Contact: John Harrington – 707.252.6166
FOR IMMEDIATE RELEASE
August 22, 2005
Napa, California
Bribery Shouldn't Pay
Monsanto shareholder resolution asks for more company oversight
Harrington Investments, Inc. (HII), a Napa, California-based socially responsible investment advisory firm filed a shareholder resolution at Monsanto Company, requesting that the board of directors create an ethics oversight committee comprised of independent directors.
"Bribery is illegal, and Monsanto's violation of federal law and the company's own voluntary code of conduct prove that management cannot be trusted to protect shareholders," said John Harrington, president and CEO of HII. "Monsanto's management has once again shown its disregard for its fiduciary duties and for U.S. law."
Harrington is specifically taking Monsanto's management to task for its recent scandal in Indonesia, in which the company attempted to facilitate the approval of genetically engineered crops in Indonesia by bribing government officials. Harrington claims that the incident clearly shows the need for additional oversight and "requires the involvement of fiduciaries without any direct financial interest in the company." Thus the proposal asks for the creation of an "ethics oversight committee" composed of independent directors.
The proposal also states that Monsanto's actions may have a very negative impact on the company, increasing legal and financial risk and damaging the company's brand name and reputation. Stating the following facts, the resolution paints a picture of a large company unable to properly monitor a foreign subsidiary or adequately control its own management team:
- In January 2005, Monsanto was fined $1 million by the U.S. Department of Justice for paying an Indonesian official $50,000 to repeal a requirement for the submission of an environmental impact study before the company could cultivate genetically modified cotton crops in the country. This bribe was a direct violation of the Foreign Corrupt Practices Act.
- Monsanto was also fined $500,000 by the Securities and Exchange Commission (SEC) for the $50,000 bribe and related violations which included more than $700,000 of illegal or questionable payments made to at least 140 current or former Indonesian government officials and their family members from 1997 to 2002.
- A Monsanto manager based in the U.S. instructed a consulting firm in Indonesia to submit false invoices to conceal the $50,000 bribe. According to the SEC complaint, "Despite obvious irregularities in the invoices, the Senior Monsanto Manager approved the false invoices and convinced other Monsanto managers to approve the false invoices for payment." The other improper payments were concealed by Monsanto's Indonesian affiliates using false registration fees and inflated sales of pesticide products.
- According to the SEC complaint, the repeated violations of Monsanto's accounting policies, controls and procedures by its Indonesian subsidiary were undetected due to inadequate internal controls. From 1996 to 2001, Monsanto failed to conduct audits of its Indonesian subsidiary as required by Indonesian law. When Monsanto did conduct an internal investigation in 2001, uncovering the illicit payments and disclosing them to the SEC, it did not uncover the $50,000 bribe.
The Harrington advisory firm last year filed a shareholder resolution with Monsanto requesting information from the company on the export of dangerous and carcinogenic chemicals to developed and developing countries, receiving over 13% of the shareholder vote in 2004 and the two prior years.
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