Large corporations are paying too little in taxes and too much in campaign contributions. The top Wall Street banks have again become too big to fail. Walmart, ExxonMobil and others of the top 10 corporations boast larger revenues than most countries' economies.
And, if that weren't enough, corporations have gained extraordinary powers through trade and investment agreements to sue governments, often to override vital social and environmental protections that governments have put in place. Case in point: Next week, a mining firm is bringing the government of El Salvador to trial here in Washington for actions that the government took to protect its people and its environment.
It is time for a congressional investigation.
There is a precedent for congressional investigations into corporate abuses from just four decades ago from which we can draw inspiration.
Forty years ago, front-page allegations surfaced that the U.S.-based International Telephone and Telegraph (ITT) had offered funds to the U.S. government to prevent the democratically elected government of Salvador Allende from taking power in Chile in 1970. Using those allegations as a starting point, the U.S. Senate Subcommittee on Multinational Corporations of the Senate Foreign Relations Committee, under Sen. Frank Church (D-Idaho), convened a multi-year inquiry into "Multinational Corporations and United States Foreign Policy." The so-called Church Committee interviewed dozens of expert witnesses to look at the power and practices of U.S. corporations in the developing world. The result was 17 riveting volumes that offer a more thorough examination of corporate abuses overseas than any other inquiry of that (or perhaps any) era.
Back in the 1970s, Church and his colleagues could never have imagined the new laws that facilitate corporate misbehavior today. Like the ITT case, this is stuff for a movie, although most would consider it implausible even as fiction.
Consider this: On Sept. 15, totally off camera, there will be a hearing, like dozens of others in recent years, at the International Centre for Settlement of Investment Disputes (ICSID), housed in downtown Washington at (and subsidized by) the World Bank. Corporate-friendly investment rules, enshrined in thousands of current trade and investment agreements, have emboldened a mining firm to sue the Salvadoran government for not allowing the company to mine gold. The Salvadorans, with justification, fear that cyanide and other toxic chemicals left by gold mining will contaminate the country's main water source.
The mining firm, Pacific Rim — now part of Australian/Canadian mining corporation OceanaGold — never was given a license to mine by the Salvadoran government. That, it would seem, should be the end of the story. No license to mine; no case. But the ICSID tribunal, incredibly enough, has allowed Pacific Rim to proceed with its suit based on the fact that it had a prior license to explore for gold. And so, even though Pacific Rim never fulfilled three key conditions required for the actual mining license, the company argues that the government must let it mine or compensate it over $300 million for foregone mining profits.
Drawing inspiration from the Church Committee of the 1970s, we can use this egregious case to once again put a spotlight on excessive corporate power. And we can change trade and investment agreements to stop excessive lawsuits that damage communities, the environment and democracy.
It is time to revive that congressional subcommittee.
Broad is a professor at the School of International Service at American University. Prior to that, she worked as an international economist at the U.S. Treasury Department, in the office of then-Rep. Chuck Schumer (D-N.Y.) and the Carnegie Endowment for International Peace.