINALTRAINAL as a claimant.

The corporation has set up a dedicated website – called ‘Coke Facts’ - in response to

allegations against it (Coca-Cola Corporation, 2005).49 Building on its denial, Coke

argues that other unions deny the basis of SINALTRAINAL’s allegations, that insofar

as allegations have been considered by the Colombian and US courts, it has been

absolved, and that the corporation and its bottling companies are taking reasonable

measures to protect their employees. Coke also offers a version of the situation in

Colombia that paints a different contextual picture of the violence. This section will

consider these latter points, before proceeding to a more detailed analysis of the central

issues of Coke’s relationship with its bottlers and its portrayal of SINALTRAINAL as

irresponsibly raising accusations.

49 The title appears to be in direct response to comedian Mark Thomas’s stage show that toured Britain in the latter half of 2004 and featured a critical item called ‘Coke Facts’.


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Coca-Cola claims that it provides security for its employees, and cites a number of

specific measures undertaken by Panamco, such as special leave and job arrangements,

and assistance with homes and transport (Panamco, undated). Against this, the

president of the union’s Barrancabermeja branch William Mendoza points out that 65

SINALTRAINAL members have been threatened with death, “Coke has virtually

nothing to do with providing or paying for any of the protective measures” and that any

protection has come about through the union’s insistent campaigning with the support

of the CUT Human Rights Department (Campaign to Stop Killer Coke, 2003b). And

overall corporate policy tells a different story, sacking 15 percent of the workforce in

the two years following the US civil action whilst meantime stigmatising their main

trade union is not conducive to security for union activists. Panamco’s and the

Colombian authorities’ limited protection measures notwithstanding, the death threats,

bomb scares, beatings, assassination attempts and actual assassinations of close

relatives have all continued. The more fundamental problem is the impunity that

protects the perpetrators of violence against union organisers.

Coca-Cola executives make several related points concerning violence: the state is too

weak, the violence is prevalent, trade unionists are not the only victims, many other

trade unionists as well as Coke workers are assassinated, managers as well as workers

have been killed (Interview Coca-Cola Executive). Executives even complain that

SINALTRAINAL does not say anything about them: “because they are not unionised

they do not count as human beings.”50 The overall picture is one of confusion, the

corporation has done all in its power amidst senseless and overwhelming violence in

which all sides suffer. From the union’s standpoint, this is evasion of the corporation’s

own responsibility: SINALTRAINAL has been persecuted and Coca-Cola must address

the specific purpose and connections between its managers and the paramilitary hit

squads.

With respect to the operation of justice in Colombia, Coke cites in the corporation’s

favour a 1997 ruling by the Bogotá Criminal Court 10. This ruling treats with a tutela51

application five of the surviving targeted Carepa trade unionists. The trade unionists

50 Stated in Leeds University debate, 16 November 2004


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were through this action demanding reasonable treatment from Bebidas y Alimentos

and that the competent state authorities take action to protect their right to life. The

petitioners alleged that the company “had not paid them their wages” since January

1997 and “had taken no action of any kind to ensure their safety, nor had it done

anything to prevent paramilitary groups from entering the company and intimidating all

the workers”. The trade unionist had filed complaints with “the Office of the Prosecutor

General, labor ministries, the Office of the Ombudsman, the Human Rights and the

Office of the Attorney General”52. The legal representative for Bebidas y Alimentos

“stated that the threats had come from outside the company” and that “there was work

for the workers to do in the Urabá area, but they were not showing up for work”.

Moreover the new company manager “had sought protection for the workers from

General Rito Alejo del Río, who ordered an investigation” (República de Colombia,

1997: 1-4).

The Court held that “that, despite the threats against the plaintiffs’ lives, the proper

authorities took appropriate action to protect them, investigate who was behind the

threats, and punish conduct prejudicial to this fundamental right”. Yet there was no

punishment of the paramilitaries, and the trade unionists could not return for fear of

their lives. Without irony, the Court also noted “that the current legal representative of

Bebidas y Alimentos de Urabá S.A. has stated that they are waiting on the members of

the union’s Board of Directors to come to the bottling plant in the Municipality of

Carepa, in order to negotiate the list of demands presented by those board members.

Talks could not begin in their absence”. And so it was that the plaintiffs’ petition was

denied and justice was administered “in the name of the Republic and by the authority

of the Law” (ibid: 4-7). The extreme partiality of this ruling against workers who had

five comrades assassinated over two years of intense union-busting in the Carepa plant

is almost beyond comment, except as an example of judicial collusion with impunity,

and to explain that having exhausted this avenue to defend its members’ lives

SINALTRAINAL was left with no option to seek other remedies (Interview

SINALTRAINAL Vice-president). One of the plaintiffs reports that he was kidnapped

by paramilitaries on the same day that Gil was assassinated, and taken to a spot near a

51 literal translation is guardianship. The tutela was an innovation under article 85 of the 1991 Constitution intended to allow any Colombian citizen to seek judicial action to protect their fundamental rights. 52 Fiscalía General de la Nación, Defensoría del Pueblo, Procuraduría General de la Nación


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police station to be transferred to, he believed, the matadero - killing ground. Left in

the custody of one soldier, he managed to escape. Due to continuing threats against his

life he hid for four years, before going into exile in the US (Johnson, 2002; Thomsen,

2003).

Coke also refers to “a separate investigation by the Prosecutor General of Colombia”

that “also concluded that there was no evidence that bottler managers conspired with

paramilitaries to intimidate trade unionists”, but does not provide evidence of this

(Coca-Cola Company, 2005).

Standing of the US Court Case

In a ruling on 31 March 2003, the US District Court Judge found that the allegations

were sufficient, in the words of SINALTRAINAL’s lawyers “to allow the case to

proceed on a theory that the paramilitaries were acting in a symbiotic relationship with

the Colombian government” (Collingsworth and Kovalik, 2003). The case could go

forward against Panamco and Bebidas y Alimentos, but the claims against Coca-Cola

and its Colombia subsidiary were dismissed “on the ground that the company's bottling

agreement did not explicitly give Coca-Cola control over labor relations issues of its

Colombian bottlers” (ibid). This ruling is being appealed. There is a duality in the

corporation’s stance on the US civil action. On the one hand Coke claims that the court

rulings in Colombia and the US have absolved it. On the other, in interview Coke

Colombia’s Public Affairs and Communications Manager said the corporation would

not answer any specific allegations while the Florida court case is in motion (Interview

Coca-Cola Executive). So, is Coca-Cola in the US court case, or not? This reflects a

deeper ambiguity in Coke’s positioning, are operations in the bottling plants its

responsibility, or not?


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Analysis of Coca-Cola Corporation’s relationship with its bottlers

The Franchise System

In its early days, Coca-Cola was sold through soda fountains on drugstore counters.

Sales of the carbonated drink shot up in the 1890s, and the product’s popularity

promised commercial success if a solution to the challenge of distribution could be

found. This turned out to be the franchising system, which was initiated on 21 July

1899 when Coca-Cola Company’s owner Asa Candler signed the first bottling contract

with two entrepreneurial lawyers, Thomas and Whitehead. The contract was for most of

the United States, which Thomas and Whitehead subdivided into territories to sell on

the bottling rights to third party entrepreneurs. Candler did not charge a fee for granting

bottling rights, he considered bottling a risky enterprise and expected profits to come

from the sale of syrup concentrate to the independent bottling companies, who had to

supply their own capital and, in the first decades, establish the technical means of

production. Thomas and Whitehead became known as the ‘parent bottlers’, making

their fortunes out of managing the franchise system rather than actually bottling product

(Allen, 1995: 105; Pendergrast, 2000: Chapter 5; Hays, 2004: 17).

Company histories trace the interplay of cooperation and antagonism between the

Coca-Cola Corporation and its bottler satellites. The relationship all but broke down in

1919 resulting in a series of court cases. The settlement of this dispute established the

basis of two generations of remarkable growth that established Coca-Cola as an icon of

American capitalism. The basic organisational structure persisted over this period:

Coca-Cola Corporation supplying the product, a select group of regional parent bottlers

acted as conduits for the franchise, and a wider group of franchisees running the

bottling plants and local distribution. All of these entities in the Coca-Cola system

contributed to and benefited from the brand’s marketing (Pendergrast, 2000).

By the mid-1980s Coke saw that taking back operations from the independent bottlers

would be a way to revitalise the corporation’s flagging profits. In the drive to retake

control of its distribution systems, while allowing for partnerships with other

entrepreneurs, the corporation came up with ‘the 49 percent solution’, which provided a

specific advantage offering control whilst minimizing accountability:


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“with a 49 percent stake, Coke would have unprecedented influence over the

bottler, without actually owning it or having to account for it as if it owned it.”

(Hays, 2004: 42)

The outcome of a decade of buying back bottler businesses was that Coca-Cola

Corporation could execute a world-wide operational strategy through a handful of

regional entities under its control, a select group that it designated in 1995 as its ‘anchor

bottlers’ - the anchor bottler for Latin America was a company called Panamco

(Pendergrast, 2000: 409). This consolidated a three level system, analogous to a solar

system, with Coca-Cola Corporation the star at the centre, orbited by ‘anchor bottlers’,

that are in turn orbited by franchised bottling companies.

Coca-Cola Bottlers in Colombia

Coca-Cola’s first entry into Latin America was a sales drive into Mexico in 1897. The

company expanded its interest on the back of the US war against Spain, and started

selling in Cuba and Puerto Rico in 1899. Coca-Cola has been sold in Colombia since

1927, as part of a worldwide wave of expansion by “Coca-Cola’s missionaries” (ibid.:

67, 167). In 1942, four industrialists from Antioquia set up new company called

Industria de Gaseosas (Indega) through which they invested in bottling plants in the

three biggest cities - Medellín, Bogotá and Cali. In 1948 Coca-Cola sent the vice-

president of its Panamerica Division, Albert. H. Staton, to take over as general manager

of Indega. The company official record is that Staton was invited rather than sent, either

way the Indega group was soon taken over by the Miami based corporation

Panamerican Beverages Inc (Panamco) and its Colombian founders converted to

minority shareholders. By 1951 Panamco Indega Colombia S.A. was the principal

bottler for Coca-Cola production in the country, Staton and his successor Richard Kirby

set up another eleven plants, plus smaller bottlers in the more distant regions. Through

the 1970s and 1980s US citizen Kirby played a central role in connecting the

Colombian bottlers, as well as being general manager of Panamco Indega Colombia, he

owned Bebidas y Alimentos, the holder of the Carepa plant. These activities were all

within the Coca-Cola system, through interlocking directorships and shareholdings.

The President of' ‘Panamco Colombia' was on the Panamco board. Through Panamco,

which held 45.71 percent of Indega shares, Coca-Cola Corporation kept control of its


121

main Colombian bottler and it maintained a significant investment in the smaller

bottlers, with a shareholding varying between 10 percent to over 20 percent (Mazzeo,

2001; CICL, 2003: 19-20, 108-109).

Panamco Colombia introduced another organisational level, grouping its plants in the

north eastern cities of Bucaramanga, Cúcuta and Barrancabermeja into a company

called Embotelladora de Santander S.A. (Embosan), its four Atlantic coast plants

through Embotelladora Román S.A. (Emboroman), while Panamco Indega controls

several plants in the centre of the country (Interview Labour Lawyer). The collective

work agreements are negotiated with Embosan, Emboroman and Panamco Indega.

Whereas these bottlers control local water supplies, other components in the supply

chain are centralised. As well as direct subsidiary Coca Cola Services de Colombia that

supplies syrup and looks out for Coca-Cola’s interests, the group includes Friomix del

Cauca to supply refrigeration equipment, Comptec to produce bottles and containers,

Tapas Corona to supply bottle tops, the Ingenio San Carlos sugar mill (the group also

imports sugar from Brazil), and Líquido Carbónico to supply the carbon dioxide for the

fizz (CICL, 2003: 111; Anon, 2002: 49; Mazzeo, 2003).

This is an integrated group of companies, with a rational pattern of centralisation and

decentralisation of the different elements. Coca-Cola’s website approved these

arrangements as “the power of a system”, continuing proudly “the Coca-Cola system in

Colombia operates in a perfectly combined form”53 (Coca-Cola Company, 2003b)54.

Note that at the time there was no doubt that the bottling enterprises were part of the

“Coca-Cola system in Colombia”.

By 2002 Panamco Colombia owned 17 out of the 20 bottling plants in Colombia. It was

in turn 24 percent owned by Coca-Cola Company. Coca-Cola owned 100 percent of

Panamco’s Series C Preferred Stock, which gave it a complete veto over mergers and

acquisitions. In December 2002 another company in the Coke system, Coca-Cola

FEMSA announced it would buy Panamco for $3.6 billion. The Coca-Cola Company

acquired a 39.6 percent shareholding and 46 percent of the voting stock of combined

53 “El poder de un sistema. El sistema Coca-Cola opera en Colombia en forma perfectamente combinada.” 54 This web page has since been withdrawn.


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entity Coca-Cola Femsa-Panamco (South Florida Business Journal, 2002; Campaign to

Stop Killer Coke, 2004; Girard, 2004).

The merged Coca-Cola FEMSA-Panamco is the leading bottler of Coca-Cola products

in Latin America, handling about 10 percent of Coca-Cola's worldwide sales. The

merger was complementary in two respects. Geographically, FEMSA already

dominated the Mexican and Argentine markets. Panamco brought with it leading

positions in Brazil, Colombia, Costa Rica, Guatemala, Nicaragua, and Venezuela. As

far as product lines are concerned, FEMSA was already strong in beer as well as soft

drinks in Mexico, where there is an especially high consumption of soft drinks due to

lack of adequate drinking water. With even limited public services breaking down, and

with privatisations, failure to provide drinking water from the tap is a continental issue.

The sale of bottled alternatives to publicly available water is an expanding market with

the potential to increase even more rapidly. Access to the water market was part of the

attraction of Panamco, as an industry analyst noted, “the purchase of Panamco opens

the possibility of using its enormous distribution and marketing system to sell bottled

water and other soft drinks that are alternatives to the classic Coca Cola”55 (Baer,

2003).

Evaluation of Independence Claim

In 1990 the ‘Coca-Cola system in Colombia’ had 12,000 direct workers, of whom

9,000 had permanent employment contracts. By 2001 there were only 2,500 direct

employees, and by the beginning of 2005 less than a thousand workers had stable

employment contracts. The workforce employed in the system was still nearly 9,000

workers, but over 90 percent of these were ‘flexible’ workers, employed indirectly

through various forms of sub-contracting. Until 2003 there were 20 bottling plants but

as part of a worldwide implementation of new techniques bottling production is now

concentrated in just 5 mega-plants plus Carepa, with the remaining plants being

reduced to distribution centres.

55 “la compra de Panamco abre la posibilidad de utilizar su enorme sistema de distribución y marketing para vender aguas embotelladas y otros refrescos alternativos a la clásica Coca Cola.”


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Hence, far from being independent, Coca-Cola FEMSA-Panamco is integral to Coke's

expansion into Latin American markets. The takeover was completed in June 2003.

Within three months Panamco Colombia announced it would “stop production at 11 of

its 17 plants to boost efficiency” (Atlanta Journal-Constitution, 2003), an example of

the efficiency seeking investor in operation. Coke’s drive to concentrate production and

so reduce its workforce generated new alleged infringements of workers’ rights.

According to the union, on 9 March 2004 managers in Cúcuta, Valledupar and

Cartagena locked workers inside the plants pressuring them to relinquish their

contracts. Thirty SINALTRAINAL members went on hunger strike to protect their

jobs, and after 12 days they managed to secure an agreement after meeting with Coca-

Cola’s new general manager in Colombia (Silverman, 2004).

When it suits the corporation, Coke presents itself as providing jobs, as in “In

Colombia, Coca-Cola operates six plants employing 8,000 Colombians” (Coca-Cola,

2005). Furthermore, workers who apply for work at any bottling plant fill in a Coca-

Cola standard application form, they wear a Coca-Cola logo on their uniforms, and they

work with standard Coca-Cola products according to Coca-Cola work practices. All

franchisees have to sign a Bottler Agreement with detailed quality controls. The court

action against Coca-Cola points out that the corporation suspended its agreement with a

franchisee in Guatemala when eight trade unionists were assassinated, and appointed a

replacement franchisee, “Coke's action was the result of a massive public campaign

against the company, but its action, however motivated, shows specifically that Coke

has the control to prevent and/or remedy violence against workers and trade union

leaders in its foreign bottling plants.” (Kovalik et al., 2001: 12; see also Reyes and

Gatehouse, 1987). Thus even when the actual control over the labour force is sub-

contracted to the franchisee, Coca-Cola Corporation has demonstrated it can revoke the

franchise and so it retains ultimate control over employment policy.

Based on this evaluation of the genealogy and functional interconnections of ‘the Coca-

Cola system in Colombia’, the use of the word ‘independent’ as applied to the bottling

companies cannot be sustained, or is so manipulated as to be contrary to all normal

interpretation.


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Responsible vs. Irresponsible Trade Unionism

The Coca-Cola Corporation suggests that there are other more responsible trade

unionists than SINALTRAINAL, which in any case is but one of twelve trade unions

represented in its plants. The corporation often quotes another union,

SINALTRAINBEC which, Coke says, confirms that “we have not a single indication”

that the bottling companies are linked to illegal armed groups (Coca-Cola Company,

2005).56 This attitude from the corporation needs to be interpreted in the actual context

of repression of labour representation.

The Replacement of an Irresponsible Union by a Responsible Union in Carepa

The upsurge of paramilitarism during the period of the Pastrana presidency was most

intense in the Urabá zone of Antioquia, before spreading throughout the department,

and in the two Santander departments. These regions had in the 1980s seen an upsurge

in radical popular movements and the communist influenced Unión Patriótica political

front, and from the early 1990s the paramilitaries were moving in a counterinsurgency

programme to destroy the left, whether armed or unarmed. According to a regional

human rights NGO, the number of unarmed civilians deaths increased sharply in Urabá

from 37 in 1996 to 548 in 1997, with the major responsibility for these deaths lying

with the regional paramilitary force called the ACCU 57 (IPC, 1999: 62, 77). Carepa

was at the centre of the onslaught. A human rights observer wrote at the time:

“Down the Panamerican highway south from Turbo, the panorama remains

much the same. Currulao, Apartadó, Carepa and Chogorodó all scenes of

terrible massacres in recent months and all witnesses to the ruthless advance of

the ACCU forces.” (Bland, 1996)

There is considerable evidence that the paramilitarisation of the Urabá region was

overseen and in many cases implemented by official forces. The same General Rito

Alejo Del Rio, who as commander of the Army’s XVII Brigade headquartered in

56 See also (Interview Coca-Cola Executive; Coca-Cola Corporation, 2003). 57 Autodefensas Campesinos de Córdoba y Urabá - Peasant Self-Defense Forces of Córdoba and Urabá


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Carepa had been cited in the Bogotá Criminal Court ruling, became notorious for

failing to act against the paramilitaries, and for combining military special forces with

paramilitary operations in Urabá between 1995 and 1997 (CIJP, 2005). Del Rio was

dismissed from the army in 1998 on compelling evidence, with seventeen separate

complaints against him including from a Colonel who was his former second in

command, and arrested in 2001 on charges of sponsoring right-wing paramilitary death

squads, only to be released two weeks later (Agence France Presse, 2001). His case is

highlighted by Human Rights Watch (2005) to epitomise the impunity for military

officers linked with the paramilitaries and responsible for human rights violations.

Although SINALTRAINAL was never allowed to return to the Carepa plant, another

union took its place. The background is given by a Canadian trade union delegation that

visited the Urabá region in October 1997, just after the military /paramilitary offensive

in the region. The Canadians made a point of reporting their concern about a union

representing banana workers called SINTRAINAGRO whose leadership were

exceptional in not raising the issue of their members’ security, as had all other trade

unionists met on the visit. Instead SINTRAINAGRO’s leaders gave an account that

‘coincided exactly’ with the briefing by General Rito Alejo del Rio, who in turn praised

SINTRAINAGRO as a ‘model’ union. The Canadians were very worried by this

apparent trade union collaboration in repression (ICCHRLA, 1998). Able to work with

such endorsement and official backing, in 1999 SINTRAINAGRO helped form a new

union branch in the same Carepa plant where Isidro Gil had been assassinated and

SINALTRAINAL had been eliminated at the point of the gun three years previously.

The new union was called SICO 58, which signed its first collective agreement with

Bebidas y Alimentos management in February 2000 (SICO, 2002).

Putting together the links in the chain: the paramilitaries, the military commander, the

Bogotá court and managers in the Carepa Coca-Cola bottling plant all played a part in

eliminating SINALTRAINAL’s presence and replacing it with another, more

acceptable, union.

58 Sindicato de Trabajadores de la Industria de las Bebidas: Cervecera, Maltera, Jugos, Refrescos y Gaseosas de Colombia - Workers Union of the Drinks: Brewery, Malt, Juice, Soft Drinks and Soda Industry of Colombia


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The subsequent role of SICO is contentious. One report cites SICO as an example of a

‘yellow union’, charging that the union’s president Alejandro Pedraza is a “well known

sell-out … expelled from the workers union in Bavaria [brewers] for being corrupt and

on the boss’s side”59 (CILCT, 2003:16) Against this, Pedraza is well connected in the

international trade union structures, a delegate to the International Union of

Foodworkers (IUF) and a member of its Latin America committee. The IUF has backed

SICO in dispute with the employer, which it calls ‘Coca-Cola Carepa’ (SICO, 2002).

Whether SICO is a boss’s ‘yellow union’ or simply the corporation’s responsible

preferred option may be a moot point, that this union should allow itself to be brought

in to the Carepa plant on the back of the SINALTRAINAL assassinations is remarkable

by the morals of trade union solidarity and an illustration of the deeply damaging effect

of division to trade union bargaining power.

Accusations by Panamco Management, and Insinuations by Coca-Cola Executives

Through their vehicle Coca Cola Embotelladora Santander (Embosan), Panamco

managers in the three Santander bottling plants accused SINALTRAINAL members of

being connected with economic sabotage and terrorism.

Several lorries in the Barrancabermeja plant were set afire and wrecked by ELN

guerrillas in November 1984. Seven leaders of SINALTRAINAL’s Barrancabermeja

branch were accused by the plant manager of constituting an ELN cell and detained,

but released without charge one month later. According to a leader of the union branch,

from that time whenever the union side entered negotiations it was continually accused

by the employer’s legal advisers, both of Embotelladora Santander and Coca-Cola

Colombia, of being “the ideological arm of the guerrilla”60 (Interview Barrancabermeja

Worker).

According to the US court action and interview by one of the claimants, the manager of

the Bucaramanga plant publicly accused workers of being auxiliaries of the insurgency,

“he marked the union as being an organisation that used to do … that it was a rebel, a

59 “encabezado por un reconocido vendeobreros, Alejandro Pedraza, expulsado del sindicato de trabajadores de Bavaria por corrupto y patronal” 60 “que el sindicato es brazo ideológico de la guerrilla”


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group of the insurgency”61 (Interview Bucaramanga worker). This accusation was

effectively rebutted when the court case against three local leaders was lost (Kovalik et

al., 2001). Although not in the court case, similar cycles of accusation, detention and

release took place in Cartagena in 1993 and Barranquilla in 1995 (CILCT, 2003:12).

The accusations resurfaced again at a Leeds University student debate in November

2004, where Coca-Cola’s presentation gave the corporate explanation of why the

allegations against it are being made. Coke tried to link SINALTRAINAL with the

FARC and the ELN, Colombia’s two biggest guerrilla groups. One slide is of a

newspaper report headlining that the FARC prohibited Coke sales, because the

company refused to make payments, but there is no mention of the union anywhere in

the text (Coca-Cola Corporation, 2004c). Another slide is headed “Violence and

Security”, and lists “Some known attacks from the past 10 years…”, starting with

“1994: Bomb destroys Barrancabermeja Plant (ELN)”, alongside is the image of an

ELN publication declaring growing solidarity with Coca-Cola workers62. If this

publication is genuine then a significant detail has been changed by Coke, in the small

print is the date of publication - November 1984 – the explosions that in fact took place

ten years before and for which the local SINALTRAINAL leaders had been legally

exonerated.

When challenged in the debate by the Colombia Solidarity Campaign representative

who pointed out that in Colombia such labeling is normally a prelude to assassination,

the Coca-Cola representative denied any such intention. But insinuation clearly was the

corporation’s intent: the same presentation quotes from SINALTRAINAL’s website

that the union is against Plan Colombia and US military intervention, and quotes union

President Javier Correa calling for an international campaign against corporate

violence, as though both self-evidently demonstrate subversion (Coca-Cola

Corporation, 2004c).63

61 “señaló al sindicato a ser un organización que hacía .. que era rebelde que era de un grupo de la insurgencia” 62 The ELN stated it was acting in solidarity with the Guatemalan workers in dispute with Coca-Cola at the time 63 Mark Thomas highlights similar tactics in India, where Coke puts out “that the protests in Plachimada have been the work of Marxist agitators” (Thomas, 2004).


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The attempt to label SINALTRAINAL as subversive to an international audience is a

component of Coca-Cola Corporation’s response to the allegations against it. Coca-

Cola oscillates between accepting and denying SINALTRAINAL’s legitimacy,

reflecting a deeper contradiction in the corporation’s basic orientation between

industrial relations and counterinsurgency strategies.

Irresponsible Majority and Responsible Minority?

Although a number of unions have fallen by the wayside, such as drivers union

SINTRAPAC and the Atlantic coast union SERVIEMBOROMAN, there are still

twelve unions in the fragmented plurality of labour organisation in the Coca-Cola

system. Some have just forty members (SICO), or possibly as few as ten members

(SINALTRAINBEC). Importantly, although only a minority of the workers are in

unions (for reasons expanded upon below), and despite the persecution directed against

it, SINALTRAINAL claims it still represents the absolute majority of unionised

workers with 417 out of 810 union members in 2001, and 389 of 550 union members in

2004 (SINALTRAINAL 2002c; 2004f).

The events following the 1994-1996 Carepa assassination wave, the hostility of

managers in the Panamco plants and the subsequent presentation by Coca Cola itself all

indicate the possible explanation of a corporate policy to stigmatise and eliminate a

form of trade unionism that is considered irresponsible whilst promoting responsible

representation. We will now consider other phenomena that have occurred since the

US civil action was entered to test this hypothesis further.


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Ongoing Paramilitary Links, Violations and Criminalisation

Collaboration Between Plant Managers and Paramilitaries

The most prominent example of a link between managers of the bottling companies and

the paramilitaries was when the weekly magazine Cambio reported that Ramón Isaza

the paramilitary chief of the Magdalena Medio region had sought a ‘debt repayment’

from Panamco. Isaza had enforced a four-month boycott pressurising Panamco to pay

up. On 15 August 1998 Panamco executives flew to Monteria where, according to

Cambio’s sources, with the help of ‘an international organisation’ they met national

AUC paramilitary chief Carlos Castaño and persuaded him to overrule Isaza’s extortion

demand.64 On the face of it this does not indicate collusion, on the contrary the

corporation’s interests were being illegally threatened. It could be argued that the

bottlers had little choice but to seek a pragmatic solution. The interesting point is the

consolidation of a policy of cooperation with the corporations on the paramilitary side.

Castaño reportedly told Isaza, “Ramón, we cannot allow ourselves to become

mercenaries against the multinationals. Our objective is the guerrilla".65 Castaño used

the occasion to issue a general order to the paramilitary forces under his control that

“they abstain from attacking private corporations operating in their zones of

influence”66 (Cambio, 1999). The incident thus brings out the tension between the

paramilitaries’ role qua organised crime and qua counterinsurgency, and a significant

point in the transition of the paramilitaries as a nationally led force.

Many incidents since the Monteria meeting suggest that managers in Coke’s Colombia

bottling plants have been working in active and ongoing collaboration with the

paramilitaries, including:

• The AUC published death threats against William Mendoza and Luis

Alberto Diaz in the Barrancabermeja publication La Noticia on 12 August

2001. When these two union activists arrived for their work shift on

64 A later interview by journalist Dick Emanuelsson suggests that the negotiations were actually conducted by an official from the International Red Cross, with Panamco executives in close proximity (Emanuelsson 2002). 65 “Ramón, nosotros no podemos convertirnos en mercenarios contra las multinacionales. Nuestro objetivo es la guerrilla." 66 “se abstengan de atacar a las empresas privadas que operan en sus zonas de influencia.”


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Christmas Eve 2001 they found AUC greeting cards in their lockers inside

the plant (SINALTRAINAL, 2001; Kovalik, 2005).

• US journalist Steven Dudley (2002) wrote that “Paramilitary leaders have

told me on several occasions they protect business interests in Colombia,

especially international companies . . . throughout Colombia they have

established bases near Coca-Cola bottling facilities.”

• On 2 October 2002 Saul Rincón, a known paramilitary, and another man

were seen monitoring a union protest at the entrance to the Barrancabermeja

plant; the two men then entered and talked with plant managers. On 5

October Rincón warned that local SINALTRAINAL leader Juan Carlos

Galvis was an assassination target, and on 8 October he was discovered

carrying out surveillance in Galvis’s home district. Galvis was fired at by

several paramilitary assailants on 22 August 2003, but managed to survive.

Rincón was arrested for homicide in a different case on 22 June 2004

(SINALTRAINAL, 2004d).

• According to witnesses, Panamco official Jhon67 Ordonez makes payments

on the 28 of each month to paramilitary leaders in Cúcuta. On 13 January

2003, paramilitary forces announced that, on instructions from management,

“they intended to kill members of SINALTRAINAL because they were

interfering with the business of the Coca-Cola bottler at the Barranquilla

facility.” (Campaign to Stop Killer Coke, 2003a)

Shifting Patterns of Attacks

SINALTRAINAL reports 179 serious human rights violations against its members

between 1990 and 2001. Their data shows that the threats, beatings and assassinations

mostly occur against local union representatives in the periods immediately prior to and

during annual negotiations on collective agreements. According to incidents recorded

by SINALTRAINAL (2002d), the violence against Coca-Cola workers increased

dramatically in 1994/1995, and again in 1997/1998.


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SINALTRAINAL cites several instances where violence against the unions organising

in Coca-Cola bottling plants increased just as local production was closed, the workers

sacked and the union presence eliminated. In two such instances (Valle de Cauca, 1994

and Nariño in 1996), production was reopened, only under new contracts without a

collective agreement and without a union (SINALTRAINAL, 2002c: 2).

Since the ATCA case, there have been no assassinations in the bottling plants.

Nonetheless there has been one assassination and many attacks on individual Coca Cola

workers who are SINALTRAINAL activists, and their families, as well as heightened

harassment by management and legal measures against the union.

At 7 pm on 31 August 2002 Adolfo Munera López was shot dead at the door of his

mother’s home in Barranquilla. The union’s account of events preceding his murder

illustrates how the state, corporation and paramilitaries can combine. The bottling plant

manager had denounced Munera López, whose home in Barranquilla was raided by the

armed forces on 6 April 1997, and so he moved from city to city and could not attend

his job. Coca-Cola’s letter sacking him arrived a month later, for failing to turn up to

work. Munera López made a legal application to be reinstated, which was granted in

the first instance, but appealed against by the employer. Nine days previously, on 22

August 2002 he had received notification from the Constitutional Court that it would

revise the employer’s appeal, giving him hope of return to work (SINALTRAINAL,

2002b).

Increasingly, family members are victims. According to information supplied by

SINALTRAINAL:

• On 18 June 2002, three men tried to kidnap the four year old daughter of

William Mendoza the President of SINALTRAINAL in Barrancabermeja,

and a member of the Regional Corporation for the Defence of Human

Rights, "CREDHOS". The individuals tried to snatch away the girl from the

arms of her mother in a park, who ran towards the road and got into a taxi,

struggling with one of her assailants who was still trying to seize her

daughter (SINALTRAINAL, 2002a).

67 In Colombia the custom is to spell the proper name ‘John’ as ‘Jhon’.


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• On 10 September 2003, four men who had covered their faces with hoods

took 15 year old son of Limberto Carranza, a worker in Coca Cola in

Barranquilla and a national leader of SINALTRAINAL, from the bicycle he

was riding along Simón Bolívar Boulevard in Barranquilla. They forced him

into a white van, in which he was driven around, while he was tortured and

interrogated on the whereabouts of his father. After over three hours they

threw the youth out at Ahuyama Canyon, he was found by a passerby.

Meanwhile a telephone call was received at Limberto Carranza's residence,

“Son of a bitch trade unionist, we are going to crush you, and not just you,

we are going to attack your home” (SINALTRAINAL, 2003c).

• At about 7 am on 20 April 2004, several men armed with machine guns

entered the home of Gabriel Remolina and his partner Fanny Robles in the

la Cumbre neighbourhood of Bucaramanga. They fired indiscriminately at

all the family, assassinating Gabriel and Fanny, and wounding three of their

children, one of whom later died. The victims were the brother-in-law,

sister-in-law and nephew of Efraín Guerrero, President of the local branch

of SINALTRAINAL and a worker at the Coca Cola bottling plant who had

just come off hunger strike against the closure of production at the plant

(SINALTRAINAL, 2004c).

There have been incidents of threats and actual attacks on union offices. Three phone

calls were received at SINALTRAINAL’s national office during the morning of 16

May 2003 with a sound like tin cans being smashed, in the fourth call an unknown

voice said: "we are calling from a Bank ... son of a bitch get out from there because at

12 o’clock we are going to blow up that joint …” followed by similar sounds and then

hung up (SINALTRAINAL, 2003a). The union office in Santa Marta was threatened on

28 January 2004. On 2 March 2004 four unkown and heavily armed men entered the

SINALTRAINAL local offices in Barranquilla, they took records and equipment before

being picked up by more armed men (SINALTRAINAL, 2004a).


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Attempts to Criminalise and Destroy the Union through Colombian Courts

Coca-Cola’s bottlers continue using legal instruments to persecute SINALTRAINAL.

In 2003 Panamco raised charges of ‘injury and calumny’ against seven named leaders

in retaliation for their participation in a press conference launching the US ATCA civil

action. In Colombia these are treated as criminal offences. Panamco’s lawyer Dr. Jaime

Bernal Cuellar was National Prosecutor in the mid-1990s, in which position he signally

failed to pursue any of those responsible for the assassinations. Coke’s bottlers raised

at least seven libel cases against individual SINALTRAINAL leaders, and the

corporation raised injunctions seeking to remove union leaders from their posts in

Giradot, Bogotá and Villavicencio. The libel cases were ruled against on 13 January

2004, but the bottling company raised a new lawsuit against two SINALTRAINAL

leaders in the Valledupar plant (SINALTRAINAL, 2004a).

The next move was an attempt to criminalise the union as an organisation. On 4 January

2002 Coca-Cola brought a legal action seeking the dissolution of the Santa Marta

branch of SINALTRAINAL, which was denied (SINALTRAINAL, 2004e). On 8 July

2004, Coca-Cola presented a petition to the Ministry of Social Protection to revoke

SINALTRAINAL’s statutes, attacking articles 2 and 7 that make it possible for

shopkeepers, informal workers and other people in the agro-industry to join the union.

This petition was accepted and agreed by officials. SINALTRAINAL appealed to the

courts, and on 24 February 2005 a magistrate ruled that the Ministry decision was in

contravention of international labour treaties recognising labour rights and human

rights, and upholding SINALTRAINAL’s statutes as legal. At time of writing the

Ministry officials have not accepted the court’s ruling. As the union points out, the

outcome is crucial for it to be able to legally organise manual workers who are outside

the collective agreement (SINALTRAINAL, 2003b; 2004f; 2005a).


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Results - Structural Changes in the Coca-Cola System in Colombia

By the beginning of 2005, only 8 percent of Coke’s manual workers were covered by

collective agreements and formal employment law protections. The rest sold their

labour as sub-contracted, independent or temporary workers outside the minimal

protections and benefits - that is to say as ‘flexibilised’ informal workers

(SINALTRAINAL, 2005). The shift of power to capital that was intended with Law 50

had been comprehensively achieved in the Coca-Cola system, a labour force

substantially without employment rights. The result of nearly fifteen years of

flexibilisation is the loss in income, longer hours and worse conditions for the workers,

but reduced production and distribution costs for the corporation.

Coca-Cola Corporation is involved in a worldwide programme to decrease unit costs by

investing in new processes to render its bottling workforce more productive, enabling it

to sack a significant section of them, to increase production with fewer workers. Coca-

Cola Femsa-Panamco closed 11 bottling plants in Colombia from September 2003

onwards. Coca-Cola’s drive for extra profits caused their closure, the criterion of

efficiency being an exclusively financial one based on the most ‘efficient’ return on

capital employed (Anon, 2004: 50-56). Despite a limited market, the modernisation of

Coca-Cola’s Colombia production operations is under its control and on a profitable

basis for the parent corporation.

Coca-Cola (2005) states that the FEMSA bottling plants “are unionized at about 9 times

the national average” and “in a country where violence against union members has

deterred all but four percent of workers from unionizing, 31 percent of the employees

of our Coca-Cola Colombian bottling partners belong to unions.” But Coke’s

presentation of the figures is entirely misleading, the corporation is not comparing like

with like. The four percent national unionisation rate refers to the number of union

members (estimated at 850,000 in 2005) in relation to the entire adult economically

active population (just under 20 million). By 2004 the real rate of unionisation of the

workforce in the Coca-Cola system in Colombia, when the temporary workers, sub-

contractors and independents are taken into account was no higher than 5 percent, close

to the national average.


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The drastic fall in the Coca-Cola workers’ rate of unionisation from over 15 percent in

1990 to about 6 percent in 2002, and lower subsequently, is even more pronounced than

the average national trend, which includes public sector as well as private sector trade

unionism. The evidence suggests that SINALTRAINAL’s struggle represents in

microcosm the experience of Colombian workers employed by multinational

corporations, most of whom have eliminated trade unions altogether. In 1993

SINALTRAINAL had 1,440 members in Coke plants, by 2004 this had fallen to just

389 members (SINALTRAINAL, 2004f).

Add to this the further factors of multiple small unions and difficulties in organising the

majority of the workforce without direct, permanent contracts leads to the conclusion

that another result of the Coca-Cola FEMSA Panamco policy has been authoritarian

fragmentation, seriously weakening union organisation.


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Theoretical Observations

An example of Efficiency Seeking Investment

This case study has been adopted as an example of an efficiency seeking multinational

investment, where the investor’s main concern is not securing access to raw materials,

or directed at expanding market share, but to cut costs. This emphasis can be

differentiated by two counter examples. Coca-Cola Corporation’s original franchising

of bottling production was adopted to take advantage of the strength of the Coke

product and brand, to rapidly expand production and distribution in the US. In the

classification of investment strategies, franchising as it originally developed was a

mechanism for a market access seeking strategy, rather than efficiency. It allowed for

the rapid inclusion of other capitals to assure the ubiquity of Coke. And

contemporaneous with this case study has been the campaign to hold Coke accountable

in India, where six communities are fighting to close down production plants

(Srivastava, 2004). The key issue there is competition over water usage, which the

communities around plants allege Coke has taken from them. In the classification of

investment strategies, the corporation is both raw material seeking, water as the

essential but scarce element, and market access seeking. Thus one should not be too

dogmatic in classifiying a given investment project exclusively into one strategy or

another, as all the variables of market, raw materials and labour must be present, rather

the advantage is in clarifying in a given context which variable is being prioritised by

the corporation.

The focus of this case study is labour repression. A clear benefit to the corporation

functioning as a capitalist profit maximising entity has been identified. Absolute

surplus value has been increased by prolonging the working time and reducing wages;

and relative surplus value has increased by concentrating production - both have been

facilitated by weakening union organisation and suppressing opposition to job cuts. The

violent persecution of trade unions has been directly functional, it has removed an

obstacle to the intensified exploitation of the workforce.


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Confirmation and Elaboration of Pearce’s Framework

This case study has touched on issues central to Pearce’s approach to corporate

criminality, its relationship to the demands of capital accumulation and the attitude of

the state. We have addressed the issue concerning capital accumulation, attempting to

fill out and advance the theory by examining the relationship between violations and

investment strategy. Turning then to the state, Pearce invites us to question the quality

of a democracy where corporate misbehaviours are exempt from official scrutiny and

censure. Despite the normative enunciation of rights in the Colombian constitution, the

case study demonstrates a reality of official tolerance (court) and the probable

involvement of state institutions (army) in the violent persecution of trade unionists.

If, in general, Pearce offers a helpful framework for theorising the phenomena in the

case study, we can also identify areas where theory needs to be developed. Pearce’s

thesis that corporations organise favourable factors and disorganise unfavourable

factors is borne out in terms of the results of the process, but there remains a problem

with understanding the process itself. If, as Pearce argues, corporate crime (as distinct

from white-collar crime) is the result of rational calculation, this implies a conscious

evaluation of costs and benefits, and an executive level in the corporate structure where

such consciousness exists. Given the pattern of aggression from plant managers and

their collusion with paramilitaries, the evidence is suggestive of a higher common point

at which a calculation was made, but the claim remains plausible rather than proven,

and there is in this case study no analysis of the internal processes of such presumed

calculations.

Definitionally, Pearce as Sutherland before him, was alert to the issue of what

behaviours are designated as crime by state authorities. When the state is involved, and

not just in passing but as a matter of policy, then definition of the phenomena

concerned as criminal all but collapses as a datum point. The phenomena are better

approached definitionally as social harms or, in the Latin American and Colombian

context, human rights violations. The shift from white-collar crime to corporate crime,

needs a further definitional shift to frame its subject as corporate involvement in human

rights violations.


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Paramilitarism as an Informal System of Labour Repression

In discussing the connections between criminals and service providers Ruggiero posits

that

“the current economic situation promotes two symmetrical types of criminal

activity, and that both, with the expansion of the informal, show a growing

obfuscation of the boundaries between legitimate and illegitimate conduct”

(2000: 90).

The current case is of criminal activity sub-contracted as a form of service provision.

The case study looks at paramilitary attacks on organised workers; and the connection

between managers and the paramilitaries. SINALTRAINAL’s account points to the

ready availability of an informal system of coercion and elimination against its

organisers, i.e one that managers had knowledge of and access to. Managers in the

bottling plants contracted or otherwise employed paramilitaries to eliminate trade union

leaders. As an instrument of labour repression this is not casual but systematic. This

recalls Dieterich’s notion of corruption and disappearances as two analagous informal

systems. In that discussion, corruption was depicted as a system offering economic

privileges; and disappearances a system offering political privileges. If the

SINALTRAINAL allegations are true, they reveal these motives and methods

combined in a new configuration; an informal system of extra-judicial killings for

economic advantage.

Thus far we have looked at the instrumentality of paramilitarism to private capital, its

utility as a deniable tool. This study only touches on paramilitarism as such, and

provides limited empirical basis to theorise the phenomena. Nonetheless, two

preliminary reflections are noted here.

The paramilitaries are organisations with purpose, perpetrating violence and human

rights violations through various forms. Petras’s notion of criminality as a form of class

consciousness has some resonance. The distinction here is that this is not an extreme

conjuncture under which the property owning class feels threatened for the very

existence of its privileged position (as in Allende’s Chile); but rather an ongoing

modality of social control.


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To be a paramilitary and commit violations is a learned behaviour. Critical criminology

can offer various insights into understanding parmilitarism beyond the rudimentary

theory offered here. Fuller analysis of paramilitarism as such would need to take into

account that it is not only a learned behaviour, but a taught behaviour. The paramilitary

organisations are quite open about their selection of recruits and instruction in training

camps (Semana, 2005) that constitute a set of para-institutions. Moreover they are open

in their far right ideology, the modus operandi of their violations and can be related to

the literature on ‘hate crime’ (Steinert, 1998; Wilson and Greider-Durango, 1998).

Stated at its highest, what we have from the case study is the prospect of corporate

crime as hate crime. The accumulated evidence on the violations is that they do possess

a systemic character that is in someway purposeful and functional. But there is a

distinction here to be drawn between purpose of the violence – to eliminate militant

trade unionists – and its function with respect to the corporation, that it benefits

economically. The charge that the corporation benefited from the violations takes us to

different assessments as to the extent of the system. One is that managers acted without

the policy backing of their corporate bosses, i.e. that ‘white-collar’ offences took place.

The alternative is that the behaviour of the managers was a manifestation of corporate

policy, albeit an informal rather than formal policy, i.e. that corporate violations took

place.

Corporate Neutralisation and Denial

Sykes and Matza (1957: 667-669) identify techniques of neutralisation used by young

offenders to defend their criminal activity. The neutralisation works beforehand to

weaken social control making delinquency possible, and afterwards to deflect blame

(Cohen, 2001: 60). The techniques are denial of responsibility (“I didn’t mean it”);

denial of injury (“I didn’t really hurt anybody”); denial of the victim (“They had it

coming to them”); condemnation of the condemners (“Everybody’s picking on me”)

and appeal to higher loyalties (“I didn’t do it for myself”).

The distinction between the rationalisations of young offenders and the neutralisation

sub-culture of corporate officials is, according to Box, that the legal system is on the


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side of the latter and unlikely to compensate their victims or to control their crime, i.e.

they are privileged, whilst at the same time senior corporate officials are more likely to

be committed to conventional values and hence “they have an even greater need to

neutralize the moral bind of the law and thus protect their respectability and self-

identity from the signs of discreditability implicit in corporate crimes” (1983:54). And

Cohen (2001) points out that three of the justifications are couched as denials, and that

similar techniques are used by those in authority to deny atrocities and state crimes.

Let us consider the shape of corporate neutralisation and denial from the case study.

The Corporation deflects blame by denying responsibility, although in a different sense

than an individual would. This denial of responsibility has two variants. The first, to

paraphrase: is that the act was carried out, not by our corporation but by an independent

entity beyond our control. The second is, again paraphrasing, managers and workers

alike, we are all victims of violence beyond our control. There is also denial of the

victim, intermittent in public, by associating the trade unionists with the insurgency.

And Coke has a heightened sense of condemning the condemners who are, it claims,

perpetrating “a shameless effort to generate publicity using the name of our company,

its trademark and brands” (Coca-Cola Corporation, 2003a).

There is a strong correspondence between Coca-Cola Corporation’s denials, and the

types of official state denial examined by Cohen: “literal (nothing happened);

interpretive (what happened is really something else) and implicatory (what happened

is justified)” (2001:103). Cohen goes on to explain that these may be advanced

sequentially, or simultaneously with each other (as in the allegations are ‘completely

false’, and that they are part of a ‘shameless effort’ by SINALTRAINAL):

“How can one say that a massacre did not take place, but also that 'they got

what they deserved?' Trying to 'expose' this contradiction misses the point. As

the apocryphal US army spokesman said in Vietnam: 'There was no massacre

and the bastards got what they deserved.' The contradictory elements form a

deep structure: their relationship to each other is ideological, rather than logical”

(ibid: 103).


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Rather than deal with the issue of links between its managers and paramilitaries

assassinating trade unionists, Coca-Cola has denied the massacre, and turned to the sub-

text - ‘the bastards got what they deserved’ - because they oppose Plan Colombia. This

is more than a throwback to the 1950s Cold War mentality, it is the Bush doctrine in

dangerous practice. In Coke plants in Colombia – those who are not for us are against

us - corporate denial becomes corporate counter-insurgency, and it raises the

ideological stakes: a corporation that aligns itself with the counter-insurgency strategies

of the US and Colombian state runs a high risk of becoming the object of moral

opprobium.


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Chapter 6 BP’s Pipeline: The Strange Case of the Crimeless Victims

“To some people we seem dangerous, powerful and unaccountable” Lord Browne, BP Annual General Meeting 18 April 2002 “My shirt has no value for you, but for me it has” 68 Colombian peasant saying

Introduction

This case study is treated as an example of ‘raw materials-seeking’ foreign direct

investment and its social, environmental and human rights impacts. According to

ECLAC, multinational investments in extractive industries tend to be capital intensive,

long term and have few linkages with local economies, with the possible difficulty of

environmental pollution (ECLAC, 2004: 16).

The case of BP’s production operations in Casanare, Colombia had already assumed a

high profile before this research, and has been claimed by the World Bank and others as

a positive model of corporate social responsibility - (Davy, McPhail and Sandoval,

1999; Jenny Pearce, 2004; Warner and Sullivan, 2004; Zandvliet and Reyes, 2004).

This chapter critically examines this positive evaluation of BP’s role before proceeding

to test an alternative interpretation through a case study of the corporation’s pipeline

activities and their impact on a specific rural community.

68 “Para Uds la camisa mia no vale nada, pero para mi vale mucho”


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The Resource-Conflict Paradigm and an Alternative

Modernisation Reformulated as ‘Greed or Grievance’

The reformulated modernisation paradigm as it applies here consists of two overlapping

discourses, both promoted by the World Bank. The one is constructed around the

connection between civil war and resources, and the other is corporate social

responsibility. The first is ontological concerning the social environment and the

second considers how the corporation should behave in such an environment. Though

addressing slightly different issues, these two discourses nonetheless share the same

uncritical paradigmatic assumption that foreign investment is desirable. The discourses

are brought together in Warner and Sullivan (2004) who cite BP’s activity in Colombia

as a leading case study confirming the benevolent, modernising corporation thesis.

The connection between conflict and access to resources is theorised as the “greed or

grievance” model, and is formulated by Collier and various co-writers working on a

World Bank research programme. With respect to problem definition, the

multinationals are essentially not within the scope of the model, rather it is either the

local state or society, or both, that are problematised. Collier et al argue that economic

resources attract rebel groups who seek economic rents from which they can finance

their activities, and hence continue civil wars (Collier, 2000; Bannon and Collier,

2003). These authors present a benign process of development led by multinational

investment that is affected negatively by rebellion, “for the affected country, civil war

represents development in reverse” (Bannon and Collier, 2003: 1). In a further

elaboration within this resource-conflict paradigm, Ross identifies dependence on the

export of natural resources as the problem, to the extent that for him the natural

resources themselves become a ‘curse’ that ‘cause problems’ and are ‘at fault’ (2003a:

17). Ross (2003b) distinguishes between ‘lootable’ (e.g. drugs, alluvial gems, timber)

and ‘unlootable’ (oil, gas, deep-shaft minerals) natural resources, hypothesising that

lootable resources tend to prolong non-separatist conflicts, whereas unlootable

resources engender separatist conflicts.69

69 With oil, drugs and emerald diamonds Colombia is afflicted by this characterisation with the double curse of lootable and unlootable resources.


144

Without unpicking these positions in detail,70 the point here is that theorists in the rent-

seeker paradigm ignore a simpler explanation of social conflict arising from resource

extraction, that conflict stems from the behaviour of the multinational corporations. It

follows that corporate behaviour must be scrutinised and evaluated. In the reworked

modernist orthodoxy, the multinational corporation is at once assumed present as the

agent of resource extraction and yet removed as itself problematic or an object of study.

If the economic sources of political violence are to be addressed, why not examine the

economic sources of corporate and state violence as well as rebel violence? Ballentine

and Nitzschke contrast to Collier’s ‘rebel centric’ theoretical approach, ‘state centric’

approaches that focus on state failure or the collapse of institutions and processes,

warning that

“casting rebellion as a criminal rather than a political phenomenon may risk

mischaracterizing legitimate grievances, thereby foreclosing opportunities for

negotiated resolution, and may lend de facto legitimacy to state actors.” (2003:

2)

These authors conclude that a holistic conflict analysis is required, using a modified

political economy that considers the interrelationship between economic and political

factors (ibid: 4; Ballentine and Sherman, 2003).

Critical criminology offers another perspective by keeping focus on FDI and its

interactions with society. It is a ‘corporate centric’ as well as state centric approach, in

that it considers that corporate behaviour may be harmful, conflict inducing or

otherwise problematic. As noted in Chapter 2, the oil industry per se can be considered

as a criminogenic business sector (Pearce and Tombs, 2003).

There is an overwhelming case on empirical grounds to link oil and conflict, notably

with respect to the Middle East. The question is why? Critical criminology needs to

turn to radical political economy to establish the theoretical basis of an alternative

paradigm.

70 For a critique of the Collier model as it pertains to Colombia see (Gutiérrez Sanín, 2004).


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A Critical Political Economy of Oil - Towards an Alternative Paradigm

Critical criminology requires a critical political economy of resource extraction. The

chemical qualities of oil as a hydrocarbon make it the cheapest option compared with

rival energy sources. Hence oil derived products compete in the market at average

prices determined by the cost of production of the available substitutes, considerably

above oil’s own production cost. At first approximation, the enormous profits

generated by the oil industry contradict labour theories of value. Investigation of how

it is that relatively few workers, compared to other sectors, can be the source of this

value starts with the considerable gap between oil’s cost of production and its selling

price. The private ownership of oil deposits and their means of extraction bestows a

privileged position on the owner that is manifest in prevailing, capitalist, economic

relations as economic rents over and above normal rates of profit.

The category of rent introduces a second theoretical approximation adopted in the

literature (Noreng, 2002). According to Marx’s theory of rent, in the capitalist system

labour remains the source of value, but that is not to say that Nature’s contribution is

ignored. In all social systems natural wealth enhances human productivity but, Marx

argues, capitalism’s tendency is to subsume Nature’s contribution under monopoly, i.e.

by turning natural resources into private property and so denying access to others.

Monopoly translates into rent the social fact that private ownership of a part of the

natural resources of the planet bestows on the owner a claim on the overall social

production (1974b: Part VI).

This circumstance of privilege within the class of property owners is of immense

significance in a world system that harbours a great impulse towards possession of

natural resources because of the great surplus profits that accrue, and is key to

understanding the pre-eminent role oil multinationals in the world system. Elaboration

of a critical theory of rent as applied to world oil and energy markets is found in

Massarrat (1980) and Alvarez (2000).71

71 The acquisition of empirical data that demonstrates the distribution of rent and costs between all the major players in oil production and distribution is a major undertaking, not least because of the industry’s complicated pricing structures. Oil prices are usually reported as the spot price for crude, but to gain a fuller understanding one must consider the final selling price of main derivative products (kerosene and petrol). For example, in 1990 while the spot price of crude fluctuated between US $16 and $20 a barrel the final price of oil reached the equivalent of


146

The two hikes in crude oil prices in 1973 and 1979 are well known. Less commented

on is the rapidly changing internal variation, i.e. in the distribution of oil income

between the three main agents: the producing countries, the oil companies and the

consuming countries. The producing countries pushed their share up from 12 percent to

57 percent of the final price, but by the end of the 1980s this had fallen once again to

around 20 percent. Conversely the consuming countries share of the final price of oil

was pushed down form 56 percent to 14 percent, but by the end of the 1980s was again

around 60 percent. The oil companies portion was squeezed down from 33 percent to

19 percent, albeit of a much higher amount (see Annex Table 6.1).72

The figures illustrate that the great differential between average costs of oil production

and final price is taken as rent divided between three major parties. Apart from the

increase in final price, there are two striking observations: a) the extent to which the

states in consuming countries benefit, and b) the volatility in the variation between the

shares. This latter volatility suggests that power relations between the three major

players are the principal factor, rather than any strictly economic value-added elements

that they contribute. Each of the three players may seek to maximize the rents they

receive from oil at the others’ expense, whilst at the same time entering into collusive

alliances to protect those rents. From this perspective the notion of a rentier state that is

normally applied only to the producing country is not only limited but misdirects

attention away from a fundamental economic driver for conflict. When it comes to

benefiting from oil surplus profits, the multinational companies and the importing

states are not only rent seekers, but rent takers.

nearly $100 a barrel. Using the final price allows an overview of the distribution of oil surplus – including economic rent taken in the form of extra profits or taxes between the main agents. 72 Note that the figures are illustrative and subject to a number of qualifications. Not least, oil companies tend to minimise the export price of crude as this is the price on which they pay royalties, and conversely the oil corporations tend to emphasise the value added in downstream activities. The data used in Table 1 include costs, and therefore are not sufficiently refined to demonstrate the distribution of profits. Massarrat achieved a more refined analysis, isolating the profit element and reporting an even greater accentuation towards consuming countries. The distribution of surplus profits in 1973 was 18 percent ground rent in the producing countries; 11percent company profit and 71percent petroleum taxes in importing countries; in 1975 these proportions had changed to 42 percent, 9 percent and 49 percent respectively (1980: 55). Although Massarratt’s figures end in 1975, the general relation still holds. An Australian specialist source reported in October 2004 that crude prices represent only 35-40 percent of the final price of petrol, and that petrol consumption tax levels are at about 70 percent in most of Western Europe (Dickman and Holloway, 2004).


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There has been increasing centralisation of capital in the sector. When Sampson’s

popular study was published in 1975 there were 'seven sisters'. The book was updated

in 1987 with a chapter 'then there were five' corporations acting on a global scale

(Sampson, 1988). Centralisation was accentuated even further after the 1999-2001

round of mergers that left the top 5 with over 70 percent of the capital of all private oil

corporations (see Annex Table 6.2). That two of these five mega-corporations are UK-

based means that the UK is second only to the USA in the oil and gas sector, far

outstripping its size or economic power by other indices.

Curtis (1998) argues that the interests of the big oil companies underpin much of the

mutuality in UK and US military and foreign policy, starting in the Gulf. From its very

origins as a supplier of fuel to the Royal Navy the corporate history of BP is

intertwined with British imperial interests (Sampson, 1988: 70-75). Previously called

the Anglo-Persian Oil Company the company name British Petroleum dates from the

aftermath of a coup against Dr. Mossadeq, Iran’s elected nationalist prime minister in

1953. The coup was a joint Anglo-US operation to restore the interest of BP. Shell and

seven US oil corporations were allowed to share the benefits as well (ibid.: 128 - 152).

Ranked by market capitalisation, BP and Shell are the UK’s first and sixth biggest

companies, between them accounting for 13 percent of the London stock market

(Observer, 2005). Their influence was revealed in a statement by chief executive Lord

Browne defending BP’s profitability, “We make large profits. We are the second

largest oil and gas company in the world. BP contributes a pound out of every six or

seven pounds in every private [pension] scheme in the UK" (Scotsman, 2004), which is

tantamount to claiming that what is good for BP is good for Britain.

Although the UK government’s shares in the corporation were sold off in 1989, BP's

commercial interests are so substantial that they are closely attended to by government.

The ties between BP executives and the upper echelons of government and the civil

service have if anything increased since the election of New Labour in 1997, as noted

in the press on several occasions (Financial Times, 2002b; Guardian, 2002; The

Sunday Times, 2003).


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BP’s Controversial Role in Colombia

Oil Production in Colombia

From just over 100 thousand barrels per day (kbd) of crude in the early 1980s

Colombia’s oil production rose in two large investment tranches. Big investments in

1985 in the Caño Limón field in Arauca increased production to 400 kbd. There was

another major increase from 1992 in the Cusiana and Cupiagua fields in Casanare,

doubling national oil production to a peak of 844 kbd in 1999. By 2000 Colombia was

the seventh biggest supplier of oil to the US market (EIA, 2005).

In 1995 oil overtook coffee as Colombia’s biggest export commodity (Wall Street

Journal, 1997). The employment base of the two sectors is entirely different, with far

fewer oil workers than coffee cultivators. Alvarez (2000: Chapter 6) is critical of the

lack of popular participation in the national oil policy, arguing that in the 1990s

Colombia’s presidents used the oil income coming through state oil corporation

Ecopetrol to offset general state expenditure, rather than ensure the viability of a state-

led hydrocarbon policy. Their guiding idea was to capture the maximum income for the

government rather than consider the sustainability of the natural resources.

While Ecopetrol is directly responsible for some oil production and there are small

entirely private concessions, the greatest proportion of production is carried by

multinational corporations working in association contracts with Ecopetrol (see Annex

Table 6.3).

The largest production fields lie on the eastern side of the Andes: Caño Limon is

controlled by US corporation Occidental; the Cusiana and Cupiagua fields are worked

by a consortium led by BP. As its main fields become depleted, Colombia’s oil

production has declined since 1999 to just over 500 kbd. After domestic consumption,

oil exports averaged 230 kbd in 2003 valued at US $1.65 billion, providing 28 percent

of export revenues and 10 percent of all government revenues (EIA, 2004; Ecopetrol,

2004). As operator of the Cusiana and Cupiagua fields, BP controls over half

Colombia’s oil exports.


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Dirty Business in Casanare?

BBC and ITV television programmes broadcast in 1997 alleged that BP was linked

with extra-legal repression in Casanare.73 The charge was that legitimate civilian

protest against BP's operations had been criminalised, the presumed ringleaders were

singled out for persecution, death threats and assassination.

Six years previously BP hired a private company, Defence Systems Limited (DSL), to

train and equip its security operations. DSL was run by a former SAS officer to provide

specialist military services to governments and companies in 26 countries. BP signed

an agreement with Colombia’s Minister of Defence on 7 November 1995 that

committed it to paying to the Colombia army a 19 percent share of US $11.6 million to

guarantee the security of oil operations until 31 December 1997 (Cambio 1997). A

brigade of 3,000 Colombian soldiers was specially created to protect oil installations.

There were very grave human rights consequences. In El Morro village, the locals

complained that BP’s operations had damaged their road and natural water supply. The

central allegation was that BP had taken photographs of protesters at public meetings

and passed them on to Colombian military intelligence, a charge that BP refuted. Six

local leaders from El Morro were assassinated, and despite the company’s refutation

there was real concern that BP was at least complicit in serious human rights violations

(Gillard, 1997; Beder, 2002).

Dirty Business ... Clean Business

The first phase of BP’s response led by crisis management. Behind a public position of

denial the corporation started to organise its allies whilst seeking to marginalise its

opponents. The company issued a statement refuting the accusations of its critics,

centering on the company’s links with the military. BP also stated that “Allegations of

wanton environmental damage are untrue – we do not deny that mistakes have been

made, but these have been promptly addressed and rectified” (1997: 3). The statement

concluded with a declaration of intent to set high standards:

73 Oil and Terror and BP’s Secret Soldiers.


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“There is a human rights issue in Colombia. Both BP and the Colombian

government need to demonstrate that a strife torn region like Casanare can

progress economically as a consequence of investment in oil without

precipitating human rights abuses. We have proposed that the area be targeted

for a model programme on human rights”. (ibid.: 4)

The second strand in the corporation’s response was to organise support from its allies,

and for a company of BP’s standing this ran from government to the NGO sector. The

initial revelations concerning BP's Colombia operation came into the British press in

1996-97, in the months preceding a general election. The incoming New Labour

government's decision to ennoble and appoint the corporation's Chairman David Simon

to ministerial positions signaled that Prime Minister Blair was apparently less

concerned with a possible human rights scandal than with using Simon's expertise in

gas privatisation. The Colombian oilworkers union USO observed that:

“The endorsement of the British government for BP’s activities has been, so to

say, integral: diplomatic, judicial, military and technological; in times of Labour

as of the “Iron Lady". Things do not seem substantially different with the

present government of Tony Blair, an example of which is the appointment of

the old president of the British Petroleum Board of Directors, Sir David Simon,

as Minister for the relations with Europe”74 (1999: 2).

The other element was to concede ground whilst counterattacking to isolate the critics:

BP’s tactics were designed to clean up the image of its Colombian operation utilising a

series of 'divide and rule' manouevres; in similar manner to Shell’s response in the face

of its own public relations disaster at that time (Rowell, 2002). The UK based

‘Coalition Against BP in Colombia’ reported Belén Torres, president of the National

Association of Peasants-Unity of Reconstruction (ANUC-UR), saying that BP had

proposed a code of conduct on human rights and the environment. A commission was

set up comprising several Colombian organisations including the Centre of

74 “El respaldo del gobierno británico a las actividades de la BP ha sido por llamarlo de alguna manera integral: diplomático, judicial, militar y tecnológico; en tiempos de la "Dama de Hierro" como de los Laboristas. Con el actual gobierno de Tony Blair las cosas no parecen sustancialmente diferentes, ejemplo de ello es el nombramiento del antiguo presidente de la Junta Directiva de la British Petroleum, Sir David Simon, como Ministro para las relaciones con Europa.”


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Investigation for Popular Education (CINEP), the Colombian Lawyers Commission,

Political Prisoners Solidarity Committee (FCSPP) and ANUC-UR, but BP’s manner of

conducting the consultation split the local NGOs between those who accepted and those

who rejected the company’s manner of conducting the process.

“ ‘The elaboration of this code remained suspended between BP desperately

searching for an ethical-moral code that would not resolve anything and that

would not involve any system of sanctions or verification and furthermore not

be binding’, said Belén...At the beginning of this year BP organised a new

project of investigation in order to elaborate a code of conduct; the team is made

up of six agencies financed by NGOs, however it remained a unilateral code

where BP imposed its conditions.” (Mobilise, 1998: 3)

ANUC-UR had wanted substantive changes in the multinational’s policies on the

exploitation of oil resources, compensation for local populations and a revision of

labour contracts in favour of workers. But, according to Torres, these recommendations

were not acceptable to BP. There were no trade unions in the Casanare operation; the

corporation continued its policy of 28-day work contracts that violate International

Labour Organisation agreements. BP implemented labour mediation committees to

operate as a filter in choosing personnel that were not residents of the area. The excuse

was that the local workers could be supporters of insurgent groups, but in practice what

BP did was to contract an unorganised migrant workforce, one that carried less risk of

sustaining demands (Mobilise, 1998).

Demands were being dropped elsewhere too. While the Colombian peasant

organisation ANUC-UR opposed BP's tactics, some international NGOs took the

decision to ‘constructively engage’ with the corporation. From their perspective they

had persuaded BP to adopt the Universal Declaration of Human Rights. On the other

hand from early 1998 onwards BP was reconstructing its reputation as a positive force

for human rights. In a pattern that was to be repeated, the corporation received the

endorsement of Amnesty International’s UK Business Group at the time chaired by of

Sir Geoffrey Chandler, former finance director at Shell and since 2001 chaired by

Christopher Marsden, former Head of Community Affairs at BP (Amnesty

International UK, 2000: 112- 144).


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The policy of isolating the militants was applied in Britain as well. The Independent on

Sunday ran a feature entitled ‘A lethal brew of oil and blood’ that portrayed both the

British government and BP as victims of Colombia’s civil war (Raynor, 1997). The

apparent purpose of this error-ridden article and its accompanying piece ‘Shadowy trail

that leads to London’ was designed to undermine the legitimacy of BP’s critics. There

was a matching article in the Bogotá based Semana magazine. The pressure on

Colombian refugees prepared to challenge BP’s human rights record had the hallmarks

of a co-ordinated operation to isolate a target through manipulation of the public

information system. Yet even as BP responded to the first wave of critics, the human

rights allegations continued. The journalist team who made BP’s Secret Soldiers

reported an investigation by the government’s ombudsman, whose

“inquiry into BP’s environmental record between 1991 and 1997... is a

devastating catalogue of pollution, illegal deforestation, water contamination

and the dumping of untreated toxic waste in Casanare” (Gillard, Gomez and

Jones, 1998a).

There was yet a further set of revelations to come concerning BP’s recruitment of

intelligence gathering networks along its pipeline.

Clean Business ...Dirty Society

Rebuttal was not enough, the next phase entailed moving from a defensive posture to

one where the corporation’s good faith could once again be assumed. BP and its allies

set out to construct a perceptual frame where it, the corporation, is not the problem but

the social reality it encounters is assumed to be a problematic given, a hostile

environment replete with risks and threats that need to managed, that is controlled and

then lead.

The World Bank sent a social development study team to Casanare. They found “a

general reluctance of interviewees to comment on the issues of violence and human

rights” (Davy et al., 1999: 38), although this admitted ignorance did not stop the team

casting doubt on the objectivity of the ITV and BBC programmes. Instead the World

Bank researchers endorsed the approach where “to obtain a more representative view of


153

community perspectives on BPXC’s social investments, a local NGO (CEMILLA) was

hired to evaluate five representative projects that BPXC had cofinanced” (ibid.: 39).

They found BP’s programmes to be well intentioned but inadequate. Their main

conclusion was that while royalty income provided a potential basis for funding

ongoing and sustainable private investment in non-oil sectors, Casanare suffered from a

lack institutional capacity “at the departmental and municipal levels to plan, manage

and implement projects that use the substantial oil revenues for sustainable

development.” It is this institutional vacuum that resulted in “an enclave situation”

(ibid.: 43).

The problem was not understood as being BP’s sudden and massive investment, or the

oil wells’ contamination, or the corporation’s association with and training of human

rights violators, but with the failures of the local state and society. BP could help solve

these problems by developing partnerships with government and civil society to

encourage local leadership and to get involved in the regional development planning

exercise (ibid.: 44). BP needed to break out of its enclave and the way to do this was to

build up the entrepreneurial class that would thus become a pro-business ally, a bridge

between the corporation and local actors. In this transition from villain to victim, BP

became the clean business that has to respond in a dirty society.

Meanwhile BP was not only seeking partnership with the local state, but with the US

state to defend its interests in case the local state should fail. The corporation was

making a related move at the highest level of geo-politics. Along with Occidental and

Texaco, and several armaments corporations, BP had financed the US Colombia

Business Partnership an active business group set up in the USA to lobby in favour of

military intervention. US direct intervention was presented as a war against drugs,

packaged through the $1.3 billion Plan Colombia and yet, as the Financial Times

reported, “defence contractors and oil companies provided most of the push for the aid

package, backed by companies with stakes in Colombia”, including BP (Dunne, 2000).

Complete Rehabilitation (Nearly)

The process of BP reinventing its image went global in July 2000, when the company

adopted a new logo and the catch-phrase “Beyond Petroleum”. BP’s apparent new

environmental orientation was captured by the replacement of its traditional shield by


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an abstract sunflower representing, according to company executives, the ancient Greek

sun god Helios. But the re-branding was ambiguous if not downright misleading, BP

was not actually saying that it would drop oil production which it planned to increase

by 5.5 percent year on year, rather implying that it would become less important as the

corporation evolved into an energy services company, including renewables. The

Financial Times (2000) commented that “there is a danger that BP’s progressive image

will clash with operational realities.”

As the protests faded away and stories were being treated as old news, the UK

government assisted in BP's rehabilitation. In November 2000 the Foreign and

Commonwealth Office published a brochure decorated with pictures from BP and

Shell. BP's investment Colombia was seen strategically as the bridgehead towards

wider commercial exploitation of Latin America, with UK direct investment leaping

up by 73 percent between 1994 and 1998. At the end of this period Colombia received

20 percent of all British investment in the continent, second only to Brazil, and due

almost entirely to BP (Green, 2000: 18).

The UK government got involved in projecting BP as an exemplary standard bearer in

the field of corporate responsibility as well. In December 2000 seven leading US and

UK oil and mining multinationals launched the Voluntary Principles on Security and

Human Rights code, worked out in partnership with the US and UK governments, and

international NGOs. Three of the companies involved were British - BP Amoco, Shell

and Rio Tinto Zinc. The purpose of the code was to regulate this partnership in a way

that would purportedly monitor for and prevent human rights abuses. BP claimed best

practice in the field, having already adopted similar internal guidelines. The initiative

was seen as a breakthrough in corporate ethics - high profile corporations adopting self-

regulation out of enlightened self-interest (Freeman, 2001).

The initiative was further consolidated through a three-year research project of

‘Business Partners for Development’ that also got under way in 2000. The Natural

Resources Cluster grouped “some of the world's leading transnational and domestic oil,

gas and mining corporations, together with The World Bank Group (IBRD and IFC),

the UK Department for International Development (DFID) and CARE International”


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(BPD, 2004). BP was one of the four co-convenors of this research promoting tri-

partite partnerships.

Two narratives were competing in the public domain: dirty corporation or clean

corporation? This question has several aspects. Were BP really cleaning up their act –

or is the cleaner, greener image a deception? For example is the security code of

conduct superficial or does it reflect real changes in the modus operandi of the

company? Another concern is the process of how government, NGOs and academics

have since 1998 lined up to defend BP in Colombia. What is the mandate of the NGOs,

and the quality of their research? Fundamentally, how inclusive are these partnerships

of the communities affected by BP’s operations? Which leads on to another vital

aspect, that of motive. Not only BP but Britain claims to be a leader in this policy of

corporate responsibility, why has it assumed this position; or is the new image itself an

instrument of commercial advantage?

At first sight the evidence is that BP’s campaign to revamp its image has been an

unqualified success. The corporation is accumulating ‘reputational capital’. In polls of

the world’s most respected companies, BP came “first among CEOs and third among

NGOs - one place above Greenpeace”. The Financial Times concluded that BP and

other like companies “are succeeding in convincing the most sceptical of professional

audiences - NGOs and media - that their commitment to environmental sustainability is

real” (Poynter, 2003).

Approval is not universal however. BP states that it has learned from its Colombia

experience, but has the corporation really cleaned up its act or learned how to better

contain criticism? The corporation’s liquified gas plant in Tangguh, West Papua and

the Baku-Tblisi-Ceyhan pipeline are two mega-projects drawing criticism from

campaign groups (Muttit and Marriot, 2002; Kirksey and Grimston, 2003; Gillard,

2004). Moreover evidence from the pipeline case, which will be considered in this case

study, suggests that the controversy concerning BP in Colombia is not as closed as the

corporation might wish.


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The Pipeline Case

Normative Framework

The law on foreign investment, Law 9 of 1991, was one of the prime measures in the

neo-liberal apertura (opening) programme of President Gaviria. It provides an

investment regime based on access to foreign corporations on an equitable basis with

domestic capital, and guarantees foreign investments. There are special regimes for the

finance, mining and hydrocarbon sectors (República de Colombia, 1991).

Alongside this fundamentally market-oriented approach is Colombia’s principal

environmental legislation, Law 99 of 1993, which was passed in the light of the 1991

Constitution and under the direct influence of the 1992 Rio Summit on the

Environment and Development. The Rio Declaration stated that

“In order to protect the environment, the precautionary approach shall be widely

applied by States according to their capabilities. Where there are threats of

serious or irreversible damage, lack of full scientific certainty shall not be used

as a reason for postponing cost-effective measures to prevent environmental

degradation” (UNEP, 1992).

Colombia’s Environment Law 99 of 1993 enacted this ‘precautionary principle’

through the use of environmental impact studies to assess threats of damage. A new

Environment Ministry was set up charged with the power of granting, and also

withholding, environmental licences as necessary. Moreover, in the spirit of Rio

Declaration that called for States to make information widely available to encourage

public awareness and participation, Law 99 directed all levels of government to plan

environmental changes, including forms of popular consultation (República de

Colombia, 1993; Brañes, 2001: 70). The clear intention of the Rio Declaration was for

democratic inclusion “in decision-making processes”, and it further insisted that

“effective access to judicial and administrative proceedings, including redress and

remedy, shall be provided” (UNEP, 1992).

Encouraged by the apertura policy, there was a surge of incoming investment in the

early 1990s, especially in the oil sector. Free market access and the precautionary


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principle were in latent contradiction. The question was whether an investor-friendly

regime would take its own laws seriously and in practice apply the new environmental

and social protections, even if against the financial interests of the multinationals. The

following case tests that question.

BP Project Manages the Pipeline Construction

BP had for some time been interested in exploring deposits in the Orinoco region to the

east of the Andes. Its attention was on Casanare department, in the piedmont to the

south of Arauca. In 1987 BP acquired exploration rights in the Santiago de las Atalayas

contract, and in 1990 to the Tauramena contract. One year later drilling at Cusiana 2

had begun, and by 1992 the presence of a huge oil and gas deposit was confirmed. BP

signed the Piedmonte production contract, and the following year (1993) it discovered

the Cupiagua field, also in Casanare. The Cusiana and Cupiaga fields were the biggest

new find in South America for thirty years, BP focussed its logistical, financial and

technical resources to bring them into commercial production as quickly as possible.

Construction was in two phases - Phase 1 revolved around building a central

processing installation in Tauramena capable of handling throughput of 160 kbd. Two

short pipelines were constructed, one from Cusiana to El Porvenir in Casanare, and the

other from La Belleza across the mountains to Vasconia in the Magdalena Medio

valley. From Vasconia the crude could be either piped to internal destinations or, as it

turned out, for export through the existing Oleoductos de Colombia (ODC) pipeline to

the Caribbean port of Coveñas that had just been completed in 1992. The ODC pipeline

was built and operated by a consortium of the same name, in which Ecopetrol held a 49

percent stake. US oil corporation HOCOL held the biggest private corporation share

(34.35 percent), and amongst seven smaller share holders BP held a 4.16 percent stake

in ODC (ODC, 1989).

Phase 1 of BP’s combined extraction and transport system was completed in 1995

(Davy et al., 1999: 11-12). Phase 2 was dedicated to boosting the extraction capacity

of Cusiana and Cupiaga to 360 kbd, the biggest extraction unit in Colombia. More

transport capacity was needed to take the additional crude all the way to Coveñas on

the coast. In all a 800 kilometer pipeline system crossing two plains, mountain regions

and a river valley was needed, plus a series of pumping stations as well as storage tanks


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and extra facilities at Coveñas75. Ocensa (full name Oleoducto Central S.A.) was

specially formed as the corporate vehicle to build and operate this second pipeline, in

coordination with the other elements of Phase 2. The entire construction programme

had to be completed by 1998. In short, an enormous investment, worth $10 billion in

total and involving $3 billion from BP, was hanging on rapid completion of the Ocensa

pipeline (BPXC, 2001).

BP took a ‘hands on’ approach to ensuring that its investments came on stream. Its

wholly owned subsidiary BP Exploration Colombia (BPXC) lead in creating the

Ocensa consortium; BPXC directly project managed the pipeline construction activities

before Ocensa came into being, and into the consortium’s early years. BPXC wrote to

the Environment Ministry on 11 and 22 July 1994 seeking environmental licenses for

the Cusiana - La Belleza and Vasconia - Coveñas legs of the new pipeline (Quintero,

1999: 34). Ocensa was formed on 14 December 1994: the major shareholders were

Ecopetrol (50 percent), BPXC (19 percent), the French Total Pipeline Colombie

S.A.(19 percent), Canada’s Triton Pipeline Colombia Inc (12 percent) – that is in the

same proportion as contracted shares in the Cusiana and Cupiaga fields - plus very

small holdings by TCPL International Investments and IPL Entreprises (Colombie) Ltd

(Ocensa, 1994).76

Peasants from the Zaragoza and Segovia municipalities in north east Antioquia claim

that the two oil pipelines passing through their farms have caused extensive

environmental damage, and that they have been forced off their land. Most of the

claimants work their own lands in a stretch from Segovia to Zaragoza. With El Bagre to

the north and Remedios to the south, these municipalities form the Bajo Cauca sub-

region of north-east Antioquia, an area of hills and rivers. The main economic activity

in this sub-region has been gold mining (large corporations and artisan miners)

supplemented by peasant agriculture (CAJSC, 1993).

75 The ODC pipeline linking Vasconia with Coveñas is 480 km long. The entire OCENSA Cusiana to Coveñas pipeline system consists of four legs: Cusiana to El Porvenir - completed in Phase 1; El Porvenir to La Belleza - completed in Phase 2; La Belleza to Vasconia - completed in Phase 1; Vasconia to Coveñas – completed in Phase 2. 76 By 2003 the respective holdings in OCENSA were Ecopetrol 35.29 percent, BP 24.8 percent, TOTAL Pipeline Colombia 15.2 percent and Canadian corporation Enbridge 24.71 percent (BP, 2003)


159

The ODC pipe was laid in a trench along the higher ground of the undulating terrain.

The president of Ecopetrol wrote to the peasant farmers in August 1988, seeking

authorisation to run the pipeline through their lands:

“Ecopetrol guarantees you a just and fair compensation for the losses that this

State Corporation causes you, taking into account the area that the Corporation

requires, crops and goods affected in the agreed zone and to pay you [the

amount] established for the right of way”77 (ODC, 1988).

But in the construction phase, ODC stripped away all the trees along the pipeline

corridor, leaving it without vegetation, exposed to water and wind erosion. The

peasants lost their fruit trees and other crops (Hinestroza, 2001a). ODC had agreed with

each peasant farmer a ‘right of way’ use of their land for 10 metres either side of the

actual pipe. The contracted amount was worth 125 pesos per square metre of the strip,

subdivided into payment for right of way - 23.08 percent of the total - and losses due to

damages during construction - 76.92 percent of the total78 (ODC, 1993). But, according

to the peasants, ODC failed to deliver on detailed promises to put right specific

damages to crops and buildings, and the amounts paid were well short of actual losses

(Hinestroza, 2001a). The peasants’ complaints were raised in Antioquia departmental

assembly, but neither ODC nor Ecopetrol attended (Florez, 1993).

When it came to constructing the Ocensa pipe, planned to run in parallel with and near

to the ODC line for most of the way, there were significant differences: a) the peasants

already had a negative experience from ODC; b) their right to be consulted enjoyed

greater legal protection under the 1993 environment law; c) a foreign multinational, BP,

had got directly involved. BPXC wrote to each peasant farmer along the pipeline

corridor asking for written permission to carry out works on their land, declaring:

77 “ECOPETROL le garantiza una indemnizacion justa y equitativa por los perjuicios que esta Empresa del Estado le cause, teniendo en cuenta el área que la Empresa requiera, cultivos y bienes que se afecten en la zona determinada y el pago de la servidumbre que se establezca” 78 The payment was for the equivalent of US $3 per metre of pipeline. Exchange rate estimated at 800 pesos per US$.


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“BP guarantees you a just and fair compensation for the damages that the

studies, analysis and works of construction might cause your lands, crops and

other goods that are affected”79 (BPXC, 1994).

The promise was in similar terms to the previous guarantee from Ecopetrol. Would it

be fulfilled?

Official Process 1: The Hearing that was Heard but Not Listened To

While BP and its partners had a commercial imperative to press ahead as quickly as

possible, the peasant farmers in Zaragoza were unhappy with the prospect of another

pipeline and had formed themselves into an informal committee. Under their pressure,

Zaragoza’s mayor wrote to the Environment Ministry seeking a Public Administrative

Hearing, as provided by the 1993 law concerning the granting of an environmental

license for the second pipeline (Arango García, 1995a). The peasants’ concerns were

considered seriously by regional officials, who alerted the national authorities. The

Agrarian Prosecutor of Antioquia, responsible for ensuring that other state bodies

would follow the 1991 Constitution, wrote to the Environment Ministry and the

Prosecutor General asking for copies of “all possible information” concerning the

proposed pipeline and the environment, as “the community in Zaragoza is very

interested to prevent damages and minimising the impact that the works might cause,

and they state they already have the negative antecedent of the Vasconia – Coveñas

[ODC] Pipeline” (Procuraduría Agraria, 1995a). Another government official with

environmental protection responsibilities in the Defensoría (Ombudsman’s office)

prepared an 18-page report for the Hearing that rests on the collective human right that

all the people affected by an environmental change should participate in deciding that

change. The Defensoría considered that the construction project was especially

sensitive in two aspects:

“Management of the lands affected. The erosion produced by the workings along

the pipeline corridor deteriorate the lands of the adjoining plots. This effect is

visible in many regions and is heightened by failures to complete revegetation and

79 “BP le(s) garantiza una indemnización justa y equitativa por los daños que los estudios, análisis y trabajos de construcción puedan ocasionar a sus terrenos, cultivos y demás bienes que se afecten”.


161

reforestation plans. Generally the protection barriers do not meet the objective that

they were built for and the contracting corporations do not respect the agreement at

the start of the works.

Care and prevention of contamination and deterioration of the waters of the pipeline

corridor. Water is the principal asset of our communities and as such must be cared

and respected, establishing efficacious preventative measures”80 (Defensoría, 1995:

2-3).

The Defensoría emphasised that the completion of the constitutional and legal

provisions for community participation were imperative, and it recommended that the

Ministry of the Environment apply the legislation strictly by suspending the decision to

grant an environmental license until BP supplied a detailed response to a list of socio-

economic and environmental concerns, including specific information on potential

impact on land and water in Zaragoza and north east Antioquia (ibid.:16). In his own

submission to the Hearing, the Mayor of Zaragoza, emphasised how much the ODC

pipeline had disrupted the mining activities of the peasants, and urged that any

environmental impact study for the second pipeline would take this into account,

pointing out that “the construction and operation of the previous Vasconia – Coveñas

pipeline left us with a bitter taste”81 (Arango García, 1995b).

The Public Administrative Hearing was convened by the Environment Ministry, and

took place on 19 May 1995. Peasants who were present say that they put their

complaints and told the authorities that they did not want a second pipeline. The BPXC/

Ocensa representative assured them that the corporation would do things much better

80 “Considera la Defensoría que la construcción del Proyecto es especialmente sensible en dos aspectos: - Manejos de los suelos afectados. La erosión producida por las obras del corredor del oleoducto deteriora los suelos de los predios colindantes. Este efecto es visible en muchas regiones y se agudiza por el incumplimiento en los planes de revegetalización y reforestación. Generalmente las berreras de protección no cumplen en el objetivo para el que se construyen y las empresas contratistas no respetan [lo] pactado al iniciar las obras. - Cuidado y prevención de contaminación y deterioro de las aguas del corredor del

oleoducto. El agua es el principal tesoro de nuestras comunidades y como tal debe cuidarse y respetarse, estableciendo medidas preventivas eficaces.”

81 “La construcción y operación del anterior oleoducto Vasconia – Coveñas nos dejó un amargo sabor”


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than had occurred before. But from that point on there was something amiss in the

process: the statements of opposition from the community have not been recognized

nor preserved in the national official record. In fact BPXC, “in its role as coordinator

of the pipeline construction”, and Ocensa had written to the Environment Ministry on

21 April 1995 asking that there be four further public hearings along the length of the

proposed pipeline (BPXC, 1995a). The Ministry ’s record of the exchanges notes it

wrote to BPXC on 30 March 1995 and on 2 May 1995 seeking environmental impact

and social impact studies respectively; Ocensa replied on 22 June 1995 remitting

additional information; and the Ministry granted a licence on 31 August 1995. This

record does not include any reference to the Zaragoza Public Administrative Hearing,

although it was convened under the Ministry’s own responsibility to protect social

rights, or the concerns raised there (Quintero, 1999: 34-35). And so, despite the local

Defensoría’s recommendations to carry out a detailed study and against the peasants’

unequivocal opposition, the Ministry officials granted the license that BPXC/Ocensa

needed to proceed. The actual license document refers to the Zaragoza hearing but not

to its recommendations (Ministerio del Medio Ambiente, 1995: 4). The Zaragoza

peasants had been heard, but not listened to.

If the precautionary principle and BP’s own promise were being followed, the

corporation should have carried out a full impact study and disseminated it to the

community for consultation before the Ministry granted an environmental license.

Instead, the license requires Ocensa to “establish a mechanism for the evaluation of

damages caused during the construction and the adoption of immediate mitigation,

recuperation and compensation measures”82, and to carry out “a Plan of Environmental

Management”83 (Ministerio del Medio Ambiente, 1995: 9). Attention to “a programme

to follow up and monitor water quality and all water resources during the phases of

construction and operation”84 (ibid,:14) is one of the many detailed provisions.

An expert team (geologist, anthropologist and mining engineer) did carry out a census,

but the study’s objectives were formulated in a one-sided way “to determine the impact

82 “OCENSA debe estabelecer un mecanismo para la evaluación de daños ocasionados durante la construcción y la adopción de medidas inmediatas de mitigación, recuperación y compensación.” 83 “un Plan de Manejo Ambiental”


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of mining on the pipeline, as well as the parameters that would permit mining activity

without prejudicing it [the pipeline]”85 (Municipio de Zaragoza, 1996: 2). The

objectives did not include the converse case, the potential impact of the pipeline on the

peasants’ mines or on their livelihoods more generally. Consequently what follows is a

catalogue of health and safety problems and negative environmental impact of the

informal, low technology mine operations.

BPXC agents had been visiting the farmers from around the time of the Public Hearing

urging them to sign detailed eight page promissory contracts committing them to

providing right of way. Many of the peasants trusted BP, but some never signed a

contract, and others again complain that they were offered a blank piece of paper to

sign, which was later above-filled with the actual contract terms. The BPXC contracts

offered compensation for a strip of land just 12.5 metres wide in total, i.e. narrower

than the ODC strip set at 10 metres either side. The compensation calculation contained

three elements: the payment for use of the right of way per square metre of this strip; an

element for damages to pasture and crops within the strip during the construction

phase; valued at 280 pesos per square meter and 120 pesos per square metre of the strip

respectively, i.e. 400 pesos per square metre. There was a third element for any

additional damages within the right of way area that was calculated on the basis of a

notional 1,700 pesos per meter of the length of pipeline passing through the property.

Between June 1995 and March 1996 BP made three cheque payments from its account

to each farmer who had signed a contract (BPXC, 1996). The value of these payments

is equivalent to US $7 per metre of pipeline.86 It is important to note that these amounts

were to cover damages within the ‘right of way’ corridor during the construction

period. Extra-contractual damages beyond this narrow strip were not included, nor was

the cumulative impact of any damage over time.

84 “La compañia debe estructurar el programa de seguimiento y monitoreo de calidad del agua y de los recursos hidrobiológicos, tanto para la fase de construcción como para la fase de operación” 85 “Censo Socio-económico, Ambiental y Minero”. “Determinar la incidencia de la minería en la línea del Oleoducto, al igual que los parámetros que permitan la actividad minera sin perjuicio de éste.” 86 For example, in one case where the pipeline passed through 250 meters of land the proprietor’s total compensation package was for 1,637,500 pesos (BPXC, 1995b; 1995c), worth about US $1,740 at 1995/1996 exchange rates averaged at 940 pesos per US $.


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Ownership of the leg of the pipeline that crosses the Eastern Andes, the Porvenir –

Vasconia section, was transferred from Ecopetrol to Ocensa in late 1995. This section

was already transporting an average of 213 kbd by 1995, increasing to 266 kbd in 1996

(Ecopetrol, 2001; 2002). Although the ODC pipeline already carried some of this crude

on from Vasconia to the coast, with the Casanare fields’ production capacity building

up rapidly the ODC pipe’s capacity was only half what was required. From the

investor’s point of view it was urgent to get the Vasconia - Coveñas leg of Ocensa on-

stream.

Alleged Harm Caused by Laying the Ocensa Pipeline

There is no available official environmental study of the Zaragoza area either before the

ODC pipeline or before the Ocensa pipeline to serve as adequate baselines for

measuring the subsequent impacts. One of the farmers, Jhon Kennedy Morales Moreno

who had instigated the peasants committee, took the initiative to commission a property

expert to assess his own farm. The expert reported that although Ocensa had just started

the works to lay the pipeline at that point, the farm’s many water sources were still

“crystalline, uncontaminated, refreshing and can be ingested without any risk”87. But,

the expert’s evaluation continued, these same water sources were threatened by the

placement of the pipeline through the property (Gil Ospina, 1996).

The work of laying the Ocensa pipeline in the Zaragoza district took place through

1996 and into 1997. The oil did not start to flow until the whole pipeline system was

completed in late 1997, by which time the farmers were experiencing another round of

environmental damage on their lands that they attribute to the second pipeline. Once the

pipeline had been laid, Ocensa did carry out restoration work, using plastic materials

pegged over the ground, crossed with shallow ‘V’ shaped water channels and other

retention works. But the earth moving operations to dig the second trench were more

extensive than the ODC workings. They had caused avalanches, blocked springs and

diverted streams. Even the restorative work had unintended consequences: the retention

sacking had rotted away within a few months and farm animals that ate the synthetic

sacking were poisoned. The peasant farmers were reporting damages from erosion;

87 “Las aguas de la finca son cristalinas, incontaminadas, refrescantes, que pueden ingerirse sin riesgo alguno.”


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disruption and contamination of water supplies; and the loss of crops and farm animals

extending well beyond the pipeline corridor.

Responding to a petition from the farmers, Zaragoza’s circuit judge appointed two

experts to carry out an inspection in September 1997. Their report states that along the

pipelines’ length “crevices or gullies were verified and these in their turn generated and

/or generate danger not only for the proprietors of the plots and/or their families, but

any livestock that they might have”88 (Gil Ospina and Montoya, 1997: 7). Bearing in

mind that the damage encountered in the inspection may have been caused by the first

or second pipeline, the experts specifically found that “for all the plots where the

Cuisana – Coveñas Pipeline passed” – i.e. the Ocensa pipeline – “the disappearance of

crops, pastures, natural as well as artificial water, and many houses because of the

danger of an avalanche as a result of the erosion was verified, as was the loss of their

mines in a clearly gold bearing zone”89 (ibid.: 7).

The experts summarised the damage as "constant erosion, scarce re-vegetation, and

fundamentally the total lack of water", concluding that “as a result of the exploitation

given in the previous point, to re-emphasise the above, water sources, secondary

tributaries and ponds were all inoperative in their specific functions”90 (ibid.: 8). Not

only had there been clearly expressed concerns of further damage should the Ocensa

line go ahead, there was evidence soon after its construction of the second pipeline’s

additional environmental impact. At certain points the second line takes a distinctly

different route to the first, and in these stretches the damage specific to Ocensa is

apparent (Restrepo, 2001). Photographs and videos taken at the time illustrate that the

land appropriated for the construction was three or four times wider than the 12.5

metres specified in the BPXC contracts (El Colombiano, 1997).

88 “se verificaron grietas o cácavas y que estas a su vez generaron y/o generan peligrosidad no solamente para los proprietarios de los predios y/o sus familiars sino para los semovientes que puedan tener” 89 “precisamente por todos los predios donde pasó el Oleoducto Cusiana Coveñas, fue verificado que desaparecieron cultivos, potreros, las aguas tanto naturales como artificiales, muchas viviendas por el peligro de un alud producto de la erosion y las minas propias de una zona netamente aurífera” 90 “producto de la explotación dada en el punto anterior, es de recalcar que las cuencas, nacimientos de agua, afluentes secundarios y estanques, quedaron inoperantes para la función específica que prestaban”


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Security, Military-Paramilitary Violence, Displacement

In parallel with the above developments, another major issue connected with the

pipeline began to impact on the peasants’ lives: security. Security for the pipeline and

security for the people in its environs are not by definition the same: one is to protect an

investment project and the other is to protect human rights. Whether these two

requirements converge, overlap or contradict each other is contingent on the security

model applied.

A human rights report on the north-east Antioquia sub-region documents patterns,

recurring since the early 1960s, of executions committed by official armed forces and

“by paramilitaries groups and ‘Death squads’ working with complicity, collaboration or

acquiescence of the military and police authorities” (CAJSC, 1993: 51). The report

highlights the appearance in November 1991 of a new death squad called ANA91 that

worked in close cooperation with the army and mounted road blocks on the road

between Zaragoza and Segovia. Residents reported that the ANA operatives boasted

that they “represented the government and that they obtained their finances from

Ecopetrol, "Mineros de Antioquia" and other rich companies in the region; and that

they had two hundred well armed men to cover from Puerto Berrio to El Bagre”92, i.e.

along the route of the ODC pipeline (ibid: 53). Colombia’s state institutions had set a

precedent with the ODC operation that was deeply inimical to human rights. Would the

security model adopted by BP and its Ocensa associates be any more respectful of the

local population’s human rights?

By the mid-1990s, important and inter-related changes were taking place regionally and

nationally that connected with the situation in Zaragoza and its neighbouring

municipalities along the pipeline. Firstly was the official endorsement of auxiliary

security operations. President Gaviria issued Decree 356 in 1994 legalising ‘Special

Vigilance and Private Security Services’. His successor President Samper pressed

ahead with this initiative and from 1995 on these were formed as security cooperatives

called Asociaciones Convivir. The CONVIVIR groups were civilians entitled to carry

arms and primarily focused as an intelligence gathering network to pass information by

91 Autodefensas de Nordeste Antioqueño – Self-Defence of Antioquia’s North-East 92 “manifestaron que representaban al gobierno y que su financiación la obtenían de Ecopetrol, "Mineros de Antioquia" y otras compañías ricas de la región; igualmente, que contaban con docientos hombres perfectamente armados que cubrían desde Puerto Berrio hasta El Bagre”.


167

radio on to the official armed forces and police (Human Rights Watch, 1996: 44). The

units were funded by wealthy contributors and were able to keep their identities secret.

Human rights monitors note that the CONVIVIR provided a legal cover and official

endorsement for the rapid expansion of paramilitary coercion against the civilian

population, “in practice, they differed little from illegal paramilitary groups” (Human

Rights Watch, 2000: 15). The policy of Antioquia’s then governor, Álvaro Uribe Vélez,

was to strongly promote the formation of CONVIVIR groups. Uribe’s vice-governor

Pedro Juan Moreno was the “architect of the CONVIVIR program” which by the end of

1996 had established seventy units with around ten thousand members (Amnesty

International, 2002: 3; Contreras, 2002: 125, 128).

Secondly, was the increased power of the military over civil society. In 1996 President

Samper passed under state of emergency provisions Decree 717 that allowed military

commanders to declare ‘special zones of public order’, taking direct control and

suspending civilian authority and basic rights of movement. The first of these was

announced by governor Uribe on 11 May 1996 and the commander of the Army’s 14th

Brigade assumed control of the municipalities of Segovia and Remedios, just to the

south of Zaragoza93 (McDonald, 1997: 23; Contreras, 2002:135).

Thirdly, the formally illegal paramilitary ‘self-defence’ forces were rapidly expanding

their field of operations at his time. In March 1996 the forces of Carlos Castaño’s

ACCU arrived in the Bajo Cauca sub-region. They assassinated 15 people in the town

of Segovia on 22 April 1996 and were reported as acquiring the best properties in the

zone, having forced local inhabitants off their lands (Contreras, 2002: 132-133). The

paramilitary groups reorganised nationally under Castaño’s leadership and in April

1997 they announced the formation of the United Self-Defence Forces of Colombia

(AUC) as an anti-subversive, armed federation with strategic targets (McDonald, 1997:

24; IGC, 2003: 13). The AUC soon launched an offensive into the mountains of South

Bolivar, ranged to the east of the pipeline, to capture the stronghold of the ELN94

(Richani, 2003: 87).

93 The banana region of Urabá in northern Antioquia featured in Chapter 5 and five other departments were also declared special zones. 94 ELN Ejército de Liberación Nacional – National Liberation Army, the second largest of Colombia’s guerrilla movements.


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These developments coalesced with BP and Ocensa’s arrangements to secure the new

pipeline from disruption. There had been 65 attacks by ELN guerrillas on the ODC

pipeline up to 1996, only a quarter of the attacks on the Caño Limón-Coveñas pipeline

in the same period, but still a serious headache for the authorities (CAJSC, 1993: 60;

Castro Caycedo, 1998: 11-14). A Defensoría report points out that providing security to

oil installations carries with it a high social and environmental as well as financial

costs, but that oil companies had not been characterised by such concerns (ibid: 49-50).

On Ocensa’s prompting, Zaragoza’s Mayor issued Decree 056 that established a 6pm to

6am curfew along the pipeline. The decree also prohibited the movement of machinery

in the pipeline construction area and the use of mining explosives within 100 meters

either side (Arango García, 1996). The army implemented this as a complete curfew,

rendering economic activity inoperable in practice in the 200 meter band. The

combined effects of additional erosion and contamination from the second pipeline and

the curfew meant that instead of losing the use of a narrow strip, the peasants had lost

use of their entire holdings. The drive to ensure the pipeline security was to have

another cost, in human rights terms.

Alongside the official military protection corridor a second, unofficial layer of the

cordon sanitaire around the pipelines started to operate, patrolled by paramilitary

forces. As we have seen, paramilitarism was an established phenomenon in north-

eastern Antioquia. Martha Hinestroza (2002: 4) reports that as a newly qualified lawyer

she was appointed as local ombudsman in the town of Vegachi in 1993, where she had

to make “formal complaints on behalf of the local community about masked men

carrying out killings”. The following year she was appointed ombudsman in El Bagre,

near to Zaragoza, where she received reports from residents “saying that the killings by

masked men in the area were being carried out by police and the army” (ibid: 4).

Despite alerting national attention to investigate the situation the killings continued and

the conviction grew that there was a covert policy being implemented, “that the masked

men carrying out these murders were from military intelligence units. They were

killing guerrillas and guerrilla-collaborators - or people they accused of being such.

They were also killing people from particular social groups, such as drug addicts, petty

criminals, prostitutes and street children” (ibid: 5).


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On Hinestroza’s account paramilitaries arrived in force in Zaragoza during 1995, the

same year that she was appointed ombudsman to the municipality. Hinestroza reports

charges not only of close army links with the paramilitary, but direct army involvement

in paramilitary style operations, “a number of people came to my office to complain

that they had been put on an army list. They told me they were being persecuted by the

army and the paramilitaries. To be put on such a list meant that the person was a

guerrilla, or a guerrilla-collaborator. The army were targeting such people to kill them”

(ibid: 7). The paramilitaries began to openly threaten people, in collusion with

Zaragoza’s Mayor. People who complained became targets of the military/

paramilitaries. Hinestroza notes three instances where people were assassinated after

they had registered official complaints with her. She began to investigate complaints

that the Mayor and muncipal engineer were corruptly diverting royalties, and believes

that it was a result of this, and her aunt Elvia Regina Cuello’s campaign to elect a new

mayor, that Ms. Cuello was taken from her home by thirty uniformed men, and shot in

the head. Hinestroza was forced to flee Zaragoza and resign her post, but the

assassinations continued. Jhon Kennedy Morales was murdered shortly after he

commissioned the inspection of his farm at the end of 1996. It is one thing not to listen

to the farmers, it is another thing to silence them by elimination.

Despite the intimidation, in early February 1997 the desperate farmers blockaded the

Ocensa pipeline’s construction in protest. The action was peaceful and lasted 36 hours,

but the farmers had to desist when Ocensa officials arrived with the Army and stated

that they were ready to retake the machinery by force. The farmers demanded adequate

compensation from ODC, they wanted assurances that Ocensa would not repeat the

mistakes of the first pipeline, and they complained that the security corridor prevented

them form working their mines or other economic activities. ODC, which did not at

first accept peasants’ demands, stated through Ocensa that it would study them (El

Colombiano, 1997). The human rights cost of the pipelines was beginning to mount up:

armed men came to the farm of Alfonso Hernández who had been prominent in the

blockade. He was threatened, and had to flee immediately from the area to save his life.

This leads on to questioning the character of BPXC and Ocensa’s involvement in an

unethical policy to safeguard the oil. Michael Gillard and his co-investigators revealed

that BP’s own security officer Roger Brown was running the Ocensa security

department; that BP and Ocensa had a relationship with the 14th Brigade of the


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Colombian Army and with the private Anglo-American security company DSL; and

that Ocensa had also contracted an Israeli company Silver Shadow through which it

was considering equipment such as attack helicopters and other special weapons.

Brown had been discussing with Silver Shadow setting up a system for intelligence

gathering, targeting and interrogation of individuals. According to the testimony of a

former employee, for two years Ocensa had been running a spying operation in the

community “whose information was passed to the counter-guerrilla brigades protecting

the pipeline”. The operation consisted “of a 35-strong team of former Colombian

officers who reported to Mr Brown and a BP security manager”. John O’Reilly BP’s

public relations officer on Colombia justified the company’s involvement (Gillard et

al., 1998a; 1998b). Brown was moved on after these revelations, but apart from ending

the involvement of Silver Shadow it is quite plausible that his security model

continued, dovetailing as it did neatly with the Colombian army’s own modus operandi.

For example, Caucasia is the center of operations both for Ocensa and the base for the

Army’s pipeline brigade, and is also a pivotal base for the paramilitaries (COPP, 2002:

141).

BP’s active project management of the Ocensa pipeline included managing the security

environment using covert military techniques against the civilian population. In so

doing, the corporation was directly involving itself in the dramatically deteriorating

human rights situation in Antioquia. A report by the Medellín based IPC on this period

emphasises the rapid escalation of violations starting from1996, especially in Antioquia

department where the number of non-combatant deaths shot up from 300 that year to

1,578 in 1997. Rightwing paramilitaries were, according to the IPC figures, responsible

for 78.2 percent of the assassinations (Rincón, 1999: 60 – 62). IPC report points out

that three zones within Antioquia most affected by armed conflict and violence against

the civilian population were the locations of major economic projects: banana exports

in the north; hydroelectric projects in the east central area; and gold mining in the

eastern perimeter (ibid: 123). The pipelines passed through this latter sub-region which

was, according to the evidence collated by the Nunca Más project, becoming the scene

of a ‘holocaust’. Approximately 250 people were assassinated in the pipeline districts

of Segovia, Remedios and El Bagre in 1997 alone (Nunca Más, 2000: 474). This figure

is higher than the IPC data, which nonethless shows that assassinations in the three


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areas through which the Ocensa pipeline passed (Magdalena Medio, Nordeste and Bajo

Cauca) increased from 71 people in 1996 to 218 people in 1997 (Rincón, 1999: 123).

The IPC study also looks at the consequential explosion in forced displacement

between 1995 and 1998. In 1998 forced displacement reached 317,161 people in

Colombia as a whole, Antioquia was the worst affected department, with 60,655 people

obliged to leave their homes that year. 542 people were displaced from Zaragoza

municipality in 1997, and another 355 people in 1998 (Angarita, 1998: 134; Rincón,

1999: 111-112). The displacement of the farmers along the length of the pipeline was

either to the local towns of Zaragoza and El Bagre - the CAJSC report terms these local

displacements the ‘silent’ displacement (CAJSC, 1993: 69) - or more visibly to cities

further afield, especially to Medellín, Antioquia’s departmental capital.

The Social Effects of Displacement

The forced displacement of rural families of humble means is a major phenomenon in

Colombia, a humanitarian disaster on a par with the worst in Africa (Rojas Rodríguez

et al., 2001). The traumatic social effects of displacement from the pipeline zone

present a microcosm of the wider picture. Some of the families displaced off their land

by the pipelines have moved to Medellín, where they live on the city’s rubbish tip in

the Moravia district. Because of the security situation there it was not possible to study

their lives in any depth, what follows is based on group interviews and a visit to their

homes and thus represents a limited snap-shot of their new reality, nonetheless a

revealing glimpse. The displaced peasants’ feel an all-embracing nostalgia, a sense of

bereavement for the land and the way of life that they have lost. They want their land

back because they want their way of life back. It is not unusual for a peasant farmer to

proudly list the twenty or thirty different types of fruit they used to cultivate:

“Before the pipeline came we used to live on the land, from agriculture: we had

plantain, maize, yucca; we had pastures, chickens, pigs, fisheries and we

weren’t in the circumstances that we are now”95 (Interview Group of Displaced

Farmers)


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“we used to live very comfortably, very happy because we had [everything] for

subsistence”96 (ibid.)

“a very hard change, very drastic.”97 (Interview Displaced Family A)

The farmers’ former life was hardworking but stable. They worked for themselves in

extended family units, they were mostly middle peasants, who did not have to go out

and work for others, but worked their own farms. Some of them were able to hire in

labourers. They had built wooden single story homes for themselves. Now the

displaced farmers are in precarious conditions:

“the city turns you into a perverse man, because that’s how it is here, in the city

you don’t see anything but violence, in contrast to the countryside where you

live a peaceful life”98 (Interview Group of Displaced Farmers)

“we are campesinos and we are trained to get our living in the fields not in the

city, the city is not for us, because we are not given work.”99 (ibid.)

When they first arrived in the city most did not know anyone, a few had relatives who

helped them find lodging. They joined an invasion shanty town in the district of

Moravia, where they live in plásticos, rough shacks erected on a mound of bedded-

down rubbish. The water supply to Moravia is often interrupted, it runs for just one

hour each day. One family of nine is housed in a small shack. Another unit of two

brothers and their families, numbering 17 members in all, sleeping in just three beds.

They have a slightly bigger dwelling, but dangerously perched on the hillside.

Unemployment is around 60 percent, any work available is as a casualised day-

labourer. The women take in washing and their teenage daughters seek work as

95 “Antes de pasar el tubo, nosotros vivíamos de la tierra, de la agricultura, teníamos el plátano, el maíz, la yuca, el pasto, teníamos la gallina, los cerdos, las peceras, y nosotros no estábamos en las circunstancias en que nos encontramos hoy en día”. 96 “vivíamos muy cómodos, muy contentos porque nosotros teníamos, de qué subsistir” 97 “un cambio muy duro, un cambio muy drástico” 98 “la ciudad es propicia para volverse uno un hombre perverso, porque eso es lo que, aqui en la ciudad no se ve sino violencia, en cambio en el campo se vive una vida pacífica.”


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domestics. The men try the work of pirate taxi drivers, hiring out a car on a daily basis,

but it is an enterprise in which they carry risks, as one explained:

“I make a pledge for 53 thousand pesos, 25 for the hire, 25 for gas and three for

washing, then any more than 53 thousand that I take is for me. There are times

when I only take 50, so I come back home gutted, without a peso.”100 (Interview

Displaced Family A)

The way informal labour relations work is illustrated by Moravia’s main economic

activity, recycling rubbish. The recyclers get up at four in the morning to start work at

5.30am, they go on until 2 or 3pm in the afternoon. They comb the freshly dumped

rubbish for bottles, gas canisters, plastic containers which they sell on. For this they

might glean between two and five thousand pesos a day 101 (ibid.). The recyclers work

in teams of three to fifteen. There is a lot of competition, and potential rivals are

prevented from coming onto the tip unless they have paid for access rights.

The descent from working farmer to casualised informal worker has fomented changes

in familial relations. The children used to go to school until they were 14 years old,

meanwhile helping out on the farm from a young age. Whereas before children worked

alongside their parents as part of the farm’s production mechanism, according to their

abilities, the displaced family has little opportunity for co-production. Displacement

generates contradictory feelings amongst the displaced farmers, who now experience

the cost of having children more acutely, whilst at the same time they are especially

anxious for their children sent out into the city to work, and feel for their privations.

“my children walk around here without any work to do”102 (Interview Group)

“in the country children are riches and in the city they are poverty”103 (ibid.)

99 “nosotros somos todos personas campesinas que estamos enseñados a conseguir nuestra vida es en el campo y no en la ciudad, la ciudad no es para uno, porque a nosotros no nos dan trabajo” 100 “me levanto empeñado en 53 mil pesos, 25 de liquidacion, 25 de gasolina y tres de lavada, entonces son 53000 pesos lo que haga de ahi para delante es para mi, hay veces que no hago ni los 50, entonces me toca venirme para la casa blanqueado, sin un peso” 101 “a veces que se consiguen 2000, 3000, 5000 dependen como se rebusquen” 102 “Los hijos míos andan por ahi sin trabajo sin que hacer” 103 “en el campo los hijos son riqueza y en la ciudad son pobreza”


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“it’s very hard to send the children to bed just with a bit of bread and sugar cane

water.”104 (Interview Displaced Family A)

One 16 year old goes every morning to rich houses to clean before taking up her studies

in the afternoons. When cleaning is not available the children go to sell sweets at traffic

lights. Of their net income, two thousand on a good day, sweet sellers have to hand

over a cut between 200 and 500 pesos, to the gangs controlling the entrance to the

Moravia barrio.

The displaced campesinos’ existence is precarious not only in income terms, but even

more so in terms of security. There are many bands patrolling the marginalised zones:

“We are living in districts called invasions, and it’s very dangerous with many

bands”105 (Interview Group)

The displaced families have to pay a vacuna [lit. vaccination] of 2,000 pesos per person

every week, including for children. The bands are clandestine and they change, new

men come with guns, but performing the same predatory role. The collectors come

knocking on the door. Those who do not pay get killed.

“There have already been cases of people who refused to pay …they kill them,

ufff… just up there there is a little park and up to three dead bodies appear there

on a night”106 (Interview Displaced Family A)

The tragic conditions of the displaced people in Moravia was further underlined when a

fire rendered 250 families homeless. Flames from a short-circuiting light spread

through the rubbish and set their wooden shacks alight. By any standards the farmers of

Zaragoza had been reduced to the most precarious and marginalised existence (El

Colombiano, 2002).

104 “para uno eso es muy duro tener que darle un pan a un hijo y acostarlos con un pan y una agua de panela” 105 “estamos viviendo en unos barrios que son invasiones, y eso es muy peligroso mantienen muchas bandas” 106 “Ya ha habido el casos de gente que se niega a pagar. Los matan, ufff… por aqui hay un parquecito y han aparecio hasta tres en una noche ahi muertos, un parquesito por ahi arribita”


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Following the Money

If ‘following the money’ is a useful method in studying much white-collar crime, it is

central to this study of ‘rent seeking’ corporate behaviour. This section indicates the

scale of income from the pipeline and how it divides up for the different parties.

By 2000 the OCENSA and ODC lines were together carrying up to three-quarters of all

Colombia’s crude oil exports worth around US $8.7 million a day. The total value of

the oil exported along the ODC and OCENSA pipelines between 1992 and 2003 was

US $19.75 billion. According to Alvarez (2000: 84) the cost of production of exported

crude from the eastern plains was no more than US $3 per barrel in 1999, including

discovery and transport costs. Ecopetrol reports cost of production including transport

in 2003 as $6.50 a barrel (Ecopetrol, 2005). Taking the higher figure as correct for the

whole period, the total costs of the oil transported through the ODC and OCENSA lines

between 1992 and 2003 were $6.1 billion, leaving a gross profit of US $13.7 billion

(see Annex Table 6.4).

Although known to BP’s group headquarters and of public interest in Colombia, BPXC

does not publish separate figures, so the following has been compiled from other

sources. The state’s proportion of revenue from oil production, the ‘state take’, is stated

to be 75 percent by Alvarez which corresponds closely to the 73 percent figure given

by ANHI (2004: 12). BP (2001) says that the ‘state-take’ on its Casanare operations is

85 percent. The corporation has over the years lobbied hard to try and reduce this

proportion (CED-INS, 2004: 32-40). Under the terms of the contracts of association,

royalties take 20 percent of production, with 50 percent of the remainder attributed to

Ecopetrol, and 50 percent going to BP, Triton and Totalfina-Elf. Between 1997 and

2003 BP exported 149 million barrels of crude oil that should have realised an income

of US $3.3 billion at international prices (see Annex Tale 6.5). $1 billion is estimated in

costs and $2.3 billion gross profits. Colombia’s corporation tax is set at 35 percent and

there is a 7 percent tax on repatriated profits. On conservative assumptions, BP’s post-

tax profit is estimated at around $1.5 billion.107

107 The slight variation depends on what proportion has been kept in Colombia or has been repatriated to the UK.


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Another flow of money to follow is that which should be paid to Zaragoza municipality

as its share of the royalties. There is a royalty tax shared out to municipalities along the

pipelines.108 The municipality should have received the peso equivalent of US $3.24

million in royalties from 1995 to 2001 (Interview with Zaragoza Official). It is

suggested that much of this was filtered off and never turned into spending on welfare

for the community (Hinestroza 2002). The aggregate of all the royalties of all

municipalities along the pipeline amounts to around 0.2 percent the total sales value of

the oil passing through, which puts a very different perspective on the realities of ‘state

take’ for the common people.

The other flow of money of interest is that proportion that was paid directly to the

peasants as compensation. Combining the individual ODC and BPXC/Ocensa contracts

outlined above, compensation was paid out at around US $10 per meter of pipeline,

totaling US $4.8 million if paid proportionately along the entire Vasconia – Coveñas

stretch, just 0.03 percent of the total sales value of the oil passing through.

Official Process 2: The Hearing that was Not Seen or Heard

Once the area surrounding the pipelines had come under effective paramilitary as well

as military control the peasants were unable to sustain protests, their attention turned to

judicial remedies to their predicament.

Twenty peasants jointly raised a legal action against the curfew decree decision. Using

their entitlement to a tutela, the legal remedy under the 1991 Constitution that had also

been attempted by the SINALTRAINAL victims, the peasant farmers petitioned the

courts. They asked the Antioquia Superior Court to overturn the Zaragoza mayoral

decree: on the grounds that it contravened their constitutional rights to equal treatment

(no other mayor along the length of the pipeline issued a decree); their right to free

movement; their right to work and their right to use their private property (Menoyes et

al., 1997). The judge denied the tutela, in this case noting that ELN guerrilla action was

108 The total rate is 2 percent of the transport tariff per barrel times the number of barrels transported. This overall sum is then subdivided between the municipalities along the length of the pipeline. Both pipelines run 481 km from Vasconia - Coveñas, of which 54 km pass through Zaragoza, which accordingly should receive 11.2 percent of total pipeline royalties paid out to municipalities.


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notorious and that the decree was in order to protect the pipeline from attack “because

the Colombian nation would suffer a more serious harm from the damage to the

Colombia pipeline, than the petitioners might suffer” (Tribunal Superior de Antioquia,

1997: 10).

In 1998, seventeen property holders settled their claims with ODC, worth on average

US $33 thousand. Ocensa too offered further payments, but the sums were derisory and

most of the peasants refused. Ocensa’s agents warned that if the peasants wanted a

settlement they were not to appoint a lawyer. But eighty five of them appointed

Hinestroza as their legal representative, and in 2000 she filed two claims for damages

and compensation against ODC and another one against Ocensa at the court in El

Bagre. There then followed a series of administrative delays and manouevres to avoid

the cases being heard. The El Bagre judge set a date for a conciliation hearing, but he

was transferred and his replacement acceded to an application by ODC and Ocensa to

transfer the cases to Bogotá. According to Hinestroza such a transfer once a case has

started is most unusual. In the course of this transfer the files went missing, “all three

cases disappeared from our view. The circumstances were very strange” (Interview

Marta Hinestroza). The El Bagre court administrator said that the case files had been

handed over to the ODC and Ocensa lawyers, and then retracted saying that they had

been posted. There was however no record of the arrival of these files in the Bogotá

judicial support office, “We wrote to the national postal service to try and track down

the papers. I visited Bogotá several times from El Bagre, and we had a member of the

legal team in Bogotá as well, but we could not find the case files or the destination

courts for the cases.” (ibid.)

With the legal cases de facto invisible to the peasants and their legal team, they began

to look beyond the Colombian justice system for a remedy. In July 2000 the peasants

made an appeal to the national and international community for assistance to secure

compensation from the BP and Ecopetrol (Campesinos, 2000). This appeal was

forwarded through the Human Rights Department of the Colombian trade union

federation to the Colombia Solidarity Campaign in the UK which picked up the case

and starting asking BP questions and making protests at the corporation’s AGMs. For

the second time, Hinestroza came under intense paramilitary pressure. Her name

appeared on a death list, she started receiving telephone threats - “do you want to die”,

and then threatening visits. The lawyer was forced to abandon her home in Medellín


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and move clandestinely from place to place, before eventually fleeing the country and

applying for refugee status in the UK, which was granted in December 2002

(Hinestroza, 2002; Lennard, 2002).

The disappeared Ocensa case reappeared in the most surprising manner. In December

2002 BPXC informed this researcher that a conciliation hearing had been arranged in a

Bogotá court, but since neither the claimants or their legal representatives appeared, the

case was dismissed. This version was confirmed by Ocensa (Higginbottom, 2002a;

2002b). There was now a second hearing, this time judicial rather than the

administration Public Hearing, with an even stranger outcome for the peasants – they

had not seen or heard of its existence. According to Hinestroza under normal judicial

procedures when a case is listed for hearing, the announcement is posted in the court

building, at the support office and on the web site; and her legal team were monitoring

all three sources. The peasants were neither informed of the hearing, nor was the

reappearance of the case ever published through the normal channels. Furthermore “if a

claimant and their legal representatives do not attend, the court fixes a second date and

sends notification of this to ensure the attendance, and it is only after a second non-

attendance that the case should be closed and the claimants fined” (Interview Marta

Hinestroza). But in the Ocensa case this did not happen, and the two ODC cases that

reappeared in 2003 had archived indefinitely. Hinestroza alleges corruption was

involved; she decided that it was impossible to obtain a fair hearing in Colombia.

The subterranean hearing occurred at the same time as the death threats against

Hinestroza became incessant, making it in any case impossible for the peasants to be

properly represented even if they had been notified or found out about the hearing. This

coincidence of official and unofficial pressures in settling disputes is highly

characteristic of Colombia, symptomatic of parallel systems operating and its

schizophrenic state.

A Test for BP's Global Policies

Further to the administrative and legal processes in Colombia, the substantive

complaint of the displaced Zaragoza peasant farmers and request for compensation has

been presented to BP at three shareholder AGMs, in bilateral meetings with BPXC and


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Ocensa executives, and in a meeting with Sir Peter Sutherland, Chair of BP in London.

The corporation denied the substance of the claim and any wrong-doing on its part

(Higginbottom, 2002a; 2002b; BP, 2003).

There is scant evidence of right-doing however, and if the peasants’ allegations are

true, then BP has contravened its declared corporate standards in significant respects,

most notably the corporation’s 'no damage to the environment' policy goal sets a high

standard that is not being met in north eastern Antioquia:

“We are committed to demonstrate respect for the natural environment and

work towards our goals of no accidents, no harm to people and no damage to

the environment” (BP, 2004)

The Voluntary Principles on Security and Human Rights state that “civil society, home

and host government representatives and other sources should be consulted to identify

risks presented by the potential for violence” (Freeman, 2001) and yet there has been

no consultation with local communities over the security arrangements along the

pipeline corridor. Rather a counter-insurgency model has been applied with intelligence

gathering networks to spy on the civilian community.

BP emphasises its adherence to the Universal Declaration of Human Rights and yet the

Zaragoza peasants’s right to property and in some cases their right to life have been

denied by the Ocensa pipeline project.


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The Character of Neo-liberal Development: Displacement of ‘Unpeople’

Within the normative framework of the Rio Summit the precautionary principle is part

of the wider democratic concept of sustainable development centred on welfare

improvement. Despite its recent adoption in Colombian law, the principle was not

followed either by BP and its partners in Ocensa, or by Colombian state institutions.

Where officers of the state, notably the Defensoría and local control officials, did seek

to apply the precautionary principle they were by-passed or overruled at more senior

levels. It can be argued that the royalty and tax revenues from the oil are available to

the state for developmental purposes, and that on utilitarian grounds it would be wrong

to promote localism over the greatest good for the greatest number, but the issue is

qualitative not quantitative. A contributor in the World Bank school reveals the

assumptions when he writes of “the long-term right to growth”, only he is referring to

BP’s “right to growth” by picking up new investment projects in the country, not to the

Colombian people’s collective right to development (Warner et al., 2004: 164). In this

conceptual universe rights accrue to corporations, not to people.

The Colombian state’s failure to listen to the objections of its own citizens is

symptomatic of an approach to development that prioritises earning foreign exchange

and partnership with big multinational capital above supporting small producers

making a sustainable living. In this case study the peasants’ were not seen or heard by

the national authorities, their concerns did not count, they are the ‘unpeople’ of

corporate-led development (Curtis, 2004: 145-150). The case exemplifies the forced

displacement that accompanies other projects extracting the country’s natural resources,

that is to say the ruination of peasant production is a general characteristic of the neo-

liberalism in Colombia.

Rent-Seeking, Resource-Conflict and Critical Criminology

There is no justification to specifically apply the appellation ‘rent seeker’ to rebels or

any other party that seeks to disturb the distribution of surplus profits between

exporting state, multinational and importing state. Analysis of the connection

between resources and conflict must consider the economic interests of all actors


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involved, and not only those depicted as rebels. Following the money leads to an

alternative view of rent: the distribution of surplus profits between exporting states,

multinational corporations and importing states. Whilst in competition, these three

actors each benefit from a share of the enormous oil surplus and hence have an interest

in collusion. The private oil industry is a major and heavily concentrated power. The

biggest oil multinationals are aligned with powerful states, making them extraordinarily

well placed to have their interests adopted as de facto if not official foreign policy.

This analysis of the political economy of oil illustrates Pearce’s model of corporate

crime in an accentuated manner. Oil corporations liaise with states to organise support

whilst disorganising the opposition, a big oil corporation acting rationally can enlist

their own state to support their operations overseas, and the corporation’s relationship

with the exporting state is pivotal in disorganising the opposition.

The corporate profits available from oil production are enormous. Continuing with BP

as the example, the company has a policy of actively rotating its global portfolio of

assets, selling off the less profitable and concentrating investment on the most

profitable projects. BP aims for the highest possible return on capital employed, which

at 20 percent in the first quarter of 2003 was two or three times the average return in

non-oil sectors (Financial Times, 2003). As argued above, this unusually high

profitability stems from gaining a share in the surplus profits due to the difference in

oil’s production costs and selling price.

Yet the resource-conflict paradigm gives prime attention on the economic interests of

rebel armed actors and the millions that they might gain, without any attention on the

motives of multinational corporations and the billions that they extract. The theory of

rent-seekers is intimately connected with the multinational agenda. In contrast, a critical

criminology concerned with corporate exploitation asks what is the rent-seeking

subject, and is it not a potentially criminal subject?

Richani’s important study of the conflict in Colombia argues that a motive force behind

paramilitary violence has been the capture of landed property by unscrupulous

landowners, often linked with narco-trafficking. Richani’s analysis tangentially

includes BP through the company’s relations with the Colombian military. In his

conception the multinational is the target of rent-seeking behaviour, in that it pays the


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military for protection rent (2003: 53-54). In distinction from Richani, the thesis

advanced here is that the multinational’s own behaviour is a manifestation of rent-

seeking, or rather rent-defending. As with landowners, so a multinational may be

tempted into unscrupulous behaviour to protect its rents, i.e. its surplus profits. The

case study has shown a rationally acting, rent-seeking corporation

endeavouring with its partners to externalise real environmental costs at the

expense of other producers, the common good and future generations.

Corporations, the Dependent State, Informal Armed Actors - and the Imperial

State

The different armed actors have been analysed in the historical context of the region.

There is no proof from this research of BP’s direct involvement with paramilitaries in

Zaragoza. There is proof that BP and Ocensa worked with the army (in itself not denied

but considered legitimate), and that the corporations commissioned specialists to set up

covert intelligence networks, only discovered through exceptional investigative

journalism. There is also considerable concern that the Colombian army was, especially

in this period in Antioquia, directly collaborating with paramilitaries in assassinations.

What theoretical insight can be drawn from this case study in terms of any relationship

between the corporation, the dependent state and informal armed actors? What is

established is a pattern of behaviour functional in two senses: providing security for the

oil pipeline whilst providing plausible deniability. The Colombian state is a key link

between the foreign multinational and informal systems of repression. Income from oil

is central to the Colombian state’s fiscal policies. The state is concerned that current oil

investments are secure and that the insurgency does not give a disincentive to future

investors. The corporation has passed its security concerns on to the state.

Here it is useful to distinguish between the functions of paramilitarism and variations in

its form. The paramilitary project is concerned with the elimination of organisations

capable of protecting the local population from predations, violent social control that

neutralises opponents within an ostensibly democratic society. We have seen that in

Antioquia in the mid 1990s it was government policy to link the Colombian army and

privatised security to set up covert but legal intelligence gathering networks. The

BP/Ocensa security operation was likewise covert yet legal. Although the corporations


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did not invite publicity on this operation they were nonetheless prepared to defend it as

it had a legal form. Then the issue is concerned with purpose, what was to be done with

information covertly but legally gathered on individuals? What actors would it be

passed on to and with what result?

The case of BP in Colombia begins to reveal the web of interconnections, not only

between the dirty war directed by Colombia's armed forces, but also between BP and

the British state. Certainly an explanation for Britain's attempt to play a leading

international role in this area of the corporate social responsibility of oil and mining

multinationals has become apparent. The long-term profitability of these multinationals

depends on their public perception, and this is a strategic interest of the British state -

an active neutralisation agent.

Corporate Denial and Complicity

As in the Coca-Cola case, levelling and sub-contracting are vital components in BP’s

denial of responsibility. But here the denial is less overtly aggressive, the main

emphasis being on giving a different interpretation of the events.

Cohen (2001) suggests a further point of analysis that may be helpful in understanding

the workings of corporate denial, the different states of complicity. There is the

complicity of an offender as part of cover up and collusion (ibid.: 66-67), and the

complicity of a bystander who while not involved in authorship, fails to respond

actively to evidence of harmful behaviour, which is closer to indifference (ibid: 70).

The moral distinction being between offences of commission and ommission.

Once again we see the importance of organisational delegation to the parent

corporation’s neutralisation rationale. BP diminishes its complicity in any damage

perpetrated by the pipeline project by presenting itself as a third-party ‘bystander’

(customer, service receiver) rather than the ‘offender’ (author, service provider). The

case study evidence is that in fact the corporation related to the project in both

capacities, being able to shift from one to another according to circumstances, and so

could be said to have a dual complicity. In either relation the corporation has been a

major beneficiary of avoiding the payment of full compensation to the farmers.


184

The UNHCHR (2005: para 34) report discusses this beneficiary role as one situation

where allegations of complicity might arise against a company, and points to the extent

of knowledge that the company has as an important factor. The report further points out

that in criminal law complicity is defined in terms of the role of the accomplice

contributing to the crime, including by intent or recklessness (ibid: para 35). In this

evolving area the distinction between a corporation’s criminal liability and its liability

under civil law, seems to be important to cover a range of circumstances where a

benefiting corporation is more than a bystander and less than a criminal accomplice.

Victimless Crime … or Crimeless Victims?

Rather than portraying white-collar crime as victimless crime, this case study reverses

that relation - there is an abundance of victims but without a crime being recognised.

This disconnection between cause and effect may well be another characteristic of

crimes of the powerful, more aptly characterised not so much victimless crimes as

crimeless victims.

And in this framework, as Sutherland (1983 [1949]) was the first to point out, the

definition of certain actions as criminal is highly contingent. Actions by corporations

and their agents, which by other criteria could be said to be socially harmful, can avoid

a definition as criminal through a combination of formal and informal partnerships with

the state. Corporations cannot only pay for military battalions, contest allegations

brought against them through legal process, they can change, evade or avoid laws, and

they can influence or corrupt state institutions, all variants of what Green and Ward

(2004) call state –corporate crime.

Building Social Capital – The Appropriation of Society by Capital?

Corporate responsibility theorists uncritically recycle the modernisation paradigm,

applying it at enterprise level. The corporation is encouraged to become an enlightened

actor bringing rationality into otherwise irrational environment. The responsible

corporation is involved in conflict prevention and transformation. The alternative view

presented here is that rent-seeking corporations tend to generate conflict. This is a

contradiction: capital generates conflict and instability, and yet requires stability to

accumulate. The outcome is a dynamic inter-relation of stability and instability. More

sharply than in other forms of investment, capital in the extractive industries tends to


185

externalise and displace instability away from its installations while keeping strict

control within its limits, hence the enclave.

Davy (2004) argues that to succeed, corporations in the extractive industry need to

build out from their enclave. He argues that the multinational building partnerships can

be a means of conflict resolution:

“In conflict situations, trust building, mutual understanding and social capital

formation can be the primary objectives of partnerships, albeit with outcomes

that are difficult to measure. In this respect, the most important aspect of the

partnership is the process, rather than the specific objectives… The erosion of

social capital in conflict situations is inimical to sustainable social investment,

and can profoundly affect the ability and willingness of civil society to

participate in partnerships” (ibid.: 224)

Davy’s discussion is from the corporate standpoint and is deeply imbued with a

corporate view of society. Consider a redefinition of ‘social capital’ closer to what is

really being aimed at: the type of partners and society that capital wants to provide

security for its continued growth. This ‘social capital’ is there as a bridge between

society and capital, on capital’s terms, to induce agreement in societies to multinational

projects, and to provide a counterweight to radical social actors and thereby

neutralising or preventing threats and challenges. Whereas Fine (2001)’s thesis is that

social capital is ideationally colonising out from economics into other social science

disciplines, in this scenario there is a material process - the occupation of social space

from the multinational corporate enclave outwards, extending the multinational’s

‘sphere of influence’.

Although BP has put a lot of effort into building social partnerships in Casanare since

1998, there is no corresponding programme in Antioquia. The pipeline corridor

conforms to the enclave as an evacuated physical and social space.


186

Annex to Chapter 6

Table 6.1: Distribution of Oil Income Between Main Agents

Year Final price US $/b Producer countries and costs percent

Multinational companies and costs percent

Consuming countries percent

1973 16.0 12 33 56 1975 30.7 36 16 47 1980 46.6 57 30 14 1986 44.8 19 17 65 1990 98.3 21 19 60 Source: extract and calculation from (Alvarez, 2000:130)

Table 6.2: World Rankings of Oil and Gas Corporations 2001

Rank Company Country Market value

(US $ billion)

percent of

sector private

capital

1 Exxon Mobil US 299.8 23.6

2 BP UK 200.8 15.8

3 Royal Dutch/ Shell Netherlands/UK 189.9 14.9

4 Total Fina Elf France 109.4 8.6

5 Chevron Texaco US 96.3 7.6

Top 5 sub-total 896.2 70.5

Overall total 1,271 100

Source: Financial Times (2002)

Table 6.3: Oil Production in Colombia by Category December 1999 Category Kbd Percent

Ecopetrol Direct 75,166 10 Ecopetrol Association 261,363 34 Corporate Associates 262,737 34 Concessions 14,884 2 Royalties 152,809 20 Totals 766,959 100 Source: Ecopetrol (2004)


187

Table 6.4: ODC and OCENSA Pipeline Oil Throughput ODC volume

kbd [1]

OCENSA

volume kbd

[1]

Combined

volume kbd

Annual mill

barrels

Average

Price

US$/barrel

[2]

Annual Sales

Value US$

million

1992 19.4 0 19.4 7.1 17.41 123.62

1993 36 0 36 13.1 15.86 208.401994 41.5 0 41.5 15.1 15.1 228.73

1995 147.8 0 147.8 53.9 17.25 930.591996 175.3 0 175.3 64.2 20.94 1,343.511997 187.3 44.6 231.9 84.6 18.5 1,565.90

1998 110.8 252.4 363.2 132.6 11.96 1,585.511999 136 312.1 448.1 163.6 19.64 3,212.25

2000 122.3 219.1 341.4 125.0 28.32 3,538.652001 103.6 192.4 296 108.0 21.94 2,370.40

2002 89.5 152.8 242.3 88.4 25.83 2,284.39

2003 57.9 163.2 221.1 80.7 29.23 2,358.90

936.4 19,750.85 Kbd = thousand barrels a day Source: Ecopetrol "Estadísticas de la industria petrolera" http://www.ecopetrol.com.co/ [1] http://www.ecopetrol.com.co/especiales/estadisticas2003/06transporte/0Transporte-Crudos-Oleoductos-Ecopetrol.htm [2] http://www.ecopetrol.com.co/especiales/estadisticas2003/07comercio/Exportaciones-Ecopetrol-Petroleo-Derivados-precio.html


188

Table 6.5: Estimate of BP's Oil Exports and Profits from Colombia 1995 – 2003

Year

BP

Annual

Export

Producti

on (kbd)

[1]

Annual

Exports

(million

barrels)

Ave

Price

per

barrel

US $

[2]

Est

Ave Cost

per

barrel

US$ [3]

Ave

Gross

Profit

per

barrel

(US $)

Annual

Sales

Value

US $

mill

Est

AnnualC

osts US $

mill

Est

Gross

Annual

Profit

US$ mill

Est

Annual

Profit net

of tax

US$ mill

[4]

1992 0.37 0.14 17.41 6.5 10.91 2.36 0.88 1.48 0.96

1993 2.00 0.73 15.86 6.5 9.36 11.58 4.75 6.83 4.441994 2.25 0.82 15.1 6.5 8.6 12.40 5.34 7.06 4.591995 19.62 7.16 17.25 6.5 10.75 123.53 46.55 76.98 50.041996 26.30 9.63 20.94 6.5 14.44 201.56 62.57 139.00 90.351997 31.26 11.41 18.5 6.5 12 211.08 74.16 136.92 89.001998 55.15 20.13 11.96 6.5 5.46 240.75 130.84 109.91 71.441999 64.54 23.56 19.64 6.5 13.14 462.66 153.12 309.54 201.202000 64.54 23.62 28.32 6.5 21.82 668.96 153.54 515.42 335.032001 46.78 17.07 21.94 6.5 15.44 374.62 110.99 263.63 171.362002 48.53 17.71 25.36 6.5 18.76 449.21 115.14 334.08 217.152003 51.14 18.67 30.64 6.5 24.14 571.93 121.33 450.60 292.89

Totals 148.96 3,304.32 979.20 2,351.45 1,528.45

Source: Ecopetrol "Estadísticas de la industria petrolera"

http://www.ecopetrol.com.co/ on 11 Feb 2005

[1] Volumen de Exportacion de Crudo por Compania http://www.ecopetrol.com.co/especiales/estadisticas2003/07comercio/Exportacion-Crudo-Compania-KBPD.html [2] Exportaciones de petróleo y derivados - Precio Promedio - US$/BL at http://www.ecopetrol.com.co/especiales/estadisticas2003/07comercio/Exportaciones-Ecopetrol-Petroleo-Derivados-precio.html [3] Source http://www.ecopetrol.com.co/paginas.asp?pub_id=550&cat_id=268&idCategoriaprincipal=4&cat_tit=GupercentC3percentADapercent20depercent20Negocios&pag=2 [4] Corporation tax charged at 35percent. (There is a further tax of 7percent on repatriated profits – not deducted). http://www.businesscol.com/economia/glosaeco/glecon-hijk.htm


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Chapter 7 SINTRAEMCALI: Anti-corruption as Class Struggle

“the non-ruling factions of the French bourgeoisie cried: Corruption! The

people cried: Down with the big thieves! Down with the assassins!” (Marx ,

[1850] 1978: 50-51)

Introduction

World Bank inspired analysis of corruption in the public sector is coloured by the

underlying push for market solutions. Behind its criminology lies neo-liberal political

economy.

In this case study the forms of white-collar crime within the EMCALI municipal

services corporation are identified, as are the remedies to counteract them. A significant

new ingredient is present: the workers in the state sector. The trade union

SINTRAEMCALI adopted anti-corruption as an integral component of its broader

campaign to stop privatisation, thus planting the germs of an alternative social vision.

This has consequences for the issue of agency in combating white-collar crime, the

state or social movements?


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Theories of Public Sector Corruption

International Context and Working Definition

The issue of corruption is a top agenda item in the international community. The

‘corruption eruption’ marked by a series of conferences in the late 1990s has since

worked its way through the international institutions, and in 2003 the General

Assembly adopted the United Nations Convention against Corruption:

“a) to promote and strengthen measures to prevent and combat corruption more

efficiently and effectively;

(b) To promote, facilitate and support international cooperation and technical

assistance in the prevention of and fight against corruption, including in asset

recovery;

(c) To promote integrity, accountability and proper management of public

affairs and public property.” (UNODC, 2003: 2)

Although the emphasis is on action by signatory states, the Convention encourages civil

society actors to assist in the fight against corruption as well.

The Convention does not offer a definition of corruption, although the above quoted

purposes combine important elements. Corruption is a contested concept, and the

literature is full of definitional debates. A working definition used by the World Bank

that corruption ‘is the abuse of public power for private benefit’ has the advantage of

simplicity, if not completeness. As Tanzi (1998: 564) points out, corruption also exists

in private corporations, e.g. in procurement activities, and in state regulated private

sector activities.

The World Bank’s Rent-Seeking Paradigm of Corruption

The theoretical foundation of what was to become the World Bank’s approach to

corruption in underdeveloped countries was established by Krueger (1974)109,

according to which rent seeking occurs when an interest group tries to gain access to

state protected monopoly profits to gain an income that could not be obtained on the


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open market. In Krueger’s conception rent-seeking diverts resources from productive

activities to unproductive ones, and therefore carries a social cost.

Rent-seeking involves a range of practices such as lobbying for the interests of a private

group that are legal, if not always moral. In this paradigm, corruption occurs when

rent-seeking steps from legal lobbying into illegal forms of using public office for

private gain. Other work leading this field fits squarely in the rent-seeking paradigm.

Rose-Ackerman, for example, distinguishes between “productive economic activity and

unproductive rent seeking” (1999: 2) – see also (Klitgaard, 1998; Tanzi, 1998; Mauro,

2002). These works from the ‘organic intellectuals’ of the World Bank and IMF are

carried out in the context of the pro-privatisation policies of these institutions. 110 They

are also in line with the modernisation paradigm of development: the view is that of the

reformer overcoming traditional and cultural obstacles to efficient modernisation. The

blatant anti-social results of wholesale privatisation in Russia and Eastern Europe

obliged a modification of the view, and from 1997 onwards there was a new emphasis

on improving how privatisation was to be carried out by getting the regulating

institutions right. This policy shift to a post-Washington consensus was reflected in the

academic literature on corruption, taking into account the need to establish a credible

privatisation process – “privatization is both an anti-corruption reform and a new

potential source of corrupt gains” (Rose-Ackerman, 1999: 42). Stiglitz’s admission is

more forthright – “Russia provides a devastating case study of the harm of privatization

at all costs’” (2002: 58).

Why does corruption matter? A developing country may be caught in a ‘corruption

trap’ in which illegal actors have a comparative advantage, encouraging excessive

public investment and reducing total investment. Corruption acts as a tax on foreign

direct investment, discouraging its entry (Rose-Ackerman, 1999: 2, 3). It is at this point

especially when, like rent-seeking, corruption becomes an obstacle to development, viz.

the entry of multinational capital, that it becomes “too important a phenomenon to be

left to moralists" (Ruggiero, 2000: 110).

109 Krueger was appointed chief economist at the World Bank in 1981, and later became First Deputy Managing Director at the IMF. 110 Rose-Ackerman was attached to the World Bank’s Private Provision of Public Services Unit.


192

How to reduce corruption? Attempts at reform are on the basis of controlling rent-

seeking behaviour. This is summed up by the notion that “Corruption equals monopoly

plus discretion minus accountability” (Klitgaard, 1988). It follows from this that

systemic corruption can be reduced by introducing competition to eliminate monopoly;

by regulation to limit the discretionary powers of officials, and by mechanisms of

accountability to achieve transparency. Structural reforms aimed at rationalising the

role of the state, increasing the reliance on market-based pricing and creating a sound

regulatory environment should contribute to growth directly, and indirectly by lowering

the incidence of corruption. (Mauro, 2002)

Moving from the economics of corruption to its mode of operation, the literature

generally follows Klitgaard’s descriptive model of principal-agent-client. The principal

is essentially the executive of the state – the government, the agent is an agent of the

state - the officials in its bureaucracy, and the client is the private third party. A corrupt

exchange, e.g. bribe, takes place between agent and client. The principal must evaluate

costs and benefits of different anti-corruption measures (Klitgaard, 1988). Note that to

effect organisational changes to the system, the principal is the active policy agent.

There are two problematic issues for this perspective, even within its own terms.

Firstly, there is the issue of political agency. Low level corruption can be considered as

a breach of contract between the agent and the principal (Colombatto, 2001). The

principal-agent-client model implies top-down solutions to corruption, which becomes

complicated when the corruption is top down, i.e. the commanding principal presides

over and benefits from a corrupt system. This has led to the notion of state capture, that

is:

“the actions of individuals, groups, or firms in both the public and private

sectors to influence the formulation of laws, regulations, decrees, and other

government policies to their own advantage as a result of the illicit and non-

transparent provision of private benefits to public officials” (Gray, Hellman and

Ryterman, 2004: 10).

But this is incomplete to cover the range of top-down corruption, which in its extreme

form is far more than influence, as demonstrated in those kleptocracies (e.g. Mobutu’s

Zaire, Duvalier’s Haiti, Stroessner’s Paraguay) where corruption is organised from the


193

top. Here, the state is an instrument of looting society in the interests of a ruling clique

(Rose-Ackerman, 1999: 114-121; Bayart, Ellisand and Hibou, 1999). In a kleptocracy,

enterprises may be public or private, serving to generate income for a faction, rather

than the needs of capital as a whole or society as a whole.

Rose-Ackerman distinguishes the supply side and demand side of the bribery “market”,

both of which can be dimensioned in terms of their degree of monopoly. She identifies

the case of the bilateral monopoly, where bribe recipients concentrated at the top of the

political structure face a private monopoly, e.g. where there is economic dependency

“on the export of one or two minerals or agricultural products” such that “the country

becomes an appendage of the large investor” (ibid.: 122). Another case occurs where

the state is weak and monopoly economic power lies outside it, such that “the private

power dominates the state, buying the cooperation of officials” (ibid.: 123). It would

seem that the principal-agent-client model is limited in scope, it does not fit the latter

case at all, where powerful corporations or the Mafia are not the clients, but in effective

command of a client state.

The second issue is the extension of the rent-seeking paradigm of corruption from the

economic and political into the social domain. The modernisation-developmental

challenge provides new motivation for studying corruption as a harmful social problem.

The notion of limiting the discretion of state agents is close to the Weberian view that

the state bureaucracy should function according to universal rules. But in a corrupt,

rule-breaking environment no individual official will cease being corrupt unless there is

trust that the others will do likewise - even if there is a general benefit in so doing, there

is no individual incentive. Mauro observes that “some countries appear to be stuck in a

bad equilibrium characterized by pervasive corruption with no sign of improvement”

(2002: 3). As well as this ‘bad equilibrium’ vicious cycle, there may be a ‘good

equilibrium’ of low corruption and high growth, setting off a virtuous cycle. Policies of

good governance need to be found to shift a country trapped in one cycle to the other.

The theory of corruption is increasingly linked to the theory of social capital. The

usage by the World Bank (2004) oscillates between social capital as resource (attribute

of individual or family) and social capital as social trust (quality of a wider social

group). This definitional tension is developed into a distinction between bonding social

capital and bridging social capital. Bonding social capital refers to “tight-knit,


194

homogeneous groups of people that provide important safety nets for one another in

times of crisis”. Bridging social capital refers to “horizontal networks of more

heterogeneous people or groups that enable members to access additional, diverse

resources and information”. Furthermore social capital is, according to the World

Bank, “a resource which can be used for good or bad”. Bad social capital “can serve

perverse functions leading to nepotism, corruption, ethnocentrism, mafias and/or

stringent social controls”. Interestingly, the notion of perverse social capital originates

in Colombia (Rubio, 1997).

How does the concept of social capital inform theoretical understanding of corruption?

Della Porta finds that political corruption operates through informal norms, reciprocity

and networks. She links the effective workings of this ‘bad’ social capital with the ‘bad

equilibrium’ condition, connecting the social malaise with a sub-optimum economic

state. Della Porta finds an association between high levels of corruption and low

satisfaction with democracy. Corruption is both a cause and an effect of poor

government performance,

“Lack of confidence in government actually favors corruption insofar as it

transforms citizens into clients and bribers who look for private protection to

gain access to decision-makers.” (2000: 205)

‘Bad’ social capital and political corruption are seen here as characteristic of disaffected

democracies.

Critique and the Basis for an Alternative Paradigm

From the critical criminology perspective, Ruggiero observes that corruption resembles

some forms of corporate crime in that they are apparently victimless crimes. In an

analysis of political and administrative corruption in Italy, he considers key issues of

impunity and the commodification of rights that are germane to this investigation

(Ruggiero, 2000: Chapter 7).

This work notwithstanding, it has to be admitted that theoretical critique of the

dominant rent-seeking / privatisation / bad social capital paradigm of corruption is in its


195

infancy, and has not yet matured into a full grown alternative interpretive paradigm.

Two lines of critique have been adopted. One is to expose the neo-liberal interests

driving the dominant discourse on corruption; as done comprehensively and

convincingly by Williams and Beare (2003). The other line of critique is focussed on

the World Bank version of the concept of social capital. Fine (2001) argues that a

disciplinary colonisation of social science is taking place, and calls for a rejection of

social capital as bridgehead of the invasion. Schuurman’s critique is more adaptive, he

wishes to explore “the politico-emancipatory potential” of the disputed concept of

social capital, arguing that the concept may be turned towards “possibilities of

reconnecting the social with the political” (2003: 989,1008). This chapter will employ

the case study to explore Fine and Schuurman’s suggestions, and to see if ‘social

capital’ in modified form warrants the proposed rehabilitation.

However questionable the motives behind the turn of the international organisations to

this phenomenon, one cannot argue that corruption is not a pressing problem in the

Third World. A critique of the dominant discourse on corruption is necessary but

insufficient, given the phenomenon’s presence. Transparency International’s Global

Corruption Index is based on aggregates from various northern based surveys. It has

clear groupings with OECD (‘First World’) countries clustered around the top positions

as least corrupt, the next band occupied by Eastern Europe and unusual mini-states

(‘Second World’) and the long tail of corrupt countries – the forever last Third World

(Lamsdorf, 2004: 284 -286).

Another source of empirical evidence, a victimisation survey carried out in nine

underdeveloped countries in 1992, reports that consumer fraud is the most commonly

experienced crime, followed closely in most cases by corruption by government

officials. Significantly, the indices for these two forms of ‘white-collar crime’ were

both much higher than reported in official criminal statistics. While attempts are made

by states to make it invisible, corruption is not a victimless crime in these societies. It

goes to the heart of the form of relation between state and society in the

underdeveloped world. The report’s authors comment:

“Both victimisations indicate much more than the sheer sphere of conventional

crime; they speak about development itself, of the citizens' position vis-a-vis


196

government and commercial/service activities, the lack of consumer/client and

citizen protection, and the ways in which people go about, or are made to go

about, in satisfying their needs and rights.” (Zvekic and Alvazzi del Frate,

1993: 58)

The report sketches a scene worse than disaffected democracy, societies where the

general populace suffers predations by those in official public and private institutions.

White-collar predation may even be a characteristic feature of underdevelopment.

There is some evidence that the level of administrative corruption is inversely related to

the salaries of public sector officials in the Third World. Although this correlation does

not establish causation, researchers have cited the cases of three countries (Ghana, Peru

and Uganda) where increased salaries to tax collectors was followed by increased tax

revenues (Van Rijckeghem and Weder, 1998).

Turning to research of the Latin American experience, Saba and Manzetti review the

rapid, wholesale and corrupt privatisations by Menem in Argentina in the early 1990s.

They argue from the standpoint that “one of the most troublesome aspects of these

corrupt practices is the damage they wreak on public support for the market reforms

required for economic growth and investment” (1997: 355). They advise that

“transparency is the best safeguard against arbitrary decisions and administrative

abuses”, concluding “the association between civilian government and corruption is

unfortunate wherever it occurs. Again, there is nothing inherently wrong or corrupt

with free-market economic policies” (ibid.: 366). The problem is not with the policy

but in its manner of implementation.

This faith in the efficacy of privatisation so long as it is transparent is contentious.

According to another researcher corruption has increased across the region since 1980,

the very period of neo-liberal reforms “during which bureaucrats and politicians

disposed of huge portions of public property, often with limited transparency”

(Weyland, 1998: 108). Weyland suggests the role of the mass media in determining the

transparency of the political process has become critical. He argues that the demise of

traditional parties means that neo-populist leaders have increased incentives to corrupt

practices, they have to raise the funds to pay for sympathetic media exposure. Instead


197

of being a factor for transparency and hence tending to reduce corruption as per the

Klitgaard thesis, the role of the corporate media has been questionable. On the one hand

there has been greater exposure of corruption scandals, but the media has been gaining

considerable income from corrupt political leaders. There is evidence of corporate

media deals with politicians in Costa Rica, Guatemala and Uruguay where discounts

reached 95 percent (Casas-Zamora, 2004: 49-50).

It seems transparency, as with every element in the equation corruption = monopoly +

discretion – transparency (C=M+D-T), cannot be read at face value without substantive

analysis of the exercise of the power relations involved. Moreno argues that in

Argentina and other developing countries there is a different problem to resolve:

“How can citizens control the corruption of high officials? …One of the keys to

controlling and preventing corruption is to detect the influence of the political

system. In a regime of hegemonic power (HP) there are no independent powers

but a monopoly power (M); the law is not carried out except with the discretion

of those who hold authority (D) and freedom of the press and information are

restricted, thus affecting transparency (T).”111 (cited in Ariza Ruiz, 2001: 519)

Hence we have HP=M+D-T, from which Moreno deduces that corruption is none other

than hegemonic power. We have seen that Dieterich views corruption functioning as

an informal system that extends the formal, legal system of class power. That is,

corruption serves as an additional access to privilege in an already polarised class

society. Its informality as a system is the product of a contradiction between formal

democracy and real class antagonism. The strong implication here, that is lost entirely

in the rent-seeking paradigm, is that to challenge corruption is also to challenge one of

the means by which the dominant class exercises its power. This is demonstrated by the

case study and is, I will argue, the kernel of an alternative theory.

111 “¿Cómo hacen los cuidadanos para controlar la corrupción de los altos funcionarios? … Una de las claves para controlar y prevenir la corrupción es detectar la influencia del sistema político. En un régimen de poder hegemónico (PH) no hay poderes independientes sino un poder monopólico (M); no se cumple la ley sino la discrecionalidad de los que detentan la autoridad (D) y se retringe la libertad de prensa y la información afectando la transparencia (T)”


198

Theorisation of Corruption in Colombia

While corruption in Colombia has certain unusual aspects, that very fact has brought

forth a literature that deserves wider consideration for a theory of corruption.

The first factor to consider is the connection between the drugs economy and

corruption. Once it took hold as part of a vicious spiral, the violent narcotics industry

has been one of the major factors feeding the high level of corruption in Colombia.

Drugs money buys a lot of local government favours, induces police indifference,

blinds the eyes of bureaucrats, colours judges’ wisdom and primes presidential election

campaigns - see (Thoumi, 1994).

The second factor has been the lack of an effective institutional political opposition

whose absence generates a pact of silence providing fertile grounds for corruption

(Ulloa, 1997: xiv), or to put it another way, political exclusion prevents transparency.

Colombia’s form of ‘hegemonic power’ is deeply affected by the geographic limits of

the state, its lack of control over parts of the national territory reinforcing its oppressive

character in those parts it does control, where it is experienced as an “hegemonic,

autistic and exclusive power”112 (Ariza, 2001: 519). This leads on to el clientelismo,

clientelism - the informal and illegal yet widely practised subversion of the formal

election system by politicians retaining loyalty through deal-making and vote buying,

of which Colombia is a prime example (ibid.: 521-522). These procedures have been

legitimised over decades of what is called a stable democracy, with profound

consequences for human rights.

The third factor closely related to corruption is impunity, so much so that Arila depicts

them as Siamese twins. There is 97 percent conviction failure rate of crimes committed

in Colombia. The concept of impunity includes not only failure to punish, but use of the

law to protect special interests. The combined problems of corruption and impunity, or

‘unjust justice’, present a determinant, strategic element amongst all of Colombia’s

social problems, according to a major review:

“When justice does not function, someone usurps its functions, in the majority

of cases, to exercise them for private benefit. Due to the incapacity of the

112 “un poder hegemónico, autista y excluyente”.


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judicial apparatus, offences become profitable and the rates of criminality rise…

If the state, through the branches of public power, provides the bases for

imparting justice, that is to say it legislates, executes and applies justice – what

happens when the state is corrupt?”113 (Amaya, 2001: 25-26)

There is an outline emerging of a corrupted state’s relationship with society that does

not quite fit any of the cases depicted by Rose-Ackerman. In part, there has been

evidence of a Mafia-dominated state. In part Colombia behaves as a kleptocracy, as we

shall see specifically at local level, meanwhile in many respects and increasingly it

conforms to the ‘bilateral monopoly’ situation in its relations with multinational capital.

All of these forms involve state capture and corrupt practices harmful to the common

good. It is as though there has been a succession of parties queuing up to take

advantage of the Colombian state and use it as an instrument of plunder.

Rose-Ackerman brings out an issue that is not elaborated theoretically in the rent-

seeker framework, the distinction between political monopoly and economic monopoly.

This is a real point of focus in the Colombian case. In one view “political capitalism”

predominates over Colombia’s economic regime, that is a form of capitalism where

profits are obtained from state privileges and not through competition in the market. A

variant of this is that there is such a proliferation of ‘rent-seeking’ entrepreneurs and

other citizens that Colombia forms a “sociedad rentista”, which can be translated as

either financier society or rentier society (Carvajal and Carvajal, 2002: 517-518).

113 “Cuando la justicia no funciona, alguien usurpa sus funciones, en la mayoría de los casos, para ejercerla en beneficio privado. Debido a la incapacidad del aparato de justicia, el delito se torna rentable y crecen losíndices de criminalidad…Si el Estado, a través de las ramas del poder público, provee las bases para que se imparta justicia, es decir, legisla, ejecuta y aplica, ¿qué sucede cuando es corrupto?”


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Corruption and Privatisation in Colombia

Corruption Surveys

Transparency International’s Corruption Perceptions Index 2003 ranks Colombia 59th

out of 133 countries (Lamsdorf, 2004: 284). A joint World Bank / Colombia

government survey found that over 50 percent of state contracts contain a bribe

element, averaging 19 percent of their value, and that 11 percent of all state resources

are diverted from their official destination (Vicepresidencia de la República, 2002: 4).

The report found widespread administrative corruption, which it saw as regressive, with

14 percent of the income of the poor going to paying bribes (ibid.: 26). Perhaps

surprisingly, the survey diagnosed capture of the state by private interests as “the most

extensive and relevant form of corruption in Colombia”.114 The most corrupt of all

entities is the National Congress. Private interests working from within the highest

levels of the state sector affects the formulation of policy, but also the politicisation of

appointments in the public administration is seen as having a strong correlation with

corruption (ibid.: 5).

The survey reports low credibility for the state’s fight against corruption, with a view

that citizens watchdog bodies are needed to augment the state’s own control

institutions (ibid.: 52-55). Finally, it recommends political reform as the extent of

corruption effects the very legitimacy of the state, adding a deep note of concern that

confronting the issue of governance “poses the most difficult challenges”115 (ibid.: 56).

The Privatisation of Utilities in Colombia

The Inter-American Development Bank (IDB) considers Colombia to be an excellent

example of the issues involved in the reform of the water and sewerage sector. At the

beginning of the twentieth century most utilities in Colombian cities were privately

owned. In a process riven with conflict, from the 1920s onwards these were taken into

local state ownership, and then in the 1950s the government purchased most of the

remaining services given, “the precarious conditions in which the services were

provided and the lack of investment” (Avendaño and Basañes, 1999: 219).

114 “aparece como la forma de corrupción más extendida y relevante en Colombia”.


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For these IDB authors, the reason that private capital had not invested and kept services

in adequate condition is not the inherent limits of profitability, but “the limited

institutional framework” of the time. Thus the interest in Colombia’s institutional

reforms, would they provide the regulatory conditions for private provision of public

utility services?

The 1991 Constitution had encouraged private participation, but had not established a

regulatory framework. This was enacted through the residential Public Utilities Law

(Law 142) of 1994 that abolished the government monopoly in public service

provision. Law 142 created the new category of public utility enterprise that would

provide residential public services under contractual terms. The law established new

regulatory bodies to set prices, including subsidies for low-income groups. In effect

Law 142 established the outputs that had to be achieved. State corporations would

operate under commercial pressure, if they could not perform to meet the service

delivery criteria, they would be privatised (Interview with Union Adviser).

According to Avendaño and Basañes (1999: 222), the public sector utilities had up to

the 1980s been controlled by the local political class, and were inefficient and

inadequate. They cite five cases of urban centres in northern Colombia where provision

was part-privatised in the early 1990s. By 1997 the water delivery system coverage

varied between 56 percent and 94 percent, while the sewerage system coverage was

from only 23 percent to 68 percent of the relevant populations. The first form of private

participation was under management contracts, considered to be an unsatisfactory ‘half

way house’ (ibid.: 242). The period 1990-1997 saw a push for not just private sector

management, but full control and effective ownership of the utility infrastructure.

Avendaño and Basañes main concern is that government discretion to vary the terms

that private capital invests in the sector should be severely limited, i.e. once private

capital calculates that a profitable long-term investment can be made, it is allowed to

realise that investment. One can see how the pro-privatisation argument draws

sustenance from the common points it shares with the literature on corruption,

particularly the Klitgaard thesis that monopoly needs to be broken and that rules

limiting discretion are essential. The neo-liberal project in Colombia was being

prepared to enter a new phase.

115 “se plantean los desafíos más difíciles”.


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The Issues at Stake – Research Questions

The dominant literature assumes privatisation. The question asked is how state assets

and public services can be privatised without inflaming corruption. The converse is

barely asked, viz. is it possible to tackle corruption while keeping services public? The

original assumption of agency, that anti-corruption policies will come from the state

principal, e.g. through a government-led reform programme, has been challenged.

Contributors increasingly look to outside agents to improve governance - the

international institutions, augmented by a degree of citizen participation. It is not clear

where this process leads and what its limits are in terms of national sovereignty. Should

there be an ‘anti-corruption’ model taking such additional variables into account?

But none of the literature considers the possibility that state sector workers are an actor.

In terms of the economic theory they are viewed as another privileged interest group,

rent-seekers. What does it mean for the model when a rent-seeker takes action against

corruption? The World Bank’s social capital thesis makes arbitrary distinction between

‘good’ and ‘bad’ social capitals. While a corrupt network may be normatively

explained in terms of ‘bad social capital’, to extrapolate this to label groups working

against privatisation becomes blatantly apologetic. Can the social capital thesis be

reinterpreted to explain the forces operating in an anti-privatisation struggle?


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SINTRAEMCALI’s Fight against Privatisation

EMCALI Corporation

Cali is a city of 2.2 million people in the south west of Colombia, lying on the Cauca

river that runs northwards to its eventual outlet several hundred kilometres downstream

in the Caribbean. The Cauca valley is traditionally the site of sugar cane plantations,

and Cali retains a strong Caribbean flavour in its vibrant culture. The poor barrios of

the ladera cluster on the Andean mountainsides flanking the west of the city, and on its

eastern side lies Agua Blanca – a city within the city of some 600,000 poor. Most of the

housing in these areas was built with their own hands by displaced people.

EMCALI Municipal Corporation of Cali supplies electricity, water,

telecommunications to Cali and the surrounding areas. The corporation was formed in

1931 and has 1.6 million customers using one or more of its services, generating an

annual income of 1.2 billion pesos, around US $480 million.116 Colombia's urban

neighbourhoods are officially graded in six social strata according to the quality of

housing, ranging from level 1 (very poor) to level 6 (the rich). There are also ‘level

zero’ zones (new arrivals, the invasiones with hand built dwellings and no facilities)

and even a ‘level sub-zero’, which refers to the destitute and homeless (Interview with

Youth Worker). This is important for public utility providers like EMCALI, because

the higher the level, the higher the prices for services - a progressive consequence of

the 1991 Constitution. To illustrate this, in March 2002 EMCALI’s domestic electricity

charges were 77 pesos, 93 pesos and 131 pesos per kilowatt-hour to level 1, 2, and 3

households respectively (up to a limit of 200 kilowatt-hours a month); 155 pesos to

level 4 and 186 pesos per kilowatt-hour to households in levels 5 and 6 (Diario

Occidental, 2002).

EMCALI scores well on indicators such as percentage of the population covered by

each service, hours of service, costs for the services, quality of service. The profile of

telecommunications services is 24 percent commercial, 10 percent to social strata 5 and

6, and the remainder to social strata 1,2 3 and 4, including public telephones. This 66

percent the union calls ‘telefonía social’ - a social telephone service. EMCALI claims

to provide the best quality drinking water in Colombia, and amongst the best in Latin

116 In Colombia a billion is a million million. Exchange rate used is a rough average for 2002: 2,500 pesos to 1 US $.


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America. Maintenance costs for drainage are high in Cali, representing about 50

percent of the charges.

SINTRAEMCALI – an example of 'social movement unionism'

SINTRAEMCALI, Sindicato de Trabajodores de EMCALI, is the trade union that

organisers EMCALI workers. It has two thousand eight hundred members, with a high

level of unionisation, over 95 percent in the non-management grades. The union has a

developed social outlook. Attached to the union’s office is the Instituto

SINTRAEMCALI, which provides evening classes up to secondary completion for the

workers’ children, as well as technical training. The union’s team of economic and

technical advisers worked on a strategy to keep EMCALI in the public sector. Detailed

preparation helped the union’s argument against privatisation of the services its

members provide in the economic and technical domains, as well as the socially and

ethically. SINTRAEMCALI argues that in EMCALI the public has a technological

platform that can be used for the social benefit and the economic profit of Cali and the

region. In 2001 the union expanded its Human Rights Department, which started to do

human rights training courses with the participation of a widening regional network of

trade unions and social movements.

The union’s strategy for opposing privatisation hinged on the idea of uniting with the

community, and it has employed a range of tactics to further this, including voluntary

work brigades, community surveys, and outreach education programmes.

SINTRAEMCALI’s own members are accustomed to mobilisation and use militant

direct action tactics. The union has built up a network of regional, national and

international alliances. In other words the union is an advanced example of what is

known in the literature as ‘social movement unionism’, comparing with similar

developments in underdeveloped countries (Novelli, 2003).

The final element in the union’s strategy to defend the public sector, upon which this

study focuses, is defence through transformation, that is by fighting corruption and, as

its struggle developed, other forms of economic misdemeanour in the corporation.


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History of an Anti-Privatisation Struggle

The question of EMCALI’s privatisation had been on the agenda from the mid-1990s.

Cali’s council decided in 1996 that it was going to restructure EMCALI’s three main

functional areas - water, electricity and telecommunications -into three independent

entities. SINTRAEMCALI interpreted this as a prelude to privatisation, as each

separate unit would be more saleable to multinationals specialising in that sector. The

union had already developed a direct action culture; its members were involved in a

series of occupations from 1994 onwards. The union built up its campaign and in

September 1998 it occupied production plants and the main administrative building

demanding reintegration under one corporation, which after days of negotiations it won

(Interview with Union Adviser).

Maintaining EMCALI as a multi-service provider remained an issue between the two

sides. Up until 1999 Cali’s city street lighting had been free, but the Mayor introduced

charges and handed over the service to a private company. The union held a nine-day

strike and conducted city-wide demonstrations, attracting fifteen to twenty thousand

participants on its marches. In February 2000 a council sub-committee voted 4 to 3

against the Mayor’s proposal to privatise EMCALI. But the argument did not end there.

The city was polarised into two camps. The Mayor and his supporters argued that

EMCALI could only go forward with private investment. The union and its supporters

argued that for EMCALI to be viable its onerous and corruptly engaged debts had to be

cancelled or otherwise alleviated. Just over 29 percent of the corporation’s income went

on debt payments in 2002, the union projected this would rise to 39 percent for 2003

(SINTRAEMCALI, 2003b: 23).

In April 2000 Cali’s Mayor took EMCALI corporation out the hands of his own locally

appointed management board and placed it under the direct control of the national

Superintendent of Public Domestic Services (SSPD). The SSPD national director

announced that there would be no more state funding for EMCALI (El Pais, 2000b).

The union argued that these measures illustrated a policy of weakening EMCALI,

preparing to terminate its protected status under Law 142 as a state enterprise, as

designated by the corporation’s full title EMCALI EICE (State Industrial and

Commercial Corporation). The superintendent’s advisory team reported in September

2000, recommending that the telecommunications arm should be sold off, and the


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remaining services (electricity, water and sewerage) be run as a concession. By

February 2001the union’s telecommunications workers were in dispute, trying to block

the selling off of the public telephone system to the private company that employed

security guards to take away the money, but with no trained engineering staff (El

Espectador, 2000).

In the meantime SINTRAEMCALI had launched an anti-corruption offensive against

the former management board and their allies in senior management posts in the

corporation. Based on evidence presented to a public hearing, on 12 June 2000 the

Prosecutor General punished nine officials and opened corruption investigations against

another 24 individuals, including former members of the management board, two

former directors, managers and the ex-Mayor. A sum of 26 thousand million pesos

(over US $10 million) was involved. The punishments varied from 5 days loss of wages

to 60 days suspension from work – there were no custodial sentences (Procuradaría

General de la Nación, 2000; El Pais, 2000a; Revista Valle 2.000, 2002). But there was

an immediate backlash against the union. Its president, Alexander Lopez, was forced

into temporary exile after a failed assassination on 14 June - the third attempt on his life

(Diario Occidente, 2000). “They want to kill me because I defend public services”, he

later said (Higginbottom, 2000).

This was in the year following President Pastrana’s agreement with the IMF, and

besides the government was under pressure to find more disposable assets to help

finance Plan Colombia. There was a strong push to carry through more privatisations.

In October 2000 the government sold off Carbocol, Colombia’s coal corporation, for

US $ 383 million. Then Pastrana announced that EMCALI was definitely going to be

privatised. Lopez addressed a meeting of union members via international video link,

they decided to take strike action against the privatisation threat at a time to be decided

(ibid.).

Another possibility emerged. Some officials at different levels of the public service

opposed the government’s privatisation policy. Cali’s Personer’a (local government

ombudsman) complained that privatisation of street lighting had caused a deterioration

in the service and demanded its reinstatement to EMCALI. Minister of Labour

Angelino Garzon, a dissident voice in Pastrana’s Conservative government, appointed


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an investigating commission that recommended, on a majority verdict, against

privatisation. Most telling of all, the nation’s Controller General publicly rebuked the

SSPD for the manner of its intervention in EMCALI, which had not been devoted to the

corporation’s recovery, but had “sharpened the crisis, and will increase pressure for

liquidation and privatisation” (El Espectador, 2000).

The second official appointed by the SSPD as Director of EMCALI turned out to be

strongly in favour of keeping the corporation in the state sector, and was sympathetic to

SINTRAEMCALI’s aims. In mid-2001, with Lopez back in Colombia and with the old

guard swept away, the replacement acting Director was able to appoint his preferred

senior managers, who began working in close cooperation with SINTRAEMCALI and

the workforce in an emergency programme to recover the corporation and save it from

privatisation. Their PARE (literally STOP) programme was run by an internal coalition

of progressive managers and the union. A series of initiatives had brought the

corporation under near workers control. From July 2001 the workforce and

management worked together feverishly to demonstrate practically that their

corporation was viable on an ongoing basis, provided that it did not have to continue

paying off the onerous debts incurred by the previous corrupt administration. They

estimated that they would only have until the end of the year to achieve this objective

(Interview EMCALI Managers).

The PARE programme was not allowed that long. The Pastrana government announced

that it was going to replace EMCALI’s Managing Director with an executive from the

Spanish multinational FENOSA. The union called a general meeting of all its members.

The workers decided that if the government tried to implement its decision they would

take direct control of the corporation (Interview Alexander Lopez I). Pastrana backed

off, but it was no more than a reprieve.

On 24 December 2001 the union learnt that the SSPD was going to appoint a

replacement Director of EMCALI, a man with previous experience in the corporation,

and who had also been charged with corruption. The union assessed that this signalled a

decision to press ahead and privatise, and it responded by occupying EMCALI’s main

administrative building, the CAM tower on 25 December. Cali’s working class

communities mobilised support demonstrations and food, and other trade unions


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surrounded the CAM tower to prevent its repossession by force. A month on, and with

matters apparently at stalemate, a team of volunteers from SINTRAEMCALI and social

movement activists took over the SSPD headquarters in Bogotá on 28 January 2002. It

was an audacious move. The situation was immediately very tense as anti-riot police

and snipers trained their sights on the occupiers in the SSPD building. The support

alliance, especially at this point international protests, was energetic enough to hold off

a massacre. The next day the Pastrana government backed down and offered a deal

guaranteeing no privatisation, no price increases and agreeing to set up an anti-

corruption commission.117 The union, the community and their growing international

network were jubilant. A popular mobilisation to defend public services had struck a

victory against neo-liberalism (Novelli 2003; Interview with Alexander Lopez II).

Lopez stood as a candidate for the Social and Political Front and was elected to

Congress for the department of Valle del Cauca in March 2002. Uribe came into the

presidency in August that year. Despite the 29 January 2002 Agreement, Uribe made

clear that the future of EMCALI was to be re-opened. He denied the advances achieved

by the PARE programme, stopped the process of worker and community participation

and pointedly consulted only with the Chamber of Commerce and private business

interests. The nub of Uribe’s proposal Todos Ponen 118 was to set up a 'Social

Capitalisation Fund' that would hand overseeing powers to a board of the corporation’s

creditors. The Fund was almost a debt for equity swap, except without the swap, giving

control over the corporation in proportion to debt held. As a cover, EMCALI’s users

could also buy their way into the Fund, but only by paying a supplement on their tariff

to pay for their shares, up to 2 percent of the total and which in any case would have

secondary voting status.

The Social Capitalisation Fund would rationalise all debts, and thus would act as

EMCALI’s sole creditor. In the words of the Superintendent’s proposal, the Fund:

“will have intervention rights in the administration of the corporation, through

conditions and agreements. To be included in privileged debt contracts between

117 Full title ‘Agreement of National Government, Municipal Government, SINTRAEMCALI and Community representatives for the Saving and Strengthening of EMCALI EICE ESP’. 118 ‘Everyone Lends a Hand’


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EMCALI and the Fund are: investment decisions, debt and operations contracts

for the business units.”119 (SSPD, 2003: 12)

The arrangement gives the creditors powers close to full ownership. EMCALI’s service

infrastructure remains formally in the public sector, but it is directly accountable to

finance.

Uribe demanded the union renounce rights that it had negotiated in its Collective

Agreement. SINTRAEMCALI agreed to forfeit some rights, but insisted on an 'integral

solution' which renegotiated or otherwise alleviated the corporation’s debts, especially

to creditors on the Termocali and PTAR contracts which the union argued had been

corruptly entered (see below). Negotiations began in early 2003 in an atmosphere of

brinkmanship. Uribe became personally involved. There was a televised confrontation

between him and SINTRAEMCALI’s new president Lucho Hernández, when

Hernández pointed out that the President of the Republic had lied. Uribe demanded an

apology, but Hernández stuck to his version, which was confirmed in the press as true

(El Pais, 2003b; El Tiempo, 2003b).

Public complaints forced the suspension for 90 days pending judicial action of another

SSPD appointed Managing Director of EMCALI, due to “presumed irregularities in the

processing of contracts” (El Tiempo, 2003a). This incident suggests that the union and

community alliance is sufficiently strong to achieve some transparency and influence

events. The Todos Ponen accord was implemented on 5 May 2004, but it has not done

away with fundamental antagonism between the state and SINTRAEMCALI. On the

day that the deal was signed, street fighting between riot police and EMCALI workers

flared up once again (SINTRAEMCALI, 2004).

Comparison to other struggles against privatisation

The water war in Cochabamba Bolivia took place after the service was privatised, and

in response to the subsequent tripling of prices. The opposition alliance included a wide

range of people as consumers, and small peasant water producers whose livelihoods

119 “El Fondo será el único acreedor de Emcali y tendrá ingerencia en la administración de la empresa, a través de las condiciones y pactos que se incluyan en los contratos de deuda privilegiada que subscriban Emcali y el Fondo: decisiones de inversión, endeudamiento y contratos de operación de los negocios.”


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were threatened, but was not initiated by unionised workers in the industry (ODG,

2005). Similarly, the eruption of protest against privatisations in Argentina was post the

event, and based in the consumer community (Green, 2003).

In Colombia the privatisation of public services has been on a piecemeal, regionalised

basis. By 2000, some 60 percent of services were privatised. Again, popular opposition

came in response to loss of jobs and price increases (Pulido, 2003). These

circumstances meant that workers and citizens in Colombia’s three main cities, Bogotá,

Cali and Medellín could look to the rest of Latin America and the Caribbean north of

their own country to see the likely consequences of privatisation, and prepare

accordingly.

SINTRAEMCALI’s fight against privatisation has distinct characteristics. It was

launched to prevent anticipated consequences. The union was in a central position in

the anti-privatisation alliance with the community. The early alert provided an

opportunity to block privatisation, whilst challenging corruption from inside the

corporation even before a sell off took place. This atypicality provided laboratory like

conditions to expose corrupt practices that are more normally kept hidden.


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Economic Offences and Union Counter-strategies

‘Politiquería’ and Indebtedness

Colombians refer to politiquería, a syndrome of corrupt politics where the political

class feeds itself with the spoils of office. Politiquería combines both political

corruption and administrative corruption as customarily defined. The two party factions

within the dominant class milked the region’s biggest corporation, in Cali politiquería

functioned as a local kleptocracy.

Under Liberal Party control between 1995 and 1997 EMCALI’s board of directors

routinely helped themselves to 15 percent commissions on contracts (Edwards, 2003:

37). Of greater long-term cost, in just three years EMCALI’s debt rose threefold

without any evident increase in its plant or facilities. The Liberal Mayor Mauricio

Guzman was at the centre of using EMCALI to extract finance. The funds for phantom

projects were navigated through EMCALI, although they have nothing to do with its

functions. A notorious case concerns Cali’s bridges, construction projects used to skim

off so much money that the local joke is “we caleños have the most expensive bridges

in the world”120 (Interview EMCALI Managers). Although Guzman was later

imprisoned as a result of the Proceso 8.000 investigation into the Cali drugs cartel

funding of President Samper’s election campaign in 1994, what is remarkable is the

lack of control from national or international watchdogs as the debts shot up.

The Conservative Mayor Ricardo Cobo who took over in 1998 had two advantages. He

had married into the Lloreda family, the local grandees with money from sugar, owners

of the regional daily newspaper El Pais and much else besides. A Conservative had

won the presidency, Andres Pastrana, whose Minister of Education was also a Lloreda.

Pastrana presided over a torrent of corruption, as later press reports revealed. With

these protections in place, “pilferage turned to plunder” (Edwards, 2003: 38).

120 “los caleños somos una población toda vez que tenemos los puentes mas costosos de todo el mundo, se necesita mucha imaginación y creatividad para hacer puentes intransitables a ese costo”


212

But even this was not the end of it, for the illegal corruption had incurred a legally

enforceable indebtedness - that grew and grew, until it came to take over EMCALI

completely.

Enter the Multinationals

Termoemcali

Termoemcali was formed on 22 December 1994. The principal shareholders were JMC

Cauca Valley Inc - a US company formerly known as Boston Energy, with a 93 percent

stake - and EMCALI, that had 7 percent of the shares. Termoemcali was set up to

operate a 220 Mwatt thermoelectric generating plant. The main contract was linked in

to a Protected Price Agreement (PPA) signed on 8 May 1995 that stated that EMCALI

would buy electricity at US 4 cents per kilowatt-hour. Another company, Intergen

Management Services Ltd Colombia (a subsidiary of the US corporation Bechtel) was

commissioned to build and operate the plant, which came on line in July 1999, at a total

cost of US $215 million. EMCALI financed the original estimate of $165 million by

floating bonds in the US, and was obliged to procure additional loans to meet the $50

million cost overrun. The Controller General pointed out that at an installation cost of

$919 per kilowatt this generator capacity was “excessively costly” compared to other

generators. But worse was to come, wholesale market prices for electricity were

significantly lower than the minimum agreed prices in the PPA. For example, in May

2000 the PPA price for Termoemcali’s electricity was 111 pesos per kilowatt-hour,

while the open market price was just 40 pesos per kilowatt-hour. EMCALI would have

to pay about US $9,400 extra daily for taking Termoemcali’s output. Under the terms

of the PPA, EMCALI has in any case to continue paying US $4.5 million Termoemcali

a month whether or not it is buying any output (EMCALI, 1994; Termoemcali, 1994;

Controlería 2000: 12; Diario Occidente 2003).

For the private investor, a PPA eliminates risk and ensures a continuing guaranteed

return on the investment. But for the municipal corporation Termoemcali had become

an expensive white elephant, a plant that generated no electricity or income, only costs.

Why had such a one-sided contract ever been signed in the first place? A strong clue

lies in the circumstance that ownership of Termoemcali had passed to a new

consortium that was made up EMCALI (43 percent), Intergen (54 percent) and


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Corporación Financiera del Pacífico (3 percent) – headquartered in the Cayman Islands.

Edwards (2003: 38) notes this last company disappeared in 2000 with all of its

principals censured and fined for financial irregularities. The perpetrators of the deal

seem to have evaporated, while Bechtel is left collecting the money every month. Not

surprisingly, SINTRAEMCALI and many others demand that the PPA be cancelled as

an unfair contract (Hernández, 2003).

PTAR

The Planta de Tratamiento de Aguas Residuales (PTAR) sewerage treatment plant at

Cañaveralejo is a high technology automated operation, using methane gas taken off in

early stages to power the final processing (Interview EMCALI Managers). The plant

was built by a consortium including the Japanese corporations Mitsubishi Suido and

Tokyo Engineering, plus Norberto Odebrechi (Brazil) and Degremont (France),

financed with a loan to EMCALI from the Japanese government backed development

bank JBIC. The initial loan of US $75 million spiraled up to a final US $165 million

(Edwards, 2003: 38; El Pais, 2003c).

Late in 2000 Cali's Municipal Controller initiated an action without precedent in the

city's history and froze the personal assets of 53 citizens under investigation for their

role in the PTAR contract. The enquiry went back to 1991 – 1995, and monies paid out

for advice and inventory management during the design stage of the PTAR project.

Corrupt practices included overcharging for site clearance, and multiple consultancies

invoicing for the same design study (Interview Union Adviser; Edwards, 2003: 38,47).

Despite its high cost, PTAR will only process 40 percent of Cali’s waste water output.

The union argued that since most of the benefit from the plant will be for the four

departments downstream, the government should honour a commitment to that 80

percent of the construction cost comes from national funds (SINTRAEMCALI, 2001a).

For its part, the government insists that PTAR’s running costs of $10 million a year be

covered by increases in water charges to the caleños of 15 percent to 35 percent.


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Unregistered Use – Tapping of Electricity and Consumer non-payment of bills

At the other end of the scale of economic offences, it is not unusual in the very poorest

areas for whole blocks to hook up to the electric mains and tap off supplies. This is a

dangerous practice; fires occur and can quickly destroy dwellings. This is truly a

collective form of law breaking by those living on the margins, beyond the limits of

regulation. The other forms of illegal electricity consumption are individual. Either by-

passing the seal on the electricity meter or not paying the bills.

These types of ‘offences’ evoke a mixed and even contradictory response from

EMCALI and its workers. As an economic entity EMCALI needs to maximise income

from its customers. Socially, most of its workforce and SINTRAEMCALI as a union

are sympathetic to the sections of desplazados who simply cannot afford to pay. The

union developed a differential response to these problems. As part of its strategy of

working with the community, SINTRAEMCALI started doing voluntary work

brigades, or community mingas.121 These were weekend events, where once a month

SINTRAEMCALI members and other workers provided free services to a selected

neighbourhood. While work teams were fixing drains and wiring, SINTRAEMCALI

also sent out other teams to carry out a detailed census of all electricity use in the zone,

checking on meters and any signs of illegal consumption. This had been approved in

advance with local community leaders, but nonetheless the census teams were anxious

in case they met opposition.122

The leaflet distributed by SINTRAEMCALI to the community literally reflects the two

sides of this relationship. One side calls the attention of the local people:

“Take advantage, if you have damages and complaints about water, sewerage,

electricity, telephones then call … Besides, there will be a day of health,

hairdressing, cultural activities and lawyers advice. We await you and count on

your presence.”123 (SINTRAEMCALI, 2001b)

121 The term minga resonates with associations, it means both work team and a group who come together to help someone in the community, e.g. to repair a house. 122 Meeting Note, 21 February 2001 123 “Aproveche; si Usted tiene daños y quejas en acueducto, alcantarillado, energía, teléfonos, informe a los teléfonos …Además habrá una jornada de salud, peluquería, actividades culturales y asesoría de abogados”.


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And, on the other side,

“Friend User,

Avoid snags, and future punishment – even imprisonment for one to four years.

Take advantage of the Community Minga that the EMCALI workers will carry

out to be connected legally to public services. Remember that Article 26 of the

new Criminal Code states that ‘any clandestine mechanism to alter water,

electric or telecommunications metres or a fraudulent connection will incur

prison from one to four years and fines from one to a hundred minimum

salaries’.

Join with us, the workers of EMCALI EICE are your friends”.124

The union adopted the position that as a human right all homes should receive basic

electricity whether or not they could afford to pay. It helped blocks that had tapped in

illegally to make a safe connection through a common metre, while at the same time

negotiating with the council that subsistence consumption in these zones be paid for out

of municipal funds as a form of special relief (Interview Community Leaders).

Under the PARE, there was a renewed drive to encourage customers to pay their bills

promptly appealing to good will order to help defend EMCALI as a public corporation.

In the electricity branch specialist work-units “to recover non-technical losses” worked

systematically. The teams targeted businesses and residences of all social strata,

keeping detailed records of actions taken (EMCALI, 2001).

Inflated Operating Costs

Operating costs at EMCALI were inflated by a range of different practices that can be

grouped under the headings of procurement and inefficiencies.

124 “Amigo Usuario: Evite inconvientes, sanciones en el futuro y hasta prisión de uno a cuatro años. Aproveche la MINGA COMUNITARIA que realizarán los trabajadores de EMCALI para que se conecte de manera legal en los servicios públicos. Recuerde que el nuevo Código de Procedimiento Penal, en su Artículo 256, establece que ‘cualquier mecanismo clandestino que altere los CONTADORES de agua, energía y telecomunicaciones o una conexión fraudulenta incurrirá en prisión de uno a cuatro años y multas de uno a cien salarios mínimos’. Acérquese, los trabajodores de EMCALI E.I.C.E., Somos Sus Amigos.”


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Procurement Procurement is the classic area for corrupt practices. For years management corruption

artificially inflated operating costs through over billing and fraudulent sub-contracting.

According to the Prosecutor General, EMCALI had made around 40 contracts on

political recommendations rather than objective grounds, and large sums of money had

been paid to unregistered organisations. Between 1998 and 1999 the directors of

EMCALI's telecommunications arm spent over US $30,000 on themselves, had signed

a series of overpriced contracts, and one contract for $210,000 of fictitious services.

The electricity managers had entered contracts for $3 million without budgetary

clearance, while the water section managers specialised in sub-contracting out work

that could have readily been done by the permanent workforce (Procuradaría General

de la Nación, 2000).

Under the PARE programme this problem was addressed in two ways. Firstly,

managers were appointed strictly according to their technical capacity. Technically

competent workers replaced nearly all of the dismissed corrupt managers. The worker-

managers were on the same salaries as they previously earned, and were meanwhile

expected to take on managerial responsibility. This had the side effect of saving on

managers' salaries, but the connection between managers and workforce working

together was far more significant for morale. Secondly, great efforts were made to

avoid sub-contracting with the target of eliminating it completely from operational

areas such as cuts, suspensions, reconnections, re-installations, fraud detection and the

installation of new clients. This process threw up interesting contradictions. The

workers agreed to avoid unnecessary overtime, and accept flexible working, in part so

that they could be re-deployed to tasks that might otherwise go to sub-contractors

(Interview EMCALI Managers).

Efficiency gains While avoidable inefficiencies and waste are not by definition corruption, it might be

considered there is an overlap at the lower end of corrupt practices, e.g. using

corporation petrol for private trips or negligence in fuel use. It would seem likely that

in work environment where managers are believed to be on the graft, the workforce

might feel it acceptable to take whatever perks it can. The new union/management team


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endeavoured to change such attitudes through the PARE programme. The workers

cooperated in avoiding wasteful practices, fuel consumption for example was cut by 42

percent, and the use of the corporation’s mobile phones was reduced to a minimum.

Many of the workers involved themselves in the minga voluntary work teams visiting

communities once a month. There was an ongoing political dialogue lead by the union

to change the work culture, to really work for the service of the community. A new

ethic was being engendered.

Manipulation of Assets and Liabilities

Non-payment of debts by State Bodies.

EMCALI has had difficulties in getting state entities that are clients to pay their debts

as customers. According to one manager, “they are trying to push EMCALI into debt

while we are trying to save it from being in debt”. (Interview Union Adviser)

Asset Portfolio

As well as the Termoemcali contracts, the contracts with two other generators

Termocauca and Termopacifico were on remarkably favourable terms to the suppliers.

SINTRAEMCALI further alleges that there have been irregularities in the purchase of

top of over-priced shares in other businesses and buildings.

Padded Retirement Scheme

EMCALI had set up a pension fund for its employees. There have been three major

issues in dispute. SINTRAEMCALI negotiated early retirement for workers in

hazardous jobs, 15 years service for sewerage workers, and after 20 years for others.

This early retirement package has been a permanent point of attack against the union,

especially in the Lloreda family’s press (El Pais, 2002a; 2003a).

The story has another side. Crooked managers had used the fund for buying influence,

setting up false entitlements and retiring their cronies early. The national government

has not accepted its statutory commitments. The combined effect is that every year

EMCALI paid US $3 million more into the pension than it should. The new managers

approached Minister of Labour Garzon and agreed a complete check of the pension


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portfolio, eliminating those who had no right to a pension with the aim of establishing

an honestly administered fund (Interview EMCALI Managers).

Dubious Debts

In the years 1992 to 1997 the basic rate of interest varied between 5 and 10percent, and

yet EMCALI's debts were contracted at interest rates of 20-25percent. There is some

indication that although cases involving loan debts and contracts with multinationals

involve sums larger than procurement irregularities by a factor of ten or more,

suspected corruption has been harder to prove evidentially as in illegal action, although

the costs are all the greater. The union tends to mix this category of offences in with its

general denunciation of aggressors against the corporation. It presents external debt

payments, internal debt payments and payments to major suppliers alongside the

payments to Termoemcali as financial aggression that is destabilising EMCALI by

taking a projected 69 percent of its income. SINTRAEMCALI urges renegotiation of

EMCALI's debt, which it sees as a culmination of disastrous decisions by previous

managers combined with government policy (SINTRAEMCALI, 2003b: 24).

Anti-corruption as Class Struggle

SINTRAEMCALI has a carefully controlled process of handling allegations of

corruption. The union set up its own specialist unit – an Anti-Corruption Commission –

to investigate and document corrupt practices. Complaints from the public or workers

are evaluated and documentation is collected. Only then are the complaints passed to

lawyers for advice. If there is merit in the complaint then it is passed to EMCALI to

resolve through its own internal procedures, or to the competent state authority. The

post-1991 Constitution had created three national departments with the remit to

investigate and control other branches of the state.

Between 1999 and 2001 the union presented evidence concerning cases dating back to

1995. The money lost to EMCALI totalled 846 thousand million pesos, about US $338

million (SINTRAEMCALI, 2002). If one averages this loss to corrupt practices over a

six-year period, it amounts on average to about one sixth of the corporation’s operating

income. Cali’s Contraloría wrote to SINTRAEMCALI in March 2002 confirming that

it was processing 82 cases of corruption referred to it by the union (Contraloría, 2002).

The General Prosecutor wrote to SINTRAEMCALI in May 2002 confirming that his


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office was processing 149 complaints that it had received concerning corruption of the

EMCALI managing board, managers and officials (Procudaría General, 2002).

The union has a sophisticated and class conscious differentiation in its strategies. It is

possible to summarise by tabulating, in ascending order, see Table 7.1.

Table 7.1: Type of Offence and Union Action

Type of Offence Responsible Union Remedial Action Comment Waste Workforce Waste and Efficiency

targets Change of attitude

Tapping of electricity Poor Communities Joint Area Programmes Requires Co-operation with City

Poor Communities Locally specific mingas, reminder of law -"Conscientisation"

Small Businesses, Commerce, Residents

Energetic debt collecting

Non-payment of bills

State Bodies Public Lobbying

Differentiated Response

False supply invoices Management Board/ Local Politicians

Commission on bids Management Board/ Local Politicians

a) Uncovering of evidence

b) Trigger for security problem?

Fictitious or unnecessary pensions

Management Board/ Local Politicians

a) Exposure and active denunciation of vested interest;

b) Pass evidence to state control authorities

Contradictory, press hostile

Unreasonable Loans Multinational company and local consultants

One sided contracts Multinational company and local consultants

a) Exposure and active denunciation of vested interest; b) pressure to renegotiate a la Enron

A wide range of economic misdemeanours that affected the viability of the corporation

were addressed, only some of which could be described as crimes of the powerful. The

union had a sophisticated and differentiated set of responses, according to the type of

offence and the type of offender responsible. The union’s elected leadership was acting

a principal agent against corruption and white-collar crime. The fight against corruption

built up and reached a highpoint under the PARE programme, the phase during which

the workers were most empowered within the corporation. This process was ejecting

corrupt practices, and attitudes that accepted them, was in its substance a recapture of

the state corporation in the public interest. It was informed by a broader vision of social

justice. These ethical practices gave the union, despite a campaign to stigmatise and


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criminalise it, a claim to the moral high ground and it attracted allies and support on

that basis. Anti-corruption had been adopted as a front of class struggle.


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The Criminalisation of Social Protest

Violations Against SINTRAEMCALI

“The watchword of the multinationals and their supporters has been that you have to

liquidate the trade unions, that is to liquidate trade unionists.” (Interview Union

Adviser)

Many SINTRAEMCALI members have been arrested for participating in occupations,

in 1996 alone 600 were punished, in 1997 300 were punished of whom 22 were

imprisoned. 55 union members have been charged with rebellion. Away from major

events and clashes with official state forces, the forms of harassment against the union

include heavy surveillance of its leaders and their families. The principal leaders

operate with armed body guards, and move home periodically. Constant death threats

by telephone and warning cards (in the form of invitations to their own funeral) are sent

to individuals. Sixteen people, either union members, community members connected

with the anti-privatisation campaign, or members of the immediate families of either of

these categories, have been assassinated. It is not the focus of this case study to

document this phenomenon, as it effects all Colombia’s social movements and was

examined in the case study on SINALTRAINAL - although see (Hernandez, 2004;

Higginbottom 2004) for reports. What concerns us here is any connection between

exposure of the corrupt practices, the fight against privatisation and the criminalisation

of social protest.

Through its anti-corruption campaign the union is condemning its condemners. But in

this context this is not a technique of neutralisation of the dominant social morality,

rather a conscious rejection of it. Two opposite discourses are competing in the public

domain, both trying to portray their opponents as the criminals. Community groups

working with SINTRAEMCALI (2001c) put on their leaflets “To privatise EMCALI is

to rob the people.”125

125 “Privatizar a EMCALI es Robar al Pueblo”


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Evaluation of representativity in sector

EMCALI as a corporation provides similar services to those offered by public

corporations in other major cities. The services in Bogotá are separately supplied,

whereas the city of Medellín also has a multi-service corporation - Empresa Pública de

Medellín (EPM). EPM exemplifies a contrasting approach within the public sector to

EMCALI. The corporation is headquartered in a high-tech computer controlled

‘intelligent’ building, it has expanded operationally by aggregating up smaller state

suppliers in other regions. EPM is an example of high commercialisation, and projects

itself much more like a multinational than a conventional public sector supplier. One

possibility to keep EMCALI in the public sector is to merge the two corporations, or

form an alliance between them (Interview EMCALI Managers).

Similar corrupt practices in the setting up of one-sided electricity supply deals are the

cause of public scandal in the TermoRio case, and outrageous pension fraud occurs

elsewhere as in the Folconpuertos scandal (Portafolio, 2003a; El Tiempo, 2004). Other

public utilities unions have experienced similar repression when they resist

privatisation, as with the telecommunications workers union SINTRATELEFONOS

and the electricity workers union SINTRAELECOL (Interview SINTRATELEFONOS

Leader; Interview Group of CUT Unions and NGOs). In these respects it is therefore

valid to generalise from the SINTRAEMCALI case although, as already commented,

there are special circumstances in the case concerning the union’s advanced capacity in

implementing an alliance with the community.


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State Dualities and Dualities within the State

Santos (2001) analyses the duality of the state and its chameleon like character when

dealing with “civilised zones” and “savage zones” of Colombia’s acute social

apartheid. These observations concern the state’s juridical and repressive arms. But

here we are discussing a branch of the state carrying out social functions. By the nature

of its services the utility corporation and its workers may enter all zones. The workers

providing domestic utilities and their relation with the “savage” zones may be much

less distant and antagonistic to the local community than the police entering those same

areas. In this respect at least, the state is not a unified entity, rather there is

differentiation and even conflict within it. The duality within the state comes to the fore

in this case study.

Turning rent-seeking wisdom on its head

The case study shows that concern to stop corruption need not by definition be

subsumed under the driver of privatisation. On the contrary, in this example anti-

corruption was used as a major means to defend state sector provision of public

services. Unionised state sector workers have been treated as another ‘rent-seeking’

special interest group, seeking to defend privilege. But the case study turns this

conventional wisdom on its head. The corrupt want to privatise as a means of

continuing their privileges, while the union encourages vigilance against corruption

because it robs public funds, and undermines its vision of co-operation with the

community.

The case study also challenges assumptions about monopoly. What is the character of

the monopoly that induces corruption? It is not monopoly as a service provider – but

the monopoly of management control over the service. We have found that corruption

as an informal system of the local politically dominant class. The problem is monopoly

of political power rather institutional monopoly.


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The IMF/World Bank ‘rent-seeking’ view of corruption is concerned with removing

barriers to the penetration of international capital, so that finance may lay hold of the

apparatus and infrastructure that others had controlled (and milked through corrupt

means). The means for this are not public mobilisation against corruption but pressure

on the elite. So there is anti-corruption from above and anti-corruption from below.

But the World Bank needs a domestic base to maintain social control and implement its

programme; this determines the form and sets a limit on the thoroughness of the World

Bank's anti-corruption drive.

Can two bads make a good? Beyond the social capital thesis

The necessity to invoke perverse or bad social capital to explain a range of (what the

ascribing author considers to be) harmful phenomena is the reducto ad absurdum of the

entire social capital thesis.

SINTRAEMCALI has demonstrated enormous resourcefulness and extensive

networking capacity, these could be considered illustrative of ‘bonding social capital’

and ‘bridging social capital’ respectively. Its antagonistic attitude to the privatisation

project would be considered an example of ‘bad’ social capital. At the same time the

local elite’s milking of EMCALI illustrates another example of informal connections

being used to perverse ends. In these terms the anti-corruption fight was a clash

between two bad social capitals. This illustrates a deep flaw in the social capital thesis,

the vacuous and moralistic labeling of ‘good’ and ‘bad’ social capitals. The

designation seems class based or politically determined, and recalls all the problematic

features of labeling deviancy, with the addition of a spurious patina of considered social

scientific authority.

Let us turn to consideration of the possibility of social capital being shaped for an

emancipatory project. The emancipation seems to have been given a non-socialist

character in advance by Schuurman, who tells the reader (four times) that socialism is

dead. One has to question whether emancipatory social capital is being suggested as an

acceptable alternative to unacceptable socialism. A basic problem here is sharing the

assumption that social attributes have to be capital to be of any worth. Capital is a

social power that augments itself, feeding on its own investment. This notion can be

treated as mere tautology, except that closer inspection reveals that capital feeds off the


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labour of others. The working class, at least the one under discussion, does not have

any capital, therefore by definition under these terms it cannot be of any worth. Social

capital is a loaded concept, with built in success for some and failure conditions for

others - which takes us back to the inevitable asymmetry between good and bad social

capital. Indeed, there is a confusion of capital with class here. Recalling Dieterich’s

suggestion that corruption and disappearances occupy a similar space as informal

systems of privilege, one could likewise consider parallels in the struggles against

disappearances and corruption. In Latin America and elsewhere it is the victims’

families who have led the campaign against disappearances. An historic memory has

been consciously recovered, with national variations, but also as a continental

movement. Why not a historic memory of struggles against corruption, as part of a

collective class-consciousness fighting privatisation?

Just as poor remakes of old film classics reveal a hidden benefit, at least they can be

thanked for leading the viewer back to the original, so we can say of the ‘bad social

capital’ thesis. The acquired social capital needed to participate in corruption is

reminiscent of the differential association learning of white-collar crime as in

Sutherland. And is it not part of the class formation of a ‘lumpen-bourgoisie’? If so,

then as the forms of dependency evolve so will the forms of corruption that need to be

learnt as hidden class practices.

There is an interesting coincidence in the terminology for the board of creditors in the

case study, the Social Capitalisation Fund. Here again the working class, whether as

producer or consumer of public services, is allowed a presence, but one which is

subordinate and marginal by design. Social Capitalisation is socialised capital, that is

capital acting as the public decision making power on behalf of society. And not just

any capital, but finance – the multinational beneficiaries of one-sided contracts, internal

and external bankers. The Social Capitalisation Fund is a retrospective legitimisation of

the previous corruption, if not the individuals then its product as an informal system

that ended up handing formal control of public service to private interests.

If one were to generalise the proposition, it is that social movements are seeking

emancipation from socialised capital, not with social capital.


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Impunity and Active Citizenship – the limits of the principal-agent-client model

At first sight the case conforms to the principal-agent-client model. We have identified

conditions of mutual interest in the privatisation project leading to a degree of collusion

between principal (as in national government) and agent (as in local politiquería). But

there is instability in the role of principal, between local elite, national government,

national control authorities and so on. There are similar issues with the agent and client

roles. As agents, the senior EMCALI managers were very close indeed to their political

masters, who are both principals and clients. These are not however objections in

principal to the model.

The real objection is the mixing up of this model with identifying the forces against

corruption. Minimally, a distinction can be drawn between a corruption model and an

anti-corruption model. A recurring theme in the reform literature on corruption is the

gap between good intentions and deeds. This is seen as an implementation problem. But

the issue goes deeper, especially in a country like Colombia. What if the principal,

agent and client all collude and mutually support each other in a system of impunity?

To end corruption requires either the system to breakdown or a challenge from without.

Transparency International’s solution to this problem is to promote ‘active citizenship’,

and quotes Juan Tokatlian,

“Besides a consistent state policy to fight corruption it also takes strong civic

involvement, to control, curb and warn against corruption before it takes place.

Without active citizenship, corruption will be even more widespread.’” (cited in

Luzzani, 2002: 182)

Active citizenship nonetheless plays a supplementary role, a walk-on part that is not

built into the model. Whereas in the case study, the main anti-corruption force has been

an alliance of state sector workers and active citizens.

The Commodification of rights

In the normative sense, access to domestic utility services is considered a human right.

Certainly access to the consumption of drinking water. So too is the complement,

access to drains and sewerage, as becomes obvious on wet Andean mountainsides


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where poor dwellings are permanently endangered by mudslides. We have seen that the

Colombian Constitution provides for a state of social right and that, as a consequence,

the state regulates a progressive pricing policy. But even with this formal state

protection, the most marginalised in society do not have their rights to water respected.

A significant proportion cannot afford electricity even at subsidised prices.

The situation becomes qualitatively worse once privatisation threatens. The Inter-

American Development Bank (IDB) said that EMCALI must be privatised at the very

point when honest managers of the corporation were pointing out that current income

was covering current costs (Edwards, 2003: 39). The commodification of rights is both

a consequence and cause of corruption.

The latent role of the public sector technocracy

One cannot say that the role of the bureaucracy is ambiguous. For years senior

managers in EMCALI colluded in corruption, and were in favour of privatisation. And

yet there was another section or element of public service managers and officials, the

technocracy for want of a better term, who believe in public service principles and

reject corrupt use of public funds. One could describe this as a latent force which

SINTRAEMCALI’s policy of mobilisation helped bring into active play. The senior

management of EMCALI who took over after the corrupt managers were removed

explained their philosophy before introducing the plan to save the corporation. They

explained that while in the neo-liberal doctrine capital and labour are in competition,

with capital trying to use labour to create profit, the relationship within EMCALI is

different. The 'public capital' of EMCALI is used to complement the efforts of labour

within a common mission to provide public services. The directors are opposed to

privatisation, because they believe that public capital and labour need to be applied

together for the benefit of the whole community, not to any particular interests

(Interview EMCALI Managers). The union SINTRAEMCALI continues to argue for

appointment of middle and senior managers in EMCALI by merit (SINTRAEMCALI,

2003c).

If the bureaucracy has a double role, to implement the official rules and the unofficial

demands for privilege of the dominant class, only exceptionally will officials break


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with this dual system. These exceptions are all the more important, as they provide a

channel of information to the real workings of the system.

Contesting the Modernisers’ Corruption Theory

In the case study concerned with privatisation, corruption had saddled EMCALI with a

crippling debt, but in investigating the inter-relation between corruption and

indebtedness we need to analyse which is cause and which is effect.

According to the modernisation paradigm corruption is an obstacle to incoming

investment from the multinationals. According to the dependency paradigm, the most

dangerous aspect of corruption is that it lets in the multinationals on advantageous

terms, allowing them to take over a country and its resources. What are the roots of

corruption according to these competing conceptions? For Rose –Ackerman the

fundamental motivator is self-interest:

“Critics call it greed. Economists call it utility maximization. Whatever the

label, societies differ in the way they channel self-interest. Endemic corruption

suggest a pervasive failure to tap self-interest for productive purposes” (1999:

3).

The best to be hoped for are institutions that can only channel the pre-given self-

interest. But this approach is reductive and individualistic, and fails to capture the

sociological relations of class and power that overdetermine any individual

predilections. In the case study example two social groupings engaged in a fight over

the future of the same corporation but acting in very different ways, the one avaricious,

the other public spirited. This difference cannot be reduced down to individuals but

concerns the social formation of the groupings.

The basis of a more consciously sociological concept of corruption is given as “a

perversion of power” (Brasz, 1970 [1963]: 41). Let us fuse this with Dieterich’s

analysis, and formulate corruption as “an informal system perverting state power to

private advantage”. By informal we mean indefensible, illegal, secret. But informality

in all these respects is contingent. On so many occasions a blind eye is turned and


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impunity is the norm. Such a definition is not specific enough however. On this

definition corruption would be no different to, say, informally practiced extra-judicial

killings or other repressive actions. Corruption refers to the powers or capacities of

those in the formal bureaucratic apparatus, rather than (e.g.) the military. Corruption is

an informal system misusing the state’s executive power or bureaucratic apparatus to

private economic advantage.

Why are punishments for corruption so light? The easiest explanation is that the

perpetrators and the judges come for the same class - they are, after all, ‘one of us’, as

per Sutherland’s wider comment on the attributes of white-collar crime. This seems

inadequate. For the sake of the legitimacy of the system, corrupt behaviour cannot be

legally sanctioned in a democracy, and yet the possibility of such behaviour needs to be

kept around, on standby for such times as may be useful. Hence punishment is meant to

neither deter the practice, nor to rehabilitate the offender. Rather it is an inducement to

potential corrupt actors to learn better how to avoid being caught.

Consider this discussion in relation to the overall thesis attempting to construct a theory

of crimes of the powerful in the dependency paradigm. Corruption’s place and

definition in the modernisation paradigm, has itself evolved. Since (Kreuger, 1974)

rent-seeking theory is the basis of the economistic neo-liberal theory of corruption.

Corruption as part of import-substituting state needs to be swept aside as a barrier to

trade and investment. In the late 1990s social capital was taken up as part of the post-

Washington consensus to get the institutions right, neo-liberalism in a velvet glove.

Once multinational capital moves in and takes a hold, another face is appearing.

Moving in the early years of the twenty first century to the neo-conservative phase,

which is ever more frank about the use of state power, we can expect both the tolerance

of corruption and its theoretical contours to shift towards a more permissive stance.

What would be the constituents a theory of corruption in the dependency paradigm?

First of all that corruption is not simply an inherited attribute of traditional society, but

is related to contemporaneously acting forces of underdevelopment; secondly

corruption is an expression of dependency; and thirdly that it is in some way functional

to capital reproduction, and to social control of the subordinate classes.


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To satisfy these requirements one would expect corruption to change its form in

relation to the form of underdevelopment. This is illustrated in Colombia’s case, where

the hybrid manifestations of corruption express the country’s hybrid forms of

underdevelopment (part latifundista, part semi-industrialised and both coming under

the domination of finance capital). Corruption as a product of underdevelopment can

accept deficit causation - e.g. the relative poverty of public officials for administrative

corruption, state services less than demand (Ulloa, 1997: 85) -and especially sees

inequality as a stimulus to corruption.

As regards dependency, the local ruling class will only get away with corruption in so

far as this is subservient, acceptable to and serves (or at least is not against) the interests

of multinational capital. Corrupt practices do not only occur in Third World,

dependent nations. As Ruggiero (2000) points out in his comparative study of three

Western European states - Italy, France and the UK - each country finds its own

nationally characteristic forms of corruption. Nor can it be assumed that all forms of

corruption are the same in all Third World countries without, again, considering the

national specifics. There is, nonetheless, an important path to explore. To what extent

are the corrupt practices revealed in this case study common to Third World countries,

and in some way constitutive of their dependent condition? In this regard it is worth

highlighting two elements in the case study that are generalised.

The nefarious Power Purchase Agreements (PPAs) can be found operating on private

supply projects in at least eleven Third World countries, in Africa, Asia and Latin

America. The multinationals involved come from rich First World countries (US,

France, Norway, United Kingdom, Japan, Germany and Switzerland) whose states in

many cases sponsor the projects through export guarantee funding (Bosshard, 2002).

Perhaps the most notorious case is Enron’s Dabhol power plant in Maharashtra, India,

which threatened to send the state government into bankruptcy (ibid.: 13; Prashad,

2002: 100-105). Bosshard comments that the common features of PPAs include lack of

competitive bidding, lack of rational planning, cronyism and corruption, the risk of

insufficient demand, high exchange rate risks, high cost of private power and cronyism

and corruption (2002: 9).


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The PPA practice is so widespread that there must have been some process whereby

power supply multinationals within the pro-privatisation business community learnt

how to set up such one sided deals. A corruption inducing commercial practice has

been diffused internationally, independent of national characteristics. One could call

this the globalisation of white-collar crime, except with the proviso, as we have noted,

that the principal beneficiaries are (First World) multinationals, whereas the victims are

the public in Third World countries, and the agents are those officials induced to agree

the PPAs. Here we have a strong example of the functionality of corruption for

economic profitability, and hence the clear rationale to the private corporation of

pursuing such a policy, despite harmful consequences to the public.

Is there a further demand side aspect to this beyond the corruption of decision making

officials? It is almost more shocking to consider that the officials could have signed

without any corrupt exchange taking place. It may well be that the original attraction of

a private international supplier is connected with the technological prowess of the

corporation. Lack of industrial technical capacity (apparent or real) weakens the local

state authority in its negotiations. In other words there is a suggestion of a relationship

between technical incapacity and proneness to corruption that would require further

research to explore. Nonetheless, this aspect of the case study, reinforced by evidence

from similar international experiences, prompts a serious reflection on the

‘lumpenbourgeoisie’ thesis. The thesis should be interpreted by the historically

constituted conditions of its environment of dependency on the one hand, and

domination on the other. It may also be that the PPAs and other such one sided

agreements induce particularly entreguista or ‘comprador’ forms of corruption,

encouraging a ‘lumpenbourgeoise’ faction or tendency that allies with the

multinationals to sacrifice national private production as well as the public interest.

The second element that deserves closer consideration because of its general

implications is the role of the international financial institutions, that is, the World

Bank and the Inter-American Development Bank (IDB). Is corruption functional to

multinational capital? Neo-conservativism accepts some forms of administrative

corruption as part of the necessary costs, the faux frais, of a domestic support alliance.

It is primarily interested in state capture, in the sense the overall shaping of national

policies in the multinationals’ interests.


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Privatisation and the threat of popular democracy

The fight against corruption is also a fight for democratisation. There are two

discourses in this respect. In the Colombian context the reforming conception of the

active citizen is to invigilate the state of social right in which the state is the guarantor

of domestic services, whether they be sourced from state or private corporations (Ulloa,

1997: 56-59). The EMCALI anti-privatisation struggle revealed another, more

participatory conception. Primarily because it created a more direct social contract

between service providers and consumers, requiring trust and accountability on both

sides; a social contract that does not require the mediating intervention of the official

state apparatus. The superstructure of the official system was being by-passed, the

more its intermediation had become corrupt and dysfunctional to service delivery, i.e.

the more parasitic it became.

Is it an example too far? SINTRAEMCALI’s network of relations with other social

movements has started to create counter hegemony to the power of the local state. Its

partial victories have been at great cost and in any case a part of an ongoing social class

struggle.

The neo-liberal agenda is to strip the state of public services, while retaining its

coercive power. The converse option, to strip the state of its coercive power while

retaining its public services is more rarely posited. This fight to keeping the public

sector, and to keep it clean of corruption, is an ethical class struggle, an advanced

process that has pushed the envelope of possibilities to the limit. It is an example of the

potential of popular democracy as an emancipatory project. A popular democratic

alliance to get rid of corruption is an alliance for social justice without declaring either

for or against socialism. An alliance in which, contrary to the active citizenry model,

the social movement is central rather than peripheral.


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Chapter 8 Findings and Conclusions

Summary of Case Study Findings

Association Between Investment Strategies and Human Rights Violations

This research started with the general proposition that forms of corporate crime are

dependent on forms of capital accumulation, that was reformulated as a research

question to investigate whether certain investment strategies lead to characteristic forms

of human rights violation. Overall it was found that incoming direct investment has

generated severe social conflict and human rights violations.

A summary of the findings from the three case studies is set out in Table 8.1. In each

case study it was found that there is a pattern of human rights violations matching the

economic rationale of the investment strategy. The rationale of efficiency seeking

investment is to cut labour costs below previous established norms, and the case study

is marked by the principal phenomena of labour repression to eliminate a militant trade

union through paramilitary assassination of trade unionists, as well as related

violations. Failure to address environmental damage leading to the displacement of

peasant farmers is the principal phenomenon of the raw materials seeking case study,

although here too there is evidence of related paramilitary persecution; this corresponds

with a rationale of avoiding social costs as deductions from the surplus profit

(economic rent). The right to affordable drinking water is an issue in the privatisation

case study, where corruption is a significant phenomenon alongside again assassination

of the union’s activists and their community allies, the outcome of which has not been

the complete privatisation of the services but their effective subordination to the

discipline of finance capital.

It was further found that the forms of human rights violations are a rational extension to

investment strategy and state policy. State policy appears in two modalities. The first

modality involves the state as an agent for the accumulation of capital, that is the

legislation, governermental and institutional and promotion of specific neo-liberal

policies designed to attract and further the interests of multinational capital. Public

policies of flexibilisation, deregulation and privatisation have been found to


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substantially facilitate efficiency seeking, raw materials seeking and market access

seeking strategies respectively.

Table 8.1: Summary of Case Study Findings

Investment

Strategy

Efficiency Seeking Raw Materials Seeking Market Access

Seeking

Leading

Neoliberal

Policy

Flexibilisation

Deregulation

Privatisation

Case SINALTRAINAL dispute with Coca-Cola

BP and ODC / OCENSA Pipeline

SINTRAEMCALI and community

Principal

Phenomenon

Labour repression to eliminate militant union

Damage and failure to address it adequately

State action to defeat popular democratic alliance

Paramilitary assassination of trade unionists

Displacement of peasant farmers

Access to means of life (water)

Detention of Trade Unionists

Selective assassinations and threats

Corruption and violence of local elite

Assassination of trade unionists and community activists

Human Rights

Concerns

Impunity and partiality of state authorities

Economic

Rationale

Reduce labour cost below established norm

Avoid social cost as a deduction from economic rent

Open to direct finance market discipline

Globalisation

Tendency

Intensify exploitation within capitalist mode

Dispossess pre-capitalist producers

Stop ‘out of the box’ post-capitalist solution

The second modality concerns the state as an agent of social scontrol, and here there is

a pattern of impunity for the perpetrators of assassinations of social movement activists

and other victims of neoliberal polices. The impunity is not complete, there is one

counter-example of a presumed paramilitary being detained, but it is general. There are

contradictions in the state apparatus: each case study provides instances of state

officials, especially at the lower levels and within the limited scope of their institutional

powers under the 1991 Constitution, supporting victims in defence of their rights, only

to be overruled by state authorities at higher levels.


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236

Layers of Corporate Power: Control, Responsibility and Liability

Each of the case studies demonstrates a variant of layers of functionality affecting

corporate control, responsibility and liability for human rights violations. Since the

corporations concerned are operating across borders, this also relates to the issue of

appropriate legal jurisdiction.

In the Coca-Cola case study, the parent corporation itself uses the concept of a Coca-

Cola system reflecting the interconnectedness of different entities. The research found

that the system is hierarchical, more akin to a pyramid than a network, with the parent

company keeping tight control on supplies, products, the production process,

distribution and marketing leaving little scope for innovation in the bottling plants.

Each element in the system implements group policy rules, and contributes to group

profits. The measures taken to ‘flexibilise’ the labour force through introducing sub-

contracting and the use of labour cooperatives were policy decisions taken centrally to

cut costs.

In the BP case study, the corporation argues that it is a responsible party only insofar as

it is a minority shareholder in a joint enterprise and that jurisdiction properly lies with

the Colombian courts. The investigation has found no material differentiation between

the BP group and its direct and wholly owned subsidiary in Colombia, and the

subsidiary was directly involved in managing the pipeline project during its critical

implementation phase. At that point there was no party more in control of the decision-

making than BP, which in any case was concerned to bring its huge investment on

stream as rapidly as possible.

In both cases where a specific multinational is involved there are major legal issues

concerning liability. In the two cases there are ongoing civil legal actions in the US and

UK respectively, which lie beyond the scope of this time limited investigation.

Criminogenic Interaction between Neoliberalism, the Colombian State and Society

From the apertura in 1990 Colombian governments have driven through policies

favourable to incoming foreign direct investment, despite the social and human rights


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consequences. The investments entered an already polarised society with a high

incidence of political violence and an armed guerrilla insurgency. Paramilitary violence

increased dramatically around 1996 in the Antioquia department, has since established

nationally and has been targeted against civilian populations and social movements.

Despite the emphasis on human rights in the 1991 Constitution, state authorities have

failed to protect Colombian citizens in conflict with multinational interests, or from the

associated paramilitary violations. The short-term consequence of incoming foreign

direct investment is that Colombia is becoming a rentier economy in which

multinationals are the principal rent takers, obtaining surplus profits especially through

the extraction of raw materials. There has been more pressure to privatise state

corporations in the wake of the 1998/99 economic crisis and the IMF Agreement.

The alliance between state authorities and multinationals, supported by a tacit

involvement of paramilitary forces and further bolstered by US intervention, has been

highly criminogenic, providing both motive and opportunity for crimes of the powerful.

There is a de facto regime of impunity for multinational corporate crime in Colombia.

Multinational corporations have access to and/or benefit systematically from informal

systems of violent social control.

The demands of neoliberalism are pushing beyond the formal constraints to abuses of

economic and political power embodied in a liberal democracy. The continuing failure

of authorities to respect the human rights of opponents to multinational investment

projects, and to criminalise their opposition, has, using the distinction of Friedrichs

(1996: 17), engendered not only a crisis of confidence but a deep crisis of legitimacy.

Consequently social movements are seeking solutions that transcend the limited legal

protections of their nation state.

The introduction of a state led ‘culture of control’ has accelerated since Plan Colombia

and the IMF agreement, with programmatic implementation since Uribe’s election in

2002. In one sense this is another round of the episodic periods of emergency under

which Colombia has been governed since the Second World War. But the latest

emergency occurs in the post-9/11 international context, and significant US military

intervention in a war that has morphed from counter narcotics to counter terrorism.


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Colombia is in transition from neoliberalism to neoconservatism, with serious

implications for the entrenchment of crimes of the powerful.

Reflections on a Theoretical Model of Corporate Crime

Levels of Theory

A complete theory of corporate crime has to operate at all of Snider (1993)’s three

levels of theoretical model: socio-economic, organisational and occupational. On those

grounds what is offered here is not a complete theory, but a contribution in favour of a

theoretical approach that corresponds with the experience of social movements in the

case studies and integrates the theoretical observations in previous chapters.

Do multinationals benefit from human rights violations? The answer can be sketched as

follows.

At the most general level, there is a structural essentialism to multinational corporations

tending to commit if not crimes, because that depends on the particular legal regime,

then infractions of human rights in Third World countries. Their raison d’etre in these

locations is to make economic advantage out of the oppressive conditions. It is a

persistent, structural and highly profitable arrangement.

At the organisational level the corporations develop internal operational procedures,

corporate cultures and training particular to their products and markets that socialise

their managers into acting on the corporation’s behalf in these conditions, with

sufficient flexibility to ensure that the necessary functions are carried out. Their

amorality stems from their corporate managerial function responding to diverse

conditions.

At the lowest, most concrete level we find differentiation in the manner of carrying out

these functions. A corporation may or may not use criminal, illicit or otherwise harmful

methods, to achieve its objectives. Between the demand for services and their supply

through partnerships or subcontracting, a division of labour arises. This third level is

the most contingent. A contingent or sub-contracted agent can be advantageous for

other reasons, for they are expendable and their actions are also deniable.


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I will argue for a theoretical approach that attempts to retain the structural essentials,

modified but present in a mediated analysis of the organisational level, and without

losing them in the necessary contingencies of occupational crime.

The Role of Contradiction in Theories of Corporate Criminality

This section briefly explores the role of contradiction in theories of corporate

criminality. There are three integrated models that seek to explain corporate

criminality theoretically. What the models have in common is they are multilevel and

synthesise already existing criminological and social theories (Poveda, 1994: 98 – 102).

We have already met the work of Braithwaite and co-writers, who draws from a

labelling theory of crime the distinction between ‘stigmatisation’ and ‘reintegrative

shaming’. Since, according to Braithwaite, stigmatisation has the likely consequence of

reinforcing the offenders’ criminal sub-culture, the reintegrative shaming approach is to

be preferred, including towards corporate criminality. A key contention is that “most

organizations have a greater stake in complying with the law and in projecting a

legitimate reputation …than in maintaining criminal subcultures" (ibid.: 102). That is,

in Braithwaite’s conception, the notion of any contradiction between corporate interests

and the wider needs of society is simply eliminated. Hence methods of social control

should reflect that and be voluntary rather than punitive and adversarial. This

‘compliance’ approach has been convincingly critiqued for being a justification for

deregulation in tune with neoliberal policies, and that on the contrary society needs

independent, adversarial state regulation (Pearce and Tombs, 1998; Slapper and Tombs,

1999).

Coleman’s theory is “based on the notion that all criminal behavior requires two basic

elements—motivation and opportunity—that must coincide before a crime can occur”

(1994: 190). Theory must bring together the structural forces and the social-

psychological motivation of individuals to commit white-collar crime. Coleman’s

explanation has three elements. A ‘culture of competition’ fosters the motivation to

commit crime; and powerful organisations shape employee behaviour so that ethical

constraints inhibiting criminality can be neutralised. These two elements encounter a

structure of opportunities depending on legislation and the enforcement regime (ibid:

227). Coleman’s is a critical theory, recognising that “the problem of white-collar


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crime is rooted in the social contradictions of industrial society” (ibid.235), the focus of

his concern is how actions are given meaning in a culture of competition.

The integrated theory put forward by Box (1983) employs the same elements as

Coleman but with a distinct emphasis on corporate crime as organisational crime. The

tendency to criminality arises from the basic contradiction between the narrow

motivational goals of the corporation and the uncertainties of its environment:

“This defining characteristic - it is a goal-seeking entity - makes a corporation

inherently criminogenic, for it necessarily operates in an uncertain and

unpredictable environment such that its purely legitimate opportunities for goal

achievement are sometimes limited and constrained.” (ibid.: 35)

Box predicts that the strain towards corporate criminal activity will increase as

environmental uncertainties increase. And, like Coleman, he sees neutralisation and

opportunity as the two necessary further elements. Neutralisation techniques are,

according to Box, part of a subculture of amoral flexibility that releases corporate

executives from moral imperatives. This ‘structural immorality’ differs from the

subculture of young delinquents in two important respects. Corporate executives find

that the law infrequently holds them to account or compensates their victims. And since

they are more committed to conventional values, they “have an even greater need to

neutralize the moral bind of the law” to “protect their respectability and self-identity”

(ibid. 54).

There is an issue in Box’s synthesis that needs to be drawn out. Box oscillates between

organisation and corporation, his definition of corporate crime (ibid.: 20-22) is more a

definition of organisational crime. The identity cannot be assumed. Not all

organisations are corporations, an organisation may be goal seeking without being

profit-maximising - e.g. a public utility to supply drinking water, or a department

charged with running a primary education system – and with no inherent contradiction

with the uncertainties of its environment that induce criminal motivations. It follows

that the criminogenic character of corporations arises from their differentia specifica,

their particular motivation as profit-seeking capitalist entities, not because they are


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goal-seeking as such. The overriding goal of profitability is at the root of corporate

criminality.126

The external contradiction Box identifies is also expressed in an internal contradiction

of the corporation. While not claiming to be an integrated theory, Punch’s contribution

is very helpful in this respect. Again drawing evidence from illustrative case studies he

develops the notion of the shadow corporation, that he sees as arising from the

contradiction between means and ends (Punch 1996: 219). Punch describes this duality

occurring as double-think as well as double-act, giving rise to a schizophrenia between

the public ideology and the operational codes of how things are actually done, a

deceiptful world leading even to the formation of managers as double-agents (ibid.:

215). He sees such duality as inherent in all organisations and the interactions of

insitutional life (ibid.: 217), rather than something special to the corporation and its

character as a capitalist enterprise .

Corporate Crime as a Means to Increase Exploitation

In the last decade three other significant variables have come to the fore that would

need to be incorporated into an integral theory of multinational corporate crime: newer

‘post-modern’ forms of corporate organisation such as flexible working,

decentralisation and contracting out (Tombs, 1995); market structure, especially the

degree of regulation, noting that “there is a great deal of evidence that corporate crime

increases in deregulated industries” (Slapper and Tombs, 1999:138); and, as throughout

this research, corporate production activity in Third World locations.

The debate between the Braithwaite compliance school and the Pearce and Tombs

critical position puts emphasis on capitalism as a market system. I advance here a more

‘fundamentalist’ conception of corporate crime that relies on the concept of capitalism

as a mode of exploitation.

Friedrichs (1996: 234) argues that the Marxist account of white-collar crime is not very

helpful in explaining why some individuals and organisations engage in it, and others

not. There is validity to this criticism insofar as it concerns individual behaviour, and

126 This point is captured in Kramer’s definition of corporate crime (cited in Slapper and


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the argument advanced here is limited in its focus to the behaviour of the corporation.

But the same author criticises Marx for stating that “all employers … were stealing

from their employees, because instead of the worker getting a full return on the value of

his labor, the owner expropriated a part of this value in the name of profit” (ibid.98). If

all exploitation is stealing and by definition criminal, then there is no need for the

separate study of corporate crime per se. But this is a misunderstanding of the Marxist

position, which considers the distinction between ‘the value of labour’ and the value of

labour-power a vital intellectual discovery. The employer pays the value of the

worker’s labour-power, which is a commodity and different to the labour the worker

expends during the working day. The wage contract is for reproducing the labour-

power, not the valued added in production, and the difference between the two is

unpaid labour, a surplus value that is neither definitionally nor juridically theft. That is

to say the surplus value created in capitalist production arises from a social relation of

domination, not an illegality. This form of exploitation is the condition of capitalist

production, and the ratio between the surplus value created by the worker and the value

returned to the worker in the form of wages is the degree of exploitation (Marx, 1974a

[1886]).

Whilst Friedrichs acknowledges that there is exploitation of workers, he falls into

common day usage – “in many instances underpaid … by any reasonable standard”

(ibid.: 89). What Friedrichs terms exploitation, would in Marxist understanding be

intensified exploitation or in some accounts super-exploitation, that is a degree of

exploitation over and above the established norms for a given society. There is not

some point at which employer downward pressure on wages becomes exploitation,

rather this is a quantitative change in the degree of exploitation. Quantity turns into

qualitative change when downward pressure on wages reduces them below what

society regards as minimally acceptable. In a country where the minimum wage is set

in law, then paying below it is illegal, but there is no automatic connection between

exploitation and its extension into super-exploitation, and law breaking. For example,

to reduce wages an employer may either break a legally binding wage contract, or use

agreed legal-administrative processes or lobby to change existing law. In every case the

employer would be seeking to increase the degree of exploitation, but only in the first

case by illegal means.

Tombs, 1999: 16).


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There is however an historic tendency to super-exploitation that is realised in two

respects. The first is in Marx’s theory to explain the necessity of the periodic economic

crisis in capitalism. In the period leading up to crisis the profitability of each individual

capital is increased through enhancing the productivity of labour under its command,

this individual solution leads to a decline in the general rate of profit, the only general

solution to which is found in driving wages below the value of labour power - a

generalised if temporary attack on living standards, an outbreak of super-exploitation

(Marx, 1974b [1909]).

The second turn is the qualitative change that occurred in the world economy around

the turn of the twentieth century, the systematic export of capital to establish production

under capitalist conditions in the ‘backward economies’, that is known to classical

Marxism as imperialism. This system-level solution ameliorated the tendency to

convulsive crisis by consolidating super-exploitation as a fundamental structural

characteristic of the world system.127

The tendency to super-exploitation has again accelerated in the neoliberal phase,

characterised as it is by the opening up through deregulation and other mechanisms of

‘dirty economies’, that is informal, or ‘grey’ markets “where the licit and the illicit

overlap” (Ruggiero, 1997a: 28). I argue that this notion of dirty economies applies not

only to the mutually beneficial exchanges between entrepreneurs, i.e. in the sphere of

circulation; neoliberalism reintroduces dirty economics and formal-informal interfaces

in the value chain, that is in the production of surplus-value.

Consider the discussion in the literature about the profit motive, whether avoiding a fall

in profits or pushing to maximise profits is more criminogenic that Coleman (1994:

219) addresses, but only at the level of the formation of managers. I have argued that a

systemic decline in profitability leads to recession, making corporate crime more likely

(see also Box, 1987: 54). With regard to maximising profits, Marx argued that unlike in

previous modes of production where the greed of the dominant class reached a point of

satiation, there is in principle no upper limit in the sense of a self-limiting factor within

the capitalist profit motive. The history of the twentieth century has shown that if the


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opportunity structure allows for enormous profits to be made, then the neutralising

rationales will be found.

Another doubt expressed concerning the significance of the profit motive for corporate

crime, is that it gets diluted in intermediate operating goals, or whether indeed there

exists in decentralised organisations the capacity to rationally interpret and implement

profit maximisation (Tombs, 1995: 133-134). The foreign investment strategies

counteract any such dilution, since they provide a clearly defined operational objective

whilst retaining the underlying purpose of profitability. In this respect the strategy of

efficiency seeking capital is most obvious, and is an evident euphemism for super-

exploitation predicated on paying the workers less, and giving the rationale for

avoiding, evading, breaking or changing labour protection laws. The raw materials

seeking strategy is likewise profit maximising, in this case by claiming the greatest

possible share of the economic rent from the exploitation of natural wealth. The

strategy of market access seeking capital pushing for privatisation is seeking to

reintroduce production for profit and hence exploitative social relations. Corporate

crime is likely in all these circumstances as means to increase exploitation.

The Para-Corporation and Corporate Criminality

If the above argument is correct, then the internal normative and organisational

dualities that we have seen detected in cases where corporate deviancy has been

publicly revealed, would exist in all corporations as they arise from the essential

duality of the corporation as producer of profit and producer of those goods and

services particular to its line of business.

This dual reality, and the necessity to suppress one side of its existence, is however

particularly acute in corporations where super-exploitation in one sphere of operations

offends against corporate citizenship claims in another. The contradiction between

essence and appearance is especially sharp in a multinational engaged in super-

exploitation. The multinational corporation alienates from itself that network of

subcontracted services over which it claims no control and yet which it has called into

existence and continues to benefit from. This gives rise to not only to Punch’s shadow

127 The individual company histories of both Coca-Cola and BP as multinational corporations


245

corporation, but to what I provisionally term the ‘para-corporation’. The para-

corporation involves a nexus of informal systems and operations that are of, but not

necessarily in, the corporation.

Note that this concept echoes Giraldo (1999)’s suggestive analysis of the Colombian

state and para-state. In Colombia, sub-contracting of violence is commonplace and goes

hand in hand with sub-contracting the workforce. From this experience I suggest that

the corporation is not only gaining access to an informal system of social control, but

that it is in turn affected by it. It is not the corporation that connects with the para-state,

but the para-corporation. Paramilitarism allows the corporation to alienate extra-legal

requirements, but it cannot interface directly with this alienated function. The links are

made in the shadows, a sub-contracted penumbra of specialised security. The alienation

takes place in practice as a rational division of labour, and not just a post-hoc

rationalisation. Contract killing nonetheless requires two parties to the contract, and

that therefore eventually impinges back on the contracting out organisation. The

corporation can never completely disavow itself of the criminality. The state and the

corporation both have their people who deal with the dirty business, and both parties in

their legitimate existence strive to provide impunity. Hence, under the situational

pressure of counterinsurgency and paramilitary state the para-corporation may even

become a schizoid corporation, whose identity and boundaries are at times not clear,

even to itself.

Profitability, Neutralisation and Opportunity

If we again review the proposed theoretical models of white-collar or corporate crime

then the profit motive is a more or less immediate presence. Thus far I have

concentrated on profitability as the overdetermining motive for corporate crime and

sought to present it less as an external mechanical force acting on the corporation from

the outside as an immanent presence in the operations of the surplus value producing,

exploiting corporation. But this is insufficient as a predictor for corporate criminality,

under what conditions will it occur?

are each in their way highly illustrative of this metamorphosis.


246

Coleman and Box both invoke neutralisation (the corporation’s capacity to rationalise

criminality) and structure of opportunity as two logically necessary elements in an

integrated theory of corporate crime. That is, we have motive, opportunity and

neutralisation as the criminal’s modus operandi. To what extent opportunity and

neutralisation should be considered as independent variables occupying their own

dimension, or subsumed under the shaping dominance of the drive for profitability has

to be considered. All three elements contribute to the incidence of corporate

criminality, which could be conceived as a vector in three dimensions. For example, in

a given structure of opportunity for profit making by criminal means, the corporation

with the greater capacity to neutralise (rationalise, deny) its involvement is the more

likely to engage in criminality than the corporation with less capacity. The power to

neutralise may itself be seen as a competitive advantage.

If the essential driver of profit maximisation is correct, then every corporation strives to

move from lower to higher profitability. The case of Albert Speer’s enterprises in Nazi

Germany illustrates high profitability, benefiting from the combination of fullest

opportunity for corporate criminality and the most complete denial (Cohen, 2001: 84-

88). The mining corporations operating in apartheid South Africa made similarly

stupendous profits under a regime of absolute exploitation. In contrast to these extreme

examples, Colombia presents an ambiguous opportunity for corporate criminality, a

contradictory combination of a formal state of social right with a reality of neoliberal

policies and violent social control. Successful corporations will align with this

environment and work it to their advantage.

In both the BP and Coca-Cola case studies lower level actors acted in the name of the

parent corporation, even if post-hoc corporate responsibility is denied. The capacity to

control and yet subsequently disown operatives as perpetrators can itself be considered

an expression of corporate power in organisational systems designed to “manufacture

‘genuine’ deniability” (Cohen, 2001: 68). I suggest that BP has a high capacity for

neutralisation from ethical controls, as evidenced by the corporation’s adept response to

the Sara Wiwa scandal, the close support it gets from the British government and the

intervention of the World Bank. Note the importance to profitability of this capacity to

stay clean while working in a dirty business. There is a paradox here: Coca-Cola is in


247

more aggressive denial than BP, yet it has demonstrated a less sophisticated

neutralisation capacity.

Convergences of Corporate Crime and Corruption as Crimes of the Powerful

One factor that is missing in a model that sees corporate crime as an outcome of the

combination of opportunity and neutralisation capacity is that of constraints due to

deterrence and opposition. The relationship is not mechanical in any concrete case, for

example trade unions opposing their members’ assassination may engender more

assassinations, or it may put a brake on the criminality.

Nevertheless we can posit the general proposal that the likelihood corporate criminality

increases with opportunity and neutralisation capacity, and decreases with social

protest, that may be expressed by the equation corporate crime = opportunity +

neutralisation – protest (C=O+N–P). This form is the same as in the case study

discussion on the incidence of corruption (Chapter 7), presented as corruption =

monopoly + discretion – transparency (C=M+D-T). It could be that the correspondence

is more than formal, both ‘equations’ summarise relations of hegemonic power that

tend to give rise to crimes of the powerful.


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What Is To Be Done About Multinational Corporate Crime?

Corporate Criminality as a Tendency of Neoliberal Globalisation

To consider what the investigation has revealed concerning the current phase

globalisation, let us reflect on each case study from the perspective of modes of

production in the historical processes.

The Coca-Cola case study of efficiency seeking capital revolves around the types of

sub-contracting and the oppressive conditions under which labourers sell their own

labour-power. At first sight this is a return to pre-capitalist forms, or at least early

capitalist forms that bore a legacy of forced labour. But this is not so, the stripping

away of employment rights is the objective of modern policies through reintroducing

paternalist and clientelist practices128 to intensify exploitation within the capitalist mode

of production.

Typically, the harm perpetrated by natural resource seeking capital as exemplified in

the BP case study is to separate the peasant farmers from their land. While not

necessarily a conscious policy at corporate level, the effect is to dispossess small

producers thereby clearing the way for a model of large-scale capitalist agriculture.

This driving out of peasant production signifies the expansion of the capitalist mode of

production over pre-capitalist forms.

Providing utility services to a population by local state corporation EMCALI, pushes

the outer limits within the system. It is essentially a transitory form, with the germs of a

post-capitalist solution. And social mobilisation opposed to privatisation steps even

further ‘out of the box’ of political acceptability. The drive to privatise these services is

to bring them back under the direct dominion of capitalist enterprise, to prevent a post-

capitalist solution.

Extrapolating beyond the limited empirical base of Colombia, these case studies give

some support to the propositions that a) corporate crime and neoliberal regimes are

128 Such as the gangmaster, or capataz, as in Conrad’s novel Nostromo.


249

functional to each other and b) corporate criminality is a systemic tendency of the

current phase of globalisation.

Are multinational corporations Good Samaritans, Passive Bystanders or Offenders? Corporate Self-regulation, State Regulation or Social Mobilisation

International policy discussion on corporate social responsibility and human rights

violations has focussed on the notion of complicity (UNHCHR, 2005), and we have

already seen in Chapter 6 how complicity can be distinguished as the intentional act of

an accomplice, a direct offender, or the unintentional witness of a bystander. The

conservative position on multinationals in Third World countries assumes neither of

these roles, rather it interprets the corporation as a Good Samaritan, the moderniser

coming to the aid of an ailing victim.

Two of these distinctive positions correspond with the competing schools of thought

introduced in Chapter 2 on the regulation of corporations between the voluntary and the

mandatory. I summarise their underpinning views as: a) corporations are essentially

well intentioned, hence mandatory legal restraint is unnecessary; and b) that good

intentions are not enough making legal restraint necessary. We are now able to add a

third view with its corresponding policy approach: because corporations are essentially

mal-intentioned towards society, legal restraint is insufficient to hold them in check and

social mobilisation is required.

The self-regulation position, calling on a multinational corporation to be a Good

Samaritan, and no longer a bystander, already presupposes a distance from the

violations. The case studies in this research suggest a more integral connection of

responsibility.

Arguing for regulation was perhaps only available and hence realist response to

deregulationists when the neoliberal world order was in its pomp (as in Pearce and

Snider, 1995). Since that time neoliberalism has faltered and its retreat from

invincibility that brought the ‘post-Washington’ consensus, and Latin America has

further moved into a new phase of resurgence of social movement led resistance to

multinational depradations. Trying to get regulation introduced into the Third World as

a progression from First World regulatory regimes is an especially difficult challenge

(the NAFTA agreement sidlined all labour and environmental protections).


250

What is to be done about multinational corporate crime? What can be done is to look

again at what the Third World offers. As a generalisation, Third World nation states

have failed to protect their citizens against the multinationals, and are unlikely to

support an international regulatory regime. Our view of what counts as ‘realistic’ needs

to change, we need to adopt a new realism that puts the agency of social movements

fighting multinationals at its centre. These movements experience in reality how

criminality is an extension of exploitation. Ironically, they have often adopted the very

tactics of publicity and corporate shaming praised by the self-regulators (Fisse and

Braithwaite, 1983). But this is not a trite convergence of the idealist left with

conservativism, rather it is symptomatic of the profound moral authority and emerging

capacity of social movements from the global South to build alliances and engage in

real battles against multinational corporate crime.


251

Chapter 9 References

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